UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07655
Driehaus Mutual Funds | ||
(Exact name of registrant as specified in charter) |
25 East Erie Street | ||
Chicago, IL 60611 | ||
(Address of principal executive offices) (Zip code) |
Janet L. McWilliams
Driehaus Capital Management LLC
25 East Erie Street
Chicago, IL 60611 | ||
(Name and address of agent for service) |
Registrant's telephone number, including area code: 312-587-3800
Date of fiscal year end: December 31
Date of reporting period: December 31, 2023
Item 1. Reports to Stockholders.
(a) | The Reports to Shareholders are attached herewith. |
Table of Contents
Portfolio Managers’ Letter, Performance Overview and Schedule of Investments: | |
Driehaus Emerging Markets Growth Fund | 1 |
Driehaus Emerging Markets Small Cap Growth Fund | 8 |
Driehaus Global Fund | 15 |
Driehaus International Small Cap Growth Fund | 21 |
Driehaus Micro Cap Growth Fund | 28 |
Driehaus Small Cap Growth Fund | 35 |
Driehaus Small/Mid Cap Growth Fund | 42 |
Driehaus Event Driven Fund | 49 |
Statements of Assets and Liabilities | 56 |
Statements of Operations | 58 |
Statements of Changes in Net Assets | 60 |
Financial Highlights | 64 |
Notes to Financial Statements | 74 |
Report of Independent Registered Public Accounting Firm | 97 |
Interested and Independent Trustees of the Trust | 99 |
Officers of the Trust | 100 |
Fund Expense Examples | 101 |
Shareholder Information | 104 |
Board Considerations in Connection with the Approval of the Investment Advisory Agreement for Driehaus Mutual Funds | 106 |
Driehaus Emerging Markets Growth Fund — Portfolio Managers’ Letter
Dear Fellow Shareholders,
The Driehaus Emerging Markets Growth Fund (“Fund”) Investor class (DREGX) returned 11.24% and the Institutional class (DIEMX) returned 11.45% for the year ended December 31, 2023. The Fund outperformed its primary benchmark, the Morgan Stanley Capital International (“MSCI”) Emerging Markets Index (“Benchmark”), which returned 9.83% for the year, and it also outperformed the MSCI Emerging Markets Growth Index which returned 5.83%.
Emerging markets seemed to benefit from the easing in financial conditions which was ignited by the decline in U.S. bond yields. The one conspicuous part of the market that did not see that benefit was again China, whose equity market languished under the continued absence of confidence in economic and political conditions in the country. For emerging markets, the elephant in the room remains the situation in China, which unfortunately has changed very little in recent months aside from one policy measure. At a high-level, policy efforts have not been working well as confidence remains absent. Surveys, data from consumer companies, property sales, all say the same thing which is that Chinese consumers and businesses remain extremely risk-averse. Whether that is a result of weak economic activity over the past few years or from lack of confidence in government and policy direction in the future, we cannot definitively say, though we suspect it’s a combination of those factors. The past 15 years or so, the primary thing we’ve followed is monetary policy and liquidity metrics, because when the economic model was working, it was clear that looser liquidity would result in better activity and higher asset prices - that appears to no longer be the case. For us, data related to sentiment is now primary.
Over the course of 2023, security selection within the information technology and utilities sectors contributed to the Fund’s returns versus the Benchmark. From a geographic perspective, security selection in India and Mexico made contributions to performance versus the Benchmark in the past year.
Taiwan Semiconductor Manufacturing Co. Ltd. Sponsored ADR (Ticker: TSM-US) was a notable contributor to the Fund’s returns for the year. The company is the world’s leading advanced semiconductor foundry. The company continues to see strong growth in design activity for its future process nodes, which we see as a positive long-term indicator that the company will continue to generate attractive growth while retaining its competitive position.
Samsung Electronics Co. Ltd. (Ticker: 005930-KR) was also a significant contributor to the Fund. Samsung is a global leader in memory chips, other types of semiconductors, electronic components, and consumer products. After a steep downcycle, the memory market is starting to improve as inventory normalizes, helped by the industry’s aggressive response to curtail production, and cut capacity expansion. Additionally, HBM, a new DRAM form factor designed to speed up the transfer of data into and out of processors, has emerged as a critical enabler of AI training and inference. The demand for HBM is very strong and the industry is allocating more production to HBM, which in turn is helping to tighten the market for other memory products.
During 2023, security selection within the communication services and financials sectors detracted from the Fund’s returns versus the Benchmark. At the country level, security selection in China and Hong Kong detracted from the Fund’s performance relative to the Benchmark.
Tencent Holdings Ltd. (Ticker: 700-TK) was the most significant detractor from the Fund’s return in 2023. Tencent is an internet and social service platform that offers social networking, music, gaming and e-commerce related services. The stock underperformed due to efforts by U.S. regulators to ban TikTok, which has posed a negative sentiment to the overall China internet sector. Additionally, one of the company’s largest shareholders, Prosus, has been selling their equity stakes, which caused a further negative impact on the share price.
Another significant detractor from the Fund’s return for the year was Meituan Class B (Ticker: 3690-HK). The company is a food delivery and local services platform in China. The company’s food delivery business was negatively affected by the resurgence of COVID cases in China during the fourth quarter of 2022 and the first quarter of 2023. Additionally, the market became increasingly concerned about competition from both livestream and other local services players. There was also a sentiment overhang on Meituan as Tencent Holding Ltd completed a distribution of most of its stake in Meituan to its own shareholders in March of 2023.
1 |
As we look to 2024, we see interest rates broadly remaining supportive for emerging markets as a whole. The reason is simply that we believe U.S. interest rates will soon be in the early stages of easing and an easing in financial conditions typically benefits investments perceived as higher-risk, especially those denominated in non-USD terms. We do have a few caveats to this view, however. The first is that there is a wide variance of expectations any time the Fed commences easing in terms of what is priced in and that typically increases rate volatility and can be bad for risk. We think, ultimately, the most important point is that rates have likely peaked, and policy rates will be substantially lower a year from now than they are today. But, much of that initial easing may already be priced in, and there’s no guarantee exactly when cuts will begin. Second, one of the main channels that boosts emerging markets in cutting cycles is a weaker dollar. We are moderately dollar bearish but would highlight that a large depreciation has already happened. Moreover, many emerging market currencies have been quite strong for a while already.
Another major consideration as we look to the year ahead is the significant election calendar. There is an unusually heavy dose of major political contests this year. From an emerging markets perspective, the contests in India, Taiwan, Indonesia, Mexico and South Africa likely loom the largest for equities, with India the most important. We are relatively sanguine on the outcomes of all of those for our current positioning and anticipate the election in India to continue the positive momentum we have seen in many areas driven by public sector capital expenditures. While there is scope for some volatility in Indonesia, we anticipate continuation of the status quo there with a likely Prabowo victory. Ultimately, the most impactful election for the asset class will more than likely come in the U.S., which will impact global policy and possibly the currency and rates. The simple shorthand conclusion is that more elections create more uncertainty, and more uncertainty generally benefits the U.S. dollar. For now, other factors are more important for foreign currency markets, but we suspect that could change into the second half of 2024.
Thank you for investing alongside us in the Fund. We appreciate your continued confidence in our management capabilities.
Sincerely, | ||
Howard Schwab | Chad Cleaver | Rich Thies |
Lead Portfolio Manager | Portfolio Manager | Portfolio Manager |
Performance is historical and does not represent future results.
Please see the following performance overview page for index description.
2 |
Driehaus Emerging Markets Growth Fund
Performance Overview (unaudited)
The performance summarized below is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares. Performance data presented measures the change in the value of an investment in the Fund, assuming reinvestment of all dividends and capital gains. Average annual total return reflects annualized change. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The graph compares the results of a $10,000 investment (minimum investment) in the Fund over the last 10 fiscal year periods, with all dividends and capital gains reinvested, with the indicated indices (and dividends reinvested) for the same period.
The performance data shown represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Performance data represents the rate that an investor would have earned (or lost), during the given periods, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change. Since Fund performance is subject to change after the period-end, please call (800) 560-6111 or visit www.driehaus.com/performance for more current performance information. The gross expense ratios for the Investor Class and Institutional Class are 1.36% and 1.13%, respectively, as of the most recent prospectus dated April 30, 2023, as supplemented through the date of this report.
Average Annual Total Returns as of 12/31/23 | 1 Year | 3 Years | 5 Years | 10 Years |
Driehaus Emerging Markets Growth Fund Investor Class (DREGX) | 11.24% | -5.46% | 6.17% | 3.68% |
Driehaus Emerging Markets Growth Fund Institutional Class (DIEMX)1 | 11.45% | -5.25% | 6.40% | 3.82% |
MSCI Emerging Markets Index-N2 | 9.83% | -5.08% | 3.68% | 2.66% |
MSCI Emerging Markets Growth Index-N3 | 5.83% | -9.67% | 3.90% | 3.28% |
1 | The returns for the periods prior to July 17, 2017 (institutional share class inception date) include the performance of the investor share class. |
2 | The Morgan Stanley Capital International Emerging Markets Index-Net (MSCI Emerging Markets Index-N) is a market capitalization-weighted index designed to measure equity market performance in emerging markets. Data is in U.S. dollars and is calculated with net dividend reinvestment. Source: Morgan Stanley Capital International Inc. |
3 | The Morgan Stanley Capital International Emerging Markets Growth Index-Net (MSCI Emerging Markets Growth Index-N) is a subset of the MSCI Emerging Markets Index and includes only the MSCI Emerging Markets Index stocks which are categorized as growth stocks. Data is in U.S. dollars and is calculated with net dividend reinvestment. Source: Morgan Stanley Capital International Inc. |
3 |
Driehaus Emerging Markets Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
COMMON STOCKS — 96.49% | ||||||||
FAR EAST — 61.69% | ||||||||
India — 17.61% | ||||||||
Adani Ports & Special Economic Zone Ltd. | 1,252,366 | $ | 15,396,006 | |||||
Ambuja Cements Ltd. | 1,642,258 | 10,270,230 | ||||||
Axis Bank Ltd. | 1,169,881 | 15,482,643 | ||||||
Bharti Airtel Ltd. | 958,080 | 11,877,384 | ||||||
Cipla Ltd. | 701,774 | 10,506,233 | ||||||
Colgate-Palmolive India Ltd. | 488,625 | 14,847,856 | ||||||
DLF Ltd. | 1,975,266 | 17,225,941 | ||||||
GMR Airports Infrastructure Ltd. * | 23,764,011 | 22,984,652 | ||||||
HCL Technologies Ltd. | 1,082,564 | 19,051,784 | ||||||
HDFC Bank Ltd. | 1,507,890 | 30,875,588 | ||||||
Hindustan Aeronautics Ltd. | 616,147 | 20,754,836 | ||||||
ICICI Bank Ltd. - SP ADR 1 | 2,241,750 | 53,443,320 | ||||||
Indian Hotels Co. Ltd. | 1,023,117 | 5,386,739 | ||||||
ITC Ltd. | 3,220,772 | 17,877,709 | ||||||
KPIT Technologies Ltd. | 555,964 | 10,103,009 | ||||||
Larsen & Toubro Ltd. | 659,797 | 27,941,002 | ||||||
Max Healthcare Institute Ltd. | 2,515,763 | 20,739,371 | ||||||
NTPC Ltd. | 6,647,707 | 24,836,103 | ||||||
One 97 Communications Ltd. * | 953,841 | 7,275,265 | ||||||
Persistent Systems Ltd. | 103,178 | 9,151,896 | ||||||
Power Grid Corp. of India Ltd. | 4,513,264 | 12,855,339 | ||||||
Reliance Industries Ltd. | 1,251,480 | 38,843,375 | ||||||
Sun Pharmaceutical Industries Ltd. | 1,029,807 | 15,578,779 | ||||||
Tata Motors Ltd. | 1,546,993 | 14,493,178 | ||||||
Zomato Ltd. * | 4,313,469 | 6,402,391 | ||||||
454,200,629 | ||||||||
China — 14.70% | ||||||||
Alibaba Group Holding Ltd. 2 | 1,036,400 | 9,983,167 | ||||||
China Resources Beer Holdings Co. Ltd. | 2,802,000 | 12,295,024 | ||||||
Industrial & Commercial Bank of China Ltd. - H | 60,802,000 | 29,631,451 | ||||||
Kuaishou Technology - W 2,* | 1,115,600 | 7,590,793 | ||||||
Kweichow Moutai Co. Ltd. - A | 98,300 | 23,928,397 | ||||||
Lenovo Group Ltd. | 11,862,000 | 16,600,162 | ||||||
NetEase, Inc. | 1,392,800 | 25,128,332 | ||||||
New Oriental Education & | ||||||||
Technology Group, Inc. - SP ADR 1,* | 326,442 | 23,921,670 | ||||||
PDD Holdings, Inc. 1,* | 209,463 | 30,646,532 | ||||||
Shenzhou International Group Holdings Ltd. | 2,130,600 | 21,857,524 | ||||||
Tencent Holdings Ltd. | 3,762,545 | 142,054,409 | ||||||
Tencent Music Entertainment Group - ADR 1,* | 1,792,493 | 16,150,362 | ||||||
Trip.com Group Ltd. - ADR 1,* | 359,952 | 12,961,871 | ||||||
Vipshop Holdings Ltd. - ADR 1,* | 366,515 | 6,509,306 | ||||||
379,259,000 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Taiwan — 14.34% | ||||||||
Accton Technology Corp. | 312,000 | $ | 5,303,000 | |||||
ASMedia Technology, Inc. | 235,000 | 13,853,447 | ||||||
Chunghwa Telecom Co. Ltd. | 3,152,000 | 12,332,089 | ||||||
Delta Electronics, Inc. | 2,846,000 | 29,024,735 | ||||||
eMemory Technology, Inc. | 260,000 | 20,673,736 | ||||||
Faraday Technology Corp. | 1,604,000 | 18,586,603 | ||||||
King Slide Works Co. Ltd. | 317,000 | 9,413,344 | ||||||
King Yuan Electronics Co. Ltd. | 4,489,000 | 12,390,337 | ||||||
Lotes Co. Ltd. | 424,000 | 14,743,943 | ||||||
MediaTek, Inc. | 828,000 | 27,340,479 | ||||||
Sinbon Electronics Co. Ltd. | 447,000 | 4,350,669 | ||||||
Taiwan Semiconductor | ||||||||
Manufacturing Co. Ltd. | 669,000 | 12,825,768 | ||||||
Taiwan Semiconductor | ||||||||
Manufacturing Co. Ltd. - SP ADR 1 | | | 1,516,685 | | | | 157,735,240 | |
Wistron Corp. | 4,564,000 | 14,600,685 | ||||||
Wiwynn Corp. | 284,000 | 16,815,788 | ||||||
369,989,863 | ||||||||
South Korea — 10.53% | ||||||||
Hanwha Aerospace Co. Ltd. | 25,624 | 2,471,960 | ||||||
HPSP Co. Ltd. | 401,418 | 13,555,996 | ||||||
Kia Corp. | 335,458 | 25,942,078 | ||||||
Macquarie Korea Infrastructure Fund | 1,557,125 | 15,038,110 | ||||||
Samsung Electronics Co. Ltd. | 2,709,107 | 164,434,237 | ||||||
SK Hynix, Inc. | 461,112 | 50,324,825 | ||||||
271,767,206 | ||||||||
Indonesia — 2.08% | ||||||||
Bank Central Asia Tbk PT | 22,314,875 | 13,627,686 | ||||||
Bank Mandiri Persero Tbk PT | 101,604,000 | 39,913,869 | ||||||
53,541,555 | ||||||||
Philippines — 0.86% | ||||||||
BDO Unibank, Inc. | 5,693,610 | 13,413,680 | ||||||
International Container | ||||||||
Terminal Services, Inc. | 1,974,377 | 8,800,393 | ||||||
22,214,073 | ||||||||
Macau — 0.61% | ||||||||
Sands China Ltd. * | 5,377,200 | 15,738,879 | ||||||
Japan — 0.52% | ||||||||
Nintendo Co. Ltd. | 256,800 | 13,362,303 | ||||||
Thailand — 0.44% | ||||||||
Bangkok Dusit Medical | ||||||||
Services PCL - NVDR | 13,995,600 | 11,365,926 | ||||||
Total FAR EAST | ||||||||
(Cost $1,235,038,025) | 1,591,439,434 | |||||||
NORTH AMERICA — 12.93% | ||||||||
Mexico — 7.10% | ||||||||
Arca Continental SAB de CV | 1,947,509 | 21,295,181 | ||||||
Cemex SAB de CV - SP ADR 1,* | 1,154,237 | 8,945,337 | ||||||
Corp. Inmobiliaria Vesta SAB de CV | 5,724,600 | 22,701,523 |
Notes to Financial Statements are an integral part of this Schedule.
