As Filed with the Securities and Exchange Commission on January 28, 2000
File No. 333-36975
File No. 811-8397
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 3 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 6 /X/
THE MARSICO INVESTMENT FUND
(Exact Name of Registrant as Specified in Charter)
1200 17TH STREET, SUITE 1300
DENVER, CO 80202
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: 1-888-860-8686
--------------------------------
BARBARA M. JAPHA, ESQ.
The Marsico Investment Fund
1200 17th Street, Suite 1300
Denver, CO 80202
(Name and address of agent for service of process)
COPIES TO:
SANDER M. BIEBER, ESQ.
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006
--------------------------------
It is proposed that this filing will become effective 75 days after filing
pursuant to paragraph (a)(2) of Rule 485 or on such earlier date as the
Commission may designate pursuant to paragraph (a)(3) of Rule 485.
--------------------------------
<PAGE>
THE MARSICO INVESTMENT FUND
Marsico Focus Fund
Marsico Growth & Income Fund
Marsico 21st Century Fund
(the "Marsico Funds")
Supplement Dated January 27, 2000 to the
Prospectus dated January 27, 2000
The following information supplements the disclosure contained in various
sections of the Prospectus concerning the use of the Marsico Funds Website
(www.marsicofunds.com) to effectuate Fund transactions:
The online transaction capabilities of the Marsico Funds Website, as described
in more detail in the attached Prospectus, will not be fully operational and
available for use to effectuate Fund transactions until on or about March 1,
2000. The Website remains available, however, for non-transactional purposes and
may currently be used by shareholders and potential investors to obtain useful
information about the Marsico Funds.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
THE MARSICO INVESTMENT FUND
Prospectus January 27, 2000
Marsico Focus Fund
Marsico Growth & Income Fund
Marsico 21st Century Fund
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
[LOGO]
Marsico Funds
Your Guide to the Prospectus
This Prospectus is designed to help you make an informed decision about whether
investing in the Marsico Focus Fund ("Focus Fund"), the Marsico Growth & Income
Fund ("Growth & Income Fund") or the Marsico 21st Century Fund ("21st Century
Fund") is appropriate for you. When we are discussing the Focus Fund, the Growth
& Income Fund and the 21st Century Fund together, we will refer to them as the
"Funds." The investment adviser for each Fund is Marsico Capital Management, LLC
(the "Adviser").
We have divided the Prospectus into four sections to make it easy for you to
find what you are looking for.
The first section, the Funds, contains a discussion of the objectives, principal
risks, performance history and fees of each Fund. In particular, this section
tells you four important things about each Fund:
* Each Fund's investment goal - what the Fund is trying to achieve.
* The principal investment policies of each Fund - how each Fund tries to meet
its investment goal.
* The investment selection process used by each Fund - this section specifies
each Fund's primary types of investments and principal investment strategies.
* Risks you should be aware of - the principal risks associated with each Fund.
The other three sections of the Prospectus - Who Manages the Funds, How to Buy
and Sell Shares and Financial Highlights - provide detailed information about
how the Funds are managed, the services and privileges available to the Funds'
shareholders, how shares are priced, how to buy and sell shares, and financial
information.
<PAGE>
Table of Contents
PAGE
THE FUNDS........................................................... 2
The Goals of Each Fund.............................................. 2
The Principal Investments and Policies of the Funds................. 2
Other Investment Policies of the Funds.............................. 3
The Investment Selection Process Used by the Funds.................. 5
The Principal Risks of Investing in the Funds....................... 6
Performance History................................................. 8
Expenses............................................................ 9
WHO MANAGES THE FUNDS............................................... 11
The Investment Adviser.............................................. 11
The Portfolio Managers.............................................. 12
HOW TO BUY AND SELL SHARES.......................................... 13
Pricing of Fund Shares.............................................. 13
Instructions For Opening and Adding to an Account................... 13
Telephone and Wire Transactions..................................... 15
Additional Purchase Information..................................... 16
Instructions For Selling Fund Shares................................ 18
Additional Redemption Information................................... 19
How to Exchange Shares.............................................. 21
Fund Transactions Through the Marsico Funds Web Site................ 23
Retirement Services Plan............................................ 24
Automatic Services for Fund Investors............................... 25
Shareholder Communications.......................................... 26
Dividends and Distributions......................................... 26
Taxes............................................................... 27
FINANCIAL HIGHLIGHTS................................................ 28
THE MARSICO INVESTMENT FUND......................................... 30
WHERE TO GO FOR MORE INFORMATION.................................... 31
Annual and Semiannual Reports....................................... 31
Statement of Additional Information................................. 31
<PAGE>
THE FUNDS
The Goals of Each Fund
* The Focus Fund and the 21st Century Fund each seek long-term growth of
capital.
* The Growth & Income Fund seeks long-term growth of capital with a limited
emphasis on income.
The Principal Investments and Policies of the Funds
* The Focus Fund invests primarily in the common stocks of large companies,
normally a core position of 20-30 common stocks that are selected for their
long-term growth potential.
* The Growth & Income Fund invests primarily in the common stocks of large
companies that are selected for their growth potential. In addition, at least
25% of its total assets are invested in securities that have income potential.
The Adviser may shift assets between the growth and income components of the
Fund depending on its analysis of relevant market, financial and economic
conditions. However, investors should keep in mind that the Growth & Income Fund
is not designed to produce a consistent level of income. In addition to its
fixed income securities, the Growth & Income Fund will normally hold between 35
and 50 common stocks.
* The 21st Century Fund invests primarily in common stocks that are selected for
their long-term growth potential. The Fund may invest in companies of any size
and will normally hold a core position of between 35 and 50 common stocks.
* The Focus Fund is a "non-diversified" portfolio, which means that it can
invest in fewer securities at any one time than diversified portfolios.
Conversely, the Growth & Income Fund and the 21st Century Fund are both
"diversified" portfolios, which means that they are required to invest in the
securities of a greater number of companies and other issuers than a
non-diversified portfolio. (Please refer to the panel below for more
information.)
* Each Fund may invest without limit in foreign securities. These investments
may be publicly traded in the United States or on a foreign exchange, and may be
bought and sold in a foreign currency. The Adviser generally selects foreign
securities on a stock-by-stock basis based on growth potential.
* Under adverse market conditions or in the event of exceptional redemption
requests, each Fund may hold cash or cash-equivalents and invest without limit
in money market securities, U.S. government obligations and short-term debt
securities. Under these circumstances, the Funds may not participate in stock
market advances or declines to the same extent that they would if they remained
more fully invested in common stocks. The Funds may also purchase high-grade
commercial paper, certificates of deposit and may enter into repurchase
agreements.
The Funds' goals may be changed by the Board of Trustees without shareholder
approval. You will receive advance written notice of any material changes to a
Fund's goals.
A WORD ABOUT THE FUNDS: The Funds are mutual funds, which are pooled investment
vehicles that are professionally managed and that give you the opportunity to
participate in financial markets. The Funds strive to reach their stated goals,
although no assurances can be given that they will achieve their goals.
Investments in the Funds are not bank deposits and are not insured by the FDIC
or any government agency. The Funds do not represent complete investment
programs. You could lose money by investing in the Funds.
Other Investment Policies of the Funds
* Primarily for hedging purposes, the Funds may use options, including options
on securities and securities indices, futures and foreign currency contracts.
* Because income is a part of the Growth & Income Fund's goal, in addition to
investing in stocks with dividend paying characteristics, the Fund may invest up
to 25% of its total assets in debt securities, including high-yield bonds and
mortgage and asset-backed securities. As part of this portion of the Growth &
Income Fund's portfolio, the Fund may also invest a total of up to 5% of its
total assets for non-hedging purposes in options, futures and other types of
derivatives, including forward contracts, swap-related products, zero coupon,
pay-in-kind and step coupon securities.
* Under normal market conditions, the Focus Fund and the 21st Century Fund may
each invest up to 10% of its total assets in all types of fixed income
securities and up to 5% of its total assets in high-yield bonds and mortgage and
asset-backed securities.
* Each Fund may invest up to 15% of its net assets in illiquid investments,
which are securities that cannot be sold or disposed of quickly in the normal
course of business. The Funds may also invest in the securities of other
investment companies to a limited extent and intend to do so primarily for cash
management purposes.
"LARGE COMPANIES": Both the Focus Fund and the Growth & Income Fund invest
primarily in the equity securities of large companies that the Adviser believes
have earnings growth potential. Large companies are often referred to as "large
capitalization" companies because they typically have a market capitalization of
$5 billion or more. Market capitalization is calculated by multiplying the
number of shares outstanding by the stock price of the company.
MORTGAGE AND ASSET-BACKED SECURITIES represent shares in a pool of
mortgages or other debt, like car loans. These securities involve prepayment
risk, which is the risk that the underlying mortgages or other debt may be
refinanced or paid off prior to their maturities during a period of declining
interest rates.
HIGH-YIELD BONDS are securities that involve the risk that the issuer may
not be able to meet its payment obligation. For this reason, high-yield bonds
are given a low to medium credit rating by Moody's (Baa and lower) and Standard
& Poor's (BBB and lower), and are considered to be mostly speculative in nature.
"DIVERSIFIED" VS. "NON-DIVERSIFIED": All mutual funds must elect to be
"diversified" or "non-diversified," which will affect the number and size of the
positions that they can take in the securities of different issuers. As
"diversified" portfolios, the Growth & Income Fund and the 21st Century Fund may
not invest, with respect to 75% of their respective total assets, more than 5%
of their total assets in the securities of any one issuer. In contrast, as a
"non-diversified" portfolio, the Focus Fund cannot invest, with respect to 50%
of its total assets, more than 5% of its total assets in the securities of any
one issuer. As such, the Focus Fund has the ability to take large positions with
respect to a greater number of issuers than either the Growth & Income Fund or
the 21st Century Fund.
As a result, the Focus Fund typically will hold the securities of fewer
companies than either the Growth & Income Fund or the 21st Century Fund. None of
the Funds may invest more than 25% of its total assets in a single issuer (other
than U.S. Government securities) and none of the Funds may own more than 10% of
the outstanding voting shares of any one issuer.
The Investment Selection Process Used by the Funds
In selecting investments for the Funds, the Adviser uses an approach that
combines "top-down" economic analysis with "bottom-up" stock selection.
* The "top-down" approach takes into consideration such macro-economic factors
as interest rates, inflation, the regulatory environment and the global
competitive landscape. In addition, the Adviser also examines such factors as
the most attractive global investment opportunities, industry consolidation and
the sustainability of economic trends. As a result of the "top-down" analysis,
the Adviser identifies sectors, industries and companies which should benefit
from the overall trends the Adviser has observed.
* The Adviser then looks for individual companies with earnings growth potential
that may not be recognized by the market at large. In determining whether a
particular company is suitable for investment by the Funds, the Adviser focuses
on a number of different attributes, including the company's specific market
expertise or dominance; its franchise durability and pricing power; solid
fundamentals (e.g., a strong balance sheet, improving returns on equity and the
ability to generate free cash flow); strong management and reasonable valuations
in the context of projected growth rates. This is called bottom-up stock
selection.
* As part of this fundamental, bottom-up research, the Adviser may visit with
various levels of a company's management, as well as with its customers,
suppliers and competitors. The Adviser also prepares detailed earnings and cash
flow models of companies. These models permit the Adviser to project earnings
growth and other important characteristics under different scenarios. Each model
is customized to follow a particular company and is intended to replicate and
describe a company's past, present and future performance. The models are
comprised of quantitative information and detailed narratives that reflect
updated interpretations of corporate data.
* The Funds' investments generally are anchored by stable growth companies.
However, the Funds' portfolios also typically include more aggressive growth
companies and companies undergoing significant changes: e.g., the introduction
of a new product line, the appointment of a new management team or an
acquisition. As a result, the Funds may invest in certain companies for
relatively short-term periods. Such short-term activity may cause the Funds to
incur higher brokerage costs, which may adversely affect the Funds' performance,
and may produce increased taxable distributions.
* In managing the Funds' assets, the Adviser is mindful of the tax consequences
that investment decisions may have on shareholders.
The Principal Risks of Investing in the Funds
RISKS IN GENERAL
Domestic and foreign economic growth and market conditions, interest rate
levels and political events are among the factors affecting the securities
markets of the Funds' investments. There is a risk the Adviser will not
accurately predict the direction of these and other factors and, as a result,
the Adviser's investment decisions may not accomplish what they were intended to
achieve. You could lose money investing in the Funds. You should consider your
own investment goals, time horizon and risk tolerance before investing in the
Funds.
COMMON STOCKS
(EACH FUND)
Each of the Funds invests primarily in common stocks, which subjects the
Funds and their shareholders to the risks associated with common stock
investing. These risks include the financial risk of selecting individual
companies that do not perform as anticipated, the risk that the stock markets in
which the Funds invest may experience periods of turbulence and instability, and
the general risk that domestic and global economies may go through periods of
decline and cyclical change.
Many factors affect an individual company's performance, such as the
strength of its management or the demand for its products or services. Negative
performance may affect the earnings growth potential anticipated by the Adviser
in picking the individual stocks in the Funds' portfolios.
There are overall stock market risks that may affect the value of the
Funds. Over time, stock markets tend to move in cycles, with periods when stock
prices rise generally and periods when stock prices decline generally. The value
of the Funds' investments may increase and decrease more than the stock markets
in general.
RISKS OF FOREIGN INVESTING
(EACH FUND)
Each of the Funds may invest without limit in foreign securities. Foreign
investments may be riskier than U.S. investments because of factors such as
unstable international political and economic conditions, currency fluctuations,
foreign controls on investment and currency exchange, withholding taxes, a lack
of adequate company information, less liquid and more volatile markets, and a
lack of government regulation. Investments in emerging markets involve even
greater risks such as immature economic structures and different legal systems.
FIXED INCOME INVESTING
(EACH FUND)
Credit Risk: The Funds could lose money if the issuer of a fixed income
security cannot meet its financial obligations or goes bankrupt.
Interest Rate Risk: The value of a Fund's investments in fixed income
securities may fall when interest rates rise.
High-Yield Securities: High-yield securities, also referred to as "junk
bonds," are considered to be more speculative than higher quality securities.
They are more susceptible to credit risk than investment- grade securities. This
is especially true during periods of economic uncertainty or during economic
downturns. The value of lower quality securities is subject to greater
volatility and is generally more dependent on the ability of the issuer to meet
interest and principal payments than is the case for higher quality securities.
Issuers of high-yield securities may not be as strong financially as those
issuing bonds with higher credit ratings.
RISK OF NON-DIVERSIFICATION (FOCUS FUND)
As previously mentioned, the Focus Fund is a non-diversified portfolio,
which means that, at any given time, it may hold fewer securities than
portfolios that are "diversified." This increases the risk that the value of the
Focus Fund could go down because of the poor performance of a single investment.
OTHER RISKS
The Funds may also invest in options, futures and foreign currencies, and
may enter into certain types of short sales. If these practices are used by the
Funds, the intent would be primarily to hedge the Funds' portfolios. Investors
should not regard the possible use by the Funds of these practices as a
significant factor in the performance of the Funds or in making their investment
decision. Investing for hedging purposes may result in certain transaction costs
which may reduce a Fund's performance. In addition, no assurances can be given
that each derivative position will achieve a perfect correlation with the
security or currency that it is being hedged against. No assurance can be given
that these instruments will be used, even if available, and if used that they
will achieve the desired result.
As noted above, the Growth & Income Fund may invest up to 5% of its total
assets in certain derivative instruments for non-hedging purposes. Engaging in
such practices may be used to increase returns; however, they sometimes may also
reduce returns or increase volatility and exposure.
Performance History
Performance information is presented below for the Focus Fund and the
Growth & Income Fund only, since the 21st Century Fund did not commence
operations until February 1, 2000. The bar charts below show annual total return
for the Focus Fund and the Growth & Income Fund since their inception, together
with the best and worst quarters since inception. The accompanying table gives
some indication of the risks of an investment in these Funds by comparing each
Fund's performance to that of the S&P 500(R) Index, a widely recognized
unmanaged index of stock performance. All presentations below assume
reinvestment of dividends and distributions. As with all mutual funds, past
results are not an indication of future performance.
YEAR BY YEAR TOTAL RETURNS AS OF 12/31/99 (Funds' inception: 12/31/97)
FOCUS FUND
1999 55.27% [BAR CHART]
1998 51.30%
Best Quarter (12/31/99) 34.78%
Worst Quarter (9/30/98) -10.11%
GROWTH & INCOME FUND
1999 53.30% [BAR CHART]
1998 43.40%
Best Quarter (12/31/99) 34.95%
Worst Quarter (9/30/98) -11.84%
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
Past Year Since Inception (12/31/97)
--------- ---------------
Focus Fund 55.27% 53.27%
Growth & Income Fund 53.30% 48.27%
S&P 500(R)Index 21.04% 24.75%
Expenses
As an investor, you pay certain fees and expenses in connection with the
Funds, which are described in the table below. There are no sales loads or
exchange fees associated with an investment in the Funds. Fund operating
expenses are paid out of the assets of each Fund, so their effect is included in
each Fund's share price. Annual Fund operating expenses for the 21st Century
Fund, indicated in the table below, reflect estimated expenses for that Fund's
first fiscal year.
SHAREHOLDER FEES (fees paid directly from your investment)
Growth & Income
Focus Fund Fund 21st Century Fund
Wire Redemption Fee $10 $10 $10
IRA Redemption Fee 12.50 12.50 12.50
<PAGE>
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Growth & Income
Focus Fund Fund 21st Century Fund
Management Fee 0.85% 0.85% 0.85%
Distribution 12b-1 Fees (a) 0.25 0.25 0.25
Other Expenses (b) 0.21 0.33 0.62
Total Fund Operating Expenses (c) 1.31 1.43 1.72
Fee Waivers --- --- 0.22
Net Expenses (c) 1.31 1.43 1.50
(a) Each Fund has adopted a Rule 12b-1 plan which allows a Fund to pay
distribution fees for the sale and distribution of its shares. The maximum
level of distribution expenses is 0.25% per year of a Fund's average net
assets. As these fees are paid out of a Fund's assets on an on-going
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
(b) These expenses include custodian, transfer agency and administration fees
and other customary Fund expenses.
(c) The Adviser has agreed to limit the total expenses of each Fund (excluding
interest, taxes, brokerage and extraordinary expenses) to an annual rate
of 1.60% of the Focus Fund's average net assets and 1.50% of the Growth &
Income Fund and the 21st Century Fund's average net assets until January
31, 2001. This fee waiver may be terminated at any time after January 31,
2001. The Adviser is entitled to reimbursement from a Fund of any fees
waived pursuant to this arrangement if such reimbursements do not cause
the Fund to exceed existing expense limitations and the reimbursement is
made within three years after the year in which the Adviser incurred the
expense.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The example should not
be considered indicative of future investment returns and operating expenses,
which may be more or less than those shown. This example is based on the Annual
Fund Operating Expenses described in the table.
This example assumes that you invest $10,000 in a Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that each Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
SHAREHOLDER TRANSACTION EXPENSES
One Year Three Years Five Years Ten Years
Focus Fund $133 $415 $718 $1,579
Growth & Income Fund $146 $452 $782 $1,713
21st Century Fund $153 $542 $933 $2,030
Please note that the above example is an estimate of the expenses to be incurred
by shareholders of the Funds. Actual expenses may be higher or lower than those
reflected above.
WHO MANAGES THE FUNDS
The Investment Adviser
Marsico Capital Management, LLC (the "Adviser" or "Marsico Capital"),
located at 1200 17th Street, Suite 1300, Denver, CO 80202, serves as the
investment adviser to each Fund under an Investment Advisory and Management
Agreement (the "Agreement") with the Marsico Investment Fund (the "Trust"). The
Agreement provides that the Adviser will furnish continuous investment advisory
and management services to the Funds. Marsico Capital was organized in September
1997 as a registered investment adviser. In addition to the Funds, Marsico
Capital provides investment management services to other mutual funds and
private accounts and, as of December 31, 1999, had approximately $14 billion
under management. Thomas F. Marsico is Chairman and Chief Executive Officer of
the Adviser.
The Adviser manages the investment portfolios of the Funds, subject to
policies adopted by the Trust's Board of Trustees. Under the Agreement, the
Adviser, at its own expense and without reimbursement from the Trust, furnishes
office space and all necessary office facilities, equipment and executive
personnel necessary for managing the Funds. Marsico Capital also pays the
salaries and fees of all officers and trustees of the Trust who are also
officers, directors or employees of Marsico Capital. The Trust pays the salaries
and fees of all other trustees of the Trust. For its services, the Adviser
receives a fee of 0.85% per year of the average daily net assets of each Fund.
The Portfolio Managers
The Focus Fund and the Growth & Income Fund
Thomas F. Marsico manages the investment program of each of the Focus Fund
and the Growth & Income Fund. Mr. Marsico has 20 years of experience as a
securities analyst and a portfolio manager. Prior to forming Marsico Capital,
Mr. Marsico served as the Portfolio Manager of the Janus Twenty Fund from
January 31, 1988 through August 11, 1997 and served in the same capacity for the
Janus Growth & Income Fund from May 31, 1991 (the Fund's inception date) through
August 11, 1997.
The 21st Century Fund
James A. Hillary is the portfolio manager of the 21st Century Fund. Mr.
Hillary has eleven years of experience as a securities analyst and portfolio
manager and is a founding member of Marsico Capital Management. Prior to joining
Marsico Capital in 1997, Mr. Hillary was a portfolio manager at W.H. Reaves, a
New Jersey-based money management firm. He holds a bachelor's degree from
Rutgers University and a law degree from Fordham University. Mr. Hillary is also
a certified public accountant.
HOW TO BUY AND SELL SHARES
Pricing of Fund Shares
The price you pay for a share of a Fund, and the price you receive upon
selling or redeeming a share of a Fund, is called the Fund's net asset value
("NAV"). The NAV is calculated by taking the total value of a Fund's assets,
subtracting its liabilities, and then dividing by the number of shares that have
already been issued. This is a standard calculation, and forms the basis for all
transactions involving buying, selling, exchanging or reinvesting shares. The
NAV is generally calculated as of the close of trading on the New York Stock
Exchange (usually 4:00 p.m. Eastern Time) every day the Exchange is open. Your
order will be priced at the next NAV calculated after your order is accepted by
the Fund's transfer agent, Sunstone Financial Group, Inc. (the "Transfer
Agent"). The Fund's investments are valued based on market value, or where
market quotations are not readily available, based on fair value as determined
in good faith by the Funds' Board of Trustees. The Funds may use pricing
services to determine market value. Instructions For Opening and Adding to an
Account
<PAGE>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
BY MAIL BY MAIL
Complete and sign the Account Application Complete the investment slip that is
or an IRA Application. included in your account statement,
and write your account number on your
check. If you no longer have your
investment slip, please reference
your name, account number and address
on your check.
o Make your check payable to the Marsico
Funds.
o For IRA accounts, please specify the
year for which the contribution is
made.
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
MAIL YOUR APPLICATION AND CHECK TO: MAIL THE SLIP AND THE CHECK TO:
Marsico Funds Marsico Funds
c/o Sunstone Financial Group, Inc. c/o Sunstone Financial Group, Inc.
P.O. Box 3210 P.O. Box 3210
Milwaukee, WI 53201-3210 Milwaukee, WI 53201-3210
BY OVERNIGHT COURIER, SEND : BY OVERNIGHT COURIER, SEND TO:
TO
Marsico Funds Marsico Funds
c/o Sunstone Financial Group, Inc. c/o Sunstone Financial Group, Inc.
207 East Buffalo Street 207 East Buffalo Street
Suite 315 Suite 315
Milwaukee, WI 53202-5712 Milwaukee, WI 53202-5712
BY TELEPHONE BY TELEPHONE
Telephone transactions may not be used You automatically are granted telephone
for initial purchases. transaction privileges unless you
decline them on your Account
Application or by calling
888-860-8686. You may call
888-860-8686 to purchase shares in an
existing account. Investments made by
electronic funds transfer must be from
a pre-designated bank account and in
amounts of at least $50 and not
greater than $50,000, and will be
effective at the NAV next computed
after your instruction is accepted by
the Transfer Agent.
BY INTERNET BY INTERNET
You may open new accounts through the You may purchase shares in an existing
Marsico Funds Website at account through the Marsico Funds
www.marsicofunds.com. For important Website at www.marsicofunds.com. To
information on this feature, see "Fund establish online transaction
Transactions Through the Marsico Funds privileges, you must enroll through the
Website" on page 23 of this Prospectus. Website. You automatically have the
ability to establish online
transaction privileges unless you
decline them on your Account
Application or by calling
888-860-8686. For important
information on this feature, see "Fund
Transactions Through the Marsico Funds
Website" on page 23 of this
Prospectus.
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
BY WIRE BY WIRE
Call 888-860-8686 for instructions and Send your investment to UMB Bank, n.a.
to obtain an account number prior to by following the instructions listed in
wiring the funds. the column to the left.
Send your investment to UMB Bank, n.a.
with these instructions:
* UMB Bank, n.a.
* ABA#: 101000695
* For Credit to the Marsico Funds
* A/C#: 987-085-8118
* For further credit to: investor
account number; name(s) of investor(s);
SSN or TIN; name of Fund to be purchased.
AUTOMATIC SERVICES
WITH AN INITIAL INVESTMENT indicate on your application which of the
automatic service(s) described on page 25 that you want. Return your application
with your investment.
TELEPHONE AND WIRE TRANSACTIONS
Only bank accounts held at domestic financial institutions that are
Automated Clearing House (ACH) members can be used for telephone transactions.
