Edgewood Growth Fund

Edgewood Growth Fund Shareholder Letter - April 30, 2017

Dear Shareholders:

The Fund's performance was +18.17% (Institutional Shares) and +17.94% (Retail Shares) for the six months ended April 30, 2017. The performance of the S&P 500 Growth Index was +13.59% and the S&P 500 Index was +13.32% in the same period of time. Looking at the trailing twelve months, the Fund appreciated by 25.98% (Institutional Shares) and 25.56% (Retail Shares). In the same trailing twelve month period, the S&P 500 Growth Index appreciated by 19.15% and the S&P 500 Index by 17.92%.

Over the last six months, the top portfolio contributors were Illumina Inc., Celgene Corp., The Priceline Group Inc., Amazon.com Inc., and NVIDIA Corp. Illumina Inc. has introduced more innovation in the gene sequencing market which we think improves their total addressable market size. Perhaps needless to say, that information was very well received by investors. We remain enthusiastic about the company's long term prospects. Celgene Corp. continued to generate very solid sales and earnings growth, which we believe will continue for the foreseeable future. We have seen an acceleration in gross bookings at The Priceline Group Inc. in recent quarters reflective of their strong competitive positioning and ongoing positive share shift. Amazon.com Inc. proceeds along the path of disintermediating brick and mortar retailers, growing Amazon Web Services, and improving operating cash flow as well. Finally NVIDIA Corp. continues to benefit from the surge of interest in artificial intelligence and ongoing innovation has extended their competitive advantage in this dynamic market. As a result, sales and earnings growth has been positive. 

The top portfolio detractors over the last six months were American Tower Corp., Ecolab Inc., Nike Inc., S&P Global Inc., and Alphabet Inc. American Tower Corp. is growing their business somewhat faster than we expected. The relative underperformance can probably be attributed to the fact that it is a Real Estate Investment Trust, and expectations for interest rate hikes have gone up since the US election. Ecolab Inc.'s business is still affected by soft energy prices. This trend should reverse in upcoming years. Nike Inc. still suffered from some of the issues we wrote about six months ago, namely improved competition from Adidas and a few product missteps, however, we believe the product missteps are being reversed right now. We think the company will get back to their expected sales and earnings growth as next year unfolds. S&P Global Inc. shares were especially affected by the macro economic uncertainty ensuing from the US presidential election. Since the beginning of 2017, as some of this uncertainty has abated, S&P Global Inc.'s shares have recovered. We remain very optimistic about the company's outlook. Alphabet Inc. shares took a bit of a pause in 2016 following a great 2015 but have been rewarding so far this year. Operationally we think the company is in great shape. 

We think some of the new administration's economic proposals could be helpful to our economy. We would caution investors that the US economy is an aircraft carrier, not a speedboat. Even if only a few tax reform related measures get passed, we do not think there will be an immediate and large impact. Think small and incremental, if at all. 

As usual for Edgewood, the most important factors driving portfolio performance should be sales and earnings growth of the underlying companies, at attractive valuations. We think these factors are in place and we continue to believe we should be able to drive good long term performance. 


Edgewood Management LLC 


This material represents the manager's assessment of the portfolio and market environment at a specific point in time and should not be relied upon by the reader as research or investment advice. Holdings are subject to change. Current and future holdings are subject to risk.

Definition of Comparative Indices
The S&P 500 Growth Index is a market capitalization weighted index consisting of those stocks within the S&P 500 Index that exhibit strong growth characteristics. 

The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation.  It is a market-value weighted index (stock price times number of shares outstanding), with each stock's weight in the Index proportionate to its market value.  The "S&P 500" is one of the most widely used benchmarks of U.S. equity performance. 

Mutual fund investing involves risk, including loss of principal.  The Edgewood Growth Fund is a non-diversified fund. There can be no assurance that the Fund will achieve its stated objective. 



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