4 |
Driehaus Emerging Markets Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Fibra Uno Administracion SA de CV | 17,455,957 | $ | 31,353,082 | |||||
Fomento Economico Mexicano SAB de CV - SP ADR 1 | 268,810 | 35,039,384 | ||||||
Gruma SAB de CV - B | 395,250 | 7,233,021 | ||||||
Grupo Financiero Banorte SAB de CV - O | 4,752,892 | 47,889,984 | ||||||
Vista Energy SAB de CV 1,* | 293,901 | 8,673,019 | ||||||
183,130,531 | ||||||||
United States — 4.78% | ||||||||
Copa Holdings SA - A | 122,487 | 13,021,593 | ||||||
Globant SA * | 75,337 | 17,928,699 | ||||||
Laureate Education, Inc. | 78,881 | 1,081,458 | ||||||
Legend Biotech Corp. - ADR 1,* | 105,093 | 6,323,446 | ||||||
MercadoLibre, Inc. * | 13,718 | 21,558,386 | ||||||
Samsonite International SA 2,* | 3,490,600 | 11,516,266 | ||||||
Southern Copper Corp. | 253,497 | 21,818,487 | ||||||
Synopsys, Inc. * | 33,355 | 17,174,823 | ||||||
Tenaris SA - ADR 1 | 367,376 | 12,769,990 | ||||||
123,193,148 | ||||||||
Canada — 1.05% | ||||||||
Alamos Gold, Inc. - A 1 | 1,003,892 | 13,522,425 | ||||||
Cameco Corp. 1 | 316,443 | 13,638,693 | ||||||
27,161,118 | ||||||||
Total NORTH AMERICA | ||||||||
(Cost $255,909,695) | 333,484,797 | |||||||
SOUTH AMERICA — 9.13% | ||||||||
Brazil — 8.87% | ||||||||
Banco BTG Pactual SA * | 3,559,400 | 27,530,279 | ||||||
Banco do Brasil SA | 4,526,400 | 51,598,410 | ||||||
Direcional Engenharia SA | 2,180,964 | 10,038,945 | ||||||
Equatorial Energia SA | 2,212,300 | 16,274,396 | ||||||
Hapvida Participacoes e | ||||||||
Investimentos SA 2,* | 20,088,500 | 18,389,020 | ||||||
Iguatemi SA | 1,956,500 | 9,766,932 | ||||||
NU Holdings Ltd. - A 1,* | 1,526,650 | 12,716,995 | ||||||
Petroleo Brasileiro SA - | ||||||||
SP ADR 1 | 827,617 | 13,217,043 | ||||||
Raia Drogasil SA | 2,429,352 | 14,706,337 | ||||||
Rumo SA | 1,943,000 | 9,185,191 | ||||||
Telefonica Brasil SA | 963,400 | 10,582,517 | ||||||
Telefonica Brasil SA - ADR 1 | 1,110,058 | 12,144,035 | ||||||
Vale SA - SP ADR 1 | 1,424,500 | 22,592,570 | ||||||
228,742,670 | ||||||||
Argentina — 0.26% | ||||||||
Grupo Financiero Galicia SA - ADR 1,* | 386,408 | 6,671,334 | ||||||
Total SOUTH AMERICA | ||||||||
(Cost $194,638,665) | 235,414,004 | |||||||
EUROPE — 7.10% | ||||||||
United Kingdom — 1.34% | ||||||||
Shell PLC | 1,049,741 | 34,539,933 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Greece — 1.33% | ||||||||
National Bank of Greece SA * | 3,274,630 | $ | 22,751,288 | |||||
OPAP SA | 683,800 | 11,600,322 | ||||||
34,351,610 | ||||||||
Austria — 1.13% | ||||||||
Erste Group Bank AG | 721,534 | 29,225,687 | ||||||
Spain — 1.01% | ||||||||
Banco Bilbao Vizcaya | ||||||||
Argentaria SA | 2,856,750 | 26,037,164 | ||||||
Poland — 0.97% | ||||||||
Powszechny Zaklad | ||||||||
Ubezpieczen SA | 2,079,428 | 24,977,521 | ||||||
Turkey — 0.78% | ||||||||
BIM Birlesik Magazalar AS | 885,085 | 9,027,041 | ||||||
Yapi ve Kredi Bankasi AS | 16,885,879 | 11,161,152 | ||||||
20,188,193 | ||||||||
Ireland — 0.54% | ||||||||
Linde PLC 1 | 33,959 | 13,947,301 | ||||||
Russia — 0.00% | ||||||||
Polyus PJSC 1,*,^ | 63,751 | — | ||||||
Total EUROPE | ||||||||
(Cost $178,851,641) | 183,267,409 | |||||||
MIDDLE EAST — 4.74% | ||||||||
Saudi Arabia — 2.23% | ||||||||
Dr Sulaiman Al Habib Medical Services Group Co. | 168,150 | 12,726,448 | ||||||
Saudi Airlines Catering Co. | 213,234 | 7,187,407 | ||||||
Saudi Arabian Oil Co. 2 | 2,458,186 | 21,642,247 | ||||||
The Saudi National Bank | 1,551,040 | 15,996,194 | ||||||
57,552,296 | ||||||||
United Arab Emirates — 2.22% | ||||||||
Abu Dhabi Ports Co. PJSC * | 7,508,365 | 13,042,916 | ||||||
Aldar Properties PJSC | 6,511,238 | 9,478,682 | ||||||
Dubai Electricity & Water Authority PJSC | 21,419,475 | 14,346,718 | ||||||
Emaar Properties PJSC | 9,494,220 | 20,474,479 | ||||||
57,342,795 | ||||||||
Qatar — 0.29% | ||||||||
Qatar Gas Transport Co. Ltd. | 7,894,313 | 7,499,120 | ||||||
Total MIDDLE EAST | ||||||||
(Cost $115,597,067) | 122,394,211 | |||||||
AFRICA — 0.90% | ||||||||
South Africa — 0.90% | ||||||||
Standard Bank Group Ltd. | 2,026,850 | 23,107,736 | ||||||
Total AFRICA | ||||||||
(Cost $20,564,764) | 23,107,736 | |||||||
Total COMMON STOCKS | ||||||||
(Cost $2,000,599,857) | 2,489,107,591 |
Notes to Financial Statements are an integral part of this Schedule.
5 |
Driehaus Emerging Markets Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
PREFERRED STOCKS — 0.29% | ||||||||
SOUTH AMERICA — 0.29% | ||||||||
Chile — 0.29% | ||||||||
Sociedad Quimica y Minera de | ||||||||
Chile SA - SP ADR, 1.00% 1,3 | 124,596 | $ | 7,503,171 | |||||
Total SOUTH AMERICA | ||||||||
(Cost $6,441,868) | 7,503,171 | |||||||
Total PREFERRED STOCKS | ||||||||
(Cost $6,441,868) | 7,503,171 | |||||||
SHORT TERM INVESTMENTS — 3.13% | ||||||||
Northern Institutional U.S. Government Select Portfolio (Shares Class), 5.24% 4 | ||||||||
(Cost $80,637,430) | 80,637,430 | 80,637,430 | ||||||
TOTAL INVESTMENTS | ||||||||
(Cost $2,087,679,155) | 99.91 | % | $ | 2,577,248,192 | ||||
Other Assets In Excess of Liabilities | 0.09 | % | 2,256,678 | |||||
Net Assets | 100.00 | % | $ | 2,579,504,870 |
ADR American Depositary Receipt |
NVDR Non-Voting Depositary Receipt |
PCL Public Company Limited |
PJSC Public Joint Stock Company |
PLC Public Limited Company |
SP ADR Sponsored American Depositary Receipt |
1 | Foreign security denominated and/or traded in U.S. dollars. |
2 | Security is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The total value of these securities is $69,121,493, which represents 3% of Net Assets (see Note F in the Notes to Financial Statements). |
3 | Current yield is disclosed. Dividends are calculated based on a percentage of the issuer’s net income. |
4 | 7 day current yield as of December 31, 2023 is disclosed. |
^ | Security valued at fair value as determined in good faith by the Adviser, in accordance with procedures established by, and under the general supervision of, the Trust’s Board of Trustees. The security is valued using significant unobservable inputs. |
* | Non-income producing security. |
Percentages are stated as a percent of net assets.
Security Type | Percent of Net Assets | |||
Common Stocks | 96.49 | % | ||
Preferred Stocks | 0.29 | % | ||
Short Term Investments | 3.13 | % | ||
Total Investments | 99.91 | % | ||
Other Assets In Excess of Liabilities | 0.09 | % | ||
Net Assets | 100.00 | % |
Regional Weightings | Percent of Net Assets | |||
Far East | 61.69 | % | ||
North America | 16.06 | % | ||
South America | 9.42 | % | ||
Europe | 7.10 | % | ||
Middle East | 4.74 | % | ||
Africa | 0.90 | % |
Notes to Financial Statements are an integral part of this Schedule.
6 |
Driehaus Emerging Markets Growth Fund
Schedule of Investments
December 31, 2023
Industry | Percent of Net Assets | |||
Aerospace & Defense | 0.90 | % | ||
Automobiles | 1.57 | % | ||
Banks | 17.20 | % | ||
Beverages | 3.59 | % | ||
Biotechnology | 0.25 | % | ||
Broadline Retail | 2.67 | % | ||
Capital Markets | 1.65 | % | ||
Chemicals | 0.54 | % | ||
Commercial Services & Supplies | 0.28 | % | ||
Communications Equipment | 0.21 | % | ||
Construction & Engineering | 1.08 | % | ||
Construction Materials | 0.75 | % | ||
Consumer Staples Distribution & Retail | 0.92 | % | ||
Diversified Consumer Services | 0.97 | % | ||
Diversified Real Estate Investment Trusts | 1.21 | % | ||
Diversified Telecommunication Services | 1.36 | % | ||
Electric Utilities | 1.13 | % | ||
Electrical Equipment | 0.29 | % | ||
Electronic Equipment, Instruments & Components | 1.86 | % | ||
Energy Equipment & Services | 0.49 | % | ||
Entertainment | 2.11 | % | ||
Financial Services | 0.28 | % | ||
Food Products | 0.28 | % | ||
Ground Transportation | 0.36 | % | ||
Health Care Providers & Services | 2.44 | % |
Industry | Percent of Net Assets | |||
Hotels, Restaurants & Leisure | 2.02 | % | ||
Household Durables | 0.39 | % | ||
Independent Power and Renewable Electricity Producers | 0.96 | % | ||
Insurance | 0.97 | % | ||
Interactive Media & Services | 5.80 | % | ||
IT Services | 1.79 | % | ||
Metals & Mining | 2.25 | % | ||
Money Market Fund | 3.13 | % | ||
Multi-Utilities | 0.56 | % | ||
Oil, Gas & Consumable Fuels | 5.36 | % | ||
Passenger Airlines | 0.50 | % | ||
Personal Care Products | 0.58 | % | ||
Pharmaceuticals | 1.01 | % | ||
Real Estate Management & Development | 3.09 | % | ||
Semiconductors & Semiconductor Equipment | 12.68 | % | ||
Software | 1.06 | % | ||
Technology Hardware, Storage & Peripherals | 8.59 | % | ||
Textiles, Apparel & Luxury Goods | 1.30 | % | ||
Tobacco | 0.69 | % | ||
Transportation Infrastructure | 2.33 | % | ||
Wireless Telecommunication Services | 0.46 | % | ||
Other Assets In Excess of Liabilities | 0.09 | % | ||
TOTAL | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
7 |
Driehaus Emerging Markets Small Cap Growth Fund — Portfolio Managers’ Letter
Dear Fellow Shareholders,
The Driehaus Emerging Markets Small Cap Growth Fund (“Fund”) returned 10.29% for the year ended December 31, 2023. The Fund’s primary benchmark, the Morgan Stanley Capital International (“MSCI”) Emerging Markets Small Cap Index (“Benchmark”), returned 23.92% for the same period, and the Fund’s secondary benchmark, the MSCI Emerging Markets Small Cap Growth Index, returned 23.79%.