It takes 15 calendar days after receipt by the Funds of your bank account
information to establish this feature. Purchases by ACH transfer may not be made
during this time. You automatically are granted telephone transaction privileges
unless you decline them on your Account Application or by calling 888-860-8686.
You must have ACH instructions on your account in order to conduct online
transactions. With respect to purchases made by telephone, the Funds and their
agents will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures may include, among
others, requiring some form of personal identification prior to acting upon
telephone instructions, providing written confirmation of all such transactions,
and/or tape recording all telephone instructions. If reasonable procedures are
followed, the Funds or their agents will not be liable for any loss, cost or
expense for acting upon an investor's telephone instructions or for any
unauthorized telephone transactions.
If you purchase your initial shares by wire, the Transfer Agent first must
have received a completed Account Application and issued an account number to
you. The account number must be included in the wiring instructions set forth
above.
The Transfer Agent must receive your Account Application to establish
shareholder privileges and to verify your account information. Payment of
redemption proceeds may be delayed and taxes may be withheld unless the Funds
receive a properly completed and executed Account Application.
Shares purchased by wire will be purchased at the NAV next determined
after the Transfer Agent receives your wired funds and all required information
is provided in the wire instructions. If the Transfer Agent is notified no later
than 3:00 p.m. Eastern time of the wire instructions, and the wired funds are
received by the Transfer Agent no later than 5:00 p.m. Eastern time, then the
shares purchased will be priced at the NAV determined on that business day. If
the wire is not received by 5:00 p.m. Eastern time, the purchase will be
effective at the NAV next calculated after receipt of the wire.
EXCHANGE PRIVILEGE: As a convenience, the Funds' shareholders may exchange
all or part of their investment in the Funds for the Marsico Shares of Nations
Prime Fund ("Nations Money Market Fund"), a money market fund advised by
NationsBanc Advisers, Inc. (and not by the Adviser) that invests in a
diversified portfolio of high quality money market instruments. THE SHARES OF
THE NATIONS MONEY MARKET FUND ARE NOT OFFERED BY THIS PROSPECTUS. For important
information on this exchange feature, please see page 21 of this Prospectus.
Additional Purchase Information
If you contemplate needing to redeem your investment shortly after your
purchase, you should purchase shares by wire. The Funds may hold redemption
proceeds until the proceeds used to purchase shares have been collected (e.g.
your check has cleared, or your ACH payments have been received), but in no
event for more than 10 calendar days.
If you fail to provide and certify to the accuracy of your Social Security
Number or Tax Identification Number, the Funds will be required to withhold 31%
of all dividends, distributions and payments, including redemption proceeds.
Please note that the Funds are offered and sold only to persons residing
in the United States or Puerto Rico. Applications will only be accepted if they
contain a U.S. or Puerto Rico address. This Prospectus should not be considered
a solicitation to buy or an offer to sell shares of the Funds in any
jurisdiction where it would be unlawful under the securities laws of that
jurisdiction.
The Funds will not accept your Account Application if you are investing
for another person as attorney-in-fact. The Funds will not accept accounts with
"Power of Attorney" or "POA" in the registration section of the Account
Application.
All purchases must be made in U.S. dollars and checks must be drawn on
U.S. banks. No cash, credit cards or third party checks will be accepted. A $20
fee will be charged against your account for any payment check returned to the
Transfer Agent or for any incomplete ACH or other electronic funds transfer, or
for insufficient funds, stop payment, closed account or other reasons. You will
also be responsible for any losses suffered by the Funds as a result. The Funds
reserve the right to reject any purchase order for Fund shares.
MINIMUM INVESTMENTS
INITIAL ADDITIONAL
Regular accounts $2,500 $100
Traditional IRAs and IRA Rollovers 1,000 100
Spousal IRAs 500 100
Roth IRAs 1,000 100
SEP-IRAs 500 100
Gifts to minors 500 50
Automatic Investment Plans 1,000 50
<PAGE>
INVESTMENTS MADE THROUGH FINANCIAL SERVICES AGENTS
If you invest through a financial services agent (rather than directly
with the Funds through the Transfer Agent), the policies and fees may be
different than those described here. Financial advisers, financial supermarkets
and other financial services agents may charge transaction and other fees and
may set different minimum investments or limitations on buying or selling
shares. Consult a representative of your financial services agent if you have
any questions. Your financial services agent is responsible for transmitting
your orders in a timely manner.
Certain financial services agents may enter into agreements with the Funds
or their agents which permit them to confirm orders on behalf of customers by
phone, with payment to follow later, in accordance with the Transfer Agent's
procedures. If payment is not received within the time specified, the
transaction may be rescinded and the financial services agent will be held
liable for any resulting fees or losses.
Instructions For Selling Fund Shares
TO SELL SHARES
BY MAIL
Write a letter of instruction that includes:
* the name(s) and signature(s) of all account owners
* your account number
* the Fund name
* the dollar or share amount you want to sell
* how and where to send the proceeds
* if redeeming from your IRA, please note applicable withholding requirements
Obtain a signature guarantee or other documentation, if required.
MAIL YOUR REQUEST TO: BY OVERNIGHT COURIER, SEND TO:
Marsico Funds Marsico Funds
c/o Sunstone Financial Group, Inc. c/o Sunstone Financial Group, Inc.
P.O. Box 3210 207 East Buffalo Street, Suite 315
Milwaukee, WI 53201-3210 Milwaukee, WI 53202-5712
BY TELEPHONE
* You automatically are granted * Unless you decline telephone
telephone transaction privileges unless privileges on your Account Application,
you decline them on your Account as long as the Funds take reasonable
Application or by calling 888-860-8686. measures to verify the order, you may
You may redeem Fund shares by calling be responsible for any fraudulent
888-860-8686. Redemption proceeds will telephone order.
be mailed directly to you or
electronically transferred to your
pre-designated bank account.
* You may redeem as little as $500 and as much as $50,000 by telephone
redemptions.
BY INTERNET
You may redeem shares through the Marsico Funds Website at
www.marsicofunds.com. To establish online transaction privileges you must enroll
through the Website. You automatically have the ability to establish online
transactions unless you decline them on your Account Application or by calling
888-860-8686. For important information on this feature, see "Fund Transactions
Through the Marsico Funds Website" on page 23 of this Prospectus.
SYSTEMATIC WITHDRAWAL PLAN
Call us to request a Systematic Withdrawal Plan. It may be setup over the
phone or by letter of instruction.
For specific information on how to redeem your account, and to determine
if a signature guarantee or other documentation is required, please call toll
free in the U.S. 888-860-8686.
As explained under "How to Exchange Shares," (page 21) shareholders in the
Funds may exchange all or part of their investment for shares of the Nations
Money Market Fund. To redeem shares from the Nations Money Market Fund, follow
the same procedures that apply to redeeming shares of the Funds. If you have any
questions about redeeming shares of the Nations Money Market Fund, please call
888-860-8686. Please note that when redeeming less than all of your shares of
the Nations Money Market Fund, your proceeds will exclude accrued and unpaid
income from the Nations Money Market Fund through the date of the redemption.
When redeeming your entire balance from the Nations Money Market Fund, accrued
income will automatically be paid to you when the income is collected and paid
from the Nations Money Market Fund, at the end of the month.
Additional Redemption Information
PAYMENT OF REDEMPTION PROCEEDS
You may sell shares at any time. Your shares will be sold at the next NAV
per share calculated after your order is accepted by the Transfer Agent. Your
order will be processed promptly and you will generally receive the proceeds
within seven days after receiving your properly completed request. Payment of
the redemption proceeds for shares of the Funds where you request wire payment
will normally be made in federal funds on the next business day.
Before selling recently purchased shares, please note that if the Transfer
Agent has not yet collected payment for the shares you are selling, it may delay
sending the proceeds for up to 10 calendar days. This procedure is intended to
protect the Funds and their shareholders from loss.
The Transfer Agent will wire redemption proceeds only to the bank and
account designated on the Account Application or in written instructions (with
signatures guaranteed) subsequently received by the Transfer Agent, and only if
the bank is a member of the Federal Reserve System. The Transfer Agent currently
charges a $10 fee for each payment by wire of redemption proceeds, which will be
deducted from your redemption proceeds.
If the dollar or share amount requested to be redeemed is greater than the
current value of your account, your entire account balance will be redeemed. If
you choose to redeem your account in full, any automatic service currently in
effect for the account will be terminated unless you indicate otherwise in
writing.
SIGNATURE GUARANTEES
A signature guarantee of each owner is required to redeem shares in the
following situations: (i) if you change ownership on your account; (ii) when you
want the redemption proceeds sent to a different address than that registered on
the account; (iii) if the proceeds are to be made payable to someone other than
the account's owner(s); (iv) any redemption transmitted by federal wire transfer
to a bank other than your bank of record; and (v) if a change of address request
has been received by the Transfer Agent within the last 15 days. In addition,
signature guarantees are required for all redemptions of $50,000 or more from
any shareholder account.
Signature guarantees are designed to protect both you and the Funds from
fraud. Signature guarantees can be obtained from most banks, credit unions or
savings associations, or from broker/dealers, municipal securities
broker/dealers, government securities broker/dealers, national securities
exchanges, registered securities exchanges or clearing agencies deemed eligible
by the Securities and Exchange Commission. Notaries public cannot provide
signature guarantees.
CORPORATE, TRUST AND OTHER ACCOUNTS
Redemption requests from corporate, trust and institutional accounts, and
executors, administrators and guardians, require documents in addition to those
described above, evidencing the authority of the officers, trustees or others.
In order to avoid delays in processing redemption requests for these accounts,
you should call the Funds at 888-860-8686 before making the redemption request
to determine what additional documents are required.
TRANSFER OF OWNERSHIP
In order to change the account registration or transfer ownership of an
account, additional documents will be required. In order to avoid delays in
processing these requests, you should call the Funds at 888-860-8686 before
making your request to determine what additional documents are required.
REDEMPTION INITIATED BY THE FUNDS
If your account balance falls below $500, your Fund may ask you to
increase your balance. If your account balance is still below $500 after 30
days, the Fund may close your account and send you the proceeds. This minimum
balance requirement does not apply to IRAs and other tax-sheltered investment
accounts. The right of redemption by the Funds will not apply if the value of
your account drops below $500 because of market performance.
How to Exchange Shares
You may exchange all or a portion of your investment from one Marsico Fund
to another. You may exchange shares by mail, by telephone or through the Marsico
Funds Website. You automatically are granted telephone transaction privileges
unless you decline them on your Account Application or by calling 888-860-8686.
You must have telephone transaction privileges in order to conduct online
transactions. You may establish online exchange privileges by enrolling through
the Website. For important information on this feature, see "Fund Transactions
Through the Marsico Funds Website" on page 23 of this Prospectus. Any new
account established through an exchange will have the same privileges as your
original account and will also be subject to the minimum investment requirements
described above. Aside from this requirement, there is a $500 minimum for
exchanging shares under the program. There is currently no fee for an exchange.
Exchanges will be executed on the basis of the relative NAV of the shares
exchanged. An exchange is considered to be a sale of shares for federal income
tax purposes on which you may realize a taxable gain or loss.
In addition to your ability to exchange all or a portion of your
investment between the Marsico Funds, you may also exchange Fund shares for
shares of the Nations Money Market Fund by sending a written exchange request to
Marsico Funds or, if you have established telephone exchange privileges, call
1-888-860-8686. Please read that Prospectus before making an exchange into the
Nations Money Market Fund. This exchange privilege is offered as a convenience
to the Funds' shareholders. Please note that when exchanging from a Fund to the
Nations Money Market Fund, you will begin accruing income from the Nations Money
Market Fund the day following the exchange. When exchanging less than all of the
balance from the Nations Money Market Fund to your Fund, your exchange proceeds
will exclude accrued and unpaid income from the Nations Money Market Fund
through the date of exchange. When exchanging your entire balance from the
Nations Money Market Fund, accrued income will automatically be exchanged into
the Fund when the income is collected and paid from the Nations Money Market
Fund, at the end of the month.
MORE INFORMATION ABOUT THE EXCHANGE PRIVILEGE: The Funds are intended as
long-term investment vehicles and not to provide a means of speculating on
short-term market movements. In addition, excessive trading can hurt the Funds'
performance and shareholders. Therefore, the Funds may terminate, without
notice, the exchange privilege of any investor who uses the exchange privilege
excessively (more than six times each year). This policy does not apply to
investors who have elected to participate in the Automatic Exchange Program,
described on page 25.
The Funds may change or temporarily suspend the exchange privilege during
unusual market conditions.
During periods of significant economic or market change, telephone
transactions may be difficult to complete. If you are unable to contact the
Funds by telephone, you may also mail the requests to the Funds at the address
listed under Instructions for Opening and Adding to an Account, page 13 or
access your account through Marsico Funds' Website at www.marsicofunds.com.
ABOUT THE NATIONS MONEY MARKET FUND: Please be sure to read the Nations
Money Market Fund Prospectus before investing in that Fund.
The Nations Money Market Fund seeks current income to the extent
consistent with the preservation of capital and the maintenance of liquidity by
investing in a diversified portfolio of high quality money market instruments
with remaining maturities of 397 days or less from the date of purchase.
The Nations Money Market Fund is managed by NationsBanc Advisers, Inc. and
not by the Adviser. Stephens Inc. is the distributor of the Nations Money Market
Fund's shares.
FUND TRANSACTIONS THROUGH THE MARSICO FUNDS WEBSITE
In addition to checking your Fund account balance(s) and historical
transactions, you may purchase, redeem or exchange shares of the Funds through
the Marsico Funds Website at www.marsicofunds.com. You may establish online
transaction privileges by enrolling on the Website. You automatically have the
ability to establish online transaction privileges unless you decline them on
your Account Application or by calling 888-860-8686. You will be required to
enter into a user's agreement through the Website in order to enroll for these
privileges. In order to conduct online transactions, you must have telephone
transaction privileges. To purchase shares online, you must also have ACH
instructions on your account. If you opened your account online, then any
redemption proceeds will only be sent to you via ACH or wire to the account from
which the initial proceeds were drawn. Otherwise, redemption proceeds will be
sent to you by check or, if your account has bank information, by wire or ACH.
Payment for purchases of shares through the Website may be made only
through an ACH debit of your bank account. Redemptions will be paid by check,
wire or ACH transfer only to the address or bank account of record. Redemptions
from accounts established through the Funds' Website will be paid only to the
bank account of record. Only bank accounts held at domestic financial
institutions that are ACH members can be used for transactions through the
Funds' Website.
The Funds impose a limit of $50,000 on purchase and redemption
transactions through the Website. Transactions through the Website are subject
to the same minimums as other transaction methods.
You should be aware that the Internet is an unsecured, unstable,
unregulated and unpredictable environment. Your ability to use the Website for
transactions is dependent upon the Internet and equipment, software, systems,
data and services provided by various vendors and third parties. While the Funds
and their service providers have established certain security procedures, the
Funds, their distributor and their Transfer Agent cannot assure you that
inquiries, account information or trading activity will be completely secure.
There may also be delays, malfunctions or other inconveniences generally
associated with this medium. There may also be times when the Website is
unavailable for Fund transactions or other purposes. Should this happen, you
should consider purchasing, redeeming or exchanging shares by another method.
Neither the Funds, their Transfer Agent, distributor or Adviser will be liable
for any such delays or malfunctions or unauthorized interception or access to
communications or account information.
In addition, neither the Funds, their Transfer Agent, distributor or
Adviser will be liable for any loss, liability, cost or expense for following
instructions communicated through the Internet, including fraudulent or
unauthorized instructions.
Retirement Services Plan
The Funds offer a wide variety of retirement plans for individuals and
institutions, including large and small businesses. For information on
establishing retirement accounts and for a complete list of retirement accounts
offered, please call 888-860-8686. Complete instructions about how to establish
and maintain your plan and how to open accounts for you and your employees will
be included in the retirement plan kit you receive in the mail.
The retirement plans currently available to shareholders of the Funds
include:
TRADITIONAL IRA AND IRA ROLLOVERS: an individual retirement account. Your
contribution may or may not be deductible depending on your circumstances.
Rollovers are not deductible. Assets can grow tax-free and distributions are
taxable as income.
SPOUSAL IRA: an IRA funded by a working spouse in the name of a
non-earning spouse. SEP-IRA: an individual retirement account funded by employer
contributions. Your assets grow tax-free and distributions are taxable as
income.
ROTH IRA: an IRA with non-deductible contributions, tax-free growth of
assets and tax-free distributions for qualified distributions.
403(b): an arrangement that allows employers of charitable or educational
organizations to make voluntary salary reduction contributions to a tax deferred
account.
Automatic Services for Fund Investors
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and an amount, subject to
certain restrictions. You can set up most of these services with your
Application or by calling 888-860-8686.
FOR INVESTING
AUTOMATIC INVESTMENT PLAN PAYROLL DIRECT DEPOSIT PLAN
For making automatic investments from For making automatic investments
a designated bank account. from your payroll check.
DIVIDEND REINVESTMENT
If the investor does not specify an election, all income dividends and capital
gains distributions will be automatically reinvested in shares of the Funds.
FOR INVESTING AND FOR SELLING SHARES
AUTOMATIC EXCHANGE PLAN
For making regular exchanges from your Fund into another Marsico Fund or between
a Marsico Fund and the Nations Money Market Fund. This plan is available to IRA
accounts having a minimum balance of $1,000.
FOR SELLING SHARES
For making regular withdrawals from the Funds.
Shareholder Communications
ACCOUNT STATEMENTS. Every quarter, Marsico investors automatically receive
regular account statements. You will also be sent a yearly statement detailing
the tax characteristics of any dividends and distributions you have received.
CONFIRMATIONS. Confirmation Statements will be sent after each transaction
that affects your account balance or account registration.
REGULATORY MAILINGS. Financial reports will be sent at least semiannually.
Annual reports will include audited financial statements. To reduce Fund
expenses, one copy of each report will be mailed to each taxpayer identification
number even though the investor may have more than one account in the Funds.
You may elect to receive statements, confirmations and/or regulatory
mailings electronically in lieu of paper copies by registering for this feature
on your Account Application or on the Website. For existing accounts, please
call 888-860-8686 for instructions.
Dividends and Distributions
The Funds intend to pay distributions on an annual basis. You may elect to
reinvest income dividends and capital gain distributions in shares of the Funds
or receive these distributions in cash. Dividends and any distributions from the
Funds are automatically reinvested in the Funds at NAV, unless you elect to have
dividends paid in cash. Reinvested dividends and distributions receive the same
tax treatment as those paid in cash.
If you are interested in changing your election, you may call the Transfer
Agent at 1-888-860-8686 or send written notification to the Marsico Funds, c/o
Sunstone Financial Group, Inc., P.O. Box 3210, Milwaukee, WI 53201-3210.
Taxes
Fund dividends and distributions are taxable to most investors (unless
your investment is in an IRA or other tax-advantaged account). Dividends paid by
a Fund out of net ordinary income and distributions of net short-term capital
gains are taxable to the Fund's shareholders as ordinary income. Dividends from
net ordinary income may be eligible for the corporate dividends-received
deduction.
Distributions by a Fund of net capital gains (the excess of net long-term
capital gains over net short-term capital losses) to shareholders are generally
taxable to the shareholders at the applicable long-term capital gains rate,
regardless of how long the shareholder has held shares of the Fund.
Shareholders that sell, exchange or redeem shares generally will have a
capital gain or loss from the sale, redemption or exchange. The amount of the
gain or loss and the rate of tax will depend mainly upon the amount paid for the
shares, the amount received from the sale, exchange or redemption, and how long
the shares were held.
A dividend or capital gains distribution declared by a Fund in October,
November or December, but paid during January of the following year will be
considered to be paid on December 31 of the year it was declared.
If the value of shares is reduced below a shareholder's cost as a result
of a distribution by a Fund, the distribution will be taxable even though it, in
effect, represents a return of invested capital. Investors considering buying
shares just prior to a dividend or capital gain distribution payment date should
be aware that, although the price of shares purchased at that time may reflect
the amount of the forthcoming distribution, those who purchase just prior to the
record date for a distribution may receive a distribution which will be taxable
to them.
Shareholders will be advised annually as to the federal tax status of
dividends and capital gain distributions made by each Fund for the preceding
year. Distributions by the Funds generally will be subject to state and local
taxes.
Additional tax information may be found in the Statement of Additional
Information. Because everyone's tax situation is unique, always consult your tax
professional about federal, state and local tax consequences of an investment in
the Funds.
<PAGE>
Financial Highlights
Financial highlights are presented below for the Focus Fund and the Growth
& Income Fund only, since the 21st Century Fund did not commence operations
until February 1, 2000. The financial highlights table is intended to help you
understand each Fund's financial performance and other financial information
since its inception. Certain information reflects financial results for a single
Fund share. "Total Return" shows how much an investor in each Fund would have
earned on an investment in a Fund assuming reinvestment of all dividends and
distributions. This information has been audited by PricewaterhouseCoopers LLP,
the Trust's independent accountants, whose report, along with each Fund's
financial statements, are incorporated by reference in the Statement of
Additional Information, which is available upon request.
<TABLE>
<CAPTION>
Focus Fund Fund Growth & Income Fund
--------------------------------- --------------------------------------
December 31, December 31,
Year Ended 1997 to Year Ended 1997 to
September 30, September 30, September 30, September 30,
1999 1998(a) 1999 1998(a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $12.36 $10.00 $11.54 $10.00
------ ------ ------ ------
Income from investment operations:
Net investment loss.................... (0.06) (0.01) (0.06) (0.01)
Net realized and unrealized gains
on investments....................... 5.13 2.37 1.55 4.81
------ ------ ------ ------
Total from investment operations......... 5.07 2.36 4.75 1.54
------ ------ ------ ------
Net Asset Value, End of Period........... $17.43 $12.36 $16.29 $11.54
====== ====== ====== ======
Total Return............................. 41.02% 23.60%(1) 41.16% 15.40%(1)
Supplemental Data and Ratios:
Net assets, end of period (000s)......... $2,258,141 $858,257 $688,490 $263,519
Ratio of expenses to average net assets,
less waivers and before expenses paid
indirectly............................... 1.31% 1.56%(2) 1.43% 1.51%(2)
Ratio of net investment loss to average
net assets, net of waivers and expenses
paid indirectly.......................... (0.43)% (0.27)%(2) (0.46)% (0.14)%(2)
Ratio of expenses to average net assets,
before waivers and expenses paid
indirectly............................... 1.31% 1.56%(2) 1.43% 1.78%(2)
Ratio of net investment loss to average
net assets, before waivers and expenses
paid indirectly.......................... (0.45)% (0.27)%(2) (0.47)% (0.41)%(2)
Portfolio turnover rate.................. 137% 173% 170%(1) 141%(1)
- ---------------------------
<FN>
(a) Period from commencement of operations.
(1) Not annualized.
(2) Annualized.
</FN>
</TABLE>
<PAGE>
THE MARSICO INVESTMENT FUND
Marsico Focus Fund
Marsico Growth & Income Fund
Marsico 21st Century Fund
INVESTMENT ADVISER
Marsico Capital Management, LLC
ADMINISTRATOR
Sunstone Financial Group, Inc.
DISTRIBUTOR
Sunstone Distribution Services, LLC
COUNSEL
Dechert Price & Rhoads
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
TRANSFER AND DIVIDEND DISBURSING AGENT
Sunstone Financial Group, Inc.
CUSTODIAN
State Street Bank and Trust Company
<PAGE>
THE MARSICO INVESTMENT FUND
Marsico Focus Fund
Marsico Growth & Income Fund
Marsico 21st Century Fund
WHERE TO GO FOR MORE INFORMATION
You will find more information about the Funds in the following documents:
ANNUAL AND SEMIANNUAL REPORTS
Our annual and semiannual reports list the holdings in each Fund, describe
Fund performance, include financial statements for the Funds, and discuss the
market conditions and strategies that significantly affected each Fund's
performance.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains additional and more
detailed information about each Fund, and is considered to be a part of this
Prospectus.
THERE ARE THREE WAYS TO GET A COPY OF THESE DOCUMENTS:
1. Call or write for one, and a copy will be sent without charge.
MARSICO FUNDS
P.O. BOX 3210
MILWAUKEE, WI 53201-3210
1-888-860-8686
www.marsicofunds.com
2. Call, write or submit an E-mail request to the Public Reference Section of
the Securities and Exchange Commission ("SEC") and ask them to mail you a
copy. The SEC charges a fee for this service. You can also drop by the
Public Reference Section and copy the documents while you are there.
Information about the Public Reference Section may be obtained by calling
the number below.
PUBLIC REFERENCE SECTION OF THE SEC
WASHINGTON, D.C. 20549-0102
1-202-942-8090
E-mail address: [email protected]
3. Go to the SEC's website (www.sec.gov) and download a free text-only
version from the EDGAR Database on the website.
SEC file number 811-8397
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 27, 2000
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus for The Marsico Investment Fund dated January
27, 2000, as amended from time to time, a copy of which may be obtained without
charge by calling 1-888-860-8686 or writing to Sunstone Financial Group, Inc.,
P.O. Box 3210, Milwaukee, WI 53201-3210.
TABLE OF CONTENTS
PAGE
INVESTMENT OBJECTIVES AND POLICIES............................. 1
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES.................. 4
INVESTMENT ADVISORY AND OTHER SERVICES......................... 25
DISTRIBUTION PLAN.............................................. 27
PORTFOLIO TRANSACTIONS AND BROKERAGE........................... 28
PERFORMANCE INFORMATION........................................ 29
AVERAGE ANNUAL TOTAL RETURN.................................... 30
TAX STATUS..................................................... 31
NET ASSET VALUE................................................ 36
CAPITAL STRUCTURE.............................................. 37
HOW TO BUY AND SELL SHARES..................................... 38
HOW TO EXCHANGE................................................ 40
INTRODUCTION
INVESTMENT OBJECTIVES AND POLICIES
The Marsico Focus Fund ("Focus Fund") is a non-diversified fund that seeks
long-term growth of capital.