The final two months of the year brought a strong rally across risk assets, as some slight semantic changes to statements by the U.S. Federal Reserve (Fed) as well as an updated series of economic projections played the functional role for a potential policy pivot that increased expectations for initial interest rate cuts in 2024. Recent U.S. inflation data further reinforced the rising probability of a soft landing, namely the headline measure of the Consumer Price Index (CPI) at 3.1% and the headline measure of Personal Consumption Expenditures (PCE) at 3.2%.
China’s economy has reflected a push and pull between weak economic data and supportive policy moves that have not yet managed to improve sentiment. Support for the property market continues to come in a piecemeal fashion which leaves us with frequent headlines detailing the latest moves, but little in the way of durable improvement in economic data.
With regard to the Fund’s geographical performance, security selection in Thailand and an underweight allocation to South Africa were leading contributors to performance in 2023. At the sector level, security selection in the real estate and utilities sectors provided key contributions to performance relative to the Benchmark.
KPIT Technologies Limited (Ticker: 542651-IN) was the most significant contributor to the Fund’s returns for the year. KPIT Technologies Limited is an automotive software company that is helping many of the largest global original equipment manufacturers (“OEMs”) with the transition from legacy internal combustion engine models towards electric and autonomous vehicles. The company outperformed during the first quarter of 2023 on the back of strong quarterly results and the announcement of a large-scale deal with Honda, its second such deal announcement within six months.
Wiwynn Corp. (Ticker: 6669-TW) also made a notable contribution to the Fund’s returns for the year. The company is a pure-play server original design manufacturer for cloud service providers. We initiated a position in the Fund on the view that despite a slowdown in the general server market, the company was well-placed to benefit from growth supplying AI servers in the coming years given its key customer relationships, strong design capability, and global manufacturing capabilities. The company’s stock subsequently benefited from expectations that large AI server orders were forthcoming.
Security selection within the industrials, information technology and consumer discretionary sectors detracted from performance relative to the Benchmark. From a geographic perspective, security selection in Hong Kong and Taiwan were the top detractors.
From a detractor perspective, Yihai International Holding Ltd. (Ticker: 1579-HK) was the Fund’s most notable during the year. The company is a producer of condiments for one of China’s leading restaurant chains, as well as third-party sales. While the relinquishment of China’s zero-COVID strategy supported the company’s earnings as the economy reopened, Yihai’s third-party sales struggled, leading to disappointing earnings growth.
Hygeia Healthcare Holdings Co., Ltd. (Ticker: 6078-HK) was also a significant detractor from Fund performance for the year. Hygeia Healthcare Holdings Co., Ltd. is an oncology focused hospital chain in China. The share price weakness reflected a slower than expected ramp-up of newly acquired hospitals. Additionally, the unfavorable macro sentiment in China and the rising geopolitical tension with the US have discouraged investor sentiment.
Moving into 2024, we remain optimistic on emerging markets and the alpha generation potential from the small cap segment of the asset class.
First, we see a strong opportunity for stock selection within a deep and growing universe, as performance trends have broadened out in tandem with an improving macroeconomic backdrop and the emergence of secular trends such as artificial intelligence (AI) and nearshoring.
Second, India represents a meaningful allocation in the Fund, and the country appears to be in a secular growth phase, led by a strong capex cycle. As its economy shifts toward manufacturing, domestic incomes are likely to rise, fueling demand for residential property, as well as consumer goods and services. We believe this all bodes well for India’s economy and the major sectors that are represented within small cap companies in the local market.
Third, we expect the nascent shift of the global economy toward disinflation to be a tailwind for many emerging market (EM) economies, which largely adhered to responsible fiscal and monetary policies during the pandemic and were also early to get ahead of rising global inflationary pressures by proactively normalizing monetary policy.
We continue to observe several positive structural trends within EM, including the transformative growth in the Indian economy, the role of Taiwanese technology companies in AI, and the opportunities in countries like Vietnam and Mexico arising from shifts in global supply chains. Accordingly, we remain excited about the opportunity set within the EM small cap investment universe.
8 |
We thank you for investing alongside us in the Driehaus Emerging Markets Small Cap Growth Fund and would like to express our gratitude for your continued confidence in our management capabilities.
Sincerely, | ||
Chad Cleaver, CFA | Howard Schwab | Rich Thies |
Lead Portfolio Manager | Portfolio Manager | Portfolio Manager |
Performance is historical and does not represent future results.
Please see the following performance overview page for index description.
9 |
Driehaus Emerging Markets Small Cap Growth Fund
Performance Overview (unaudited)
The performance summarized below is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares. Performance data presented measures the change in the value of an investment in the Fund, assuming reinvestment of all dividends and capital gains. Average annual total return reflects annualized change. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The graph compares the results of a $10,000 investment (minimum investment) in the Fund over the last 10 fiscal year periods (which includes performance of the Predecessor Limited Partnership’s inception), with all dividends and capital gains reinvested, with the indicated indices (and dividends reinvested) for the same period.
The performance data shown represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Performance data represents the rate that an investor would have earned (or lost), during the given periods, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change. Since Fund performance is subject to change after the period-end, please call (800) 560-6111 or visit www.driehaus.com/performance for more current performance information. The gross expense ratio is 1.45% as of the most recent prospectus dated April 30, 2023, as supplemented through the date of this report.
Average Annual Total Returns as of 12/31/23 | 1 Year | 3 Years | 5 Years | 10 Years |
Driehaus Emerging Markets Small Cap Growth Fund (DRESX)1 | 10.29% | 0.26% | 12.47% | 4.54% |
MSCI Emerging Markets Small Cap Index-N2 | 23.92% | 6.45% | 9.92% | 5.34% |
MSCI Emerging Markets Small Cap Growth Index-N3 | 23.79% | 4.58% | 9.98% | 4.54% |
1 | The returns reflect fee waivers and/or reimbursements without which performance would have been lower. |
2 | The Morgan Stanley Capital International Emerging Markets Small Cap Index-Net (MSCI Emerging Markets Small Cap Index-N) is a market capitalization-weighted index designed to measure equity market performance of small cap stocks in emerging markets. Data is in U.S. dollars and is calculated with net dividend reinvestment. Source: Morgan Stanley Capital International Inc. |
3 | The Morgan Stanley Capital International Emerging Markets Small Cap Growth Index-Net (MSCI Emerging Markets Small Cap Growth Index-N) is a market capitalization-weighted index designed to measure equity market performance of small cap growth stocks in emerging markets. Data is in U.S. dollars and is calculated with net dividend reinvestment. Source: Morgan Stanley Capital International Inc. |
10 |
Driehaus Emerging Markets Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
COMMON STOCKS — 93.82% | ||||||||
FAR EAST — 64.13% | ||||||||
India — 33.19% | ||||||||
ACC Ltd. | 49,154 | $ | 1,305,307 | |||||
APL Apollo Tubes Ltd. | 26,866 | 495,851 | ||||||
Apollo Hospitals Enterprise Ltd. | 15,593 | 1,068,187 | ||||||
AU Small Finance Bank Ltd. 1 | 225,657 | 2,133,353 | ||||||
Bharat Forge Ltd. | 76,581 | 1,138,953 | ||||||
Bharat Heavy Electricals Ltd. | 616,693 | 1,433,170 | ||||||
Bikaji Foods International Ltd. | 169,599 | 1,112,119 | ||||||
BLS International Services Ltd. | 362,293 | 1,389,576 | ||||||
Century Textiles & Industries Ltd. | 92,098 | 1,352,807 | ||||||
Colgate-Palmolive India Ltd. | 32,709 | 993,929 | ||||||
Cyient DLM Ltd. * | 68,919 | 558,289 | ||||||
GMR Airports Infrastructure Ltd. * | 2,059,764 | 1,992,212 | ||||||
Indian Hotels Co. Ltd. | 199,330 | 1,049,478 | ||||||
JSW Infrastructure Ltd. * | 539,398 | 1,350,217 | ||||||
Kajaria Ceramics Ltd. | 81,790 | 1,279,428 | ||||||
Kalyan Jewellers India Ltd. | 136,646 | 580,819 | ||||||
KPIT Technologies Ltd. | 37,349 | 678,708 | ||||||
Macrotech Developers Ltd. 1 | 263,965 | 3,242,812 | ||||||
Max Healthcare Institute Ltd. | 172,174 | 1,419,363 | ||||||
Mphasis Ltd. | 32,370 | 1,064,365 | ||||||
MTAR Technologies Ltd. * | 18,309 | 485,579 | ||||||
NHPC Ltd. | 2,423,681 | 1,880,123 | ||||||
Nuvama Wealth Management Ltd. * | 12,087 | 519,962 | ||||||
Rainbow Children’s Medicare Ltd. | 57,429 | 822,914 | ||||||
Ramkrishna Forgings Ltd. | 111,522 | 971,663 | ||||||
Raymond Ltd. | 27,112 | 561,001 | ||||||
Sula Vineyards Ltd. | 88,542 | 530,164 | ||||||
Syngene International Ltd. 1 | 56,575 | 476,641 | ||||||
Titagarh Rail System Ltd. | 86,310 | 1,081,682 | ||||||
TVS Motor Co. Ltd. | 27,584 | 671,200 | ||||||
United Breweries Ltd. | 51,939 | 1,113,551 | ||||||
Varun Beverages Ltd. | 69,401 | 1,030,978 | ||||||
35,784,401 | ||||||||
Taiwan — 13.63% | ||||||||
Accton Technology Corp. | 100,000 | 1,699,679 | ||||||
AP Memory Technology Corp. | 37,000 | 563,920 | ||||||
ASMedia Technology, Inc. | 29,000 | 1,709,574 | ||||||
Eclat Textile Co. Ltd. | 55,000 | 1,005,127 | ||||||
eMemory Technology, Inc. | 28,000 | 2,226,402 | ||||||
Faraday Technology Corp. | 87,000 | 1,008,126 | ||||||
Lite-On Technology Corp. | 409,000 | 1,553,048 | ||||||
Makalot Industrial Co. Ltd. | 98,000 | 1,130,254 | ||||||
Sinbon Electronics Co. Ltd. | 50,000 | 486,652 | ||||||
Voltronic Power Technology Corp. | 11,550 | 642,328 | ||||||
Wiwynn Corp. | 45,000 | 2,664,474 | ||||||
14,689,584 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
China — 5.46% | ||||||||
Akeso, Inc. 1,* | 214,000 | $ | 1,272,430 | |||||
Man Wah Holdings Ltd. | 1,999,200 | 1,371,141 | ||||||
Pacific Basin Shipping Ltd. | 2,784,000 | 916,163 | ||||||
Proya Cosmetics Co. Ltd. - A | 39,348 | 551,503 | ||||||
SITC International Holdings Co. Ltd. | 505,000 | 871,645 | ||||||
Yadea Group Holdings Ltd. 1 | 516,000 | 908,868 | ||||||
5,891,750 | ||||||||
South Korea — 5.12% | ||||||||
Hanwha Aerospace Co. Ltd. | 13,034 | 1,257,396 | ||||||
HD Hyundai Electric Co. Ltd. | 19,647 | 1,248,668 | ||||||
HPSP Co. Ltd. | 44,182 | 1,492,038 | ||||||
Lunit, Inc. * | 14,690 | 928,970 | ||||||
Samsung Engineering Co. Ltd. * | 26,418 | 591,797 | ||||||
5,518,869 | ||||||||
Vietnam — 2.98% | ||||||||
FPT Corp. | 759,782 | 3,217,526 | ||||||
Kazakhstan — 1.89% | ||||||||
Kaspi.KZ JSC 1,2 | 22,166 | 2,039,272 | ||||||
Australia — 1.17% | ||||||||
Paladin Energy Ltd. * | 1,879,137 | 1,259,170 | ||||||
Thailand — 0.69% | ||||||||
Bumrungrad Hospital PCL - NVDR | 113,900 | 740,072 | ||||||
Total FAR EAST | ||||||||
(Cost $55,778,077) | 69,140,644 | |||||||
SOUTH AMERICA — 11.68% | ||||||||
Brazil — 11.68% | ||||||||
Cury Construtora e Incorporadora SA | 447,234 | 1,656,858 | ||||||
Equatorial Energia SA | 221,800 | 1,631,633 | ||||||
Inter & Co., Inc. - BDR * | 266,678 | 1,503,090 | ||||||
Orizon Valorizacao de Residuos SA * | 208,100 | 1,654,195 | ||||||
PRIO SA | 81,300 | 769,071 | ||||||
Rumo SA | 415,200 | 1,962,785 | ||||||
Santos Brasil Participacoes SA | 711,000 | 1,371,067 | ||||||
SLC Agricola SA | 248,600 | 963,161 | ||||||
Vivara Participacoes SA | 154,100 | 1,085,544 | ||||||
12,597,404 | ||||||||
Total SOUTH AMERICA | ||||||||
(Cost $10,667,444) | 12,597,404 | |||||||
NORTH AMERICA — 10.34% | ||||||||
Mexico — 7.64% | ||||||||
Alsea SAB de CV * | 348,200 | 1,318,489 | ||||||
FIBRA Macquarie Mexico 1 | 393,400 | 770,537 | ||||||
GCC SAB de CV | 133,700 | 1,582,023 | ||||||
Prologis Property Mexico SA de CV | 220,500 | 1,045,301 | ||||||
Ternium SA - SP ADR 2 | 25,433 | 1,080,140 | ||||||
TF Administradora Industrial S de RL de CV | 417,300 | 893,038 |
Notes to Financial Statements are an integral part of this Schedule.