The Marsico Growth & Income Fund ("Growth & Income Fund") is a diversified fund
that seeks long-term capital growth with a limited emphasis on income. The
Growth & Income Fund places a stronger emphasis on the growth objective but
invests at least 25% of its total assets in securities that have income
potential.
The Marsico 21st Century Fund ("21st Century Fund") is a diversified fund that
seeks long-term growth of capital.
FUNDAMENTAL INVESTMENT RESTRICTIONS
As indicated in the Prospectus, the Funds are subject to certain fundamental
policies and restrictions that may not be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund if a matter
affects just that Fund), or (ii) 67% or more of the voting securities present at
a meeting if the holders of more than 50% of the outstanding voting securities
of the Trust (or a particular Fund) are present or represented by proxy As
fundamental policies, each Fund may not:
(1) Invest 25% or more of the value of their respective total assets in any
particular industry (other than U.S. government securities).
(2) Invest directly in real estate; however, the Funds may own debt or equity
securities issued by companies engaged in those businesses.
(3) Purchase or sell physical commodities other than foreign currencies unless
acquired as a result of ownership of securities (but this limitation shall not
prevent the Funds from purchasing or selling options, futures, swaps and forward
contracts or from investing in securities or other instruments backed by
physical commodities).
(4) Lend any security or make any other loan if, as a result, more than 25% of a
Fund's total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or repurchase
agreements).
(5) Act as an underwriter of securities issued by others, except to the extent
that a Fund may be deemed an underwriter in connection with the disposition of
portfolio securities of such Fund.
(6) Issue senior securities, except as permitted under the Investment Company
Act of 1940 (the "1940 Act").
(7) Borrow money, except that the Funds may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not exceeding
33 1/3% of the value of their respective total assets (including the amount
borrowed) less liabilities (other than borrowings). If borrowings exceed 33 1/3%
of the value of a Fund's total assets by reason of a decline in net assets, the
Fund will reduce its borrowings within three days to the extent necessary to
comply with the 33 1/3% limitation. This policy shall not prohibit reverse
repurchase agreements, deposits of assets to margin or guarantee positions in
futures, options, swaps or forward contracts, or the segregation of assets in
connection with such contracts. None of the Funds will purchase securities while
its borrowings exceed 5% of that Fund's total assets.
In addition to the foregoing, as a fundamental policy, neither the Growth
& Income Fund nor the 21st Century Fund may own more than 10% of the outstanding
voting securities of any one issuer and, as to seventy-five percent (75%) of the
value of its total assets, purchase the securities of any one issuer (except
cash items and "government securities " as defined under the 1940 Act), if
immediately after and as a result of such purchase, the value of the holdings of
the Fund in the securities of such issuer exceeds 5% of the value of the Fund's
total assets.
As a fundamental policy, the Focus Fund may not own more than 10% of the
outstanding voting securities of any one issuer and, as to fifty percent (50%)
of the value of its total assets, purchase the securities of any one issuer
(except cash items and "government securities" as defined under the 1940 Act),
if immediately after and as a result of such purchase, the value of the holdings
of the Focus Fund in the securities of such issuer exceeds 5% of the value of
the Focus Fund's total assets.
ADDITIONAL INVESTMENT RESTRICTIONS
The Trustees have adopted additional investment restrictions for the
Funds. These restrictions are operating policies of the Funds and may be changed
by the Trustees without shareholder approval. The additional investment
restrictions adopted by the Trustees to date include the following:
(a) A Fund will not (i) enter into any futures contracts and related
options for purposes other than bona fide hedging transactions within the
meaning of Commodity Futures Trading Commission ("CFTC") regulations if the
aggregate initial margin and premiums required to establish positions in futures
contracts and related options that do not fall within the definition of bona
fide hedging transactions will exceed 5% of the fair market value of a Fund's
net assets, after taking into account unrealized profits and unrealized losses
on any such contracts it has entered into; and (ii) enter into any futures
contracts if the aggregate amount of such Fund's commitments under outstanding
futures contracts positions would exceed the market value of its total assets.
(b) The Funds do not currently intend to sell securities short, unless
they own or have the right to obtain securities equivalent in kind and amount to
the securities sold short without the payment of any additional consideration
therefor, and provided that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.
(c) The Funds do not currently intend to purchase securities on margin,
except that the Funds may obtain such short-term credits as are necessary for
the clearance of transactions, and provided that margin payments and other
deposits in connection with transactions in futures, options, swaps and forward
contracts shall not be deemed to constitute purchasing securities on margin.
(d) A Fund may not mortgage or pledge any securities owned or held by such
Fund in amounts that exceed, in the aggregate, 15% of that Fund's net asset
value, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guaranteed positions in futures,
options, swaps or forward contracts, or the segregation of assets in connection
with such contracts.
(e) The Funds do not currently intend to purchase any securities or enter
into a repurchase agreement if, as a result, more than 15% of their respective
net assets would be invested in repurchase agreements not entitling the holder
to payment of principal and interest within seven days and in securities that
are illiquid by virtue of legal or contractual restrictions on resale or the
absence of a readily available market. The Trustees, or the Funds' investment
adviser acting pursuant to authority delegated by the Trustees, may determine
that a readily available market exists for securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933, as amended, ("Rule 144A
Securities"), or any successor to such rule, and Section 4(2) commercial paper.
Accordingly, such securities may not be subject to the foregoing limitation.
(f) The Funds may not invest in companies for the purpose of exercising
control of management. For purposes of the Funds' restriction on investing in a
particular industry, the Funds will rely primarily on industry classifications
as published by Bloomberg L.P. To the extent that Bloomberg L.P. classifications
are so broad that the primary economic characteristics in a single class are
materially different, the Funds may further classify issuers in accordance with
industry classifications as published by the Securities and Exchange Commission
("SEC").
Except as otherwise noted herein and in the Funds' prospectus, a Fund's
investment objectives and policies may be changed by a vote of the Trustees
without a vote of shareholders.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid securities,
for which there is a limited trading market and for which a low trading volume
of a particular security may result in abrupt and erratic price movements. A
Fund may be unable to dispose of its holdings in illiquid securities at
acceptable prices and may have to dispose of such securities over extended
periods of time. Marsico Capital Management, LLC ("Marsico Capital") will take
reasonable steps to bring a Fund into compliance with this policy if the level
of illiquid investments exceeds 15%. Each Fund may invest in (i) securities that
are sold in private placement transactions between their issuers and their
purchasers and that are neither listed on an exchange nor traded
over-the-counter, and (ii) securities that are sold in transactions between
qualified institutional buyers pursuant to Rule 144A under the Securities Act of
1933, as amended. Such securities are subject to contractual or legal
restrictions on subsequent transfer. As a result of the absence of a public
trading market, such restricted securities may in turn be less liquid and more
difficult to value than publicly traded securities. Although these securities
may be resold in privately negotiated transactions, the prices realized from the
sales could, due to illiquidity, be less than those originally paid by a Fund or
less than their fair value and in some instances, it may be difficult to locate
any purchaser. In addition, issuers whose securities are not publicly traded may
not be subject to the disclosure and other investor protection requirements that
may be applicable if their securities were publicly traded. If any privately
placed or Rule 144A securities held by a Fund are required to be registered
under the securities laws of one or more jurisdictions before being resold, a
Fund may be required to bear the expenses of registration. Securities which are
freely tradable under Rule 144A may be treated as liquid if the Trustees of the
Fund are satisfied that there is sufficient trading activity and reliable price
information. Investing in Rule 144A securities could have the effect of
increasing the level of illiquidity of the Fund's portfolio to the extent that
qualified institutional buyers become, for a time, uninterested in purchasing
such 144A securities.
See Appendix A for risks associated with certain other investments.
The Trustees have authorized Marsico Capital to make liquidity
determinations with respect to its securities, including Rule 144A Securities
and commercial paper. Under the guidelines established by the Trustees, Marsico
Capital will consider the following factors: 1) the frequency of trades and
quoted prices for the obligation; (2) the number of dealers willing to purchase
or sell the security and the number of other potential purchasers; 3) the
willingness of dealers to undertake to make a market in the security; and 4) the
nature of the security and the nature of marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer. In the case of commercial paper, Marsico Capital will
also consider whether the paper is traded flat or in default as to principal and
interest and any ratings of the paper by a nationally recognized statistical
rating organization ("NRSRO"). A foreign security that may be freely traded on
or through the facilities of an offshore exchange or other established offshore
securities market is not deemed to be a restricted security subject to these
procedures.
ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES
Each Fund may invest up to 5% of its assets in zero coupon, pay-in-kind
and step coupon securities. Zero coupon bonds are issued and traded at a
discount from their face value. They do not entitle the holder to any periodic
payment of interest prior to maturity. Step coupon bonds trade at a discount
from their face value and pay coupon interest. The coupon rate is low for an
initial period and then increases to a higher coupon rate thereafter. The
discount from the face amount or par value depends on the time remaining until
cash payments begin, prevailing interest rates, liquidity of the security and
the perceived credit quality of the issuer. Pay-in-kind bonds normally give the
issuer an option to pay cash at a coupon payment date or give the holder of the
security a similar bond with the same coupon rate and a face value equal to the
amount of the coupon payment that would have been made.
Current federal income tax law requires holders of zero coupon securities
and step coupon securities to report the portion of the original issue discount
on such securities that accrues during a given year as interest income, even
though the holders receive no cash payments of interest during the year. In
order to qualify as a "regulated investment company " under the Internal Revenue
Code of 1986 and the regulations thereunder (the "Code"), a Fund must distribute
its investment company taxable income, including the original issue discount
accrued on zero coupon or step coupon bonds. BECAUSE A FUND WILL NOT RECEIVE
CASH PAYMENTS ON A CURRENT BASIS IN RESPECT OF ACCRUED ORIGINAL-ISSUE DISCOUNT
PAYMENTS, IN SOME YEARS THAT FUND MAY HAVE TO DISTRIBUTE CASH OBTAINED FROM
OTHER SOURCES IN ORDER TO SATISFY THE DISTRIBUTION REQUIREMENTS UNDER THE CODE.
A Fund might obtain such cash from selling other portfolio holdings which might
cause that Fund to incur capital gains or losses on the sale. Additionally,
these actions are likely to reduce the assets to which Fund expenses could be
allocated and to reduce the rate of return for that Fund. In some circumstances,
such sales might be necessary in order to satisfy cash distribution requirements
even though investment considerations might otherwise make it undesirable for a
Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon and pay-in-kind
securities are more volatile than the prices of securities that pay interest
periodically and in cash and are likely to respond to changes in interest rates
to a greater degree than other types of debt securities having similar
maturities and credit quality.
PASS-THROUGH SECURITIES
The Growth & Income Fund may invest up to 25%, and the Focus Fund and the
21st Century Fund may invest up to 5% of their respective total assets in
various types of pass-through securities, such as mortgage-backed securities and
asset-backed securities. A pass-through security is a share or certificate of
interest in a pool of debt obligations that have been repackaged by an
intermediary, such as a bank or broker-dealer. The purchaser of a pass-through
security receives an undivided interest in the underlying pool of securities.
The issuers of the underlying securities make interest and principal payments to
the intermediary which are passed through to purchasers, such as the Funds. The
most common type of pass- through securities are mortgage-backed securities.
Government National Mortgage Association ("GNMA") Certificates are
mortgage-backed securities that evidence an undivided interest in a pool of
mortgage loans. GNMA Certificates differ from bonds in that principal is paid
back monthly by the borrowers over the term of the loan rather than returned in
a lump sum at maturity. A Fund will generally purchase "modified pass-through"
GNMA Certificates, which entitle the holder to receive a share of all interest
and principal payments paid and owned on the mortgage pool, net of fees paid to
the "issuer " and GNMA, regardless of whether or not the mortgagor actually
makes the payment. GNMA Certificates are backed as to the timely payment of
principal and interest by the full faith and Freddie Mac issues two types of
mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owned on the underlying pool. Freddie Mac guarantees timely payments of
interest on PCs and the full return of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semiannually and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment of principal
and interest but it is not guaranteed by the full faith and credit of the U.S.
government.
Fannie Mae issues guaranteed mortgage pass-through certificates ("Fannie
Mae Certificates"). Fannie Mae Certificates resemble GNMA Certificates in that
each Fannie Mae Certificate represents a pro rata share of all interest and
principal payments made and owned on the underlying pool. This type of security
is guaranteed by Fannie Mae as to timely payment of principal and interest but
it is not guaranteed by the full faith and credit of the U.S. government.
Except for GMCs, each of the mortgage-backed securities described above is
characterized by monthly payments to the holder, reflecting the monthly payments
made by the borrowers who received the underlying mortgage loans. The payments
to the security holders (such as the Funds), like the payments on the underlying
loans, represent both principal and interest. Although the underlying mortgage
loans are for a specified period of time, such as 20 or 30 years, the borrowers
can, and typically do, pay them off sooner. Thus, the security holders
frequently receive prepayments of principal in addition to the principal that is
part of the regular monthly payments. A portfolio manager will consider
estimated prepayment rates in calculating the average weighted maturity of a
Fund. A borrower is more likely to prepay a mortgage that bears a relatively
high rate of interest. This means that in times of declining interest rates,
higher yielding mortgage-backed securities held by a Fund might be converted to
cash and that a Fund would be forced to accept lower interest rates when that
cash is used to purchase additional securities in the mortgage-backed securities
sector or in other investment sectors. Additionally, prepayments during such
periods will limit a Fund's ability to participate in as large a market gain as
may be experienced with a comparable security not subject to prepayment.
Asset-backed securities represent interests in pools of consumer loans and
are backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank or
credit provider is neither the obligor nor the guarantor of the security, and
interest and principal payments ultimately depend upon payment of the underlying
loans by individuals.
OTHER INCOME-PRODUCING SECURITIES
Other types of income producing securities that the Funds may purchase
include, but are not limited to, the following types of securities:
VARIABLE AND FLOATING RATE OBLIGATIONS. These types of securities are
relatively long-term instruments that often carry demand features permitting the
holder to demand payment of principal at any time or at specified intervals
prior to maturity.
STANDBY COMMITMENTS. These instruments, which are similar to a put, give a
Fund the option to obligate a broker, dealer or bank to repurchase a security
held by that Fund at a specified price.
TENDER OPTION BONDS. Tender option bonds are relatively long-term bonds
that are coupled with the agreement of a third party (such as a broker, dealer
or bank) to grant the holders of such securities the option to tender the
securities to the institution at periodic intervals.
INVERSE FLOATERS. Inverse floaters are debt instruments whose interest
bears an inverse relationship to the interest rate on another security. The
Funds will not invest more than 5% of their respective net assets in inverse
floaters.
The Funds will purchase standby commitments, tender option bonds and
instruments with demand features primarily for the purpose of increasing the
liquidity of their portfolios.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
FUTURES CONTRACTS. To the extent described in the Prospectus, each Fund
may enter into contracts for the purchase or sale for future delivery of
fixed-income securities, foreign currencies or contracts based on financial
indices, including indices of U.S. government securities, foreign government
securities, equity or fixed-income securities. U.S. futures contracts are traded
on exchanges which have been designated "contract markets" by the CFTC and must
be executed through a futures commission merchant ("FCM"), or brokerage firm,
which is a member of the relevant contract market. Through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange.
The buyer or seller of a futures contract is not required to deliver or
pay for the underlying instrument unless the contract is held until the delivery
date. However, both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when the contract is entered into. Initial
margin deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or
certain other liquid assets by the Funds' custodian for the benefit of the FCM.
Initial margin payments are similar to good faith deposits or performance bonds.
Unlike margin extended by a securities broker, initial margin payments do not
constitute purchasing securities on margin for purposes of the Fund's investment
limitations. If the value of either party's position declines, that party will
be required to make additional "variation margin" payments for the benefit of
the FCM to settle the change in value on a daily basis. The party that has a
gain may be entitled to receive all or a portion of this amount. In the event of
the bankruptcy of the FCM that holds margin on behalf of a Fund, that Fund may
be entitled to return of margin owed to such Fund only in proportion to the
amount received by the FCM's other customers. Marsico Capital will attempt to
minimize the risk by careful monitoring of the creditworthiness of the FCMs with
which the Funds do business and by depositing margin payments in a segregated
account with the Funds' custodian.
The Funds intend to comply with guidelines of eligibility for exclusion
from the definition of the term "commodity pool operator" adopted by the CFTC
and the National Futures Association, which regulate trading in the futures
markets. The Funds will use futures contracts and related options primarily for
bona fide hedging purposes within the meaning of CFTC regulations. To the extent
that the Funds hold positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions, the aggregate
initial margin and premiums required to establish such positions will not exceed
5% of the fair market value of a Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into.
Although a Fund will segregate cash and liquid assets in an amount
sufficient to cover its open futures obligations, the segregated assets would be
available to that Fund immediately upon closing out the futures position, while
settlement of securities transactions could take several days. However, because
a Fund's cash that may otherwise be invested would be held uninvested or
invested in other liquid assets so long as the futures position remains open,
such Fund's return could be diminished due to the opportunity losses of
foregoing other potential investments.
A Fund's primary purpose in entering into futures contracts is to protect
that Fund from fluctuations in the value of securities or interest rates without
actually buying or selling the underlying debt or equity security. For example,
if the Fund anticipates an increase in the price of stocks, and it intends to
purchase stocks at a later time, that Fund could enter into a futures contract
to purchase a stock index as a temporary substitute for stock purchases. If an
increase in the market occurs that influences the stock index as anticipated,
the value of the futures contracts will increase, thereby serving as a hedge
against that Fund not participating in a market advance. This technique is
sometimes known as an anticipatory hedge. To the extent a Fund enters into
futures contracts for this purpose, the segregated assets maintained to cover
such Fund's obligations with respect to the futures contracts will consist of
other liquid assets from its portfolio in an amount equal to the difference
between the contract price and the aggregate value of the initial and variation
margin payments made by that Fund with respect to the futures contracts.
Conversely, if a Fund holds stocks and seeks to protect itself from a
decrease in stock prices, the Fund might sell stock index futures contracts,
thereby hoping to offset the potential decline in the value of its portfolio
securities by a corresponding increase in the value of the futures contract
position. A Fund could protect against a decline in stock prices by selling
portfolio securities and investing in money market instruments, but the use of
futures contracts enables it to maintain a defensive position without having to
sell portfolio securities.
If a Fund owns Treasury bonds and the portfolio manager expects interest
rates to increase, that Fund may take a short position in interest rate futures
contracts. Taking such a position would have much the same effect as that Fund
selling Treasury bonds in its portfolio. If interest rates increase as
anticipated, the value of the Treasury bonds would decline, but the value of
that Fund's interest rate futures contract would increase, thereby keeping the
net asset value of that Fund from declining as much as it may have otherwise.
If, on the other hand, a portfolio manager expects interest rates to decline,
that Fund may take a long position in interest rate futures contracts in
anticipation of later closing out the futures position and purchasing the bonds.
Although a Fund can accomplish similar results by buying securities with long
maturities and selling securities with short maturities, given the greater
liquidity of the futures market than the cash market, it may be possible to
accomplish the same result more easily and more quickly by using futures
contracts as an investment tool to reduce risk.
The ordinary spreads between prices in the cash and futures markets, due
to differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery of the instrument underlying a futures contract. To the extent
participants decide to make or take delivery, liquidity in the futures market
could be reduced and prices in the futures market distorted. Third, from the
point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of the foregoing
distortions, a correct forecast of general price trends by the portfolio manager
still may not result in a successful use of futures.
Futures contracts entail risks. Although Marsico Capital believes that use
of such contracts will benefit the Funds, a Fund's overall performance could be
adversely affected by entering into such contracts if the portfolio manager's
investment judgment proves incorrect. For example, if a Fund has hedged against
the effects of a possible decrease in prices of securities held in its portfolio
and prices increase instead, that Fund will lose part or all of the benefit of
the increased value of these securities because of offsetting losses in its
futures positions. In addition, if a Fund has insufficient cash, it may have to
sell securities from its portfolio to meet daily variation margin requirements.
Those sales may be, but will not necessarily be, at increased prices which
reflect the rising market and may occur at a time when the sales are
disadvantageous to such Fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to a
Fund will not match exactly such Fund's current or potential investments. A Fund
may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests--for
example, by hedging investments in portfolio securities with a futures contract
based on a broad index of securities--which involves a risk that the futures
position will not correlate precisely with the performance of such Fund's
investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with a Fund's
investments. Futures prices are affected by factors such as current and
anticipated short-term interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices. Imperfect
correlations between a Fund's investments and its futures positions also may
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
and from imposition of daily price fluctuation limits for futures contracts. A
Fund may buy or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or is considering purchasing in order to attempt
to compensate for differences in historical volatility between the futures
contract and the securities, although this may not be successful in all cases.
If price changes in a Fund's futures positions are poorly correlated with its
other investments, its futures positions may fail to produce desired gains or
result in losses that are not offset by the gains in that Fund's other
investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of three days for some
types of securities, the futures markets can provide superior liquidity to the
securities markets. Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any particular time. In
addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for a Fund to enter
into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, a Fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, such Fund's access to other assets held to cover its futures positions
also could be impaired.
OPTIONS ON FUTURES CONTRACTS. The Funds may buy and write put and call
options on futures contracts. An option on a future gives a Fund the right (but
not the obligation) to buy or sell a futures contract at a specified price on or
before a specified date. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an individual
security. Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based or the price of the underlying
instrument, ownership of the option may or may not be less risky than ownership
of the futures contract or the underlying instrument. As with the purchase of
futures contracts, when a Fund is not fully invested it may buy a call option on
a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures' price at the expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in that Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures' price at expiration of the option is higher than the exercise
price, a Fund will retain the full amount of the option premium which provides a
partial hedge against any increase in the price of securities which that Fund is
considering buying If a call or put option a Fund has written is exercised, such
Fund will incur a loss which will be reduced by the amount of the premium it
received. Depending on the degree of correlation between the change in the value
of its portfolio securities and changes in the value of the futures positions, a
Fund's losses from existing options on futures may to some extent be reduced or
increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Fund may buy a put option on a futures contract to hedge its
portfolio against the risk of falling prices or rising interest rates. The
amount of risk a Fund assumes when it buys an option on a futures contract is
the premium paid for the option plus related transaction costs. In addition to
the correlation risks discussed above, the purchase of an option also entails
the risk that changes in the value of the underlying futures contract will not
be fully reflected in the value of the options bought.
FORWARD CONTRACTS. A forward contract is an agreement between two parties
in which one party is obligated to deliver a stated amount of a stated asset at
a specified time in the future and the other party is obligated to pay a
specified amount for the assets at the time of delivery. The Funds may enter
into forward contracts to purchase and sell government securities, equity or
income securities, foreign currencies or other financial instruments. Forward -
contracts generally are traded in an interbank market conducted directly between
traders (usually large commercial banks) and their customers. Unlike futures
contracts, which are standardized contracts, forward contracts can be
specifically drawn to meet the needs of the parties that enter into them. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated exchange.
The following discussion summarizes the Funds' principal uses of forward
foreign currency exchange contracts ("forward currency contracts"). A Fund may
enter into forward currency contracts with stated contract values of up to the
value of that Fund's assets. A forward currency contract is an obligation to buy
or sell an amount of a specified currency for an agreed price (which may be in
U.S. dollars or a foreign currency). A Fund will exchange foreign currencies for
U.S. dollars and for other foreign currencies in the normal course of business
and may buy and sell currencies through forward currency contracts in order to
fix a price for securities it has agreed to buy or sell ("transaction hedge"). A
Fund also may hedge some or all of its investments denominated in a foreign
currency or exposed to foreign currency fluctuations against a decline in the
value of that currency relative to the U.S. dollar by entering into forward
currency contracts to sell an amount of that currency (or a proxy currency whose
performance is expected to replicate or exceed the performance of that currency
relative to the U.S. dollar) approximating the value of some or all of its
portfolio securities denominated in that currency ("position hedge") or by
participating in options or futures contracts with respect to the currency. A
Fund also may enter into a forward currency contract with respect to a currency
where the Fund is considering the purchase or sale of investments denominated in
that currency but has not yet selected the specific investments ("anticipatory
hedge"). In any of these circumstances a Fund may, alternatively, enter into a
forward currency contract to purchase or sell one foreign currency for a second
currency that is expected to perform more favorably relative to the U.S. dollar
if the portfolio manager believes there is a reasonable degree of correlation
between movements in the two currencies ("cross-hedge"). These types of hedging
minimize the effect of currency appreciation as well as depreciation, but do not
eliminate fluctuations in the underlying U.S. dollar equivalent value of the
proceeds of or rates of return on a Fund's foreign currency denominated
portfolio securities. The matching of the increase in value of a forward
contract and the decline in the U.S. dollar equivalent value of the foreign
currency denominated asset that is the subject of the hedge generally will not
be precise. Shifting a Fund's currency exposure from one foreign currency to
another removes that Fund's opportunity to profit from increases in the value of
the original currency and involves a risk of increased losses to such Fund if
its portfolio manager's projection of future exchange rates is inaccurate. Proxy
hedges and cross-hedges may result in losses if the currency used to hedge does
not perform similarly to the currency in which hedged securities are
denominated. Unforeseen changes in currency prices may result in poorer overall
performance for a Fund than if it had not entered into such contracts.
The Funds will cover outstanding forward currency contracts by maintaining
liquid portfolio securities denominated in or whose value is tied to, the
currency underlying the forward contract or the currency being hedged. To the
extent that a Fund is not able to cover its forward currency positions with
underlying portfolio securities, the Funds' custodian will segregate cash or
other liquid assets having a value equal to the aggregate amount of such Fund's
commitments under forward contracts entered into with respect to position
hedges, cross-hedges and anticipatory hedges. If the value of the securities
used to cover a position or the value of segregated assets declines, a Fund will
find alternative cover or segregate additional cash or liquid assets on a daily
basis so that the value of the covered and segregated assets will be equal to
the amount of such Fund's commitments with respect to such contracts. As an
alternative to segregating assets, a Fund may buy call options permitting such
Fund to buy the amount of foreign currency being hedged by a forward sale
contract or a Fund may buy put options permitting it to sell the amount of
foreign currency subject to a forward buy contract.
While forward contracts are not currently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contracts. In such event,
the Funds' ability to utilize forward contracts may be restricted. In addition,
a Fund may not always be able to enter into forward contracts at attractive
prices and may be limited in its ability to use these contracts to hedge Fund
assets.
OPTIONS ON FOREIGN CURRENCIES. The Funds may buy and write options on
foreign currencies in a manner similar to that in which futures or forward
contracts on foreign currencies will be utilized. For example, a decline in the
U.S. dollar value of a foreign currency in which portfolio securities are
denominated will reduce the U.S. dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, a Fund may buy put options on
the foreign currency. If the value of the currency declines, such Fund will have
the right to sell such currency for a fixed amount in U.S. dollars, thereby
offsetting, in whole or in part, the adverse effect on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a Fund may buy call options on the foreign currency.
The purchase of such options could offset, at least partially, the effects
of the adverse movements in exchange rates. As in the case of other types of
options, however, the benefit to a Fund from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, if currency exchange rates do not move in the direction or
to the extent desired, a Fund could sustain losses on transactions in foreign
currency options that would require such Fund to forego a portion or all of the
benefits of advantageous changes in those rates.
The Funds may also write options on foreign currencies. For example, to
hedge against a potential decline in the U.S. dollar value of foreign currency
denominated securities due to adverse fluctuations in exchange rates, a Fund
could, instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most likely not be
exercised and the decline in value of portfolio securities will be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a
potential increase in the U.S. dollar cost of securities to be acquired, a Fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow that Fund to hedge the
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium. If exchange rates do not move
in the expected direction, the option may be exercised and a Fund would be
required to buy or sell the underlying currency at a loss which may not be
offset by the amount of the premium. Through the writing of options on foreign
currencies, a Fund also may lose all or a portion of the benefits which might
otherwise have been obtained from favorable movements in exchange rates.
The Funds may write covered call options on foreign currencies. A call
option written on a foreign currency by a Fund is "covered " if that Fund owns
the foreign currency underlying the call or has an absolute and immediate right
to acquire that foreign currency without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other foreign currencies held in its portfolio. A
call option is also covered if a Fund has a call on the same foreign currency in
the same principal amount as the call written if the exercise price of the call
held (i) is equal to or less than the exercise price of the call written or (ii)
is greater than the exercise price of the call written, if the difference is
maintained by such Fund in cash or other liquid assets in a segregated account
with the Funds' custodian.
The Funds also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is for cross-hedging
purposes if it is designed to provide a hedge against a decline due to an
adverse change in the exchange rate in the U.S. dollar value of a security which
a Fund owns or has the right to acquire and which is denominated in the currency
underlying the option. Call options on foreign currencies which are entered into
for cross-hedging purposes are not covered. However, in such circumstances, a
Fund will collateralize the option by segregating cash or other liquid assets in
an amount not less than the value of the underlying foreign currency in U.S.
dollars marked-to-market daily.
OPTIONS ON SECURITIES. In an effort to increase current income, the Growth
& Income Fund may write covered put and call options and buy put and call
options on securities that are traded on United States and foreign securities
exchanges and over-the-counter. The Growth & Income Fund may write and buy
options on the same types of securities that the Fund may purchase directly.
A put option written by a Fund is "covered " if that Fund (i) segregates
cash not available for investment or other liquid assets with a value equal to
the exercise price of the put with the Funds' custodian or (ii) holds a put on
the same security and in the same principal amount as the put written and the
exercise price of the put held is equal to or greater than the exercise price of
the put written. The premium paid by the buyer of an option will reflect, among
other things, the relationship of the exercise price to the market price and the
volatility of the underlying security, the remaining term of the option, supply
and demand and interest rates.
A call option written by a Fund is "covered " if that Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by the Funds'
custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also deemed to be covered if a Fund holds a call on
the same security and in the same principal amount as the call written and the
exercise price of the call held (i) is equal to or less than the exercise price
of the call written or (ii) is greater than the exercise price of the call
written if the difference is maintained by that Fund in cash and other liquid
assets in a segregated account with its custodian.
The Funds also may write call options that are not covered for
cross-hedging purposes. A Fund collateralizes its obligation under a written
call option for cross-hedging purposes by segregating cash or other liquid
assets in an amount not less than the market value of the underlying security,
marked-to-market daily. A Fund would write a call option for cross-hedging
purposes, instead of writing a covered call option, when the premium to be
received from the cross-hedge transaction would exceed that which would be
received from writing a covered call option and its portfolio manager believes
that writing the option would achieve the desired hedge.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or bought, in the case of
a put option, since with regard to certain options, the writer may be assigned
an exercise notice at any time prior to the termination of the obligation.
Whether or not an option expires unexercised, the writer retains the amount of
the premium. This amount, of course, may, in the case of a covered call option,
be offset by a decline in the market value of the underlying security during the
option period. If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to buy the underlying security at the
exercise price, which will usually exceed the then-current market value of the
underlying security.
The writer of an option that wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." This is accomplished by selling an option of the same series as
the option previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
In the case of a written call option, effecting a closing transaction will
permit a Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. In the case of a
written put option, such transaction will permit a Fund to write another put
option to the extent that the exercise price is secured by other liquid assets.
Effecting a closing transaction also will permit a Fund to use the cash or
proceeds from the concurrent sale of any securities subject to the option for
other investments. If a Fund desires to sell a particular security from its
portfolio on which it has written a call option, such Fund will effect a closing
transaction prior to or concurrent with the sale of the security. A Fund will
realize a profit from a closing transaction if the price of the purchase
transaction is less than the premium received from writing the option or the
price received from a sale transaction is more than the premium paid to buy the
option. A Fund will realize a loss from a closing transaction if the price of
the purchase transaction is more than the premium received from writing the
option or the price received from a sale transaction is a less than the premium
paid to buy the option. Because increases in the market of a call option
generally will reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely to be offset
in whole or in part by appreciation of the underlying security owned by a Fund.
An option position may be closed out only where a secondary market for an
option of the same series exists. If a secondary market does not exist, the Fund
may not be able to effect closing transactions in particular options and the
Fund would have to exercise the options in order to realize any profit. If a
Fund is unable to effect a closing purchase transaction in a secondary market,
it will not be able to sell the underlying security until the option expires or
it delivers the underlying security upon exercise. The absence of a liquid
secondary market may be due to the following: (i) insufficient trading interest
in certain options, (ii) restrictions imposed by a national securities exchange
("Exchange") on which the option is traded on opening or closing transactions or
both, (iii) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances that interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options Clearing
Corporation ("OCC") may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that Exchange (or in that class or series of options) would cease to
exist, although outstanding options on that Exchange that had been issued by the
OCC as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
A Fund may write options in connection with buy-and-write transactions. In
other words, a Fund may buy a security and then write a call option against that
security. The exercise price of such call will depend upon the expected price
movement of the underlying security. The exercise price of a call option may be
below ("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money")
the current value of the underlying security at the time the option is written.
Buy-and-write transactions using in-the-money call options may be used
when it is expected that the price of the underlying security will remain flat
or decline moderately during the option period. Buy-and-write transactions using
at-the-money call options may be used when it is expected that the price of the
underlying security will remain fixed or advance moderately during the option
period. Buy-and-write transactions using out-of-the-money call options may be
used when it is expected that the premiums received from writing the call option
plus the appreciation in the market price of the underlying security up to the
exercise price will be greater than the appreciation in the price of the
underlying security alone. If the call options are exercised in such
transactions, a Fund's maximum gain will be the premium received by it for
writing the option, adjusted upwards or downwards by the difference between that
Fund's purchase price of the security and the exercise price. If the options are
not exercised and the price of the underlying security declines, the amount of
such decline will be offset by the amount of premium received.
The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and a Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, a Fund may elect to close the position or take
delivery of the security at the exercise price and that Fund's return will be
the premium received from the put options minus the amount by which the market
price of the security is below the exercise price.
A Fund may buy put options to hedge against a decline in the value of its
portfolio. By using put options in this way, a Fund will reduce any profit it
might otherwise have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs.
A Fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any, realized by such
Fund upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to that Fund.
EURODOLLAR INSTRUMENTS. A Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. A Fund might use Eurodollar futures contracts and options thereon to
hedge against changes in LIBOR, to which many interest rate swaps and
fixed-income instruments are linked.
SWAPS AND SWAP-RELATED PRODUCTS. The Growth & Income Fund may enter into
interest rate swaps, caps and floors on either an asset-based or liability-based
basis, depending upon whether it is hedging its assets or its liabilities, and
will usually enter into interest rate swaps on a net basis (i.e., the two
payment streams are netted out, with the Fund receiving or paying, as the case
may be, only the net amount of the two payments). The net amount of the excess,
if any, of a Fund's obligations over its entitlement with respect to each
interest rate swap will be calculated on a daily basis and an amount of cash or
other liquid assets having an aggregate net asset value at least equal to the
accrued excess will be maintained in a segregated account by the Funds'
custodian. If a Fund enters into an interest rate swap on other than a net
basis, it would maintain a segregated account in the full amount accrued on a
daily basis of its obligations with respect to the swap. A Fund will not enter
into any interest rate swap, cap or floor transaction unless the unsecured
senior debt or the claims-paying ability of the other party thereto is rated in
one of the three highest rating categories of at least one NRSRO at the time of
entering into such transaction. Marsico Capital will monitor the
creditworthiness of all counterparties on an ongoing basis. If there is a
default by the other party to such a transaction, a Fund will have contractual
remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals and as
agents utilizing standardizing swap documentation. Marsico Capital has
determined that, as a result, the swap market has become relatively liquid. Caps
and floors are more recent innovations for which standardized documentation has
not yet been developed and, accordingly, they are less liquid than swaps. To the
extent a Fund sells (i.e., writes) caps and floors, it will segregate cash or
other liquid assets having an aggregate net asset value at least equal to the
full amount accrued on a daily basis, of its obligations with respect to any
caps or floors.
There is no limit on the amount of interest rate swap transactions that
may be entered into by a Fund. These transactions may in some instances involve
the delivery of securities or other underlying assets by a Fund or its
counterparty to collateralize obligations under the swap. Under the
documentation currently used in those markets, the risk of loss with respect to
interest rate swaps is limited to the net amount of the payments that a Fund is
contractually obligated to make. If the other party to an interest rate swap
that is not collateralized defaults, a Fund would risk the loss of the net
amount of the payments that it contractually is entitled to receive. A Fund may
buy and sell (i.e., write) caps and floors without limitation, subject to the
segregation requirement described above.
ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD CONTRACTS AND
FOREIGN INSTRUMENTS. Unlike transactions entered into by the Funds in futures
contracts, options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the SEC. To the contrary, such instruments are traded
through financial institutions acting as market-makers, although foreign
currency options are also traded on certain Exchanges, such as the Philadelphia
Stock Exchange and the Chicago Board Options Exchange, subject to SEC
regulation. Similarly, options on currencies may be traded over-the-counter. In
an over-the-counter trading environment, many of the protections afforded to
Exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the buyer of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost. Moreover, an option writer and buyer or seller
of futures or forward contracts could lose amounts substantially in excess of
any premium received or initial margin or collateral posted due to the potential
additional margin and collateral requirements associated with such positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on Exchanges. As a
result, many of the protections provided to traders on organized Exchanges will
be available with respect to such transactions. In particular, all foreign
currency option positions entered into on an Exchange are cleared and guaranteed
by the OCC, thereby reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on an Exchange may be more readily available
than in the over-the-counter market, potentially permitting a Fund to liquidate
open positions at a profit prior to exercise or expiration, or to limit losses
in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of the availability of a liquid secondary
market described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures contracts,
options on futures contracts, forward contracts and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in foreign
countries. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be adversely affected by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in a
Fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) low trading volume.
ADDITIONAL DERIVATIVE INSTRUMENT RISKS
Additional risks inherent in the use of derivative instruments include:
o the risk that interest rates, securities prices and currency markets will
not move in the direction that the Portfolio Manager anticipates;
o imperfect correlation between the price of derivative instruments and
movement in the prices of the securities, interest rates or currencies
being hedged;
o the fact that skills needed to use these strategies are different from
those needed to select portfolio securities;
o inability to close out certain hedged positions to avoid adverse tax
consequences;
o the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits, either
of which may make it difficult or impossible to close out a position when
desired;
o leverage risk, or the risk that adverse price movements in an instrument
can result in a loss substantially greater than a Fund's initial
investment in that instrument (in some cases, the potential loss is
unlimited); and
o particularly in the case of privately negotiated instruments, the risk
that the counterparty will fail to perform its obligations, which could
leave a Fund worse off than if it had not entered into the position.
Although the Funds believe the use of derivative instruments will benefit
the Funds, the Funds' performance could be worse than if the Funds had not used
such instruments if the Portfolio Manager's judgment proves incorrect. When a
Fund invests in a derivative instrument, it may be required to segregate cash
and other liquid assets or certain portfolio securities with its custodian to
"cover" the Fund's position. Assets segregated or set aside generally may not be
disposed of so long as a Fund maintains the positions requiring segregation or
cover. Segregating assets could diminish the Fund's return due to the
opportunity losses of foregoing other potential investments with the segregated
assets.
SHORT SALES
Each Fund may engage in "short sales against the box. " This technique
involves selling either a security that a Fund owns, or a security equivalent in
kind and amount to the security sold short that a Fund has the right to obtain,
for delivery at a specified date in the future, without the payment of
additional cost. A Fund will enter into a short sale against the box to hedge
against anticipated declines in the market price of portfolio securities. If the
value of the securities sold short increases prior to the scheduled delivery
date, a Fund loses the opportunity to participate in the gain.
DEPOSITARY RECEIPTS
The Funds may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs"), which are receipts issued by an American bank or trust
company evidencing ownership of underlying securities issued by a foreign
issuer. ADRs, in registered form, are designed for use in U.S. securities
markets. Unsponsored ADRs may be created without the participation of the
foreign issuer. Holders of these ADRs generally bear all the costs of the ADR
facility, whereas foreign issuers typically bear certain costs in a sponsored
ADR. The bank or trust company depositary of an unsponsored ADR may be under no
obligation to distribute shareholder communications received from the foreign
issuer or to pass through voting rights. The Funds may also invest in European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") and in other
similar instruments representing securities of foreign companies. EDRs are
receipts issued by a European financial institution evidencing an arrangement
similar to that of ADRs. EDRs, in bearer form, are designed for use in European
securities markets.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
In a repurchase agreement, a Fund purchases a security and simultaneously
commits to resell that security to the seller at an agreed-upon price on an
agreed upon date within a number of days (usually not more than seven) from the
date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount that is unrelated to the coupon rate or maturity
of the purchased security. A repurchase agreement involves the obligation of the
seller to pay the agreed-upon price, which obligation is in effect secured by
the value (at least equal to the amount of the agreed-upon resale price and
marked-to-market daily) of the underlying security or "collateral." A Fund may
engage in a repurchase agreement with respect to any security in which it is
authorized to invest. A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed, which may cause a
Fund to suffer a loss if the market value of such securities decline before they
can be liquidated on the open market. In the event of bankruptcy or insolvency
of the seller, a Fund may encounter delays and incur costs in liquidating the
underlying security. Repurchase agreements that mature in more than seven days
will be subject to the 15% limit on illiquid investments. While it is not
possible to eliminate all risks from these transactions, it is the policy of the
Funds to limit repurchase agreements to those parties whose creditworthiness has
been reviewed and found satisfactory by Marsico Capital.
A Fund may use reverse repurchase agreements to provide cash to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities, or to earn additional
income on portfolio securities, such as Treasury bills or notes. In a reverse
repurchase agreement, a Fund sells a portfolio security to another party, such
as a bank or broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase agreement
is outstanding, a Fund will maintain cash and appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. The
Funds will enter into reverse repurchase agreements only with parties that
Marsico Capital deems creditworthy. Using reverse repurchase agreements to earn
additional income involves the risk that the interest earned on the invested
proceeds is less than the expense of the reverse repurchase agreement
transaction. This technique may also have a leveraging effect on the Fund's
portfolio, although the Fund's intent to segregate assets in the amount of the
reverse repurchase agreement minimizes this effect.
HIGH-YIELD/HIGH-RISK SECURITIES
The Growth & Income Fund may invest up to 25%, and the Focus Fund and the
21st Century Fund may invest up to 5% of their respective total assets in debt
securities that are rated below investment grade (i.e., securities rated BB or
lower by Standard & Poor's Ratings Services ("Standard & Poor's") or Ba or lower
by Moody's Investors Service, Inc. ("Moody's")). Lower-rated securities involve
a higher degree of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an unanticipated
default, a Fund would experience a reduction in its income, and could expect a
decline in the market value of the securities so affected. The Funds will not
purchase debt securities rated lower than "CCC" by Standard & Poor's or "Caa" by
Moody's.
Each Fund may invest in unrated debt securities of foreign and domestic
issuers. Unrated debt, while not necessarily of lower quality than rated
securities, may not have as broad a market. Unrated debt securities will be
included in the stated limit for investments in high-yield investments by each
Fund unless the portfolio manager deems such securities to be the equivalent of
investment grade securities.
FINANCIAL AND MARKET RISKS. Investments in high-yield/high risk securities
involve a high degree of financial and market risks that can result in
substantial or, at times, even total losses. High-yield securities are more
vulnerable to real or perceived economic changes, political changes or adverse
developments specific to the issuer. Issuers of such securities may have
substantial capital needs and may become involved in bankruptcy or
reorganization proceedings. Among the problems involved in investments in such
issuers is the fact that it may be difficult to obtain information about the
condition of such issuers. The market prices of such securities also are subject
to abrupt and erratic movements and above average price volatility, and the
spread between the bid and asked prices of such securities may be greater than
normally expected.
DISPOSITION OF PORTFOLIO SECURITIES. Although the Funds generally will
purchase securities for which the portfolio manager expects an active market to
be maintained, high-yield/high-risk securities may be less actively traded than
other securities and it may be difficult to dispose of substantial holdings of
such securities at prevailing market prices. The Funds will limit holdings of
any securities to amounts that the portfolio manager believes could be readily
sold, and holdings of such securities would, in any event, be limited so as not
to limit the Funds' ability to readily dispose of securities to meet
redemptions.
CREDIT RISK. The value of lower quality securities generally is more
dependent on the ability of the issuer to meet interest and principal payments
than is the case for higher quality securities. Conversely, the value of higher
quality securities may be more sensitive to interest rate movements than lower
quality securities. Issuers of high-yield securities may not be as strong
financially as those issuing bonds with higher credit ratings. Investments in
such companies are considered to be more speculative than higher quality
investments.
GENERAL CHARACTERISTICS OF FOREIGN SECURITIES.
Foreign securities involve certain inherent risks that are different from
those of domestic issuers, including political or economic instability of the
issuer or the country of issue, diplomatic developments which could affect U.S.
investments in those countries, changes in foreign currency and exchange rates
and the possibility of adverse changes in investment or exchange control
regulations. As a result of these and other factors, foreign securities
purchased by the Funds may be subject to greater price fluctuation than
securities of U.S. companies.
Most foreign stock markets are not as large or liquid as in the United
States. Fixed commissions on foreign stock exchanges are generally higher than
the negotiated commissions on U.S. exchanges, and there is generally less
government supervision and regulation of foreign stock exchanges, brokers and
companies than in the United States. Investors should recognize that foreign
markets have different clearance and settlement procedures and in certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Delays in settlement could result in temporary periods when assets
of the Funds are uninvested and no return is earned thereon. The inability of
the Funds to make intended security purchases due to settlement problems could
cause the Funds to miss attractive investment opportunities. Inability to
dispose of portfolio securities due to settlement problems either could result
in losses to the Funds due to subsequent declines in value of the portfolio
security or, if the Funds have entered into a contract to sell the security,
could result in a possible liability to the purchaser. Payment for securities
without delivery may be required in certain foreign markets. Further, the Fund
may encounter difficulties or be unable to pursue legal remedies and obtain
judgments in foreign courts. Foreign governments can also levy confiscator
taxes, expropriate assets, and limit repatriations of assets. Typically, there
is less publicly available information about a foreign company than about a U.S.
company, and foreign companies may be subject to less stringent reserve,
auditing and reporting requirements. It may be more difficult for the Funds'
agents to keep currently informed about corporate actions such as stock
dividends or other matters which may affect the prices of portfolio securities.
Communications between the United States and foreign countries may be less
reliable than within the United States, thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. Individual foreign economies may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross national product, rate
of inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
Because investments in foreign securities will usually involve currencies
of foreign countries, and because the Funds may hold foreign currencies, the
value of the assets of the Funds as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Funds may incur costs in connection with
conversions between various currencies. Although the Funds value their assets
daily in terms of U.S. dollars, they do not intend to convert their holdings of
foreign currencies into U.S. dollars on a daily basis. The Funds will do so from
time to time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they
do realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Funds at one rate, while offering a lesser
rate of exchange should the Funds desire to resell that currency to the dealer.
The Funds will conduct their foreign currency exchange transactions either
on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through entering into forward foreign currency exchange
contracts or purchasing or writing put or call options on foreign currencies.
INVESTMENTS IN THE SHARES OF OTHER INVESTMENT COMPANIES
To a limited extent, each Fund may purchase securities of other investment
companies. Marsico Capital does not expect the Funds to invest more that 5% of
their total assets in shares issued by other investment companies and, in no
instance, will such investments exceed the levels set forth in Section
12(d)(1)(A) of the 1940 Act. Marsico Capital anticipates investing in shares of
other investment companies primarily as a means to invest cash in Funds
consisting of short-term money market instruments and U.S. government
securities. To the extent that the Funds invest in other investment companies,
the Funds may incur duplicate investment advisory and other fees.
TRUSTEES AND OFFICERS OF THE FUNDS
The Trustees and Officers of the Funds and their principal occupations
during the past five years are set forth below.
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITIONS HELD WITH THE FUND DURING THE PAST FIVE YEARS
Thomas F. Marsico (1) Trustee, President and Chairman and Chief
1200 17th Street Chief Executive Officer Executive Officer,
Suite 1300 Marsico Capital
Denver, CO 80202 Management, LLC
DOB: 1955 (September 1997 -
present); Executive Vice
President, Janus
Investment Fund (1990 -
1997).
J. Jeffrey Riggs (1) Trustee President, Essex
8400 East Prentice Financial Group, Inc.
Avenue (Commercial Mortgage
Suite 1310 Bank) (More than five
Englewood, CO 80111 years); Principal,
DOB: 1953 Metropolitan Homes, Inc.
(January 1992 - Present);
Principal, Baron
Properties, LLC (January
1997 - Present).
Rono Dutta Trustee Senior Vice President -
1200 E. Algonquin Road Planning, United Airlines
Elk Grove Village, IL (November 1994 -
60007 Present); other positions
DOB: 1951 with United Airlines
(1985 - 1994); previously,
manager for planning, Bell
& Howell, and management
consultant, Booz, Allen
and Hamilton.
Theodore S. Halaby Trustee Partner, Halaby, Cross, &
1873 South Ballaire Schluter (law firm)
Suite 1400 (October 1998 - present);
Denver, CO 80222 Partner, Halaby, Cross,
DOB: 1940 Lichty & Schluter (law
firm) (January 1996 -
September 1998); Partner,
Halaby, Cross, Lichty,
Schluter & Buck (law firm)
(October 1994 - December
1995); Partner, Halaby,
McCrea & Cross) (law firm)
(more than five years).
Walter A. Koelbel, Jr. Trustee President, and other
5291 Yale Circle positions, Koelbel and
Denver, CO 80222 Company (Real Estate
DOB: 1952 Development Company)
(December 1976 - present)
Larry A. Mizel Trustee President, M.D.C.
Suite 900 Holdings, Inc.
3600 South Yosemite (Homebuilding and
Street Mortgage Banking) (March
Denver, CO 80237 1996 - present); Chairman
DOB: 1942 and Chief Executive
Officer, M.D.C. Holdings,
Inc. (More than five
years).
Federico Pena Trustee Managing Director, Vestar
1225 17th Street Capital Partners, (August
Denver, CO 80202 1998 - present);
DOB: 1947 Secretary , U.S.
Department of Energy
(March 1997 - July 1998);
Secretary, U.S. Department
of Transportation (January
1993 - February 1997)
Michael D. Rierson Trustee Vice President,
P. O. Box 248073 University Advancement at
Coral Gables, FL 33124 University of Miami
DOB: 1952 (September 1998 -
present); Associate Dean,
Kenan-Flagler Business
School at University of
North Carolina at Chapel
Hill (November 1993 -
September 1998); Various
positions at Duke
University, Durham, N.C.
(October 1983 - November
1993).