11 |
Driehaus Emerging Markets Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Vista Energy SAB de CV 2,* | 52,497 | $ | 1,549,186 | |||||
8,238,714 | ||||||||
Canada — 1.68% | ||||||||
Ivanhoe Mines Ltd. - A * | 186,794 | 1,811,481 | ||||||
United States — 1.02% | ||||||||
Copa Holdings SA - A | 5,320 | 565,569 | ||||||
Kosmos Energy Ltd. * | 79,264 | 531,862 | ||||||
1,097,431 | ||||||||
Total NORTH AMERICA | ||||||||
(Cost $9,224,964) | 11,147,626 | |||||||
MIDDLE EAST — 5.20% | ||||||||
United Arab Emirates — 2.59% | ||||||||
Abu Dhabi Ports Co. PJSC * | 807,845 | 1,403,322 | ||||||
Emirates Central Cooling | ||||||||
Systems Corp. | 3,078,162 | 1,391,260 | ||||||
2,794,582 | ||||||||
Saudi Arabia — 1.77% | ||||||||
Arabian Drilling Co. | 10,853 | 546,851 | ||||||
Saudi Airlines Catering Co. | 40,326 | 1,359,255 | ||||||
1,906,106 | ||||||||
Qatar — 0.84% | ||||||||
Qatar Gas Transport Co. Ltd. | 948,814 | 901,316 | ||||||
Total MIDDLE EAST | ||||||||
(Cost $4,828,369) | 5,602,004 | |||||||
EUROPE — 2.03% | ||||||||
Poland — 0.78% | ||||||||
Dino Polska SA 1,* | 7,211 | 844,303 | ||||||
Norway — 0.77% | ||||||||
Seadrill Ltd. 2,* | 17,636 | 833,830 | ||||||
Greece — 0.48% | ||||||||
Mytilineos SA | 12,655 | 512,731 | ||||||
Total EUROPE | ||||||||
(Cost $2,040,920) | 2,190,864 | |||||||
AFRICA — 0.44% | ||||||||
South Africa — 0.44% | ||||||||
Truworths International Ltd. | 116,941 | 478,100 | ||||||
Total AFRICA | ||||||||
(Cost $502,917) | 478,100 | |||||||
Total COMMON STOCKS | ||||||||
(Cost $83,042,691) | 101,156,642 | |||||||
PREFERRED STOCKS — 2.07% | ||||||||
SOUTH AMERICA — 2.07% | ||||||||
Brazil — 2.07% | ||||||||
Azul SA * | 406,800 | 1,310,810 | ||||||
Bradespar SA, 2.48% 3 | 174,100 | 920,350 | ||||||
2,231,160 | ||||||||
Total SOUTH AMERICA | ||||||||
(Cost $1,920,670) | 2,231,160 | |||||||
Total PREFERRED STOCKS | ||||||||
(Cost $1,920,670) | 2,231,160 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
SHORT TERM INVESTMENTS — 3.63% | ||||||||
Northern Institutional U.S. Government Select Portfolio (Shares Class), 5.24% 4 | ||||||||
(Cost $3,910,328) | 3,910,328 | $ | 3,910,328 | |||||
TOTAL INVESTMENTS | ||||||||
(Cost $88,873,689) | 99.52 | % | $ | 107,298,130 | ||||
Other Assets In Excess of Liabilities | 0.48 | % | 515,859 | |||||
Net Assets | 100.00 | % | $ | 107,813,989 |
JSC | Joint Stock Company |
NVDR | Non-Voting Depositary Receipt |
PCL | Public Company Limited |
PJSC | Public Joint Stock Company |
SP ADR | Sponsored American Depositary Receipt |
1 | Security is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The total value of these securities is $11,688,216, which represents 11% of Net Assets (see Note F in the Notes to Financial Statements). |
2 | Foreign security denominated and/or traded in U.S. dollars. |
3 | Current yield is disclosed. Dividends are calculated based on a percentage of the issuer’s net income. |
4 | 7 day current yield as of December 31, 2023 is disclosed. |
* | Non-income producing security. |
Percentages are stated as a percent of net assets.
Notes to Financial Statements are an integral part of this Schedule.
12 |
Driehaus Emerging Markets Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Security Type | Percent of Net Assets | |||
Common Stocks | 93.82 | % | ||
Preferred Stocks | 2.07 | % | ||
Short Term Investments | 3.63 | % | ||
Total Investments | 99.52 | % | ||
Other Assets In Excess of Liabilities | 0.48 | % | ||
Net Assets | 100.00 | % |
Regional Weightings | Percent of Net Assets | |||
Far East | 64.13 | % | ||
North America | 13.97 | % | ||
South America | 13.75 | % | ||
Middle East | 5.20 | % | ||
Europe | 2.03 | % | ||
Africa | 0.44 | % |
Notes to Financial Statements are an integral part of this Schedule.
13 |
Driehaus Emerging Markets Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Industry | Percent of Net Assets | |||
Aerospace & Defense | 1.17 | % | ||
Automobile Components | 1.06 | % | ||
Automobiles | 1.46 | % | ||
Banks | 3.37 | % | ||
Beverages | 2.48 | % | ||
Biotechnology | 1.18 | % | ||
Building Products | 1.19 | % | ||
Capital Markets | 0.48 | % | ||
Commercial Services & Supplies | 2.80 | % | ||
Communications Equipment | 1.58 | % | ||
Construction & Engineering | 0.55 | % | ||
Construction Materials | 2.68 | % | ||
Consumer Finance | 1.89 | % | ||
Consumer Staples Distribution & Retail | 0.78 | % | ||
Electric Utilities | 1.51 | % | ||
Electrical Equipment | 3.09 | % | ||
Electronic Equipment, Instruments & Components | 0.97 | % | ||
Energy Equipment & Services | 1.28 | % | ||
Food Products | 1.92 | % | ||
Ground Transportation | 1.82 | % | ||
Health Care Providers & Services | 3.76 | % | ||
Health Care Technology | 0.86 | % | ||
Hotels, Restaurants & Leisure | 2.19 | % | ||
Household Durables | 2.81 | % | ||
Independent Power and Renewable Electricity | ||||
Producers | 1.74 | % |
Industry | Percent of Net Assets | |||
Industrial Conglomerates | 0.48 | % | ||
Industrial Real Estate Investment Trusts | 2.51 | % | ||
IT Services | 3.97 | % | ||
Life Sciences Tools & Services | 0.44 | % | ||
Machinery | 1.45 | % | ||
Marine | 1.66 | % | ||
Metals & Mining | 4.89 | % | ||
Money Market Fund | 3.63 | % | ||
Oil, Gas & Consumable Fuels | 4.65 | % | ||
Paper & Forest Products | 1.26 | % | ||
Passenger Airlines | 1.75 | % | ||
Personal Care Products | 1.43 | % | ||
Professional Services | 1.29 | % | ||
Real Estate Management & Development | 3.01 | % | ||
Semiconductors & Semiconductor Equipment | 6.49 | % | ||
Software | 0.63 | % | ||
Specialty Retail | 0.44 | % | ||
Technology Hardware, Storage & Peripherals | 3.91 | % | ||
Textiles, Apparel & Luxury Goods | 4.05 | % | ||
Transportation Infrastructure | 5.67 | % | ||
Water Utilities | 1.29 | % | ||
Other Assets In Excess of Liabilities | 0.48 | % | ||
TOTAL | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
14 |
Driehaus Global Fund — Portfolio Managers’ Letter
Dear Fellow Shareholders,
The Driehaus Global Fund (“Fund”); previously known as the Driehaus Emerging Markets Opportunities Fund returned 19.46% for the year ended December 31, 2023, and underperformed its primary benchmark, the Morgan Stanley Capital International (“MSCI”) All Country World Index Markets Index (“Benchmark”), which returned 22.20% for the year. On April 30th, 2023, the Fund changed its investment strategy from an emerging markets opportunities long-short strategy to a global core equity strategy. The previous benchmark of the Fund was the MSCI Emerging Markets Index which returned 9.83% for the year.
Leveraging an investment philosophy that has been successful for over four decades, deploying existing resources that cover all global markets coupled with an awareness of macroeconomic and industry trends, and a healthy dose of humility, we embarked on what we hope to be a successful, long-term journey into the global equity space in May of 2023. We entered this space, with the knowledge that it is a competitive one, because we feel like we have something to add. The current global equity environment seems like a challenging one with index concentration growing, equities appearing expensive, and a monetary environment that has grown increasingly deflationary.
We believe our experience navigating global macro headwinds will be increasingly important as monetary and fiscal policies grow more volatile by the day, just as the geopolitical regime appears to be changing faster than many thought possible. Equally important though, will be the acknowledgment and understanding that there are a lot of good things happening in the world as well. In recent months, the speed of innovation in technology has greatly accelerated, the pharmaceutical industry appears on the cusp of changing not just itself but also the consumer environment with new weight-loss medications, while major legacy industries (automobiles, aviation, real estate) are all experiencing significant changes. While it’s often fashionable and relevant to focus on the many challenges the world faces, it’s equally important to focus on the opportunities for growth, of which we believe there are many.
In 2023, security selection in the industrials sector and an underweight in the health care sector contributed to the Fund’s return versus the Benchmark. From a geography perspective, security selection in the United Kingdom and the United States made contributions to performance versus the Benchmark in the past year.
Meta Platforms Inc. Class A (Ticker: META-US ) was the most significant contributor to the Fund’s return for the year. The company focused on controlling expenses like it never had in the past and was able to expand its operating margin by nearly twelve percentage points. Revenue growth reaccelerated and was well above expectations on the back of AI driven ad tools, improving short video monetization, and strong demand from certain verticals such as ecommerce. Lastly, while the company continues to invest in its Reality Labs business, as the emergence of Generative AI has given the company a new and more compelling technology opportunity that we believe will be highly accretive to their app ecosystem and that will create new market opportunities.
Rolls-Royce Holdings plc (Ticker: RR-GB) was another top contributor to Fund performance for the year. Rolls Royce is a U.K. based industrial conglomerate specializing in manufacturing aero, marine, and gas turbines for both the civil and military aviation sectors. The company looks to be a successful turnaround story. After years of cost and supply chain mismanagement, a mid-2022 turnaround plan has started to bear results. The company consistently reported stronger results vs. expectations, as the turnaround plan met stronger order trends, better cost and efficiency controls, and margin expansion. The big driver is the improved performance in the company’s civil division, approximately 50% of overall revenue, which after years of losses finally registered positive margins of 2-3%. While that may not sound like much, several industry peers’ margins are in the 15-20% range so we believe there remains substantial room for further margin improvement over the next several quarters.
For 2023, stock selection within the consumer discretionary and information technology sectors detracted from the Fund’s returns versus the Benchmark. At the country level, an overweight to China and an underweight to India and stock selection in Japan detracted from Fund performance versus the Benchmark.
Exxon Mobile Corporation (Ticker: XOM-US) was the most significant detractor from the Fund’s return in 2023. The company offers diversified exposure to upstream and downstream energy and strong free cash flow generation. The shares declined in 2023 as oil prices remained rangebound despite OPEC+ supply adjustments and rising conflicts in the Middle East, leading to lower sales and margins. We believe that the company’s key growth assets (Permian Basin, Guyana) remain attractive and that the company offers compelling shareholder returns, but it seems that the bottom-up fundamentals have been overshadowed by the worsening oil macroenvironment.
15 |
Another significant detractor from the Fund’s return for the year was Meituan Class B (Ticker: 3690-HK). The company is a food delivery and local services platform in China. The company’s food delivery business was negatively affected by the resurgence of COVID cases in China during the fourth quarter of 2022 and the first quarter of 2023. Additionally, the market became increasingly concerned about competition from both livestream and other local services players. There was also a sentiment overhang on Meituan as Tencent Holding Ltd completed a distribution of most of its stake in Meituan to its own shareholders in March of 2023.
We plan to take country views heavily into account in both our stock selection and allocation process, but this year it has felt like sector-level views have been more dominant. For example, we have been underweight the best performing market (United States) but have gained roughly 100 basis points there through stock selection and avoiding areas that have done poorly. Given the index composition (60% in U.S.) and the heavy concentration of a few names in the U.S. driving most of that, we believe that the strategy will remain underweight U.S. equities though that doesn’t reflect a specifically negative view on that market. We continue to uncover compelling opportunities in Japan and expect the equity market to benefit from a shift away from a persistent deflationary mindset as well as corporate reforms undertaken to improve profitability and shareholder returns. Further, we want the Fund to bring what we view as the best global opportunities to investors, rather than shy away from exposures in places like India, Brazil, and Mexico just because they may be perceived as higher risk.
We thank you for investing in the Fund and express our gratitude for your continued confidence in our management capabilities.
Sincerely, | |
Richard Thies | Daniel Burr |
Lead Portfolio Manager | Portfolio Manager |
Howard Schwab | Thomas Ansen-Wilson |
Portfolio Manager | Assistant Portfolio Manager |
Performance is historical and does not represent future results.
Please see the following performance overview page for index description.
16 |
Driehaus Global Fund
Performance Overview (unaudited)
The performance summarized below is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares. Performance data presented measures the change in the value of an investment in the Fund, assuming reinvestment of all dividends and capital gains. Average annual total return reflects annualized change. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The graph compares the results of a $10,000 investment (minimum investment) in the Fund since April 10, 2017 (the date of the fund’s inception), with all dividends and capital gains reinvested, with the indicated indices (and dividends reinvested) for the same period.
The performance data shown represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Performance data represents the rate that an investor would have earned (or lost), during the given periods, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change. Since Fund performance is subject to change after the period-end, please call (800) 560-6111 or visit www.driehaus.com/performance for more current performance information. The gross expense ratio is 1.12% as of the most recent prospectus dated April 30, 2023, as supplemented through the date of this report.