Barbara M. Japha Vice President, Treasurer President and General
1200 17th Street and Secretary Counsel, Marsico Capital
Suite 1300 Management, LLC
Denver, CO 80202 (September 1997 -
DOB: 1953 Present); Vice President
- Legal , U S West, Inc.
(September 1989 -
September 1997).
Sander M. Bieber Assistant Secretary Partner, Dechert Price &
1775 Eye Street, NW Rhoads (law firm) (more
Washington, D.C. 20005 than five years).
DOB: 1950
- --------------------
(1) Trustees who are "interested persons" of the Funds, as defined in the
Investment Company Act of 1940, as amended, (the "1940 Act"). The Trustees of
the Funds who are officers or employees of the investment adviser receive no
remuneration from the Funds. Each of the other Trustees is paid an annual
retainer of $28,000 and a fee of $3,000 for each meeting attended and is
reimbursed for the expenses of attending meetings.
COMPENSATION RECEIVED FROM FUNDS
COMPENSATION RECEIVED FROM FUNDS
AS OF SEPTEMBER 30, 1999
Pension or
Retirement
Benefits
Accrued As Estimated
Aggregate Part of Annual Total
Compensation Funds' Benefits Upon Compensation
From the Funds Expenses Retirement From Funds
- --------------------------------------------------------------------------------
Thomas F. Marsico $0 $0 $0 $0
Barbara M. Japha* $0 $0 $0 $0
J. Jeffrey Riggs $ 17,000 $0 $0 $ 17,000
Rono Dutta $ 17,000 $0 $0 $ 17,000
Theodore S. Halaby $ 18,000 $0 $0 $ 18,000
Walter A. Koelbel, Jr. $ 19,000 $0 $0 $ 19,000
Larry A. Mizel $ 16,000 $0 $0 $ 16,000
Federico Pena $ 17,000 $0 $0 $ 17,000
Michael D. Rierson $ 17,000 $0 $0 $ 17,000
* Ms. Japha resigned from the Board of Trustees effective February 1, 1999.
As of December 31, 1999, the Trustees and Executive Officers of the Trust owned
approximately 2.7% of the outstanding shares of the Focus Fund and less than 1%
of the outstanding shares of the Growth & Income Fund. As of December 31, 1999,
Charles Schwab & Co. beneficially owned in excess of 25% of the Focus Fund and
the Growth & Income Fund; and Fidelity Investments beneficially owned in excess
of 25% of the Focus Fund.
The Trust's shares are sold through broker-dealer intermediaries that
establish single, omnibus accounts with the Trust's transfer agent. The
beneficial owners of these shares, however, are the individual investors who
maintain accounts within these broker-dealer intermediaries.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY AGREEMENT. The Adviser of the Funds is Marsico Capital
Management, LLC. Under the terms of the Advisory Agreement, Marsico Capital
furnishes overall investment management for the Funds, provides research and
credit analysis, oversees the purchase and sales of portfolio securities,
maintains books and records with respect to the Funds' securities transactions
and provides periodic and special reports to the Board of Trustees as required.
For the advisory services provided and expenses assumed by it, the Adviser
has agreed to a fee from each Fund, computed daily and payable monthly, at an
annual rate of 0.85% of average daily net assets. For the year ended September
30, 1998, the Adviser earned $2,590,083 from the Focus Fund and $774,854 from
the Growth & Income Fund, of which $249,672 was waived and subsequently
reimbursed during the fiscal year ended September 30, 1999. For the year ended
September 30, 1999, the Adviser earned $14,485,811 from the Focus Fund and
$4,320,548 from the Growth & Income Fund (net of the 1999 reimbursement of the
1998 waived fees).
The Investment Advisory Agreement, with respect to each Fund, will
continue in effect for a period of two years from its effective date, unless a
period of shorter duration is agreed to by the Trust and the Adviser. If not
sooner terminated, the Advisory Agreement will continue in effect for successive
one year periods thereafter, provided that each continuance is specifically
approved annually by (a) the vote of a majority of the Board of Trustees who are
not parties to the Advisory Agreement or interested persons (as defined in the
1940 Act), cast in person at a meeting called for the purpose of voting on
approval, and (b) either (i) with respect to a Fund, the vote of a majority of
the outstanding voting securities of that Fund, or (ii) the vote of a majority
of the Board of Trustees. The Advisory Agreement is terminable by vote of the
Board of Trustees, or with respect to a Fund, by the holders of a majority of
the outstanding voting securities of that Fund, at any time without penalty, on
60 days' written notice to the Adviser. The Adviser may also terminate its
advisory relationship with a Fund without penalty on 90 days' written notice to
the Trust. The Advisory Agreement terminates automatically in the event of its
assignment (as defined in the 1940 Act). As described in the Prospectus, the
Adviser has agreed to limit the total expenses of each Fund (excluding interest,
taxes, brokerage and extraordinary expenses) to an annual rate of 1.60% for the
Focus Fund and to an annual rate of 1.50% for the Growth & Income Fund and the
21st Century Fund. Pursuant to this agreement, each Fund will reimburse the
Adviser for any fee waivers or expense reimbursements made by the Adviser,
provided that any such reimbursements made by a Fund to the Adviser will not
cause the Fund's expense limitation to exceed the amounts set forth above and
the reimbursement is made within three years after the year in which the Adviser
incurred the expense. This contract may only be changed by the Funds' Board of
Trustees.
For purposes of the Investment Company Act of 1940, as amended,
BankAmerica Corporation is deemed to have a controlling interest in Marsico
Capital, the investment adviser to the Trust. BankAmerica Corporation maintains
a 50% ownership interest in MCM.
ADMINISTRATION AGREEMENT. Pursuant to an Administration Agreement (the
"Administration Agreement"), Sunstone Financial Group, Inc. (the
"Administrator"), 207 East Buffalo Street, Suite 400, Milwaukee, WI, 53202,
prepares and files all federal income and excise tax returns and state income
tax returns (other than those required to be made by the Trust's Custodian or
Transfer Agent), oversees the Trust's insurance relationships, reviews drafts of
the Trust's registration statement and proxy statements, prepares securities
registration compliance filings pursuant to state securities laws, compiles data
for and prepares required notices and reports to the Securities and Exchange
Commission, prepares financial statements for annual and semiannual reports to
investors, monitors compliance with the Funds' investment policies and
restrictions, prepares and monitors the Funds' expense accruals and causes all
appropriate expenses to be paid from Fund assets, monitors the Funds' status as
a regulated investment company under Subchapter M of the Internal Revenue Code
of 1986, maintains and/or coordinates with the other service providers the
maintenance of the accounts, books and other documents required pursuant to Rule
31a-1 under the 1940 Act and generally assists in the Trust's administrative
operations. The Administrator, at its own expense and without reimbursement from
the Trust, furnishes office space and all necessary office facilities,
equipment, supplies and clerical and executive personnel for performing the
services required to be performed by it under the Administration Agreement. For
the foregoing, the Administrator receives from the Funds a fee, computed daily
and payable monthly, based on the Funds' average net assets at an annual rate
beginning at 0.12% and decreasing as the assets of each Fund reach certain
levels, subject to a minimum fee of $45,000 per Fund. For the year ended
September 30, 1998, the Administrator earned fees under the Administration
Agreement of $168,841 from the Focus Fund and $96,299 from the Growth & Income
Fund. For the year ended September 30, 1999, the Administrator earned fees under
the Administration Agreement of $355,421 from the Focus Fund and $235,830 from
the Growth & Income Fund.
The Trust pays all of its own expenses, including without limitation, the
cost of preparing and printing its registration statements required under the
Securities Act of 1933 and the 1940 Act and any amendments thereto, the expense
of registering its shares with the Securities and Exchange Commission and in the
various states, advisory and administration fees, costs of organization and
maintenance of corporate existence, the printing and distribution costs of
prospectuses mailed to existing investors, reports to investors, reports to
government authorities and proxy statements, costs of meetings of shareholders,
fees paid to trustees who are not interested persons of the Adviser, interest
charges, taxes, legal expenses, association membership dues, auditing services,
insurance premiums, brokerage commissions and expenses in connection with
portfolio transactions, fees and expenses of the custodian of the Trust's
assets, charges of securities pricing services, printing and mailing expenses
and charges and expenses of dividend disbursing agents, accounting services and
stock transfer agents.
DISTRIBUTION PLAN
The Funds have adopted a Distribution and Service Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. The Plan authorizes payments by the
Funds in connection with the distribution of their shares at an annual rate, as
determined from time-to-time by the Board of Trustees, or up to 0.25% of the
Funds' average daily net assets. Payments may be made by the Funds under the
Plan for the purpose of financing any activity primarily intended to result in
the sales of shares of the Funds as determined by the Board of Trustees. Such
activities typically include advertising; compensation for sales and sales
marketing activities of Financial Service Agents and others, such as dealers or
distributors; shareholder account servicing; production and dissemination of
prospectuses and sales and marketing materials; and capital or other expenses of
associated equipment, rent, salaries, bonuses, interest and other overhead. To
the extent any activity is one which the Funds may finance without a Plan, the
Funds may also make payments to finance such activity outside of the Plan and
not subject to its limitations. Payments under the Plan are not tied exclusively
to actual distribution and service expenses, and the payments may exceed
distribution and service expenses actually incurred.
For the fiscal year ended September 30, 1999, the following 12b-1 payments
were made under the Plan:
Focus Fund Growth & Income Fund Total
------------ -------------------- -----
Advertising $ 712,298.15 $ 180,190.15 $ 892,488.70
Printing and Mailing of $ 386,986.92 $ 118,304.94 $ 505,291.56
Prospectuses to other
than current shareholders
Compensation to $ 299,067.97 $ 89,199.74 $ 388,267.71
Underwriters
Compensation to $2,830,048.29 $ 824,289.32 $3,654,337.61
Broker-Dealers
Other* $ 32,131.18 $ 58,765.23 $ 90,896.41
Total $4,260,532.51 $1,270,749.38 $5,531,281.39
* This includes consulting fees, miscellaneous shipping, filing and travel
expenses, and storage of printed items.
Administration of the Plan is regulated by Rule 12b-1 under the 1940 Act,
which includes requirements that the Board of Trustees receive and review at
least quarterly reports concerning the nature and qualification of expenses
which are made, that the Board of Trustees approve all agreements implementing
the Plan and that the Plan may be continued from year-to-year only if the Board
of Trustees concludes at least annually that continuation of the Plan is likely
to benefit shareholders.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Trustees, decisions to buy and sell
securities for the Funds and negotiation of their brokerage commission rates are
made by the Adviser. Transactions on United States stock exchanges involve the
payment by the Funds of negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the over-the-counter
market but the price paid by the Funds usually includes an undisclosed dealer
commission or mark-up. In certain instances, the Funds may make purchases of
underwritten issues at prices which include underwriting fees.
In selecting a broker to execute each particular transaction, the Adviser
takes the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker; the size and
difficulty in executing the order; the use of brokerage credits to reduce
service fees as contemplated in a board approved program, and the value of the
expected contribution of the broker to the investment performance of the Funds
on a continuing basis. Accordingly, the cost of the brokerage commissions to the
Funds in any transaction may be greater than that available from other brokers
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. For example, the Adviser will consider the research
and investment services provided by brokers or dealers who effect or are parties
to portfolio transactions of the Funds or the Adviser's other clients. Such
research and investment services include statistical and economic data and
research reports on particular companies and industries as well as research
software. Subject to such policies and procedures as the Trustees may determine,
the Adviser shall not be deemed to have acted unlawfully or to have breached any
duty solely by reason of its having caused the Funds to pay a broker that
provides research services to the investment adviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount another
broker would have charged for effecting that transaction, if the investment
adviser determines in good faith that such amount of commission was reasonable
in relation to the value of the research service provided by such broker viewed
in terms of either that particular transaction or the investment adviser's
ongoing responsibilities with respect to the Funds.
Research and investment information is provided by these and other brokers
at no cost to the Adviser and is available for the benefit of other accounts
advised by the investment adviser and its affiliates, and not all of the
information will be used in connection with the Funds. While this information
may be useful in varying degrees and may tend to reduce the Adviser's expenses,
it is not possible to estimate its value and in the opinion of the Adviser it
does not reduce the Adviser's expenses in a determinable amount. The extent to
which the Adviser makes use of statistical, research and other services
furnished by brokers is considered by the investment adviser in the allocation
of brokerage business but there is no formula by which such business is
allocated. The Adviser does so in accordance with its judgment of the best
interests of the Funds and their shareholders.
For the year ended September 30, 1999, the Focus Fund paid $4,682,961 and
the Growth & Income Fund paid $1,806,116, in commissions to brokers. The Funds
did not pay any commissions to brokers who were affiliated with the Fund,
Marsico Capital, or Sunstone Distribution Services, and any affiliated person of
the foregoing.
During the fiscal year ending September 30, 1999, the Funds directed
brokerage transactions to brokers because of research services provided. The
amount of such transactions and related commissions were as follows: for the
Focus Fund, $2,441,242 in research commissions and $3,356,956,720 in research
commission transactions; for the Growth & Income Fund, $1,022,645 in research
commissions and $907,756,873 in research commission transactions.
PERFORMANCE INFORMATION
From time to time, quotations of the Funds' performance may be included in
advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures are calculated in the following manner.
AVERAGE ANNUAL TOTAL RETURN
Average annual total return is the average annual compounded rate of
return for periods of one year, five years and ten years, all ended on the last
day of a recent calendar quarter. Average annual total return quotations reflect
changes in the price of a Fund's shares and assume that all dividends and
capital gains distributions during the respective periods were reinvested in
Fund shares. Average annual total return is calculated by computing the average
annual compounded rates of return of a hypothetical investment over such
periods, according to the following formula (average annual total return is then
expressed as a percentage):
P(1+T)n = ERV
Where:
T = average annual total return
P = a hypothetical initial investment of $1,000
n = number of years
ERV = ending redeemable value: ERV is the value, at the end
of the applicable period, of a hypothetical $1,000 investment
made at the beginning of the applicable period.
It should be noted that average annual total return is based on historical
earnings and is not intended to indicate future performance. Average annual
total return for the Fund will vary based on changes in market conditions and
the level of the Fund's expenses.
In connection with communicating its average annual total return to
current or prospective shareholders, the Funds also may compare these figures to
the performance of other mutual funds tracked by mutual fund rating services or
to unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
COMPARISON OF PORTFOLIO PERFORMANCE
Comparison of the quoted non-standardized performance of various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effect of the methods used to calculate performance when comparing
performance of a Fund with performance quoted with respect to other investment
companies or types of investments.
In connection with communicating its performance to current or prospective
shareholders, a Fund also may compare these figures to the performance of
unmanaged indices which may assume reinvestment of dividends or interest but
generally do not reflect deductions for administrative and management costs.
Examples include, but are not limited to the Dow Jones Industrial Average, the
Consumer Price Index, Standard & Poor's 500 Composite Stock Price Index (S&P
500), the NASDAQ OTC Composite Index, the NASDAQ Industrials Index, and the
Russell 2000 Index.
From time to time, in advertising, marketing and other Fund literature,
the performance of a Fund may be compared to the performance of broad groups of
mutual funds with similar investment goals, or other groups of mutual funds, as
tracked by independent organizations such as Investment Company Data, Inc.,
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Morningstar, Inc., Value Line Mutual Fund Survey and other independent
organizations. When these organizations' tracking results are used to compare
the Funds to other funds with similar goals, a Fund will be compared to the
appropriate fund category, that is, by fund objective and portfolio holdings or
the appropriate volatility grouping, where volatility is a measure of a Fund's
risk. From time to time, the average price-earnings ratio and other attributes
of a Fund's or the model portfolio's securities, may be compared to the average
price-earnings ratio and other attributes of the securities that comprise the
S&P 500 Index. The Funds may also quote mutual fund ratings prepared by
independent services or financial or industry publications.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in a Fund. The
description may include a "risk/return spectrum" which compares a Fund to broad
categories of funds, such as money market, bond or equity funds, in terms of
potential risks and returns. Money market funds are designed to maintain a
constant $1.00 share price and have a fluctuating yield. Share price, yield and
total return of a bond fund will fluctuate. The share price and return of an
equity fund also will fluctuate. The description may also compare a Fund to bank
products, such as certificates of deposit. Unlike mutual funds, certificates of
deposit are insured up to $100,000 by the U.S. government and offer a fixed rate
of return.
Risk/return spectrums also may depict funds that invest in both domestic
and foreign securities or a combination of bond and equity securities.
The Funds may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a Fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
during periods of low price levels.
The Funds may include discussions or illustrations of general principles
of investing, investment management techniques, economic and political
conditions, the relationship between sectors of the economy and the economy as a
whole, the effects of inflation and historical performance of various asset
classes, the effects of compounding, and tax and retirement planning.
The total return for the fiscal year ended September 30, 1999 for the
Focus Fund and Growth & Income Fund were 41.02% and 41.16%, respectively. The
average annual total return for each fund for the period from commencement of
operations (December 31, 1997) through September 30, 1999 was 37.42% for the
Focus Fund and 32.20% for the Growth & Income Fund. The aggregate total return
for each fund for the period from commencement of operations (December 31, 1997)
through September 30, 1999 was 74.30% for the Focus Fund and 62.90% for the
Growth & Income Fund. The investment return and principal value of an investment
in the Funds will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
TAX STATUS
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, each Fund generally must, among other things, (a) derive in each
taxable year at least 90% of its gross income from dividends, interest, payments
with respect to certain securities loans, and gains from the sale or other
disposition of stock, securities or foreign currencies, or other income derived
with respect to its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of its assets is represented by
cash, U.S. Government securities, the securities of other regulated investment
companies and other securities, with such other securities limited, in respect
of any one issuer, to an amount not greater than 5% of the value of the Fund's
total assets and 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its total assets is invested in the
securities of any one issuer (other than U.S. Government securities and the
securities of other regulated investment companies).
As a regulated investment company, a Fund generally will not be subject to
U.S. federal income tax on income and gains that it distributes to shareholders,
if at least 90% of each Fund's investment company taxable income (which
includes, among other items, dividends, interest and the excess of any net
short-term capital gains over net long-term capital losses) for the taxable year
is distributed. Each Fund intends to distribute substantially all of such
income.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax at
the Fund level. To avoid the tax, each Fund must distribute during each calendar
year an amount equal to the sum of (1) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (2) at
least 98% of its capital gains in excess of its capital losses (adjusted for
certain ordinary losses) for a one-year period generally ending on October 31 of
the calendar year, and (3) all ordinary income and capital gains for previous
years that were not distributed during such years. To avoid application of the
excise tax, each Fund intends to make distributions in accordance with the
calendar year distribution requirement.
A distribution will be treated as paid on December 31 of the current
calendar year if it is declared by a Fund in October, November or December of
that year with a record date in such a month and paid by that Fund during
January of the following year. Such distributions will be taxable to
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received.
ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by the Funds may
be treated as debt securities that were originally issued at a discount.
Original issue discount can generally be defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income is actually received by a Fund, original issue
discount that accrues on a debt security in a given year generally is treated
for federal income tax purposes as interest and, therefore, such income would be
subject to the distribution requirements applicable to regulated investment
companies.
Some debt securities may be purchased by the Funds at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes.
The gain realized on the disposition of any taxable debt security having market
discount generally will be treated as ordinary income to the extent it does not
exceed the accrued market discount on such debt security. Generally, market
discount accrues on a daily basis for each day the debt security is held by a
Fund at a constant rate over the time remaining to the debt security's maturity
or, at the election of a Fund, at a constant yield to maturity which takes into
account the semi-annual compounding of interest.
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS; STRADDLES. A
Fund's transactions in foreign currencies, forward contracts, options and
futures contracts (including options and futures contracts on foreign
currencies) will be subject to special provisions of the Code that, among other
things, may affect the character of gains and losses realized by the Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund, defer Fund losses, and affect the
determination of whether capital gains and losses are characterized as long-term
or short-term capital gains or losses. These rules could therefore, in turn,
affect the character, amount, and timing of distributions to shareholders. These
provisions also may require the Fund to mark-to-market certain types of the
positions in its portfolio (i.e., treat them as if they were closed out), which
may cause the Fund to recognize income without receiving cash with which to make
distributions in amounts necessary to satisfy its distribution requirements for
relief from income and excise taxes. Each Fund will monitor its transactions and
may make such tax elections as Fund management deems appropriate with respect to
foreign currency, options, futures contracts, forward contracts, or hedged
investments. The Funds' status as regulated investment companies may limit their
transactions involving foreign currency, futures, options, and forward
contracts.
Certain transactions undertaken by a Fund may result in "straddles " for
federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by a Fund, and losses realized by the Fund on
positions that are part of a straddle may be deferred under the straddle rules,
rather than being taken into account in calculating the taxable income for the
taxable year in which the losses are realized. In addition, certain carrying
charges (including interest expense) associated with positions in a straddle may
be required to be capitalized rather than deducted currently. Certain elections
that a Fund may make with respect to its straddle positions may also affect the
amount, character and timing of the recognition of gains or losses from the
affected positions.
Under certain circumstances, the Fund may recognize gain from a
constructive sale of an "appreciated financial position " it holds if it enters
into a short sale, forward contract or other transaction that substantially
reduces the risk of loss with respect to the appreciated position. In that
event, the Fund would be treated as if it had sold and immediately repurchased
the property and would be taxed on any gain (but not loss) from the constructive
sale. The character of gain from a constructive sale would depend upon the
Fund's holding period in the property. Loss from a constructive sale would be
recognized when the property was subsequently disposed of, and its character
would depend on the Fund's holding period and the application of various loss
deferral provisions of the Code. Constructive sale treatment does not apply to
transactions closed in the 90-day period ending with the 30th day after the
close of the taxable year, if certain conditions are met.
CURRENCY FLUCTUATIONS-- "SECTION 988 " GAINS OR LOSSES. Each Fund will
maintain accounts and calculate income by reference to the U.S. dollar for U.S.
federal income tax purposes. Some of a Fund's investments will be maintained and
income therefrom calculated by reference to certain foreign currencies, and such
calculations will not necessarily correspond to the Fund's distributable income
and capital gains for U.S. federal income tax purposes as a result of
fluctuations in currency exchange rates. Furthermore, exchange control
regulations may restrict the ability of a Fund to repatriate investment income
or the proceeds of sales of securities. These restrictions and limitations may
limit a Fund's ability to make sufficient distributions to satisfy the 90%
distribution requirement for qualification as a regulated investment company.
Even if a fund so qualified, these restrictions could inhibit its ability to
distribute all of its income in order to be fully relieved of tax liability.
Gains or losses attributable to fluctuations in exchange rates which occur
between the time a Fund accrues income or other receivables (including
dividends) or accrues expenses or other liabilities denominated in a foreign
currency and the time a Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of some investments, including debt securities and
certain forward contracts denominated in a foreign currency, gains or losses
attributable to fluctuations in the value of the foreign currency between the
date of the acquisition of the security or other instrument and the date of
disposition also are treated as ordinary gain or loss. These gains and losses,
referred to under the Code as "section 988 " gains or losses, increase or
decrease the amount of the Funds' investment company taxable income available to
be distributed to its shareholders as ordinary income. If section 988 losses
exceed other investment company taxable income during a taxable year, a Fund
would not be able to make any ordinary dividend distributions, or distributions
made before the losses were realized would be recharacterized as a return of
capital to shareholders, or, in some cases, as capital gain, rather than as an
ordinary dividend.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Fund may invest in shares of
foreign corporations which may be classified under the Code as passive foreign
investment companies ("PFICs"). In general, a foreign corporation is classified
as a PFIC if at least one-half of its assets constitute investment-type assets,
or 75% or more of its gross income is investment-type income. If the Fund
receives a so-called "excess distribution " with respect to PFIC stock, the Fund
itself may be subject to a tax on a portion of the excess distribution, whether
or not the corresponding income is distributed by the Fund to shareholders. In
general, under the PFIC rules, an excess distribution is treated as having been
realized ratably over the period during which the Fund held the PFIC shares. The
Fund itself will be subject to tax on the portion, if any, of an excess
distribution that is so allocated to prior Fund taxable years and an interest
factor will be added to the tax, as if the tax had been payable in such prior
taxable years. Certain distributions from a PFIC as well as gain from the sale
of PFIC shares are treated as excess distributions. Excess distributions are
characterized as ordinary income even though, absent application of the PFIC
rules, certain distributions might have been classified as capital gain.
The Fund may be eligible to elect alternative tax treatment with respect
to PFIC shares. Under an election that currently is available in some
circumstances, the Fund generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis, regardless of
whether distributions were received from the PFIC in a given year If this
election were made, the special rules, discussed above, relating to the taxation
of excess distributions, would not apply. In addition, another election would
involve marking to market the Fund's PFIC shares at the end of each taxable
year, with the result that unrealized gains would be treated as though they were
realized and reported as ordinary income. Any mark-to-market losses and any loss
from an actual disposition of Fund shares would be deductible as ordinary losses
to the extent of any net mark-to-market gains included in income in prior years.
Because the application of the PFIC rules may affect, among other things,
the character of gains, the amount of gain or loss and the timing of the
recognition of income with respect to PFIC shares, as well as subject the Fund
itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gains, may be increased or decreased substantially
as compared to a fund that did not invest in PFIC shares.
DISTRIBUTIONS. Distributions of investment company taxable income are
taxable to a U.S. shareholder as ordinary income, whether paid in cash or
shares. Dividends paid by a Fund to a corporate shareholder, to the extent such
dividends are attributable to dividends received from U.S. corporations by a
Fund, may qualify for the dividends received deduction. However, the revised
alternative minimum tax applicable to corporations may reduce the value of the
dividends received deduction. Distributions of net capital gains (the excess of
net long-term capital gains over net short-term capital losses), if any,
designated by a Fund as capital gain dividends, are taxable to shareholders at
the applicable mid-term or long-term capital gains rate, whether paid in cash or
in shares, regardless of how long the shareholder has held a Fund's shares, and
they are not eligible for the dividends received deduction. Shareholders will be
notified annually as to the U.S. federal tax status of distributions, and
shareholders receiving distributions in the form of newly issued shares will
receive a report as to the net asset value of the shares received.
If the net asset value of shares is reduced below a shareholder's cost as
a result of a distribution by a Fund, such distribution generally will be
taxable even though it represents a return of invested capital. Investors should
be careful to consider the tax implications of buying shares of a Fund just
prior to a distribution. The price of shares purchased at this time may reflect
the amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution which generally will be taxable to
them.
DISPOSITION OF SHARES. Upon a redemption, sale or exchange of shares of a
Fund, a shareholder will realize a taxable gain or loss depending upon the
amount realized and the shareholder's basis in the shares. A gain or loss will
be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands and generally will be long-term or short-term, depending
upon the shareholder's holding period for the shares. Any loss realized on a
redemption, sale or exchange will be disallowed to the extent the shares
disposed of are replaced (including through reinvestment of dividends) within a
period of 61 days beginning 30 days before and ending 30 days after the shares
are disposed of. In such a case, the basis of the shares acquired will be
adjusted to reflect the disallowed loss. Any loss realized by a shareholder on
the disposition of a Fund's shares held by the shareholder for six months or
less will be treated for tax purposes as a long-term capital loss to the extent
of any distributions of capital gain dividends received or treated as having
been received by the shareholder with respect to such shares.
BACKUP WITHHOLDING. The Funds will be required to report to the Internal
Revenue Service (the "IRS") all distributions and gross proceeds from the
redemption of the Funds' shares, except in the case of certain exempt
shareholders. All distributions and proceeds from the redemption of a Fund's
shares will be subject to withholding of federal income tax at a rate of 31%
("backup withholding") in the case of non-exempt shareholders if (1) the
shareholder fails to furnish the Funds with and to certify the shareholder's
correct taxpayer identification number or social security number, (2) the IRS
notifies the shareholder or the Funds that the shareholder has failed to report
properly certain interest and dividend income to the IRS and to respond to
notices to that effect, or (3) when required to do so, the shareholder fails to
certify that he or she is not subject to backup withholding. If the withholding
provisions are applicable, any such distributions or proceeds, whether
reinvested in additional shares or taken in cash, will be reduced by the amounts
required to be withheld.
OTHER TAXATION. Distributions may also be subject to additional state,
local and foreign taxes depending on each shareholder's particular situation.
Non- U.S. shareholders may be subject to U.S. tax rules that differ
significantly from those summarized above. This discussion does not address all
of the tax consequences applicable to the Funds or shareholders, and
shareholders are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in a Fund.
NET ASSET VALUE
Shares are purchased at their net asset value per share. Each Fund
calculates its net asset value (NAV as follows:
(Value of Fund Assets) - (Fund Liabilities
NAV Per Shares: ------------------------------------------
Number of Outstanding Shares
Net asset value is determined as of the end of trading hours on the NYSE
(currently 4:00 p.m. New York City time) on days that the NYSE is open.
A security listed or traded on a recognized stock exchange or quoted on
NASDAQ is valued at its last sale price prior to the time when assets are valued
on the principal exchange on which the security is traded or on NASDAQ. If no
sale is reported at that time the most current bid price will be used. All other
securities for which over-the-counter market quotations are readily available
are valued at the most current bid price. Where quotations are not readily
available, the Funds' investments are valued at fair value as determined by
management and approved in good faith by the Trustees. Debt securities which
will mature in more than 60 days are valued at prices furnished by a pricing
service approved by the Trustees subject to review and determination of the
appropriate price by Marsico Capital, whenever a furnished price is
significantly different from the previous day's furnished price. Securities
which will mature in 60 days or less are valued at amortized cost, which
approximates market value.
Generally, trading in foreign securities, as well as U.S. Government
securities and certain cash equivalents and repurchase agreements, is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities use in computing the net asset value of the
shares of the Funds are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the NYSE.
Occasionally, events affecting the value of such securities and such exchange
rates may occur between the times at which they are determined and at the close
of the NYSE, which will not be reflected in the computation of net asset value.
If during such periods, events occur which materially affect the value of such
securities, the securities will be valued at their fair market value as
determined by management and approved in good faith by the Trustees.
For purposes of determining the net asset value per share of each Fund,
all assets and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean between the bid and offer
prices of such currencies against United States dollars furnished by a pricing
service approved by the Trustees.
A Fund's net asset value per share will be calculated separately from the
per share net asset value of the other fund of the Trust. "Assets belonging to"
a fund consist of the consideration received upon the issuance of shares of the
particular fund together with all net investment income, earnings, profits,
realized gains/losses and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any funds or payments
derived from any reinvestment of such proceeds, and a portion of any general
assets of the Trust not belonging to a particular series. Each fund will be
charged with the direct liabilities of that fund and with a share of the general
liabilities of the Trust's funds. Subject to the provisions of the Charter,
determinations by the Trustees as to the direct and allocable expenses, and the
allocable portion of any general assets, with respect to a particular fund are
conclusive.
CAPITAL STRUCTURE
DESCRIPTION OF SHARES. The Trust is an open-end management investment
company organized as a Delaware Business Trust on October 1, 1997. The Trust's
Trust Instrument authorizes the Board of Trustees to issue an unlimited number
of shares of beneficial interest. Each share of the Funds has equal voting,
dividend, distribution and liquidation rights.
Shares of the Trust have no preemptive rights and only such conversion or
exchange rights as the Board may grant in its discretion. When issued for
payment as described in the Prospectus, the Trust's shares will be fully paid
and non-assessable.
Shareholders are entitled to one vote for each full share held, and
fractional votes for fractional shares held, and will vote in the aggregate and
not by class or series except as otherwise required by the 1940 Act or
applicable Delaware law.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by a majority of the outstanding shares of each fund
affected by the matter. A fund is affected by a matter unless it is clear that
the interests of each Fund in the matter are substantially identical or that the
matter does not affect any interest of the Fund. Under Rule 18f-2 the approval
of an investment advisory agreement or 12b-1 distribution plan or any change in
a fundamental investment policy would be effectively acted upon with respect to
a fund only if approved by a majority of the outstanding shares of such Fund.
However, the rule also provides that the ratification of independent
accountants, the approval of principal underwriting contracts and the election
of directors may be effectively acted upon by shareholders of the Trust voting
without regard to particular funds. Notwithstanding any provision of Delaware
law requiring for any purpose the concurrence of a proportion greater than a
majority of all votes entitled to be cast at a meeting at which a quorum is
present, the affirmative vote of the holders of a majority of the total number
of shares of the Trust outstanding (or of a class or series of the Trust, as
applicable) will be effective, except to the extent otherwise required by the
1940 Act and rules thereunder. In addition, the Trust Instrument provides that,
to the extent consistent with Delaware law and other applicable law, the By-Laws
may provide for authorization to be given by the affirmative vote of the holders
of less than a majority of the total number of shares of the Trust outstanding
(or of a class or series).
If requested to do so by the holders of at least 10% of the Trust's
outstanding shares, the Trust will call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee, and to assist in
communications with other shareholders as required by Section 16(c) of the 1940
Act.
HOW TO BUY AND SELL SHARES
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by the Funds, under the following conditions
authorized by the 1940 Act: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend or holiday closings, or
(b) during which trading on the New York Stock Exchange is restricted; (2) for
any period during which an emergency exists as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably practical, or (b) it is not
reasonably practical for a Fund to determine the fair value of its net assets;
and (3) for such other periods as the Securities and Exchange Commission may by
order permit for the protection of the Fund's shareholders.
The value of shares of a Fund on redemption may be more or less than the
shareholder's cost, depending upon the market value of that Fund's assets at the
time. Shareholders should note that if a loss has been realized on the sale of
shares of a Fund, the loss may be disallowed for tax purposes if shares of the
same Fund are purchased within (before or after) 30 days of the sale.
It is possible that conditions may exist in the future which would, in the
opinion of the Board of Trustees, make it undesirable for the Funds to pay for
redemptions in cash. In such cases the Board may authorize payment to be made in
portfolio securities of the Funds. However, the Funds are obligated under the
1940 Act to redeem for cash all shares presented for redemption by any one
shareholder up to $250,000 (or 1% of a Fund's net assets if that is less) in any
90-day period. Securities delivered in payment of redemptions are valued at the
same value assigned to them in computing the net asset value per share.
Shareholders receiving such securities generally will incur brokerage costs on
their sales.
Any redemption or transfer of ownership request for corporate accounts
will require the following written documentation:
1. A written Letter of Instruction signed by the required number of
authorized officers, along with their respective positions. For redemption
requests in excess of $50,000, the written request must be signature guaranteed.
Signature guarantees can be obtained from most banks, credit unions or savings
associations, or from broker/dealers, national securities exchanges, registered
securities associations or clearing agencies deemed eligible by the Securities
and Exchange Commission. Notaries public cannot provide signature guarantees.
2. A certified Corporate Resolution that states the date the Resolution
was adopted and who is empowered to act, transfer or sell assets on behalf of
the corporation.
3. If the Corporate Resolution is more than 60 days old from the date of
the transaction request, a Certificate of Incumbency from the Corporate
Secretary which specifically states that the officer or officers named in the
resolution have the authority to act on the account. The Certificate of
Incumbency must be dated within 60 days of the requested transaction. If the
Corporate Resolution confers authority on officers by title and not by name, the
Certificate of Incumbency must name the officer(s) and their title(s).
When redeeming shares from the Money Market Fund, if you redeem less than
all of the balance of your account, your redemption proceeds will exclude
accrued and unpaid income through the date of the redemption. When redeeming
your entire balance from the Money Market Fund, accrued income will be paid
separately when the income is collected and paid from the Money Market Fund, at
the end of the month.
AUTOMATIC INVESTMENT PLAN. The Funds offer an Automatic Investment Plan
whereby an investor may automatically purchase shares of the Funds on a regular
basis ($50 minimum per transaction). Under the Automatic Investment Plan, an
investor's designated bank or other financial institution debits a
pre-authorized amount on the investor's account each designated period and
applies the amount to the purchase of a Fund's shares. The Automatic Investment
Plan must be implemented with a financial institution that is a member of the
Automated Clearing House (ACH). Also, the designated Fund must have a currently
effective registration in those states in which it is required. You may enroll
in the Automatic Investment Plan by completing the appropriate section of the
Account Application. If you wish to establish an Automatic Investment Plan after
your account has been opened, please contact the Transfer Agent at
1-888-860-8686.
Automatic Investment Plan transactions are scheduled for the 5th, 10th,
15th, and 20th of every month. Transactions also may be scheduled monthly,
quarterly, semi-annually or annually. No service fee is currently charged by the
Funds for participation in the Automatic Investment Plan. A $20 fee will be
imposed by the Funds if sufficient funds are not available in your account or
your account has been closed at the time of the automatic transaction and your
purchase will be canceled. You will also be responsible for any losses suffered
by the Funds as a result. You may adopt the Automatic Investment Plan at the
time the account is opened by completing the appropriate section of the Account
Application. Changes to bank information must be made in writing and signed by
all registered holders of the account with signatures guaranteed. A full
redemption of all funds from your account will automatically discontinue
Automatic Investment Plan privileges. Termination instructions must be received
by the Funds five business days prior to the effective date of termination.
SYSTEMATIC WITHDRAWAL PLAN. The Funds offer a Systematic Withdrawal Plan
which allows you to designate that a fixed amount ($100 minimum per transaction
limited to those shareholders with a balance of $10,000 or greater upon
commencement of participation in the Systematic Withdrawal Plan) be distributed
to you at regular intervals. The redemption takes place on the 5th, 10th, 15th,
or 20th of the month but if the day you designate falls on a Saturday, Sunday,
or legal holiday, the distribution shall be made on the prior business day. Any
changes made to the distribution information must be made in writing and signed
by each registered holder of the account with signatures guaranteed.
The Systematic Withdrawal Plan may be terminated by you at any time
without charge or penalty, and the Funds reserve the right to terminate or
modify the Systematic Withdrawal Plan upon 60 days' written notice. Withdrawals
involve redemption of funds and may result in a gain or loss for federal income
tax purposes. An application for participation in the Systematic Withdrawal Plan
may be obtained from the Transfer Agent by calling 1-888-860-8686.
RETIREMENT PLANS. The Funds offer retirement plans that may allow
investors to shelter some of their income from taxes. Descriptions of the plans,
application forms, as well as descriptions of applicable service fees and
certain limitations on contributions and withdrawals, are available by calling
the Transfer Agent at 1-888-860-8686.
HOW TO EXCHANGE
As explained in the Prospectus, the Trust offers an exchange program
whereby shares of any Marsico Fund may be exchanged for shares of another
Marsico Fund that is available for investment at any time. In addition,
shareholders may exchange all or a portion of their investment from each Fund
for Marsico shares of Nations Prime Fund, as described in the Prospectus.
----------
Sunstone Financial Group, Inc., the Funds' transfer agent, receives a
service fee from the Nations Prime Fund at the annual rate of 0.25 of 1% of the
average daily net asset value of the shares of the Funds exchanged into the
Marsico shares of Nations Prime Fund. Sunstone Financial Group, Inc. is an
affiliate of the Funds' distributor.
FINANCIAL STATEMENTS
The financial statements of the Focus Fund and the Growth & Income Fund
appearing in the Annual Report to Shareholders for those funds for the year
ended September 30, 1999 have been audited by PricewaterhouseCoopers LLP,
independent accountants. Such financial statements are incorporated herein by
reference.
DISTRIBUTION
The Trust has entered into a distribution agreement with Sunstone
Distribution Services, LLC (the "Distributor"). Under the agreement, the
Distributor serves as each Fund's principal underwriter and acts as exclusive
agent for the Funds in selling their shares to the public. For the marketing and
distribution services provided, the Funds pay the Distributor a fee at the
annual rate beginning at 0.02% of each Fund's average daily net assets and
decreasing as the assets of each Fund reach certain asset levels, subject to a
minimum annual fee of $25,000 per Fund. These fees are limited to .25% of each
Fund's average daily net assets. If the fees exceed .25% of each Fund's average
daily net assets, none of Funds will pay the difference. Any amount in excess of
.25% will be borne by Marsico Capital, and not charged to the Funds thereafter.
During the year ended September 30, 1999, The Distributor earned as
compensation $299,067.97 from the Focus Fund and $89,199.74 from the Growth &
Income Fund.
Certain officers and directors of Marsico Capital are also officers and
trustees of the Trust.
SERVICE PROVIDERS
Investment Adviser
Marsico Capital Management, LLC, 1200 17th Street, Suite 1300, Denver, CO 80202
Administrator
Sunstone Financial Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee,
WI, 53202.
Counsel
Dechert Price & Rhoads, 1775 Eye St., NW, Washington DC 20006-2401.
Custodian
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110.
Independent Accountants
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Denver, CO 80202
Transfer And Dividend Disbursing Agent
Sunstone Financial Group, Inc., LLC, 207 East Buffalo Street, Suite 400,
Milwaukee, WI, 53202.
<PAGE>
APPENDIX - A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Funds may invest. The Funds may
invest in these instruments to the extent permitted by its investment objective
and policies. The Funds are not limited by this discussion and may invest in any
other types of instruments not precluded by the policies discussed elsewhere in
this Prospectus. Please refer to the SAI for a more detailed discussion of
certain instruments. An asterisk ("*") next to a security indicates that each
Fund will invest less than 5% of its net assets in that security.
I. EQUITY AND DEBT SECURITIES
BONDS are debt securities issued by a company, municipality, government or
government agency. The issuer of a bond is required to pay the holder the amount
of the loan (or par value) at a specified maturity and to make scheduled
interest payments.
COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from 1
to 270 days issued by banks, corporations and other borrowers to investors
seeking to invest idle cash. For example, the Funds may purchase commercial
paper issued under Section 4(2) of the Securities Act of 1933.
COMMON STOCK represents a share of ownership in a company and usually carries
voting rights and earns dividends. Unlike preferred stock, dividends on common
stock are not fixed but are declared at the discretion of the issuer's board of
directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed dividend
or interest payment and are convertible into common stock at a specified price,
or conversion ratio.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation that
entitle the holder to dividends and capital gains on the underlying security.
Receipts include those issued by domestic banks (American Depositary Receipts),
foreign banks (Global or European Depositary Receipts) and broker-dealers
(depositary shares).
FIXED-INCOME SECURITIES are securities that pay a specified rate of return. The
term generally includes short- and long-term government, corporate and municipal
obligations that pay a specified rate of interest or coupons for a specified
period of time and preferred stock, which pays fixed dividends.
HIGH-YIELD/HIGH-RISK SECURITIES are securities that are rated below investment
grade by the primary rating agencies (e.g., BB or lower by Standard & Poor's and
Ba or lower by Moody's). Other terms commonly used to describe such securities
include "lower rated bonds, " "noninvestment grade bonds " and "junk bonds. "
INVERSE FLOATERS* are debt instruments whose interest bears an inverse
relationship to the interest rate on another security. The Funds will not invest
more than 5% of their respective net assets in inverse floaters.
MORTGAGE - AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or
other debt. These securities are generally pass-through securities, which means
that principal and interest payments on the underlying securities (less
servicing fees) are passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the underlying
mortgages or other debt may be refinanced or paid off prior to their maturities
during periods of declining interest rates. In that case, the Portfolio Manager
may have to reinvest the proceeds from the securities at a lower rate. Potential
market gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
PASSIVE FOREIGN INVESTMENT COMPANIES ("PFICS") are any foreign corporations
which generate certain amounts of passive income or hold certain amounts of
assets for the production of passive income. Passive income includes dividends,
interest, royalties, rents and annuities. Income tax regulations may require the
Fund to recognize income associated with the PFIC prior to the actual receipt of
any such income.
PAY-IN-KIND BONDS are debt securities that normally give the issuer an option to
pay cash at a coupon payment date or give the holder of the security a similar
bond with the same coupon rate and a face value equal to the amount of the
coupon payment that would have been made.
PREFERRED STOCK is a class of stock that generally pays dividends at a specified
rate and has preference over common stock in the payment of dividends and
liquidation. Preferred stock generally does not carry voting rights.
REPURCHASE AGREEMENTS involve the purchase of a security by the Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, the Fund will bear the risk of market value fluctuations until the
security can be sold and may encounter delays and incur costs in liquidating the
security.
REVERSE REPURCHASE AGREEMENTS* involve the sale of a security by the Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique will be used primarily to provide cash to satisfy unusually heavy
redemption requests.
RULE 144A SECURITIES are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
STANDBY COMMITMENTS are obligations purchased by the Fund from a dealer that
give the Fund the option to sell a security to the dealer at a specified price.
STEP COUPON BONDS are debt securities that trade at a discount from their face
value and pay coupon interest. The discount from the face value depends on the
time remaining until cash payments begin, prevailing interest rates, liquidity
of the security and the perceived credit quality of the issuer.
STRIP BONDS are debt securities that are stripped of their interest (usually by
a financial intermediary) after the securities are issued. The market value of
these securities generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
TENDER OPTION BONDS* are relatively long-term bonds that are coupled with the
agreement of a third party (such as a broker, dealer or bank) to grant the
holders of such securities the option to tender the securities to the
institution at periodic intervals.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of one
to ten years, and Treasury bonds may be issued with any maturity but generally
have maturities of at least ten years. U.S. government securities also include
indirect obligations of the U.S. government that are issued by federal agencies
and government sponsored entities. Unlike Treasury securities, agency securities
generally are not backed by the full faith and credit of the U.S. government.
Some agency securities are supported by the right of the issuer to borrow from
the Treasury, others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations and others are supported only by
the credit of the sponsoring agency.
VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
WARRANTS are securities, typically issued with preferred stocks or bonds, that
give the holder the right to buy a proportionate amount of common stock at a
specified price, usually at a price that is higher than the market price at the
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD TRANSACTIONS generally involve the
purchase of a security with payment and delivery at some time in the
future--i.e., beyond normal settlement. The Funds do not earn interest on such
securities until settlement, and the Funds bear the risk of market value
fluctuations in between the purchase and settlement dates. New issues of stocks
and bonds, private placements and U.S. government securities may be sold in this
manner.
ZERO COUPON BONDS are debt securities that do not pay interest at regular
intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than in interest-paying
securities of comparable maturity.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
FORWARD CONTRACTS are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Fund may enter into forward currency contracts to hedge against declines in
the value of securities denominated in, or whose value is tied to, a currency
other than the U.S. dollar or to reduce the impact of currency appreciation on
purchases of such securities. It may also enter into forward contracts to
purchase or sell securities or other financial indices.
FUTURES CONTRACTS are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. The Fund may buy and sell futures contracts on foreign currencies,
securities and financial indices including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities. The Fund may
also buy options on futures contracts. An option on a futures contract gives the
buyer the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options on
futures are standardized and traded on designated exchanges.
INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively indexed (i.e., their
value may increase or decrease if the reference index or instrument
appreciates). Indexed/structured securities may have return characteristics
similar to direct investments in the underlying instruments and may be more
volatile than the underlying instruments. The Fund bears the market risk of an
investment in the underlying instruments, as well as the credit risk of the
issuer.
INTEREST RATE SWAPS involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
OPTIONS are the right, but not the obligation, to buy or sell a specified amount
of securities or other assets on or before a fixed date at a predetermined
price. The Fund may purchase and write put and call options on securities,
securities indices and foreign currencies.
<PAGE>
APPENDIX - B
RATINGS OF INVESTMENT SECURITIES
A rating of a rating service represents the service's opinion as to the
credit quality of the security being rated. However, the ratings are general and
are not absolute standards of quality or guarantees as to the creditworthiness
of an issuer. Consequently, the Fund's investment adviser believes that the
quality of debt securities in which the Fund invests should be continuously
reviewed. A rating is not a recommendation to purchase, sell or hold a security,
because it does not take into account market value or suitability for a
particular investor. When a security has received a rating from more than one
service, each rating should be evaluated independently. Ratings are based on
current information furnished by the issuer or obtained by the ratings services
from other sources which they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability of such
information, or for other reasons.
The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc. and Standard & Poor's Corporation.
MOODY'S INVESTORS SERVICE, INC. RATINGS
Aaa--Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt-edge
". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. Although the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such bonds.
Aa--Bonds rated Aa are judged to be high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa bonds or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa bonds.
A--Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high
degree. Such bonds are often in default or have other marked shortcomings.
STANDARD & POOR'S CORPORATION RATING
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal
and interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and
interest and differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation among such bonds and CC the highest degree of
speculation. Although such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a)(1) Trust Instrument(1)
(2) Certificate of Trust(1)
(b) By-Laws(1)
(c) Not Applicable
(d)(1) Investment Advisory Agreement between Registrant and Marsico
Capital Management, LLC with respect to the Marsico Focus Fund(2)
(2) Investment Advisory Agreement between Registrant and Marsico
Capital Management, LLC with respect to the Marsico Growth &
Income Fund (2)
(3) Investment Advisory Agreement between Registrant and Marsico
Capital Management, LLC with respect to the Marsico 21st
Century Fund
(e) Amended and Restated Distribution Agreement
(f) Not Applicable
(g) Custodian Agreement (2)
(h)(1) Administration Agreement (2)
(2) Amended and Restated Schedule B to the Administration Agreement
(3) Transfer Agency Agreement (2)
(4) Amended and Restated Schedule C to the Transfer Agency Agreement
(5) IRA Custodial Agreement and Disclosure Statement (2)
(i) Legal Opinion
(j) Consent of Independent Accountants
(k) Not Applicable
(l) Initial Capital Agreement (2)
(m)(1) Distribution and Service Plan
(2) Dealer Agreement (3)
(n) Not Applicable
- -----------------
(1) Filed in Registrant's initial Registration Statement on October 1, 1997 and
incorporated by reference herein.
(2) Filed in Registrant's Registration Statement filed on December 2, 1997 and
incorporated by reference herein.
(3) Filed in the Registrant's Post-Effective Amendment No. 1 filed on
November 19, 1998 and incorporated by reference herein.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Trust's shares are sold through broker-dealer intermediaries that
establish single, omnibus accounts with the Trust's transfer agent. As a result
of this arrangement, and as of December 31, 1999 Charles Schwab & Co. and
Fidelity Investments each could be deemed to own in excess of 25% of the
outstanding shares of the Focus Fund and Charles Schwab & Co. could be deemed to
own in excess of 25% of the outstanding shares of the Growth & Income Fund.
The beneficial owners of these shares, however, are the individual
investors who maintain accounts with these broker-dealer intermediaries.
ITEM 25. INDEMNIFICATION
Reference is made to Article IX, Section 2, of the Registrant's Trust
Instrument.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant by the Registrant pursuant to the Trust Instrument or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, officers or controlling
persons of the Registrant in connection with the successful defense of any act,
suit or proceeding) is asserted by such trustees, officers or controlling
persons in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issues.
Article IX, Section 2 of the Trust Instrument provides in part that a
Trustee, officer, employee, manager, or agent of the Trust shall be indemnified
by the Trust against liability and all expenses reasonably incurred or paid by
such person in connection with any claim, action, suit, or proceeding in which
such person becomes involved because of his or her official relationship to the
Trust unless: (i) such person was adjudicated to be liable to the Trust or its
shareholders by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard for his duties to the Trust; or (ii) in the event of a
Settlement unless one of the conditions set forth in the Trust Instrument is
satisfied.