Average Annual Total Returns as of 12/31/23 | 1 Year | 3 Years | 5 Years | Since Inception (4/10/17 - 12/31/23) |
Driehaus Global Fund (DMAGX)1 | 19.46% | -1.23% | 8.81% | 7.27% |
MSCI ACWI Index-N*,2 | 22.20% | 5.75% | 11.72% | 9.43% |
MSCI Emerging Markets Index-N3 | 9.83% | -5.08% | 3.68% | 5.33% |
* | Effective April 30, 2023, the Fund elected to change its benchmark index from the MSCI Emerging Markets Index-Net to the MSCI ACWI Index Net. The Fund believes the composition of the MSCI ACWI Index Net more accurately reflects the Fund’s current investment strategy and portfolio characteristics. |
1 | Prior to April 30, 2023, the Driehaus Global Fund was known as the Driehaus Emerging Markets Opportunities Fund, and prior to January 29, 2020, the Driehaus Emerging Markets Opportunities Fund was known as the Driehaus Multi-Asset Growth Economies Fund. The returns for the period reflect fee waivers and/or reimbursements without which performance would have been lower. |
2 | The Morgan Stanley Capital International All Country World Index-Net (MSCI ACWI Index-N) is a market capitalization-weighted index designed to measure equity market performance in global developed markets and emerging markets. Data is in U.S. dollars and is calculate with net dividend reinvestment. Source: Morgan Stanley Capital International Inc. |
3 | The Morgan Stanley Capital International Emerging Markets Index-Net (MSCI Emerging Markets Index-N) is a market capitalization-weighted index designed to measure equity market performance in emerging markets. Data is in U.S. dollars and is calculated with net dividend reinvestment. Source: Morgan Stanley Capital International Inc. |
17 |
Driehaus Global Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
COMMON STOCKS — 94.59% | ||||||||
NORTH AMERICA — 63.79% | ||||||||
United States — 58.02% | ||||||||
Alphabet, Inc. - A * | 7,404 | $ | 1,034,265 | |||||
Amazon.com Ltd. * | 7,616 | 1,157,176 | ||||||
Amgen, Inc. | 879 | 253,170 | ||||||
Amphenol Corp. - A | 4,526 | 448,662 | ||||||
Apple, Inc. | 6,050 | 1,164,806 | ||||||
Broadcom, Inc. | 757 | 845,001 | ||||||
Celsius Holdings, Inc. * | 5,182 | 282,523 | ||||||
Cheniere Energy, Inc. | 2,258 | 385,463 | ||||||
Chipotle Mexican Grill, Inc. * | 275 | 628,914 | ||||||
Eli Lilly & Co. | 604 | 352,084 | ||||||
Equinix, Inc. | 350 | 281,887 | ||||||
Exxon Mobil Corp. | 10,377 | 1,037,492 | ||||||
Fluor Corp. * | 9,350 | 366,239 | ||||||
Gitlab, Inc. - A * | 10,051 | 632,811 | ||||||
JPMorgan Chase & Co. | 6,823 | 1,160,592 | ||||||
KKR & Co., Inc. | 8,347 | 691,549 | ||||||
Lockheed Martin Corp. | 1,271 | 576,068 | ||||||
Marriott International, Inc. - A | 1,596 | 359,914 | ||||||
Mastercard, Inc. - A | 1,107 | 472,147 | ||||||
McKesson Corp. | 706 | 326,864 | ||||||
Meta Platforms, Inc. - A * | 4,431 | 1,568,397 | ||||||
Microsoft Corp. | 6,744 | 2,536,014 | ||||||
Mondelez International, Inc. - A | 8,915 | 645,713 | ||||||
MongoDB, Inc. * | 1,005 | 410,894 | ||||||
Monolithic Power Systems, Inc. | 692 | 436,500 | ||||||
Motorola Solutions, Inc. | 1,674 | 524,113 | ||||||
NVIDIA Corp. | 2,643 | 1,308,866 | ||||||
PACCAR, Inc. | 6,688 | 653,083 | ||||||
Palo Alto Networks, Inc. * | 1,028 | 303,137 | ||||||
Quanta Services, Inc. | 2,762 | 596,040 | ||||||
Roper Technologies, Inc. | 1,310 | 714,173 | ||||||
Salesforce, Inc. * | 1,989 | 523,385 | ||||||
Samsonite International SA 1,* | 172,554 | 569,294 | ||||||
ServiceNow, Inc. * | 1,136 | 802,573 | ||||||
Southern Copper Corp. | 6,709 | 577,444 | ||||||
Spotify Technology SA * | 2,904 | 545,691 | ||||||
Super Micro Computer, Inc. * | 1,029 | 292,504 | ||||||
Symbotic, Inc. * | 3,592 | 184,377 | ||||||
Synopsys, Inc. * | 852 | 438,703 | ||||||
Take-Two Interactive Software, Inc. * | 2,350 | 378,232 | ||||||
The Boeing Co. * | 1,055 | 274,996 | ||||||
The Charles Schwab Corp. | 8,100 | 557,280 | ||||||
The Walt Disney Co. | 3,361 | 303,465 | ||||||
Uber Technologies, Inc. * | 14,024 | 863,458 | ||||||
UnitedHealth Group, Inc. | 892 | 469,611 | ||||||
Vertex Pharmaceuticals, Inc. * | 1,688 | 686,830 | ||||||
Vulcan Materials Co. | 1,183 | 268,553 | ||||||
Walmart, Inc. | 3,585 | 565,175 | ||||||
30,456,128 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Canada — 3.78% | ||||||||
Alimentation Couche-Tard, Inc. | 9,200 | $ | 541,773 | |||||
Aritzia, Inc. * | 10,900 | 226,218 | ||||||
Cameco Corp. 2 | 8,117 | 349,843 | ||||||
Dollarama, Inc. | 5,500 | 396,358 | ||||||
Shopify, Inc. - A 2,* | 6,044 | 470,828 | ||||||
1,985,020 | ||||||||
Mexico — 1.99% | ||||||||
Fibra Uno Administracion SA | ||||||||
de CV | 195,500 | 351,142 | ||||||
Grupo Financiero Banorte SAB | ||||||||
de CV - O | 68,971 | 694,950 | ||||||
1,046,092 | ||||||||
Total NORTH AMERICA | ||||||||
(Cost $27,488,884) | 33,487,240 | |||||||
EUROPE — 18.07% | ||||||||
United Kingdom — 6.41% | ||||||||
AstraZeneca PLC - SP ADR 2 | 4,538 | 305,634 | ||||||
London Stock Exchange Group | ||||||||
PLC | 4,074 | 481,594 | ||||||
RELX PLC | 19,824 | 786,494 | ||||||
Rolls-Royce Holdings PLC * | 277,329 | 1,057,836 | ||||||
Shell PLC | 22,309 | 734,039 | ||||||
3,365,597 | ||||||||
Spain — 3.10% | ||||||||
Banco Bilbao Vizcaya | ||||||||
Argentaria SA | 85,841 | 782,377 | ||||||
Iberdrola SA | 22,895 | 300,309 | ||||||
Industria de Diseno Textil SA | 12,431 | 542,415 | ||||||
1,625,101 | ||||||||
France — 2.74% | ||||||||
Accor SA | 17,169 | 657,162 | ||||||
Safran SA | 1,840 | 324,411 | ||||||
Schneider Electric SE | 2,282 | 459,381 | ||||||
1,440,954 | ||||||||
Netherlands — 2.50% | ||||||||
Airbus SE | 2,747 | 424,380 | ||||||
ASM International NV | 717 | 373,180 | ||||||
BE Semiconductor Industries | ||||||||
NV | 1,863 | 281,268 | ||||||
ING Groep NV | 15,595 | 233,840 | ||||||
1,312,668 | ||||||||
Italy — 1.05% | ||||||||
UniCredit SpA | 20,294 | 552,599 | ||||||
Jersey, C.I. — 0.84% | ||||||||
Ferguson PLC 2 | 2,277 | 439,620 | ||||||
Germany — 0.76% | ||||||||
BASF SE | 7,423 | 399,707 | ||||||
Ireland — 0.67% | ||||||||
Linde PLC 2 | 854 | 350,746 | ||||||
Total EUROPE | ||||||||
(Cost $7,924,497) | 9,486,992 |
Notes to Financial Statements are an integral part of this Schedule.
18 |
Driehaus Global Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
FAR EAST — 11.68% | ||||||||
Japan — 4.75% | ||||||||
Harmonic Drive Systems, Inc. | 10,300 | $ | 303,046 | |||||
Japan Airport Terminal Co. Ltd. | 9,200 | 404,752 | ||||||
Lawson, Inc. | 5,100 | 263,210 | ||||||
Mitsubishi UFJ Financial Group, Inc. | 30,400 | 260,897 | ||||||
Nintendo Co. Ltd. | 13,900 | 723,271 | ||||||
Sony Group Corp. | 5,700 | 539,407 | ||||||
2,494,583 | ||||||||
South Korea — 2.00% | ||||||||
Samsung Electronics Co. Ltd. | 9,728 | 590,459 | ||||||
SK Hynix, Inc. | 4,187 | 456,961 | ||||||
1,047,420 | ||||||||
Taiwan — 1.49% | ||||||||
Delta Electronics, Inc. | 33,986 | 346,604 | ||||||
Taiwan Semiconductor | ||||||||
Manufacturing Co. Ltd. | 22,668 | 434,581 | ||||||
781,185 | ||||||||
China — 1.16% | ||||||||
Tencent Holdings Ltd. | 16,153 | 609,854 | ||||||
India — 1.04% | ||||||||
ICICI Bank Ltd. - SP ADR 2 | 13,518 | 322,269 | ||||||
Titan Co. Ltd. | 5,065 | 223,554 | ||||||
545,823 | ||||||||
Philippines — 0.70% | ||||||||
BDO Unibank, Inc. | 156,000 | 367,523 | ||||||
Indonesia — 0.54% | ||||||||
Bank Central Asia Tbk PT | 462,045 | 282,171 | ||||||
Total FAR EAST | ||||||||
(Cost $4,899,546) | 6,128,559 | |||||||
SOUTH AMERICA — 1.05% | ||||||||
Brazil — 1.05% | ||||||||
Petroleo Brasileiro SA - SP ADR 2 | 34,524 | 551,348 | ||||||
Total SOUTH AMERICA | ||||||||
(Cost $490,650) | 551,348 | |||||||
Total COMMON STOCKS | ||||||||
(Cost $40,803,577) | 49,654,139 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
SHORT TERM INVESTMENTS — 5.41% | ||||||||
Northern Institutional U.S. Government Select Portfolio (Shares Class), 5.24% 3 | ||||||||
(Cost $2,838,798) | 2,838,798 | $ | 2,838,798 | |||||
TOTAL INVESTMENTS | ||||||||
(Cost $43,642,375) | 100.00 | % | $ | 52,492,937 | ||||
Liabilities in Excess of Other | ||||||||
Assets | (0.00 | )% | (968 | ) | ||||
Net Assets | 100.00 | % | $ | 52,491,969 |
PLC Public Limited Company
SP ADR Sponsored American Depositary Receipt
1 | Security is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The total value of these securities is $569,294, which represents 1% of Net Assets (see Note F in the Notes to Financial Statements). |
2 | Foreign security denominated and/or traded in U.S. dollars. |
3 | 7 day current yield as of December 31, 2023 is disclosed. |
* | Non-income producing security. |
Percentages are stated as a percent of net assets.
Security Type | Percent of Net Assets | |||
Common Stocks | 94.59 | % | ||
Short Term Investments | 5.41 | % | ||
Total Investments | 100.00 | % | ||
Liabilities In Excess of Other Assets | (0.00 | )% | ||
Net Assets | 100.00 | % |
Regional Weightings | Percent of Net Assets | |||
North America | 69.20 | % | ||
Europe | 18.07 | % | ||
Far East | 11.68 | % | ||
South America | 1.05 | % |
Notes to Financial Statements are an integral part of this Schedule.
19 |
Driehaus Global Fund
Schedule of Investments
December 31, 2023
Industry | Percent of Net Assets | |||
Aerospace & Defense | 5.06 | % | ||
Banks | 8.85 | % | ||
Beverages | 0.54 | % | ||
Biotechnology | 1.79 | % | ||
Broadline Retail | 2.95 | % | ||
Capital Markets | 3.30 | % | ||
Chemicals | 1.43 | % | ||
Communications Equipment | 1.00 | % | ||
Construction & Engineering | 1.84 | % | ||
Construction Materials | 0.51 | % | ||
Consumer Staples Distribution & Retail | 2.61 | % | ||
Diversified Real Estate Investment Trusts | 0.67 | % | ||
Electric Utilities | 0.57 | % | ||
Electrical Equipment | 0.87 | % | ||
Electronic Equipment, Instruments & Components | 1.51 | % | ||
Entertainment | 3.72 | % | ||
Financial Services | 0.90 | % | ||
Food Products | 1.23 | % | ||
Ground Transportation | 1.64 | % | ||
Health Care Providers & Services | 1.51 | % | ||
Hotels, Restaurants & Leisure | 3.14 | % |
Industry | Percent of Net Assets | |||
Household Durables | 1.03 | % | ||
Interactive Media & Services | 6.12 | % | ||
IT Services | 1.68 | % | ||
Machinery | 2.17 | % | ||
Metals & Mining | 1.10 | % | ||
Money Market Fund | 5.41 | % | ||
Oil, Gas & Consumable Fuels | 5.83 | % | ||
Pharmaceuticals | 1.25 | % | ||
Professional Services | 1.50 | % | ||
Semiconductors & Semiconductor Equipment | 7.88 | % | ||
Software | 11.35 | % | ||
Specialized Real Estate Investment Trusts | 0.54 | % | ||
Specialty Retail | 1.47 | % | ||
Technology Hardware, Storage & Peripherals | 3.91 | % | ||
Textiles, Apparel & Luxury Goods | 1.51 | % | ||
Trading Companies & Distributors | 0.84 | % | ||
Transportation Infrastructure | 0.77 | % | ||
Liabilities In Excess of Other Assets | (0.00 | )% | ||
TOTAL | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
20 |
Driehaus International Small Cap Growth Fund — Portfolio Managers’ Letter
Dear Fellow Shareholders,
The Driehaus International Small Cap Growth Fund (“Fund”) returned 11.95% for the year ended December 31, 2023. The Fund’s benchmark, the Morgan Stanley Capital International (“MSCI”) All Country World ex USA Small Cap Growth Index (“Benchmark”), returned 14.11%.
What a difference a year makes, or more appropriately a day makes. With the U.S. Fed essentially confirming a much anticipated “pivot” at their December 2023 meeting, markets not only climbed but leapt right over the wall of worry that stood in their way for most of the second half of the year. The soft-landing narrative, particularly for the U.S. economy, continues to be shouted from the rooftops. The Eurozone and U.K. have been flirting with recession for most of the past year so the European Central Bank (ECB) following the Fed’s lead putting further rate hikes on hold is welcome news indeed. China continues to tread in lukewarm waters at best, while the growth torch in major emerging markets has been passed to India and Brazil. On a brighter note, Japan appears to have finally exited 30 years of deflation, and it seems some meaningful medium term growth opportunities exist for the first time in years.
With central banks effectively declaring the war on inflation over, corporate earnings globally have held up better than expected, and data continues to support the much hoped for soft landing. As a result, risk appetite exploded in the fourth quarter of 2023, with technology, cyclicals, and interest rate sensitive sectors leading the charge higher.
From a sector perspective, security selection in the healthcare and real estate sectors contributed to the Fund’s return versus the Benchmark. From a geographical perspective, holdings in Germany and Italy contributed positively to the performance of the Fund compared to the Benchmark.
Rolls-Royce Holdings plc (Ticker: RR-GB) was the top contributor to Fund performance for the year. Rolls Royce is a U.K. based industrial conglomerate specializing in manufacturing aero, marine, and gas turbines for both the civil and military aviation sectors. The company is a turnaround story. After years of cost and supply chain mismanagement, a mid-2022 turnaround plan has started to bear results. The company consistently reported stronger results vs. expectations, as the turnaround plan met stronger order trends, better cost and efficiency controls, and margin expansion. The big driver is the improved performance in the company’s civil division, approximately 50% of overall revenue, which after years of losses finally registered positive margins of 2-3%. While that may not sound like much, several industry peers’ margins are in the 15-20% range so we believe there remains substantial room for further margin improvement over the next several quarters.
Fugro NC (Ticker: FUR-NL) also contributed to the Fund’s performance for the year. Fugro is a Dutch provider of geotechnical and geophysical capture and advisory services for subsea and subsurface data to energy, infrastructure and water end markets. The company is currently seeing dual growth drivers from traditional oil and gas catchup investment, as well as leading renewables work, which is driving 23% top line and 28% backlog growth. Additionally, leverage from additional scale and pricing power is driving margin improvement from 4-5% to 10%, resulting in bottom line growth of 20% and higher. We believe that consensus revenue growth of only 10% is too low and most recently in November 2023 this was affirmed by management, as they guided 11-15% growth for the next 4 years or a 50% increase by 2027.
For 2023, security selection in the information technology, energy and financial sectors detracted from the Fund’s performance versus the Benchmark. At the country level, security selection in Taiwan and India detracted from the Fund’s performance versus the Benchmark.
The most significant detractor from returns for the year was Precision Drilling Corporation. (Ticker: PD-CA). Precision Drilling is a Canadian based provider of drilling rigs for the North American oil & gas industry. The stock was a top contributor to the Fund’s performance in 2022 as a rebound in activity drove rig pricing up 30%, which resulted in a doubling of Precision’s margins. We expected this strong environment to continue, but natural gas prices experienced a sudden decline of over 50% from December 2022 to January 2023 due to warmer than expected winters in both North America and Europe. This led to a decrease in gas drilling activity, easing of rig tightness and pricing moderation, causing the stock to underperform particularly in the first quarter of 2023. We exited the position and moved our energy exposure away from “Domestic Land” and towards “International Offshore” spend where growth continued to be robust.
21 |
IHI Corporation (Ticker: 7013-JP) also detracted from the Fund’s performance for the year. IHI Corporation is a subsystem supplier of plane engines. The company outperformed in 2022 as the recovery in spare parts (due to the rebound in travel) was underestimated by the market. It was one of the Fund’s largest weightings throughout the year. At the beginning of 2023, many outperformers in Japan were heavily sold, as it seemed like the macroeconomic backdrop was negative. In our view, this was a large part of the company’s underperformance. As a result, we reduced the Fund’s position in the company.
The breadth of growth opportunities we are finding continues to expand, particularly with Japan’s economy gaining traction and financial conditions globally starting to ease. We expect that this will support consumers and elevate corporate margins. Despite elevated valuations within the technology sector, the AI investment cycle is just beginning, and we perceive a multiyear growth runway developing. While the Fund remains overweight in Europe, we have considered reduced exposure. And while we have been increasing exposure to emerging markets, we remain largely underweight. China growth appears to have stalled, and we are skeptical of markets such as Taiwan and South Korea at this point given their heightened reliance on commoditized products. India and Latin America, however, remain perceived bright spots, and the Fund maintains over-weights in Brazil and Mexico accordingly.
As we kick off the new year the focus is beginning to shift from the macro vs. micro debate to the idea of easing financial conditions and a global soft landing coming to fruition. What everyone (including us) seems to have underestimated is the ability of corporations to navigate a never-ending sea of challenges while maintaining margins and earnings growth. This has been particularly impressive when one considers the first challenge of battling rampant inflation followed later by a substantial increase in the cost of capital (interest rate hikes). With both those headwinds beginning to fade, we believe that the fourth quarter 2023 earnings season will provide great insight on many of these fronts. We remain hopeful and continue to believe that the soft landing narrative will transition to reality.
Thank you for investing alongside us in the Fund. We appreciate your continued confidence in our management capabilities.
Sincerely, | |
Daniel Burr | David Mouser |
Portfolio Manager | Portfolio Manager |
Ryan Carpenter | Andrew Srichandra |
Assistant Portfolio Manager | Assistant Portfolio Manager |
Performance is historical and does not represent future results.
Please see the following performance overview page for index description.
22 |
Driehaus International Small Cap Growth Fund
Performance Overview (unaudited)
The performance summarized below is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares. Performance data presented measures the change in the value of an investment in the Fund, assuming reinvestment of all dividends and capital gains. Average annual total return reflects annualized change. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The graph compares the results of a $10,000 investment (minimum investment) in the Fund over the last 10 fiscal year periods, with all dividends and capital gains reinvested, with the indicated index (and dividends reinvested) for the same period.
The performance data shown represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Performance data represents the rate that an investor would have earned (or lost), during the given periods, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change. Since Fund performance is subject to change after the period-end, please call (800) 560-6111 or visit www.driehaus.com/performance for more current performance information. The gross expense ratio is 1.16% as of the most recent prospectus dated April 30, 2023, as supplemented through the date of this report.
Average Annual Total Returns as of 12/31/23 | 1 Year | 3 Years | 5 Years | 10 Years |
Driehaus International Small Cap Growth Fund (DRIOX) | 11.95% | -1.62% | 10.00% | 6.69% |
MSCI AC World ex USA Small Cap Growth Index-N1 | 14.11% | -2.02% | 7.71% | 4.95% |
1 | The Morgan Stanley Capital International All Country World ex USA Small Cap Growth Index-Net (MSCI AC World ex USA Small Cap Growth Index-N) is a market capitalization-weighted index designed to measure equity market performance in global developed markets and emerging markets, excluding the U.S., and is composed of stocks which are categorized as small capitalization growth stocks. Data is in U.S. dollars and is calculated with net dividend reinvestment. Source: Morgan Stanley Capital International Inc. |
23 |
Driehaus International Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
COMMON STOCKS — 94.26% | ||||||||
EUROPE — 47.20% | ||||||||
Germany — 8.67% | ||||||||
AIXTRON SE | 92,055 | $ | 3,919,473 | |||||
Carl Zeiss Meditec AG | 14,497 | 1,578,062 | ||||||
Covestro AG 1,* | 42,740 | 2,490,540 | ||||||
CTS Eventim AG & Co KGaA | 23,137 | 1,600,277 | ||||||
Fielmann AG | 19,608 | 1,051,472 | ||||||
Gerresheimer AG | 9,810 | 1,020,590 | ||||||
HUGO BOSS AG | 37,548 | 2,797,343 | ||||||
KION Group AG | 58,772 | 2,508,355 | ||||||
Scout24 SE 1 | 31,039 | 2,194,807 | ||||||
19,160,919 | ||||||||
United Kingdom — 7.96% | ||||||||
ConvaTec Group PLC 1 | 1,337,329 | 4,161,623 | ||||||
Cranswick PLC | 23,151 | 1,121,479 | ||||||
Endava PLC - SP ADR 2,* | 15,327 | 1,193,207 | ||||||
Intermediate Capital Group PLC | 76,263 | 1,629,241 | ||||||
Network International Holdings PLC 1,* | 261,289 | 1,300,575 | ||||||
Rolls-Royce Holdings PLC * | 668,325 | 2,549,239 | ||||||
RS GROUP PLC | 104,556 | 1,091,383 | ||||||
Serco Group PLC | 1,175,125 | 2,421,268 | ||||||
WH Smith PLC | 125,663 | 2,133,886 | ||||||
17,601,901 | ||||||||
Italy — 4.43% | ||||||||
Banco BPM SpA | 483,360 | 2,561,298 | ||||||
Buzzi SpA | 37,985 | 1,155,300 | ||||||
Leonardo SpA | 244,652 | 4,042,412 | ||||||
Saipem SpA * | 1,249,879 | 2,031,642 | ||||||
9,790,652 | ||||||||
Switzerland — 4.23% | ||||||||
Comet Holding AG | 9,238 | 2,918,882 | ||||||
Flughafen Zurich AG | 12,836 | 2,682,015 | ||||||
Siegfried Holding AG * | 1,990 | 2,035,616 | ||||||
Tecan Group AG | 4,185 | 1,712,114 | ||||||
9,348,627 | ||||||||
Netherlands — 4.08% | ||||||||
Alfen NV 1,* | 16,307 | 1,088,296 | ||||||
BE Semiconductor Industries | ||||||||
NV | 8,964 | 1,353,349 | ||||||
Fugro NV * | 229,873 | 4,407,505 | ||||||
Redcare Pharmacy NV 1,* | 14,959 | 2,170,869 | ||||||
9,020,019 | ||||||||
Spain — 3.48% | ||||||||
Fluidra SA | 94,656 | 1,973,380 | ||||||
Grifols SA * | 104,071 | 1,780,382 | ||||||
Indra Sistemas SA | 197,655 | 3,061,346 | ||||||
Viscofan SA | 14,913 | 883,421 | ||||||
7,698,529 | ||||||||
Norway — 3.11% | ||||||||
Aker Solutions ASA | 359,994 | 1,486,761 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Schibsted ASA - A | 83,633 | $ | 2,407,776 | |||||
Seadrill Ltd. 2,* | 63,284 | 2,992,068 | ||||||
6,886,605 | ||||||||
Ireland — 2.85% | ||||||||
Glanbia PLC | 270,982 | 4,268,537 | ||||||
James Hardie Industries PLC * | 52,426 | 2,021,333 | ||||||
6,289,870 | ||||||||
France — 1.91% | ||||||||
Coface SA | 76,407 | 1,001,265 | ||||||
Sopra Steria Group SACA | 8,634 | 1,890,998 | ||||||
Ubisoft Entertainment SA * | 52,276 | 1,336,317 | ||||||
4,228,580 | ||||||||
Austria — 1.61% | ||||||||
DO & CO AG | 23,940 | 3,551,999 | ||||||
Sweden — 1.43% | ||||||||
Mycronic AB | 37,945 | 1,082,669 | ||||||
The Thule Group AB 1 | 75,931 | 2,070,445 | ||||||
3,153,114 | ||||||||
Belgium — 1.42% | ||||||||
Lotus Bakeries NV | 219 | 1,990,462 | ||||||
Shurgard Self Storage Ltd. | 23,318 | 1,155,061 | ||||||
3,145,523 | ||||||||
Finland — 1.14% | ||||||||
Metso Outotec OYJ | 247,323 | 2,510,797 | ||||||
Jersey, C.I. — 0.88% | ||||||||
Yellow Cake PLC 1,* | 246,991 | 1,947,350 | ||||||
Total EUROPE | ||||||||
(Cost $86,459,621) | 104,334,485 | |||||||
FAR EAST — 33.48% | ||||||||
Japan — 20.84% | ||||||||
ABC-Mart, Inc. | 131,000 | 2,286,304 | ||||||
Asahi Intecc Co. Ltd. | 69,800 | 1,415,466 | ||||||
Asics Corp. | 51,300 | 1,601,397 | ||||||
Azbil Corp. | 75,600 | 2,493,446 | ||||||
Capcom Co. Ltd. | 31,900 | 1,029,436 | ||||||
CKD Corp. | 131,800 | 2,367,542 | ||||||
Fujitec Co. Ltd. | 60,150 | 1,522,651 | ||||||
Fukuoka Financial Group, Inc. | 38,700 | 910,276 | ||||||
Harmonic Drive Systems, Inc. | 62,500 | 1,838,869 | ||||||
Hoshizaki Corp. | 53,000 | 1,936,109 | ||||||
Japan Airport Terminal Co. Ltd. | 31,100 | 1,368,238 | ||||||
Jeol Ltd. | 53,100 | 2,321,396 | ||||||
JINS Holdings, Inc. | 83,200 | 2,769,783 | ||||||
Kusuri no Aoki Holdings Co. Ltd. | 65,100 | 1,478,182 | ||||||
Life Corp. | 44,100 | 1,032,071 | ||||||
MonotaRO Co. Ltd. | 115,890 | 1,261,031 | ||||||
Morinaga & Co. Ltd. | 96,800 | 1,756,113 | ||||||
Morinaga Milk Industry Co. Ltd. | 88,400 | 1,711,213 | ||||||
Nichias Corp. | 53,630 | 1,286,489 | ||||||
NOF Corp. | 23,800 | 1,180,686 | ||||||
OBIC Business Co.nsultants Co. Ltd. | 47,300 | 2,159,863 |
Notes to Financial Statements are an integral part of this Schedule.