Section 5 of the Distribution Agreement between the Registrant and
Sunstone Distribution Services, LLC provides for indemnification of Sunstone
Distribution Services, LLC, an affiliate of Sunstone, in connection with certain
claims and liabilities to which Sunstone Distribution Services, LLC, in its
capacity as Registrant's Distributor, may be subject. A copy of the Distribution
Agreement is incorporated by reference herein as Exhibit 23(e).
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Marsico Capital Management, LLC serves as the investment adviser for the
Registrant. The business and other connections of Marsico Capital Management,
LLC are set forth in the Uniform Application for Investment Adviser Registration
("Form ADV") of Marsico Capital Management, LLC as currently filed with the SEC
which is incorporated by reference herein.
ITEM 27. PRINCIPAL UNDERWRITER
(a) Sunstone Distribution Services, LLC currently serves as distributor of
the shares of The Haven Capital Management Trust, The Green Century Funds, First
Omaha Funds, Inc., Johnson Family Funds, Inc., La Crosse Funds, Inc., Choice
Funds and RREEF Securities Trust.
(b) To the best of Registrant's knowledge, the officers and members of
Sunstone Distribution Services, LLC, distributor for Registrant, are as follows:
POSITIONS AND OFFICES
NAME AND PRINCIPAL WITH SUNSTONE POSITIONS AND OFFICES
BUSINESS ADDRESS DISTRIBUTION SERVICES LLC WITH REGISTRANT
---------------- ------------------------- ---------------
Miriam M. Allison President, Treasurer and None
207 E. Buffalo Street Member
Suite 400
Milwaukee, WI 53202
Peter Hammond Secretary None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
Terry Ladwig Vice President None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
(c) Commissions and other compensation earned, directly or indirectly,
from the Registrant during the fiscal period ended September 30, 1999 by
Registrant's principal underwriter:
<TABLE>
<CAPTION>
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage Other
Underwriter Commissions and Repurchase Commissions Compensation
----------- ---------------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sunstone Distribution Services, LLC $ 0 $ 0 $ 0 $ 388,268
</TABLE>
Sunstone Distribution Services, LLC serves as each Fund's principal underwriter
and acts as exclusive agent for the Funds in selling their shares to the public.
For marketing and distribution services provided, Sunstone Distribution Services
receives a fee beginning at the annual rate of 0.02% of each Fund's average
daily net assets and decreasing as the assets of each Fund reach certain levels,
subject to a minimum annual fee of $ 25,000 per Fund.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are in the possession of the Registrant, at Registrant's offices at
1200 17th Street, Suite 1300, Denver, CO 80202, except (1) records held and
maintained by State Street Bank and Trust Company at 225 Franklin Street,
Boston, Massachusetts 02110 relating to its functions as custodian; (2) records
held and maintained by Sunstone Financial Group, Inc., 207 East Buffalo Street,
Suite 400, Milwaukee, Wisconsin 53202, relating to its functions as
administrator and transfer agent, and (3) records held and maintained by State
Street Bank and Trust Company at 225 Franklin Street, Boston, Massachusetts
02110 relating to its role as fund accountant.
ITEM 29. MANAGEMENT SERVICES
Not Applicable.
ITEM 30. UNDERTAKINGS
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Washington in the District of Columbia, on this 27th
day of January, 2000.
THE MARSICO INVESTMENT FUND
By: / s / THOMAS F. MARSICO
---------------------------------
Thomas F. Marsico,*
PRESIDENT
By: / s / SANDER M. BIEBER
--------------------------------
Sander M. Bieber
As ATTORNEY-IN-FACT
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
SIGNATURE TITLE DATE
/ s / THOMAS F. MARSICO Trustee and President January 27, 2000
- --------------------------------- (Principal Executive
Thomas F. Marsico* Officer)
/ s / J. Jeffrey Riggs Trustee January 27, 2000
- ---------------------------------
J. Jeffrey Riggs*
/ s / RONO DUTTA Trustee January 27, 2000
- ---------------------------------
Rono Dutta*
/ s / Theodore S. Halaby Trustee January 27, 2000
- ---------------------------------
Theodore S. Halaby*
/ s / Walter A. Koelbel, Jr. Trustee January 27, 2000
- ---------------------------------
Walter A. Koelbel, Jr.*
/ s / Larry A. Mizel Trustee January 27, 2000
- ---------------------------------
Larry A. Mizel*
/ s / FEDERICO PENA Trustee January 27, 2000
- ---------------------------------
Federico Pena**
/ s / MICHAEL D. RIERSON Trustee January 27, 2000
- ---------------------------------
Michael D. Rierson*
/ s / Barbara M. JAPHA Treasurer (Principal January 27, 2000
- --------------------------------- Financial and
Barbara M. Japha* Accounting Officer)
By: / s / SANDER M. BIEBER
------------------------
Sander M. Bieber
As ATTORNEY-IN-FACT
* Pursuant to power of attorney filed with Post-Effective Amendment No. 1
on November 19, 1998.
** Pursuant to power of attorney filed with Post-Effective Amendment No. 2
on December 17, 1999.
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
OF THE MARSICO 21st CENTURY FUND
OF THE MARSICO INVESTMENT FUND
AGREEMENT, made this 27th day of January 2000, between The Marsico
Investment Fund (the "Trust"), on behalf of the Marsico 21st Century Fund (the
"Fund"), and Marsico Capital Management, LLC ("MCM"), a Delaware limited
liability company.
WHEREAS, the Trust is a Delaware business trust authorized to issue shares
in series and is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund is
a series of the Trust;
WHEREAS, MCM is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act"); and
WHEREAS, the Trust wishes to retain MCM to render investment management
services to the Fund, and MCM is willing to furnish such services to the Fund;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Trust and MCM as follows:
1. Appointment
The Trust hereby appoints MCM to act as investment adviser and
administrator to the Fund for the periods and on the terms set forth herein. MCM
accepts the appointment and agrees to furnish the services set forth herein for
the compensation provided herein.
2. Services as Investment Adviser
Subject to the general supervision and direction of the Board of Trustees
of the Trust, MCM will (a) manage the Fund in accordance with the Fund's
investment objectives and policies as stated in the Fund's Prospectus and the
Statement of Additional Information filed with the Securities and Exchange
Commission, as they may be amended from time to time; (b) make investment
decisions for the Fund; (c) place purchase and sale orders on behalf of the
Fund; and (d) employ portfolio managers and securities analysts to provide
research services to the Fund. In providing those services, MCM will provide the
Fund with ongoing research, analysis, advice, and judgments regarding individual
investments, general economic conditions and trends and long-range investment
policy. In addition, MCM will furnish the Fund with whatever statistical
information the Fund may reasonably request with respect to the securities that
the Fund may hold or contemplate purchasing.
3. Services as Manager
Subject to the general supervision and direction of the Board of Trustees
of the Trust, MCM will (a) assist in supervising and managing all aspects of the
Fund's operations; (b) maintain such books and records of the Fund as may be
required by applicable federal or state law, or supervise, as the case may be,
the maintenance by third parties approved by the Trust, of such books and
records; (c) supply the Fund with office facilities, data processing services,
clerical, accounting and bookkeeping services, internal executive and
administrative services, and stationery and office supplies; (d) prepare, file,
and arrange for the distribution of proxy materials and periodic reports to the
shareholders of the Fund as required by applicable law or supervise, as the case
may be, the distribution of proxy materials by third parties to the shareholders
of the Fund as required by applicable law; (e) prepare or supervise the
preparation by third parties approved by the Trust of all federal, state, and
local tax returns and reports of the Fund required by applicable law; (f)
prepare and arrange for the filing of such registration statements and other
documents as the Securities and Exchange Commission and other federal and state
regulatory authorities may require by applicable law; (g) render to the Board of
Trustees of the Trust such periodic and special reports respecting the Fund as
the Trustees may reasonably request; and (h) make available its officers and
employees to the Board of Trustees and officers of the Trust for consultation
and discussions regarding the administration of the Fund.
4. Performance of Duties by MCM
MCM further agrees that, in performing its duties set forth in Sections 2
and 3 above, and elsewhere hereunder, it will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code of 1986, as amended (the "Code") and all
other applicable federal and state laws and regulations, and with any applicable
procedures adopted by the Trustees;
(b) use reasonable efforts to manage the Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
(c) maintain books and records with respect to the Fund's securities
transactions, render to the Board of Trustees of the Trust such periodic and
special reports as the Board may reasonably request, and keep the Trustees
informed of developments materially affecting the Fund's portfolio;
(d) make available to the Trust, promptly upon request, such copies of its
investment records and ledgers with respect to the Fund as may be required to
assist the Trust in its compliance with applicable laws and regulations. MCM
will furnish the Trustees with such periodic and special reports regarding the
Fund as they may reasonably request;
(e) immediately notify the Trust in the event that MCM or any of its
affiliates: (1) becomes aware that it is subject to a statutory disqualification
that prevents MCM from serving as investment adviser or administrator pursuant
to this Agreement; or (2) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and Exchange
Commission or other regulatory authority. MCM further agrees to notify the Trust
immediately of any material fact known to MCM respecting or relating to MCM that
is not contained in the Trust's Registration Statement regarding the Fund, or
any amendment or supplement thereto, but that is required to be disclosed
therein, and of any statement contained therein that becomes untrue in any
material respect.
MCM, at its discretion, may enter into contracts with third parties for
the performance of the services to be provided by it under this Agreement.
5. Documents
The Fund has delivered properly certified or authenticated copies of each
of the following documents to MCM and will deliver to it all future amendments
and supplements thereto, if any:
(a) certified resolution of the Board of Trustees of the Trust authorizing the
appointment of MCM and approving the form of this Agreement;
(b) The Registration Statement as filed with the Securities and Exchange
Commission and any amendments thereto; and
(c) exhibits, powers of attorneys, certificates and any and all other documents
relating to or filed in connection with the Registration Statement described
above.
6. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Fund, MCM will use its best efforts to seek the best overall terms available. In
assessing the best overall terms available for any Fund transaction, MCM will
consider all factors it deems relevant, including, but not limited to, the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, MCM is
authorized to consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the
" 1934 Act")) provided to the Fund and/or other accounts over which MCM or its
affiliates exercise investment discretion. In accordance with Section 11(a) of
the 1934 Act and Rule 11a2-2(T) thereunder, and subject to any other applicable
laws and regulations, MCM and its affiliates are authorized to effect portfolio
transactions for the Fund as agent and to retain usual and customary brokerage
commissions on such transactions.
7. Records
MCM agrees to maintain and to preserve for the periods prescribed under
the 1940 Act any such records as are required to be maintained by MCM with
respect to the Fund by the 1940 Act. MCM further agrees that all records which
it maintains for the Fund are the property of the Fund and it will promptly
surrender any of such records upon request.
8. Standard of Care
MCM shall exercise its best judgment in rendering the services under this
Agreement. MCM shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund or the Fund's shareholders in connection
with the matters to which this Agreement relates, provided that nothing herein
shall be deemed to protect or purport to protect MCM against any liability to
the Fund or to its shareholders to which MCM would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of MCA's reckless disregard of its
obligations and duties under this Agreement. As used in this Section 8, the term
"MCM" shall include any officers, directors, employees, or other affiliates of
MCM performing services with respect to the Fund.
9. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay MCM a fee at an annual rate equal to 0.85% of the average daily
net assets of the Fund. This fee shall be computed and accrued daily and payable
monthly. For the purpose of determining fees payable to MCM, the value of the
Fund's average daily net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus or Statement of Additional Information.
10. Expenses
MCM will bear all expenses in connection with the performance of its
services under this Agreement. The Fund will bear certain other expenses to be
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees and expenses of Trustees of the Trust who are not
officers, directors, or employees of MCM; Securities and Exchange Commission
fees and state blue sky qualification fees; charges of custodians and transfer
and dividend disbursing agents; the Fund's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of membership in any
industry trade groups; costs of maintenance of the Fund's existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; charges of independent pricing services; costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Fund and of the
officers or Board of Trustees of the Trust; and any extraordinary expenses. In
addition, the Fund will pay distribution fees pursuant to a Distribution Plan
adopted under Rule 12b-1 of the 1940 Act.
11. Services to Other Companies or Accounts
The investment advisory and administrative services provided by MCM to the
Fund under this Agreement are not to be deemed exclusive, and MCM, or any
affiliate thereof, shall be free to render similar services to other investment
companies and other clients (whether or not their investment objectives and
policies are similar to those of the Fund) and to engage in other activities, so
long as it services hereunder are not impaired thereby.
12. Reimbursement of Organization Expenses
The Trust hereby agrees to reimburse MCM for the organization expenses of,
and the expenses incurred in connection with, the initial offering of the shares
of the Fund, to the extent permissible.
13. Duration and Termination
This Agreement shall become effective on January 27, 2000 and shall
continue in effect, unless sooner terminated as provided herein, for two years
from such date and shall continue from year to year thereafter, provided each
continuance is specifically approved at least annually by (i) the vote of a
majority of the Board of Trustees of the Trust or (ii) a vote of a "majority"
(as defined in the 1940 Act) of the Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on sixty (60) days' written notice by the Board of Trustees of
the Trust or by vote of holders of a majority of the Fund's shares or upon
ninety (90) days' written notice by MCM. This Agreement will also terminate
automatically in the event of its "assignment" (as defined in the 1940 Act).
14. Amendment
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
an affirmative vote of (i) a majority of the outstanding voting securities of
the Fund, and (ii) a majority of the Trustees of the trust, including a majority
of Trustees who are not interested persons of any party to this Agreement, cast
in person at a meeting called for the purpose of voting on such approval, if
such approval is required by applicable law.
15. Use of the Name "Marsico"
Marsico Capital Management, LLC has consented to and granted a
non-exclusive license for the use by the Trust and by each Series thereof to the
phrase "Marsico Capital" or the identifying word "Marsico" in the name of the
Trust and of each Series or any logo or symbol authorized by Marsico Capital.
Such consent is conditioned upon the Trust's employment of Marsico Capital or
its affiliates as investment adviser to the Trust and to each Series. As between
Marsico Capital and the Trust, Marsico Capital shall control the use of such
name insofar as such name contains the phrase "Marsico Capital" or the
identifying word "Marsico." Marsico may from time to time use the phrase
"Marsico Capital" or the identifying word "Marsico" in other connection and for
other purposes, including without limitation in the names of other investment
companies, corporations or businesses that it may manage, advise, sponsor or own
or in which it may have a financial interest. Marsico Capital may require the
Trust or any Series to cease using the phrase "Marsico Capital" or the
identifying word "Marsico" in the name of the Trust or any Series or any logo or
symbol authorized by Marsico Capital if the Trust or Series ceases to employ
Marsico Capital or an affiliate thereof as investment adviser.
16. Miscellaneous
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provisions thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Delaware.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than those as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to MCM by the Trust shall be in
writing and shall be duly given if mailed or delivered to MCM at 1200 17th
Street, Suite 1300, Denver, Colorado 80202, Attn: Barbara M. Japha, or at such
other address or to such individual as shall be specified by MCM to the Trust.
Notices of any kind to be given to the Trust by MCM shall be in writing and
shall be duly given if mailed or delivered to 1200 17th Street, Suite 1300,
Denver, Colorado 80202, Attn: Christopher J. Marsico, or at such other address
or to such individual as shall be specified by the Trust to MCM.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
THE MARSICO INVESTMENT FUND
on behalf of the Marsico 21st Century Fund
By:______________________________________
Name:___________________________________
Title:____________________________________
MARSICO CAPITAL MANAGEMENT, LLC
By:______________________________________
Name:___________________________________
Title:____________________________________
AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 31st day of December, 1999, by and
between The Marsico Investment Fund, a Delaware business trust (the "Trust"),
and Sunstone Distribution Services, LLC, a Wisconsin limited liability company
(the "Distributor").
WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "Act") and is authorized to
issue shares of beneficial interests (the "Shares") in separate series with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Distributor desire to enter into an agreement
pursuant to which Distributor shall be the distributor of the Shares of the
Trust representing the investment portfolios listed on Schedule A hereto and any
additional investment portfolios the Trust and Distributor may agree upon and
include on Schedule A as such Schedule may be amended from time to time (such
investment portfolios and any additional investment portfolios are individually
referred to as a "Fund" and collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. Appointment of the Distributor.
The Trust hereby appoints the Distributor as agent for the distribution
of the Shares, on the terms and for the period set forth in this Agreement.
Distributor hereby accepts such appointment as agent for the distribution of the
Shares on the terms and for the period set forth in this Agreement.
2. Services and Duties of the Distributor.
2.1 Distributor will act as agent for the distribution of Shares in
accordance with the instructions of the Trust's Board of Trustees and the
registration statement and prospectuses then in effect with respect to the Funds
under the Securities Act of 1933, as amended (the "1933 Act").
2.2 Subject to the terms of Section 4.2, Distributor may finance
appropriate activities which it deems reasonable which are primarily intended to
result in the sale of Shares, including, but not limited to, advertising, the
printing and mailing of prospectuses to other than current shareholders, and the
printing and mailing of sales literature. Distributor may enter into servicing
and/or selling agreements with qualified broker/dealers and other persons with
respect to the offering of Shares to the public, and if it so chooses
Distributor will act only on its own behalf as principal. The Distributor shall
not be obligated to sell any certain number of Shares of any Fund.
2.3 All Shares of the Funds offered for sale by Distributor shall be
offered for sale to the public at a price per unit (the "offering price") equal
to their net asset value (determined in the manner set forth in the Funds' then
current prospectus).
2.4 Distributor shall act as distributor of the Shares in compliance in
all material respects with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted
pursuant to the 1940 Act, by the Securities and Exchange Commission (the
"Commission") and the NASD. Distributor shall provide to the Trust's Board of
Trustees, at least quarterly, a report of its expenses incurred pursuant to this
Agreement.
3. Duties and Representations of the Trust.
3.1 The Trust represents that it is registered as an open-end management
investment company under the 1940 Act and that it has and will continue to act
in conformity with its Declaration of Trust, By-Laws, its registration statement
as may be amended from time to time and resolutions and other instructions of
its Board of Trustees and has and will continue to comply with all applicable
laws, rules and regulations including without limitation the 1933 Act, the 1934
Act, the 1940 Act, the laws of the states in which shares of the Funds are
offered and sold, and the rules and regulations thereunder.
3.2 The Trust shall take or cause to be taken all necessary action to
register and maintain the registration of the Shares under the 1933 Act for sale
as herein contemplated and shall pay all costs and expenses in connection with
the registration of Shares under the 1933 Act, and be responsible for all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Trust hereunder.
3.3 The Trust shall execute any and all documents and furnish any and all
information and otherwise take all actions which may be reasonably necessary in
the discretion of the Trust's officers in connection with the qualification of
the Shares for sale in such states as Distributor and the Trust may approve,
shall maintain the registration of a sufficient number or amount of shares
thereunder, and shall pay all expenses which may be incurred in connection with
such qualification.
3.4 The Trust shall, at its expense, keep the Distributor fully informed
with regard to its affairs. In addition, the Trust shall furnish Distributor
from time to time such information with respect to the Trust and the Shares as
Distributor may reasonably request, and the Trust warrants that the statements
contained in any such information shall be true and correct. The Trust
represents that it will not use or authorize the use of any advertising or sales
material unless and until such materials have been approved and authorized for
use by the Distributor.
3.5 The Trust represents to Distributor that all registration statements
and prospectuses of the Trust filed or to be filed with the Commission under the
1933 Act with respect to the Shares have been and will be prepared in conformity
with the requirements of the 1933 Act, the 1940 Act, and the rules and
regulations of the Commission thereunder. As used in this Agreement the terms
"registration statement" and "prospectus" shall mean any registration statement
and prospectus (together with the related statement of additional information)
at any time now or hereafter filed with the Commission with respect to any of
the Shares and any amendments and supplements thereto which at any time shall
have been or will be filed with said Commission. The Trust represents and
warrants to Distributor that any registration statement and prospectus, when
such registration statement becomes effective, will contain all statements
required to be stated therein in conformity with the 1933 Act, the 1940 Act and
the rules and regulations of the Commission; that all information contained in
the registration statement and prospectus will be true and correct in all
material respects when such registration statement becomes effective; and that
neither the registration statement nor any prospectus when such registration
statement becomes effective will include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Trust agrees to file from time
to time such amendments, supplements, reports and other documents as may be
necessary or required in order to comply with the 1933 Act and the 1940 Act and
in order that there may be no untrue statement of a material fact in a
registration statement or prospectus, or necessary or required in order that
there may be no omission to state a material fact in the registration statement
or prospectus which omission would make the statements therein misleading.
3.6 The Trust shall not file any amendment to the registration statement
or supplement to any prospectus without giving Distributor reasonable notice
thereof in advance and if the Distributor declines to assent to such amendment
(after a reasonable time), the Trust may terminate this Agreement forthwith by
written notice to the Distributor without payment of any penalty. If the Trust
shall not propose an amendment or amendments and/or supplement or supplements
promptly after receipt by the Trust of a written request in good faith from
Distributor to do so, Distributor may, at its option, immediately terminate this
Agreement. In addition, if, at any time during the term of this Agreement, the
Distributor requests the Trust to make any change in its governing instruments
or in its methods of doing business which are necessary in order to comply with
any requirement of applicable law or regulation, and the Trust fails (after a
reasonable time) to make any such change as requested, the Distributor may
terminate this Agreement forthwith by written notice to the Trust without
payment of any penalty. Nothing contained in this Agreement shall in any way
limit the Trust's right to file at any time any amendments to any registration
statement and/or supplements to any prospectus, of whatever character, as the
Trust may deem advisable, such right being in all respects absolute and
unconditional.
3.7 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by circumstances of any kind, the Trust's
officers may decline to accept any orders for, or make any sales of, any Shares
until such time as they deem it advisable to accept such orders and to make such
sales and the Trust shall advise Distributor promptly of such determination.
3.8 The Trust agrees to advise the Distributor promptly in writing:
(i) of any correspondence or other communication by the Commission
or its staff relating to the Funds including requests by the Commission for
amendments to the registration statement or prospectuses;
(ii) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or prospectuses
then in effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectuses or which
requires the making of a change in such registration statement or prospectuses
in order to make the statements therein not misleading; and
(iv) of all actions taken by the Commission with respect to any
amendments to any registration statement or prospectus which may from time to
time be filed with the Commission.
4. Compensation.
4.1 For the services provided pursuant to this Agreement, and subject to
the limitations contained in Section 4.3 below, the Funds will pay to the
Distributor a fee, payable monthly in arrears, as specified in Schedule B
hereto; provided, however, that such compensation shall be subject to an
aggregate minimum annual fee of $25,000 per Fund.
4.2 In addition to the compensation payable pursuant to Section 4.1, and
subject to the limitations contained in Section 4.3 below, the Funds will
reimburse the Distributor or pay directly, at the Distributor's discretion, the
Distributor's (i) out-of-pocket expenses incurred in connection with activities
primarily intended to result in the sale of Shares including, without
limitation, typesetting, printing and distribution of prospectuses and
shareholder reports, production, printing and distribution of sales materials
and forms, placement of media advertising, engagement of designers, free lance
writers and public relation firms, long distance telephone lines, services and
charges, postage, overnight delivery charges, storage of inventory, regulatory
filing fees and travel, lodging and meals, and (ii) amounts paid by Distributor
to dealers or other persons entering into a selling or servicing agreement with
Distributor or the Trust.
4.3 Subject to and calculated in accordance with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., if during any
annual period the total of the compensation payable and out-of-pocket
reimbursements under Sections 4.1 and 4.2 to the Distributor exceeds 0.25% of a
Fund's average daily net assets, the Distributor will rebate that portion of its
fee and expenses necessary to result in the total of (i) and (ii) above not
exceeding 0.25% of the Fund's average daily net assets. The payment of
compensation and reimbursement of expenditures is authorized pursuant to the
Trust's Distribution Plan under Rule 12b-1 under the 1940 Act and is contingent
upon the continued effectiveness of the Trust's Distribution Plan. It is
understood that the Trust's investment adviser will reimburse the Distributor
(or pay directly at the discretion of the Distributor) any distribution expenses
and compensation incurred by Distributor in excess of the amounts, if any, the
Trust, on behalf of a Fund, pays to Distributor.
5. Indemnification.
5.1(a) The Trust authorizes Distributor to use any prospectus, in the form
furnished to Distributor from time to time, in connection with the sale of
Shares. The Trust shall indemnify, defend and hold the Distributor, and each of
its present or former directors, officers, employees, representatives and any
person who controls or previously controlled the Distributor within the meaning
of Section 15 of the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses (including the costs
of investigating or defending any alleged losses, claims, demands, liabilities,
damages or expenses and any counsel fees incurred in connection therewith) which
Distributor, each of its present and former directors, officers, employees or
representatives or any such controlling person, may incur under the 1933 Act,
the 1934 Act, any other statute (including Blue Sky laws) or any rule or
regulation thereunder, or under common law or otherwise, arising out of or based
upon any untrue statement, or alleged untrue statement, of a material fact
contained in the registration statement or any prospectus, as from time to time
amended or supplemented, or an annual or interim report to shareholders, or
arising out of or based upon any omission, or alleged omission, to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Trust's
obligation to indemnify Distributor and any of the foregoing indemnitees shall
not be deemed to cover any losses, claims, demands, liabilities, damages or
expenses arising out of any untrue statement or alleged untrue statement or
omission or alleged omission made in the registration statement, prospectus, or
annual or interim report in reliance upon and in conformity with information
relating to the Distributor and furnished to the Trust or its counsel by
Distributor for the purpose of, and used in, the preparation thereof; and
provided further that the Trust's agreement to indemnify Distributor and any of
the foregoing indemnitees shall not be deemed to cover any liability to the
Trust or its shareholders to which Distributor would otherwise be subject by
reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement. The Trust's agreement to indemnify
the Distributor, and any of the foregoing indemnitees, as the case may be, with
respect to any action, is expressly conditioned upon the Trust being notified of
such action brought against Distributor, or any of the foregoing indemnitees,
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Distributor, or such person, such notification to be given by letter or by
telegram addressed to the Trust's President, but the failure so to notify the
Trust of any such action shall not relieve the Trust from any liability which
the Trust may have to the person against whom such action is brought by reason
of any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of the Trust's indemnity agreement contained
in this Section 5.1.