24 |
Driehaus International Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Rohto Pharmaceutical Co. Ltd. | 61,700 | $ | 1,240,744 | |||||
Ryohin Keikaku Co. Ltd. | 126,000 | 2,104,529 | ||||||
Sanrio Co. Ltd. | 20,200 | 840,665 | ||||||
Seria Co. Ltd. | 92,300 | 1,721,588 | ||||||
Sundrug Co. Ltd. | 55,500 | 1,781,375 | ||||||
Tazmo Co. Ltd. | 68,400 | 1,338,671 | ||||||
Yokogawa Electric Corp. | 68,600 | 1,303,947 | ||||||
46,058,080 | ||||||||
India — 3.95% | ||||||||
APL Apollo Tubes Ltd. | 93,169 | 1,719,568 | ||||||
Indian Hotels Co. Ltd. | 369,767 | 1,946,834 | ||||||
KPIT Technologies Ltd. | 90,873 | 1,651,349 | ||||||
Max Healthcare Institute Ltd. | 201,583 | 1,661,804 | ||||||
NHPC Ltd. | 1,592,825 | 1,235,602 | ||||||
Syngene International Ltd. 1 | 62,404 | 525,750 | ||||||
8,740,907 | ||||||||
Taiwan — 2.22% | ||||||||
Alchip Technologies Ltd. | 8,000 | 850,067 | ||||||
Hiwin Technologies Corp. | 160,000 | 1,222,934 | ||||||
Lotes Co. Ltd. | 37,000 | 1,286,618 | ||||||
Wiwynn Corp. | 26,000 | 1,539,473 | ||||||
4,899,092 | ||||||||
Australia — 2.21% | ||||||||
AUB Group Ltd. | 80,714 | 1,527,807 | ||||||
Cochlear Ltd. | 4,621 | 940,123 | ||||||
Paladin Energy Ltd. * | 1,194,949 | 800,710 | ||||||
Worley Ltd. | 135,694 | 1,617,437 | ||||||
4,886,077 | ||||||||
South Korea — 1.47% | ||||||||
HPSP Co. Ltd. | 33,306 | 1,124,753 | ||||||
KT Corp. | 79,772 | 2,127,008 | ||||||
3,251,761 | ||||||||
Indonesia — 1.37% | ||||||||
Indosat Tbk PT | 2,603,200 | 1,585,049 | ||||||
Sumber Alfaria Trijaya Tbk PT | 7,562,400 | 1,439,065 | ||||||
3,024,114 | ||||||||
Thailand — 0.63% | ||||||||
Bumrungrad Hospital PCL - | ||||||||
NVDR | 213,800 | 1,389,178 | ||||||
Singapore — 0.43% | ||||||||
Hafnia Ltd. | 139,120 | 960,347 | ||||||
China — 0.36% | ||||||||
Topsports International | ||||||||
Holdings Ltd. 1 | 1,028,000 | 801,642 | ||||||
Total FAR EAST | ||||||||
(Cost $68,073,590) | 74,011,198 | |||||||
NORTH AMERICA — 10.40% | ||||||||
Canada — 7.74% | ||||||||
Boardwalk REIT | 43,974 | 2,367,537 | ||||||
Boyd Group Services, Inc. | 5,400 | 1,134,935 | ||||||
CAE, Inc. * | 71,200 | 1,536,787 | ||||||
Cameco Corp. | 48,100 | 2,073,849 | ||||||
Celestica, Inc. * | 120,300 | 3,523,522 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Element Fleet Management | ||||||||
Corp. | 179,700 | $ | 2,923,914 | |||||
Kinaxis, Inc. * | 24,311 | 2,728,417 | ||||||
Xenon Pharmaceuticals, Inc. 2,* | 17,491 | 805,635 | ||||||
17,094,596 | ||||||||
Mexico — 1.70% | ||||||||
GCC SAB de CV | 180,686 | 2,137,992 | ||||||
Gruma SAB de CV - B | 88,910 | 1,627,041 | ||||||
3,765,033 | ||||||||
United States — 0.96% | ||||||||
Samsonite International SA 1,* | 641,400 | 2,116,121 | ||||||
Total NORTH AMERICA | ||||||||
(Cost $18,444,499) | 22,975,750 | |||||||
SOUTH AMERICA — 1.82% | ||||||||
Brazil — 1.82% | ||||||||
Direcional Engenharia SA | 358,783 | 1,651,473 | ||||||
Embraer SA - SP ADR 2,* | 128,923 | 2,378,629 | ||||||
4,030,102 | ||||||||
Total SOUTH AMERICA | ||||||||
(Cost $3,123,857) | 4,030,102 | |||||||
MIDDLE EAST — 1.36% | ||||||||
Israel — 1.36% | ||||||||
Camtek Ltd. 2,* | 18,073 | 1,253,905 | ||||||
Nice Ltd. - SP ADR 2,* | 8,749 | 1,745,513 | ||||||
2,999,418 | ||||||||
Total MIDDLE EAST | ||||||||
(Cost $2,585,981) | 2,999,418 | |||||||
Total COMMON STOCKS | ||||||||
(Cost $178,687,548) | 208,350,953 | |||||||
PREFERRED STOCKS — 1.11% | ||||||||
EUROPE — 1.11% | ||||||||
Germany — 1.11% | ||||||||
FUCHS PETROLUB SE, 2.76% 3 | 55,124 | 2,452,465 | ||||||
Total EUROPE | ||||||||
(Cost $2,013,550) | 2,452,465 | |||||||
Total PREFERRED STOCKS | ||||||||
(Cost $2,013,550) | 2,452,465 |
Notes to Financial Statements are an integral part of this Schedule.
25 |
Driehaus International Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
SHORT TERM INVESTMENTS — 2.41% | ||||||||
Northern Institutional U.S. Government Select Portfolio (Shares Class), 5.24% 4 | ||||||||
(Cost $5,332,031) | 5,332,031 | $ | 5,332,031 | |||||
TOTAL INVESTMENTS | ||||||||
(Cost $186,033,129) | 97.78 | % | $ | 216,135,449 | ||||
Other Assets In Excess of Liabilities | 2.22 | % | 4,904,721 | |||||
Net Assets | 100.00 | % | $ | 221,040,170 |
NVDR Non-Voting Depositary Receipt
PCL Public Company Limited
PLC Public Limited Company
REIT Real Estate Investment Trust
SP ADR Sponsored American Depositary Receipt
1 | Security is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The total value of these securities is $20,868,018, which represents 9% of Net Assets (see Note F in the Notes to Financial Statements). |
2 | Foreign security denominated and/or traded in U.S. dollars. |
3 | Current yield is disclosed. Dividends are calculated based on a percentage of the issuer’s net income. |
4 | 7 day current yield as of December 31, 2023 is disclosed. |
* | Non-income producing security. |
Percentages are stated as a percent of net assets.
Security Type | Percent of Net Assets | |||
Common Stocks | 94.26 | % | ||
Preferred Stocks | 1.11 | % | ||
Short Term Investments | 2.41 | % | ||
Total Investments | 97.78 | % | ||
Other Assets In Excess of Liabilities | 2.22 | % | ||
Net Assets | 100.00 | % |
Regional Weightings | Percent of Net Assets | |||
Europe | 48.31 | % | ||
Far East | 33.48 | % | ||
North America | 12.81 | % | ||
South America | 1.82 | % | ||
Middle East | 1.36 | % |
Notes to Financial Statements are an integral part of this Schedule.
26 |
Driehaus International Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Industry | Percent of Net Assets | |||
Aerospace & Defense | 4.75 | % | ||
Banks | 1.57 | % | ||
Biotechnology | 1.18 | % | ||
Building Products | 0.58 | % | ||
Capital Markets | 0.74 | % | ||
Chemicals | 2.77 | % | ||
Commercial Services & Supplies | 3.22 | % | ||
Construction & Engineering | 2.73 | % | ||
Construction Materials | 2.41 | % | ||
Consumer Staples Distribution & Retail | 3.58 | % | ||
Diversified Telecommunication Services | 0.96 | % | ||
Electrical Equipment | 0.49 | % | ||
Electronic Equipment, Instruments & Components | 5.70 | % | ||
Energy Equipment & Services | 2.94 | % | ||
Financial Services | 1.91 | % | ||
Food Products | 6.03 | % | ||
Health Care Equipment & Supplies | 4.71 | % | ||
Health Care Providers & Services | 1.38 | % | ||
Hotels, Restaurants & Leisure | 0.88 | % | ||
Household Durables | 0.75 | % | ||
Independent Power and Renewable Electricity Producers | 0.56 | % | ||
Insurance | 1.14 | % | ||
Interactive Media & Services | 2.78 | % |
Industry | Percent of Net Assets | |||
IT Services | 2.78 | % | ||
Leisure Products | 0.94 | % | ||
Life Sciences Tools & Services | 2.40 | % | ||
Machinery | 7.19 | % | ||
Media | 1.09 | % | ||
Metals & Mining | 0.78 | % | ||
Money Market Fund | 2.41 | % | ||
Multiline Retail | 1.73 | % | ||
Oil, Gas & Consumable Fuels | 1.73 | % | ||
Personal Care Products | 0.56 | % | ||
Real Estate Management & Development | 0.52 | % | ||
Residential Real Estate Investment Trusts (REITs) | 1.07 | % | ||
Semiconductors & Semiconductor Equipment | 4.46 | % | ||
Software | 3.75 | % | ||
Specialty Retail | 4.46 | % | ||
Technology Hardware, Storage & Peripherals | 0.70 | % | ||
Textiles, Apparel & Luxury Goods | 2.96 | % | ||
Trading Companies & Distributors | 1.94 | % | ||
Transportation Infrastructure | 1.83 | % | ||
Wireless Telecommunication Services | 0.72 | % | ||
Other Assets In Excess of Liabilities | 2.22 | % | ||
TOTAL | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
27 |
Driehaus Micro Cap Growth Fund — Portfolio Managers’ Letter
Dear Fellow Shareholders,
The Driehaus Micro Cap Growth Fund (the “Fund”) returned 11.44% for the year ended December 31, 2023. The Fund outperformed its benchmark, the Russell Microcap® Growth Index (the “Benchmark”), which returned 9.11% for the same period.
The substantial rally in the fourth quarter enabled 2023 to end up being a strong year for the U.S. equity market. This was a welcome bounce back after the sharp bear market decline of 2022. For the full year 2023, large caps outperformed micro and small caps as seven mega cap tech stocks (the Magnificent Seven) drove meaningful outperformance in the large cap indices and the Nasdaq. Interestingly, on an equal weighted basis, excluding the Magnificent Seven, the S&P 500 performed in a similar manner to small caps.
From a macro perspective, the U.S. economy continues to grow, and there seem to be no immediate signs of recession. The labor market also appears very resilient with recent strong job growth and low unemployment claims. While we believe that the inverted yield curve still needs to be respected due to its track record of consistently preceding recessions, we perceive multiple reasons why a recession may be avoided. These include tremendous fiscal stimulus, healthy consumer balance sheets, the strong labor market, the unique nature of the post-pandemic recovery, improving productivity, reshoring of manufacturing back to the U.S. and the idea that a number of key areas of the U.S. economy already experienced rolling recessions at different intervals and are now seeing a series of rolling expansions. Lower yields have been fueled in part by continued positive signs of disinflation towards the Fed’s target inflation level of two percent. This slowing inflation prompted Federal Reserve Chair Jay Powell at the December Federal Open Market Committee (FOMC) meeting to pivot away from raising interest rates and toward possibly cutting rates in 2024. This is an important change in the Fed’s monetary policy positioning.
Could the long bear market for micro and small caps be over? The bear market started in 2021 and was one of the longest and deepest micro/small cap bear markets in history. We believe that the recent price action in equities suggests that this bear market may be over and a new market cycle may be underway. Again, while we continue to respect the inverted yield curve and the potential for a recession, we perceive compelling reasons to be bullish as 2024 gets underway.
During 2023, the key sector contributors to performance versus the Benchmark were the Fund’s selection of holdings in consumer staples, consumer discretionary and materials sectors.
e.l.f. Beauty, Inc. (Ticker: ELF) was the contributor to the Fund’s performance for the year. The company is a leading manufacturer of mass market and clean beauty products. ELF reported multiple quarters that were well above initial earnings estimates and released guidance that exceeded consensus expectations. Specifically, the consensus estimate for earnings per share for the fiscal year ended March 2024 rose from $1.24 at the start of the year to $2.71 at the end of 2023.
ImmunoGen, Inc. (Ticker: IMGN) was another top contributor to Fund performance for the year. ImmunoGen, Inc. engages in the discovery and development of antibody-drug conjugates to improve outcomes for cancer patients. In November, AbbVie announced it would acquire IMGN for a 90% premium to last sale. We determined an overbid was unlikely given the premium and the competitive bidding process run by IMGN. As a result, we sold the Fund’s position.
In 2023, the information technology and energy sectors detracted the most from Fund performance. The Fund also underperformed versus the Benchmark in industrials, financials and communication services.
The holding that detracted the most from the Fund’s return during the year was Ventyx Biosciences, Inc. (Ticker: VTYX). The company is a clinical-stage biopharmaceutical company, which focuses on developing novel, small molecule therapeutics for the treatment of autoimmune diseases. During the year, VTYX released two datasets that missed investor expectations. Both datasets showed results that appeared to be similar to current, on-market options. As a result, the stock was down significantly after releasing each dataset. We subsequently eliminated the position as a result.
Xponential Fitness, Inc. Class A (Ticker: XPOF) also detracted from the Fund’s returns. Xponential Fitness, Inc. is the largest global franchisor of boutique fitness brands spanning ten verticals. The company was a top detractor after two negative reports were published that called into question XPOF’s franchisee economics and management credibility. Additionally, in September the company offered longer-term guidance that was below expectations, causing estimates for 2025 earnings to be revised lower.
28 |
Near-term, the market appears to be somewhat overbought after the sharp year-end rally, but the market’s breadth and overall technical picture are the best we have seen since before the start of the recent bear market. Near-term market conditions should continue to be influenced by the direction of treasury yields, inflation, and of course, the Fed. Smaller cap valuations, however, remain appealing to us, especially compared to large caps. As detailed above, smaller cap stocks in general continue to trade at their second largest discount to large caps over the past 40 years. We believe that the case for smaller cap stocks is also very compelling as history shows that micro and small caps typically outperform during the first five years or more of a new market cycle and post dovish policy shifts by the Fed.
There are multiple reasons to be constructive on the market as 2024 gets underway. Key reasons are lower inflation, potential rate cuts or at least more dovish Fed policy, the current economic strength, and the ample evidence that the widely expected recession is not here yet and may not materialize. In our view, there are multiple reasons we should continue to avoid a recession. That said, we do need to respect the impeccable record of the sharply inverted yield curve in predicting recessions. While we understand that, in light of the long and variable lag of monetary policy, it would be historically unique for a recession to be avoided, we nonetheless believe that the reasons for economic growth remain persuasive.
Overall, we still see many dynamic investment opportunities which have attractive valuations. We believe that these holdings nicely fit our investment philosophy of companies exhibiting growth inflections, differentiation, market share gains, strong revenues and expanding profitability.
Thank you for investing alongside us in the Fund. We appreciate your continued confidence in our management capabilities.
Sincerely, | |
Jeff James | Michael Buck |
Lead Portfolio Manager | Portfolio Manager |
Prakash Vijayan | |
Assistant Portfolio Manager |
Performance is historical and does not represent future results.
Please see the following performance overview page for index description.
29 |
Driehaus Micro Cap Growth Fund
Performance Overview (unaudited)
The performance summarized below is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares. Performance data presented measures the change in the value of an investment in the Fund, assuming reinvestment of all dividends and capital gains. Average annual total return reflects annualized change. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The graph compares the results of a $10,000 investment (minimum investment) in the Fund over the last 10 fiscal year periods (which includes performance of the Predecessor Limited Partnership), with all dividends and capital gains reinvested, with the indicated index (and dividends reinvested) for the same period.
The performance data shown represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. The Fund will charge a redemption fee of 2.00% on shares held less than sixty (60) days. Performance data represents the rate that an investor would have earned (or lost), during the given periods, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change. Since Fund performance is subject to change after the period-end, please call (800) 560-6111 or visit www.driehaus.com/performance for more current performance information. The gross expense ratio is 1.42% as of the most recent prospectus dated April 30, 2023, as supplemented through the date of this report.