5.1(b) The Trust shall be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Trust elects to assume the defense, such defense shall be conducted by counsel
chosen by the Trust and approved by the Distributor, which approval shall not be
unreasonably withheld. In the event the Trust elects to assume the defense of
any such suit and retain such counsel, the indemnified defendant or defendants
in such suit shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of any such suit, or
in case the Distributor does not, in the exercise of reasonable judgment,
approve of counsel chosen by the Trust, the Trust will reimburse the indemnified
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor and them. The Trust's
indemnification agreement contained in this Section 5.1 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Distributor, and each of its present or former directors, officers,
employees, representatives or any controlling person, and shall survive the
delivery of any Shares and the termination of this Agreement. This agreement of
indemnity will inure exclusively to the Distributor's benefit, to the benefit of
each of its present or former directors, officers, employees or representatives
or to the benefit of any controlling persons and their successors. The Trust
agrees promptly to notify Distributor of the commencement of any litigation or
proceedings against the Trust or any of its officers or directors in connection
with the issue and sale of any of the Shares.
5.2(a) Distributor shall indemnify, defend and hold the Trust, and each of
its present or former trustees, officers, employees, representatives, and any
person who controls or previously controlled the Trust within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses (including the costs
of investigating or defending any alleged losses, claims, demands, liabilities,
damages or expenses, and any counsel fees incurred in connection therewith)
which the Trust, and each of its present or former trustees, officers,
employees, representatives, or any such controlling person, may incur under the
1933 Act, the 1934 Act, any other statute (including Blue Sky laws) or any rule
or regulation thereunder, or under common law or otherwise, arising out of or
based upon any untrue, or alleged untrue, statement of a material fact contained
in the Trust's registration statement or any prospectus, as from time to time
amended or supplemented, or annual or interim report to shareholders or the
omission, or alleged omission, to state therein a material fact required to be
stated therein or necessary to make the statement not misleading, but only if
such statement or omission was made in reliance upon, and in conformity with,
information relating to the Distributor and furnished to the Trust or its
counsel by the Distributor for the purpose of, and used in, the preparation
thereof. Distributor's agreement to indemnify the Trust and any of the foregoing
indemnitees shall not be deemed to cover any liability to Distributor to which
the Trust would otherwise be subject by reason of its willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties, under this Agreement. The
Distributor's Agreement to indemnify the Trust, and any of the foregoing
indemnitees, is expressly conditioned upon the Distributor's being notified of
any action brought against the Trust, and any of the foregoing indemnitees, such
notification to be given by letter or telegram addressed to Distributor's
President, within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon the Trust or such person, but the failure so to notify Distributor of any
such action shall not relieve Distributor from any liability which Distributor
may have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, otherwise than on account of
Distributor's indemnity agreement contained in this Section 5.2(a).
5.2(b) The Distributor shall be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Distributor elects to assume the defense, such defense shall be conducted by
counsel chosen by the Distributor and approved by the Trust, which approval
shall not be unreasonably withheld. In the event the Distributor elects to
assume the defense of any such suit and retain such counsel, the indemnified
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by them. If the Distributor does not elect to assume
the defense of any such suit, or in case the Trust does not, in the exercise of
reasonable judgment, approve of counsel chosen by the Distributor, the
Distributor will reimburse the indemnified person or persons named as defendant
or defendants in such suit, for the fees and expenses of any counsel retained by
the Trust and them. The Distributor's indemnification agreement contained in
this Section 5.2 and the Distributor's representations and warranties in this
Agreement shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Trust, and each of its present or
former directors, officers, employees, representatives or any controlling
person, and shall survive the delivery of any Shares and the termination of this
Agreement. This Agreement of indemnity will inure exclusively to the Trust's
benefit, to the benefit of each of its present or former directors, officers,
employees or representatives or to the benefit of any controlling persons and
their successors. The Distributor agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against the Distributor or any of
its officers or directors in connection with the issue and sale of any of the
Shares.
6. Offering of Shares.
No Shares shall be offered by either the Distributor or the Trust under
any of the provisions of this Agreement and no orders for the purchase or sale
of such Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act, or if and so long as the current prospectus as required by Section 10 of
the 1933 Act, as amended, is not on file with the Commission; provided, however,
that nothing contained in this paragraph 6 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any shareholder in accordance with the provisions of the prospectus or
Declaration of Trust.
7. Term.
----
7.1 This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to that Fund is executed. Unless sooner terminated as provided herein,
this Agreement shall continue in effect with respect to each Fund until December
22, 2000. Thereafter, if not terminated, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Trust's
Board of Trustees or (ii) the vote of a majority (as defined in the 1940 Act) of
the outstanding voting securities of a Fund, and provided that in either event
the continuance is also approved by the Distributor and by a majority of the
Trust's Board of Trustees who are not "interested persons" (as defined in the
1940 Act) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval.
7.2 This Agreement may be terminated without penalty with respect to a
particular Fund (1) through a failure to renew this Agreement at the end of a
term, (2) upon mutual consent of the parties, or (3) on no less than thirty (30)
days' written notice, by the Trust's Board of Trustees, by vote of a majority
(as defined with respect to voting securities in the 1940 Act) of the
outstanding voting securities of a Fund, or by the Distributor (which notice may
be waived by the party entitled to such notice). In addition, this Agreement may
be terminated at any time, without penalty, with respect to a particular Fund by
vote of a majority of the members of the Board of Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and have no direct
or indirect financial interest in the operation of the Trust's Service and
Distribution Plan or in this Agreement. The terms of this Agreement shall not be
waived, altered, modified, amended or supplemented in any manner whatsoever
except by a written instrument signed by the Distributor and the Trust. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act).
8. Miscellaneous.
8.1 The services of the Distributor rendered to the Funds are not deemed
to be exclusive. The Distributor may render such services and any other services
to others, including other investment companies. The Trust recognizes that from
time to time directors, officers, and employees of the Distributor may serve as
directors, trustees, officers and employees of other entities (including other
investment companies), that such other entities may include the name of the
Distributor as part of their name and that the Distributor or its affiliates may
enter into distribution, administration, fund accounting, transfer agent or
other agreements with such other entities.
8.2 Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records relative
to the Funds and prior, present or potential shareholders of the Trust (and
clients of said shareholders), and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval may not be withheld where the Distributor may be exposed to civil or
criminal proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, when subject to governmental or
regulatory audit or investigation, or when so requested by the Trust. Records
and information which have become known to the public through no wrongful act of
the Distributor or any of its employees, agents or representatives shall not be
subject to this paragraph.
8.3 This Agreement shall be governed by Wisconsin law (except as to
Section 8.4 hereof which shall be construed in accordance with Delaware law). To
the extent that the applicable laws of the State of Wisconsin, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control, and nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or order of the Commission
thereunder. Any provision of this Agreement which may be determined by competent
authority to be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
8.4 This Agreement is executed by or on behalf of the Trust and the
obligations hereunder are not binding upon any of the Trustees, officers or
shareholders of the Trust individually but are binding only upon the Funds to
which such obligations pertain and the assets and property of such Funds.
8.5 Any notice required or to be permitted to be given by either party to
the other shall be in writing and shall be deemed to have been given when sent
by registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Distributor shall be sent to Sunstone Distribution
Services, LLC, 207 East Buffalo Street, Suite 400, Milwaukee, WI, 53202,
Attention: Miriam M. Allison, and notice to the Trust shall be sent to The
Marsico Investment Fund, 1200 17th Street, Suite 1300, Denver, Colorado 80202,
Attention: Barbara M. Japha.
8.6 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original agreement but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
THE MARSICO INVESTMENT FUND
(the "Trust")
By: ______________________________________
Vice President
SUNSTONE DISTRIBUTION SERVICES, LLC
(the "Distributor")
By: ______________________________________
Miriam M. Allison
President
<PAGE>
Amended and Restated
Schedule A
to the
Amended and Restated Distribution Agreement
by and between
The Marsico Investment Fund
and
Sunstone Distribution Services, LLC
Intending to be legally bound, the undersigned hereby amend and restate Schedule
A to the aforesaid Agreement as follows effective as of the date set forth
below:
Name of Funds
The Marsico Focus Fund
The Marsico Growth & Income Fund
The Marsico 21st Century Fund
Dated and effective this 31st day of January, 2000.
THE MARSICO INVESTMENT FUND SUNSTONE FINANCIAL GROUP, INC.
By: __________________________ By: _____________________________
Its: __________________________ Its: _____________________________
<PAGE>
Amended and Restated
Schedule B
to the
Amended and Restated Distribution Agreement
by and between
The Marsico Investment Fund
and
Sunstone Distribution Services, LLC
Intending to be legally bound, the undersigned hereby amend and restate Schedule
B to the aforesaid Agreement as follows effective as of the date set forth
below:
Fees
- ----
Name of Fund Average Net Assets
- ------------- ------------------
Focus Fund Up to $250 Million 2.0 basis points
$250 Million to $500 Million 1.0 basis points
$500 Million to $1 Billion 0.5 basis points
Over $1 Billion 0.3 basis point
Growth & Income Fund Up to $250 Million 2.0 basis points
$250 Million to $500 Million 1.0 basis points
$500 Million to $1 Billion 0.5 basis points
Over $1 Billion 0.3 basis point
21st Century Fund Up to $250 Million 2.0 basis points
$250 Million to $500 Million 1.0 basis points
$500 Million to $1 Billion 0.5 basis points
Over $1 Billion 0.3 basis point
Dated and effective this 31st day of January, 2000.
THE MARSICO INVESTMENT FUND SUNSTONE FINANCIAL GROUP, INC.
By: __________________________ By: _____________________________
Its: __________________________ Its: _____________________________
Amended and Restated
Schedule B
to the
Administration Agreement
by and between
The Marsico Investment Fund
and
Sunstone Financial Group, Inc.
Intending to be legally bound, the undersigned hereby amend and restate Schedule
B to the aforesaid Agreement as follows effective as of the date set forth
below:
Name of Fund Minimum
Annual Fee Average Net Assets Annual Fees
- ------------ ------------------ -----------
Focus Fund Up to $50 Million 12.0 basis points
$45,000 $50 Million to $100 Million 6.0 basis points
$100 Million to $250 Million 3.0 basis points
$250 Million to $750 Million 1.0 basis points
Over $750 Million 0.5 basis point
Growth & Income Fund Up to $50 Million 12.0 basis points
$45,000 $50 Million to $100 Million 6.0 basis points
$100 Million to $250 Million 3.0 basis points
$250 Million to $750 Million 1.0 basis points
Over $750 Million 0.5 basis points
21st Century Fund Up to $50 Million 12.0 basis points
$45,000 $50 Million to $100 Million 6.0 basis points
$100 Million to $250 Million 3.0 basis points
$250 Million to $750 Million 1.0 basis points
Over $750 Million 0.5 basis points
The minimum annual fee is subject to an annual escalation of five
percent (5%), which escalation shall be effective commencing one year from the
effective date of each Fund and the corresponding date each year thereafter. No
amendment of this Schedule B shall be required with each escalation. The
foregoing fee schedule assumes a single class of shares for each Fund.
Additional fees shall apply when adding any additional Fund(s) and/or classes
including compensation for the Administrator's services in connection with the
organization of the new Fund(s) or classes. The Administrator shall provide such
services and be entitled to such compensation as the parties may mutually agree
in writing.
2. Out-of-Pocket and Other Related Expenses
The Trust shall also pay/reimburse the Administrator's out-of-pocket and other
related expenses. Out-of-pocket expenses include, but are not limited to,
travel, lodging and meals in connection with travel in connection with Board
meetings and otherwise on behalf of the Trust, programming and related expenses
(previously incurred or to be incurred by Administrator) in connection with
providing electronic transmission of data between the Administrator and the
Funds' other service providers, brokers, dealers and depositories, fees and
expenses of pricing services, fees of research services including Lexis/Nexis,
Morningstar and Lipper, NASDAQ and other service interface fees, EDGAR related
fees, long distance telephone charges, and photocopying, faxes, postage and
overnight delivery expenses.
(a) Edgar Filing Production Management Fees
Annual Registration Statements (e.g., 485) $1,000
Follow-up filings to Annual Registration Statements, $850
excluding 497J (see below)
Certification of No Change to Prospectus and/or SAI $300
(497J)
Other $250 minimum
Dated and effective this 31st day of January, 2000.
THE MARSICO INVESTMENT FUND SUNSTONE FINANCIAL GROUP, INC.
By: ___________________________ By: ______________________________
Its: __________________________ Its: _____________________________
Amended and Restated Schedule C
to the
Transfer Agency Agreement
by and between
The Marsico Investment Fund
and
Sunstone Financial Group, Inc.
Fee Schedule
Intending to be legally bound, the undersigned hereby amend and restate Schedule
C to the aforementioned Agreement as follows, effective as of the date set forth
below:
Services
The following fees are charged for shareholder services:
Base fees
o Open account fee (per year)
o No load equity and non-daily accrual fixed income funds $ 8.50
o Additional for 12b-1 fee $ 0.75
o Additional for front-end load $ 1.50
o Additional for CDSC or back-end load $ 2.00
o Money market and daily accrual fixed income funds $ 11.00
o Additional for 12b-1 fee $ 0.75
o Additional for front-end load $ 1.50
o Additional for CDSC or back-end load $ 2.00
o Closed account fee (per year) $ 3.00
o Monthly base (per fund)
o One to three funds in fund family $1,500
o 4 or more funds in fund family $1,000
o Add for multiclass (per class) 25%
Account maintenance fees (per occurrence)
o New account set up $ 3.00
o Financial transactions $ 1.50
o Maintenance transactions $ 1.00
o Research/correspondence $ 2.50
o Transfer on death (TOD) set-up $ 7.50
o Fund/SERV
o Initial set-up per fund family $3,500
o Set-up fee per subsequent CUSIP $1,000
o New account set-up $ 1.00
o Per transaction - no load fund $ 0.25
o Per transaction - load fund $ 0.35
o Adjustments and rebills $ 2.50
o Fund/SERV direct charges at cost
o Commission/SERV (per check) $ 0.25
o ACH/AIP/SWP/automatic exchanges
o Set-up $ 1.00
o Per transaction $ 0.25
o Withholding per eligible account per year $ 0.25
o Account transcripts older than 2 years
(may be charged to shareholders) $ 5.00
o Locating lost shareholders $ 8.00
o Postal clean up per account $ 3.00
o Tax ID number solicitation $ 2.50
Shareholder servicing fees
o Telephone calls (per call) $ 2.50
o Annual maintenance per omnibus account $150
Tax and retirement fees
o Retirement accounts (IRA/Roth/others)
o Annual maintenance per account (may be charged to shareholders) $12.50
o Account distribution (may be charged to shareholders) $12.50
o IRA transfer/rollover $ 7.50
o Required minimum distribution (age 701/2)
o Correspondence letters $ 2.50
o Per calculation $ 7.50
o Removal of excess contributions
o Correspondence letters $ 2.50
o Per calculation $ 7.50
o Other solicitation letters
o Beneficiary information $ 2.50
o Birthday information $ 2.50
o Retirement plan documents as quoted
o Transfer on Death documents as quoted
Document Services
o Per statement, confirmation and check processing $ 0.25
o Per tax form processing $ 0.25
o Per label printing for proxy or marketing purposes $ 0.10
o Bulk mailings/insert handling charge
o 1 insert $ 0.06
o 2-3 inserts $ 0.08
o 4 or more inserts as quoted
o Production of ad hoc reports starting at $100
Optional Shareholder Services
o Telephone follow-up on incomplete transactions $ 2.50
o Average cost calculation per eligible account $ 0.25
o Dedicated representative monthly fee $5,800
o Weekend shareholder services (8 hours)
o Daily fee (minimum 3 phone representatives) $2,000
o Additional representatives (each) $ 400
o Additional hours more than 8 (per representative/hour) $ 75
o Customized reorder form tracking
o Base fee per project $ 300
o Per item $ 0.08
o Special projects fees (per representative/hour) $ 50
Money market exchange vehicles
o One-time set up per money market fund used $2,000 o Monthly base fee per money
market fund used $ 650 o Money market checkbooks at cost o Signature
verification of check writing $ 2.00
Forms and Applications
o Standard applications and forms in electronic format no charge
o Customized forms as quoted
Sunstone 4.promptSM Services (monthly fees)
o Automated Account Information and Prospectus Service
o Monthly maintenance fee $ 350
o One time set up fee $3,750
o Customized services (per toll-free number)
o Each additional 10 second greeting $50.00 plus recording o Each additional
10 second intramenu announcement $40.00 plus
recording
o Pricing script per market index $25.00 plus recording
o Customized performance script $50.00 plus recording
o Changes in announcements at cost
Sunstone 4.netSM Services
o Sunstone 4.netSM Adviser Services
o Set up fee (per location) $5,000
o Monthly maintenance (per fund family) $ 500
o Sunstone 4.netSM RIA/Broker Services
o Set up fee (per fund family) $6,000
o Monthly maintenance
o 1-10 RIA/broker representatives $ 150
o 11-25 RIA/broker representative $ 250
o 26-50 RIA/broker representatives $ 400
o 51-100 RIA/broker representatives $ 750
o over 100 RIA/broker representatives $1,000
o Sunstone 4.netSM Shareholder Services with transactions
o Set up fee (per fund family) $12,000
o Monthly maintenance
o Less than 5,000 total shareholder accounts $ 350
o 5,000 to 25,000 total shareholder accounts $ 500
o 25,001 to 50,000 total shareholder accounts $ 750
o over 50,000 total shareholder accounts $1,000
<PAGE>
o Sunstone 4.emailSM Services
o Set up fee (per fund family) $ 8,000
o Monthly maintenance
o Less than 5,000 total accounts $ 200
o 5,000 to 25,000 total accounts $ 300
o 25,001 to 50,000 total accounts $ 500
o over 50,000 accounts $ 750
o Undeliverable e-mail follow up (per occurrence) $ 5.00
o Processing (per e-mail sent) $ 0.10
o Electronic "insert " charges
o Per link to document $ 150
o Formatting insert for electronic distribution $150/hour
Reprocessings due to NAV errors
This charge applies when shareholder transactions are required to be reprocessed
as a result of NAV errors caused by the adviser or fund accountant unaffiliated
with Sunstone. This charge is not a fund expense and is billed to the adviser.
o Base fee (per occurrence, per day, per fund) $ 750
o Transaction fee $ 1.00
Fund/SERV Access
o Use of Sunstone Fund/SERV membership (per fund/per year) o First three funds
in fund family $2,000 o 4 or more funds $1,000
Custom programming
Additional fees at $150 per hour or quoted by project may apply for special
programming to meet your servicing requirements or to create custom reports.
Out-of-Pocket Expenses
Document Charges
o Copying charges (per page) $ 0.15
o Facsimile charges (per fax) $ 1.25
o Inventory and records storage $20.00/pallet
Supplies and Services
o Statement paper, check stock, envelopes, tax forms at cost
o Postage and express delivery charges at cost
o Tape/disk storage at cost
o Telephone and long distance at cost
o P.O. box rental at cost
o Toll-free number at cost
Bank Charges
o Bank account service fees and any other bank charges at cost o outgoing wire
fee varies by bank o Non-sufficient funds varies by bank o Stopped check on
money market funds $25.00
Premium Services
Certain premium services may be purchased on an as-needed basis. Fees for
premium services will be based on Sunstone's current rate at the time services
are purchased.
This Amended and Restated Schedule C to Transfer Agency Agreement is dated and
effective this 1st day of January, 2000.
THE MARSICO INVESTMENT FUND
By:_________________________
Its:_________________________
SUNSTONE FINANCIAL GROUP, INC.
By:_________________________
Its:_________________________
DECHERT PRICE & RHOADS
1775 EYE STREET, N.W.
WASHINGTON, DC 20006-2401
TELEPHONE: 202-261-3300
FACSIMILE: 202-261-3333
January 27, 2000
The Marsico Investment Fund
1200 17th Street
Suite 1300
Denver, Colorado 80202
Re: Marsico 21st Century Fund
Dear Sirs:
We have acted as counsel for The Marsico Investment Fund
("Registrant") and its series, Marsico 21st Century Fund ("Fund"), and are
familiar with Registrant's registration statement with respect to the Fund under
the Investment Company Act of 1940, as amended, and with the registration
statement relating to its shares under the Securities Act of 1933, as amended
(collectively, "Registration Statement"). Registrant is organized as a business
trust under the laws of Delaware.
We have examined Registrant's Declaration of Trust and other
materials relating to the authorization and issuance of shares of beneficial
interest of Registrant, Post-Effective Amendment No. 3 to the Registration
Statement and such other documents and matters as we have deemed necessary to
enable us to give this opinion.
Based upon the foregoing, we are of the opinion that the Fund's shares
proposed to be sold pursuant to Post-Effective Amendment No. 3 to the
Registration Statement, when it is made effective by the Securities and Exchange
Commission, will have been validly authorized and, when sold in accordance with
the terms of such Amendment and the requirements of applicable federal and state
law and delivered by Registrant against receipt of the net asset value of the
shares of the Fund, as described in Post-Effective Amendment No. 3 to the
Registration Statement, will have been legally and validly issued and will be
fully paid and non-assessable by Registrant.
We hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 3 to the Registration Statement, to be filed with
the Securities and Exchange Commission in connection with the continuous
offering of the Fund's shares of beneficial interest, as indicated above, and to
references to our firm, as counsel to Registrant, in the Fund's prospectus and
Statement of Additional Information to be included in Post-Effective Amendment
No. 3 to the Registration Statement and in any revised or amended versions
thereof, until such time as we revoke such consent.
Very truly yours,
/s/ Dechert Price & Rhoads
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this
Registration Statement on Form N-1A of our report dated November 3, 1999,
relating to the financial statements and financial highlights which appears in
the September 30, 1999 Annual Report to Shareholders of The Marsico Investment
Fund, which is also incorporated by reference into the Registration Statement.
We also consent to the references to us under the headings "Financial
Highlights", "Independent Accountants" and "Financial Statements" in such
Registration Statement.
PricewaterhouseCoopers LLP
Denver, Colorado
January 25, 2000
DISTRIBUTION AND SERVICE PLAN
OF THE MARSICO INVESTMENT FUND
WHEREAS, The Marsico Investment Fund (the "Trust") engages in business as
an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, shares of beneficial interest of the Trust have been divided into
separate series of shares, such series being set forth and identified on
Schedule A, which is attached hereto and made a part hereof (the "Funds"); and
WHEREAS, the Trust desires to adopt, on behalf of the Funds, a
Distribution and Service Plan pursuant to Rule 12b-1 under the Act (the "Plan"),
and the Trustees of the Trust have determined that there is a reasonable
likelihood that adoption of the Distribution and Service Plan will benefit the
Trust, the Funds and their respective shareholders;
NOW THEREFORE, the Trust on behalf of the Funds hereby agrees to the terms
of the Plan, in accordance with Rule 12b-1 under the Act on the following terms
and conditions:
1. The Funds shall pay fees for the distribution of their shares and for
services to shareholders of the Funds at the annual rate of .25% of each
respective Funds' average daily net assets. Such fee shall be calculated and
accrued daily and paid monthly or at such other intervals as the Trustees shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan shall be paid in
connection with any activities or expenses primarily intended to result in the
sale of the shares of the Funds, including, but not limited to, compensation to
registered representatives of broker-dealers that have entered into a Dealer
Agreement with the Funds' Distributor and to financial institutions and other
entities that make shares of the Funds available to their customers;
compensation to and expenses of the Funds' Distributor; telephone expenses;
interest expense; printing of prospectuses and reports for other than existing
shareholders; preparation, printing and distribution of sales literature and
advertising materials; and profit on the foregoing; in addition, a portion of
such amount may be paid for account maintenance and personal service to
shareholders (the "Service Fee").
3. This Plan shall not take effect with respect to a Fund until it has
been approved by a vote of at least a majority (as defined in the Act) of the
outstanding voting securities of such Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Trustees of
the Trust and (b) those Trustees of the Trust who are not "interested persons"
of the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Trustees"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. This Plan of Distribution shall continue in full force and effect as to
the Funds for so long as such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in paragraph 4.
6. The Trustees of the Trust shall be provided and shall review at least
quarterly, a written report of the amounts expended under this Plan and the
purposes for which such expenditures were made.
7. This Plan may be terminated as to the Funds at any time, without
payment of any penalty, by vote of a majority of the Rule 12b-1 Trustees, or by
a vote of a majority of the outstanding voting securities of the Funds on not
more than 30 days' written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of the
distribution fee (including any Service Fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
10. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
<PAGE>
Schedule A
to the
Distribution and Service Plan
of
The Marsico Investment Fund
Name of Funds
The Marsico Focus Fund
The Marsico Growth & Income Fund
The Marsico 21st Century Fund
Date of this Schedule A: January 27, 2000