Average Annual Total Returns as of 12/31/23 | 1 Year | 3 Years | 5 Years | 10 Years |
Driehaus Micro Cap Growth Fund (DMCRX) | 11.44% | -2.60% | 18.08% | 14.16% |
Russell Microcap® Growth Index1 | 9.11% | -8.22% | 5.97% | 3.67% |
1 | The Russell Microcap® Growth Index measures the performance of the microcap growth segment of the U.S. equity market. It includes those Russell Microcap companies that are considered more growth oriented relative to the overall market as defined by FTSE Russell’s leading style methodology. The Russell Microcap® Growth Index is constructed to provide a comprehensive and unbiased barometer for the microcap growth segment of the market. Data is calculated with net dividend reinvestment. Source: FTSE Russell. |
30 |
Driehaus Micro Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
COMMON STOCKS — 99.46% | ||||||||
HEALTH CARE — 27.20% | ||||||||
Biotechnology — 17.95% | ||||||||
ADMA Biologics, Inc. * | 298,106 | $ | 1,347,439 | |||||
Aerovate Therapeutics, Inc. * | 20,041 | 453,528 | ||||||
Apogee Therapeutics, Inc. * | 44,705 | 1,249,058 | ||||||
Astria Therapeutics, Inc. * | 50,220 | 385,690 | ||||||
Biohaven Ltd. * | 36,903 | 1,579,448 | ||||||
Biomea Fusion, Inc. * | 57,116 | 829,324 | ||||||
Crinetics Pharmaceuticals, Inc. * | 160,542 | 5,712,084 | ||||||
Day One Biopharmaceuticals, Inc. * | 57,930 | 845,778 | ||||||
Dynavax Technologies Corp. * | 192,517 | 2,691,388 | ||||||
Ideaya Biosciences, Inc. * | 98,327 | 3,498,475 | ||||||
Ironwood Pharmaceuticals, Inc. * | 52,848 | 604,581 | ||||||
KalVista Pharmaceuticals, Inc. * | 68,998 | 845,225 | ||||||
Kiniksa Pharmaceuticals Ltd. - A * | 79,338 | 1,391,589 | ||||||
Merus NV 1,* | 81,762 | 2,248,455 | ||||||
Morphic Holding, Inc. * | 16,219 | 468,405 | ||||||
Nuvalent, Inc. - A * | 38,851 | 2,859,045 | ||||||
Rhythm Pharmaceuticals, Inc. * | 69,123 | 3,177,584 | ||||||
Vaxcyte, Inc. * | 50,737 | 3,186,284 | ||||||
Veracyte, Inc. * | 49,024 | 1,348,650 | ||||||
Xenon Pharmaceuticals, Inc. 1,* | 112,912 | 5,200,727 | ||||||
39,922,757 | ||||||||
Health Care Equipment & Supplies — 5.04% | ||||||||
Alphatec Holdings, Inc. * | 157,094 | 2,373,690 | ||||||
Inspire Medical Systems, Inc. * | 3,989 | 811,482 | ||||||
LeMaitre Vascular, Inc. | 11,632 | 660,232 | ||||||
PROCEPT BioRobotics Corp. * | 44,415 | 1,861,433 | ||||||
RxSight, Inc. * | 63,518 | 2,561,046 | ||||||
TransMedics Group, Inc. * | 37,330 | 2,946,457 | ||||||
11,214,340 | ||||||||
Pharmaceuticals — 2.76% | ||||||||
Cymabay Therapeutics, Inc. * | 100,939 | 2,384,179 | ||||||
Edgewise Therapeutics, Inc. * | 31,349 | 342,958 | ||||||
Structure Therapeutics, Inc. * | 83,492 | 3,403,134 | ||||||
6,130,271 | ||||||||
Health Care Providers & Services — 1.45% | ||||||||
NeoGenomics, Inc. * | 93,707 | 1,516,179 | ||||||
PetIQ, Inc. * | 86,810 | 1,714,498 | ||||||
3,230,677 | ||||||||
Total HEALTH CARE | ||||||||
(Cost $39,320,946) | 60,498,045 | |||||||
INDUSTRIALS — 20.91% | ||||||||
Trading Companies & Distributors — 4.57% | ||||||||
FTAI Aviation Ltd. | 92,938 | 4,312,323 |
Shares, Principal Number of Contracts | Value | |||||||
H&E Equipment Services, Inc. | 31,469 | $ | 1,646,458 | |||||
Hudson Technologies, Inc. * | 154,118 | 2,079,052 | ||||||
McGrath RentCorp | 17,681 | 2,115,001 | ||||||
10,152,834 | ||||||||
Construction & Engineering — 4.20% | ||||||||
Construction Partners, Inc. - A * | 31,566 | 1,373,752 | ||||||
MYR Group, Inc. * | 12,605 | 1,823,061 | ||||||
Primoris Services Corp. | 42,617 | 1,415,311 | ||||||
Sterling Infrastructure, Inc. * | 53,696 | 4,721,489 | ||||||
9,333,613 | ||||||||
Machinery — 3.94% | ||||||||
Blue Bird Corp. * | 84,932 | 2,289,767 | ||||||
Federal Signal Corp. | 28,959 | 2,222,313 | ||||||
The Greenbrier Cos., Inc. | 35,543 | 1,570,290 | ||||||
Wabash National Corp. | 104,769 | 2,684,182 | ||||||
8,766,552 | ||||||||
Aerospace & Defense — 3.53% | ||||||||
AAR Corp. * | 52,416 | 3,270,759 | ||||||
AeroVironment, Inc. * | 23,121 | 2,914,171 | ||||||
Kratos Defense & Security Solutions, Inc. * | 82,456 | 1,673,032 | ||||||
7,857,962 | ||||||||
Commercial Services & Supplies — 1.99% | ||||||||
ACV Auctions, Inc. - A * | 112,514 | 1,704,587 | ||||||
CECO Environmental Corp. * | 45,069 | 913,999 | ||||||
Montrose Environmental Group, Inc. * | 42,907 | 1,378,602 | ||||||
Performant Financial Corp. * | 139,653 | 436,416 | ||||||
4,433,604 | ||||||||
Ground Transportation — 1.26% | ||||||||
ArcBest Corp. | 23,320 | 2,803,297 | ||||||
Professional Services — 0.81% | ||||||||
Huron Consulting Group, Inc. * | 17,447 | 1,793,552 | ||||||
Electrical Equipment — 0.61% | ||||||||
Enovix Corp. * | 108,798 | 1,362,151 | ||||||
Total INDUSTRIALS | ||||||||
(Cost $36,532,388) | 46,503,565 | |||||||
INFORMATION TECHNOLOGY — 14.85% | ||||||||
Semiconductors & Semiconductor Equipment — 5.09% | ||||||||
Aehr Test Systems * | 22,205 | 589,099 | ||||||
Camtek Ltd. 1,* | 73,232 | 5,080,836 | ||||||
Credo Technology Group Holding Ltd. * | 99,209 | 1,931,599 | ||||||
SkyWater Technology, Inc. * | 128,556 | 1,236,709 | ||||||
Veeco Instruments, Inc. * | 79,930 | 2,480,228 | ||||||
11,318,471 | ||||||||
Software — 3.65% | ||||||||
Agilysys, Inc. * | 37,239 | 3,158,612 | ||||||
Alkami Technology, Inc. * | 76,578 | 1,857,016 |
Notes to Financial Statements are an integral part of this Schedule.
31 |
Driehaus Micro Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Cleanspark, Inc. * | 101,264 | $ | 1,116,942 | |||||
PROS Holdings, Inc. * | 45,365 | 1,759,708 | ||||||
SilverSun Technologies, Inc. | 12,860 | 220,035 | ||||||
8,112,313 | ||||||||
IT Services — 2.56% | ||||||||
Couchbase, Inc. * | 117,129 | 2,637,745 | ||||||
Fastly, Inc. - A * | 92,398 | 1,644,684 | ||||||
Grid Dynamics Holdings, Inc. * | 105,156 | 1,401,730 | ||||||
5,684,159 | ||||||||
Communications Equipment — 2.02% | ||||||||
Applied Optoelectronics, Inc. * | 213,180 | 4,118,638 | ||||||
Aviat Networks, Inc. * | 11,740 | 383,428 | ||||||
4,502,066 | ||||||||
Electronic Equipment, Instruments & Components — 1.53% | ||||||||
Arlo Technologies, Inc. * | 286,036 | 2,723,063 | ||||||
Bel Fuse, Inc. - B | 10,345 | 690,735 | ||||||
3,413,798 | ||||||||
Total INFORMATION | ||||||||
TECHNOLOGY | ||||||||
(Cost $27,294,242) | 33,030,807 | |||||||
CONSUMER DISCRETIONARY — 14.60% | ||||||||
Diversified Consumer Services — 4.29% | ||||||||
Adtalem Global Education, Inc. * | 17,675 | 1,041,941 | ||||||
Mister Car Wash, Inc. * | 102,077 | 881,946 | ||||||
OneSpaWorld Holdings Ltd. 1,* | 224,390 | 3,163,899 | ||||||
Stride, Inc. * | 52,370 | 3,109,207 | ||||||
WW International, Inc. * | 153,856 | 1,346,240 | ||||||
9,543,233 | ||||||||
Household Durables — 3.29% | ||||||||
Beazer Homes USA, Inc. * | 75,747 | 2,559,491 | ||||||
Century Communities, Inc. | 24,959 | 2,274,763 | ||||||
Installed Building Products, Inc. | 13,623 | 2,490,557 | ||||||
7,324,811 | ||||||||
Specialty Retail — 2.83% | ||||||||
Abercrombie & Fitch Co. - A * | 23,974 | 2,114,986 | ||||||
Arhaus, Inc. * | 143,744 | 1,703,367 | ||||||
National Vision Holdings, Inc. * | 42,467 | 888,834 | ||||||
Warby Parker, Inc. - A * | 112,497 | 1,586,208 | ||||||
6,293,395 | ||||||||
Automobile Components — 2.26% | ||||||||
Modine Manufacturing Co. * | 83,993 | 5,014,382 | ||||||
Hotels, Restaurants & Leisure — 1.93% | ||||||||
First Watch Restaurant Group, Inc. * | 76,037 | 1,528,344 | ||||||
Genius Sports Ltd. 1,* | 247,130 | 1,527,263 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Kura Sushi USA, Inc. - A * | 16,275 | $ | 1,236,900 | |||||
4,292,507 | ||||||||
Total CONSUMER | ||||||||
DISCRETIONARY | ||||||||
(Cost $24,247,036) | 32,468,328 | |||||||
FINANCIALS — 10.70% | ||||||||
Insurance — 5.33% | ||||||||
Goosehead Insurance, Inc. - A * | 26,797 | 2,031,213 | ||||||
HCI Group, Inc. | 31,577 | 2,759,830 | ||||||
Heritage Insurance Holdings, Inc. * | 228,123 | 1,487,362 | ||||||
Mercury General Corp. | 54,390 | 2,029,291 | ||||||
Palomar Holdings, Inc. * | 17,009 | 943,999 | ||||||
Skyward Specialty Insurance Group, Inc. * | 76,658 | 2,597,173 | ||||||
11,848,868 | ||||||||
Banks — 3.80% | ||||||||
Customers Bancorp, Inc. * | 47,414 | 2,731,995 | ||||||
Live Oak Bancshares, Inc. | 24,686 | 1,123,213 | ||||||
The Bancorp, Inc. * | 66,574 | 2,567,093 | ||||||
Triumph Financial, Inc. * | 25,460 | 2,041,383 | ||||||
8,463,684 | ||||||||
Capital Markets — 1.15% | ||||||||
PJT Partners, Inc. – A | 25,204 | 2,567,532 | ||||||
Financial Services — 0.42% | ||||||||
Remitly Global, Inc. * | 47,932 | 930,839 | ||||||
Total FINANCIALS | ||||||||
(Cost $20,950,744) | 23,810,923 | |||||||
CONSUMER STAPLES — 3.16% | ||||||||
Beverages — 2.27% | ||||||||
Celsius Holdings, Inc. * | 20,224 | 1,102,613 | ||||||
MGP Ingredients, Inc. | 14,505 | 1,429,033 | ||||||
The Vita Coco Co., Inc. * | 98,413 | 2,524,293 | ||||||
5,055,939 | ||||||||
Personal Care Products — 0.84% | ||||||||
elf Beauty, Inc. * | 12,872 | 1,857,944 | ||||||
Food Products — 0.05% | ||||||||
The Real Good Food Co., Inc. * | 70,295 | 106,848 | ||||||
Total CONSUMER STAPLES | ||||||||
(Cost $4,020,118) | 7,020,731 | |||||||
ENERGY — 3.09% | ||||||||
Oil, Gas & Consumable Fuels — 1.64% | ||||||||
Uranium Energy Corp. * | 569,739 | 3,646,330 | ||||||
Energy Equipment & Services — 1.45% | ||||||||
Liberty Energy, Inc. | 44,734 | 811,475 | ||||||
Tidewater, Inc. * | 33,506 | 2,416,117 | ||||||
3,227,592 | ||||||||
Total ENERGY | ||||||||
(Cost $5,345,381) | 6,873,922 |
Notes to Financial Statements are an integral part of this Schedule.
32 |
Driehaus Micro Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
MATERIALS — 2.96% | ||||||||
Metals & Mining — 1.27% | ||||||||
ATI, Inc. * | 62,010 | $ | 2,819,595 | |||||
Construction Materials — 0.85% | ||||||||
Knife River Corp. * | 28,470 | 1,884,144 | ||||||
Chemicals — 0.84% | ||||||||
Aspen Aerogels, Inc. * | 119,291 | 1,882,412 | ||||||
Total MATERIALS | ||||||||
(Cost $3,954,546) | 6,586,151 | |||||||
COMMUNICATION SERVICES — 1.99% | ||||||||
Interactive Media & Services — 1.23% | ||||||||
EverQuote, Inc. - A * | 134,229 | 1,642,963 | ||||||
QuinStreet, Inc. * | 85,080 | 1,090,725 | ||||||
2,733,688 | ||||||||
Media — 0.76% | ||||||||
Gambling.com Group Ltd. 1,* | 118,904 | 1,159,314 | ||||||
Perion Network Ltd. 1,* | 17,555 | 541,923 | ||||||
1,701,237 | ||||||||
Total COMMUNICATION | ||||||||
SERVICES | ||||||||
(Cost $4,093,153) | 4,434,925 | |||||||
Total COMMON STOCKS | ||||||||
(Cost $165,758,554) | 221,227,397 | |||||||
SHORT TERM INVESTMENTS — 0.15% | ||||||||
Northern Institutional U.S. Government Select Portfolio (Shares Class), 5.24% 2 | ||||||||
(Cost $331,796) | 331,796 | 331,796 | ||||||
TOTAL INVESTMENTS | ||||||||
(Cost $166,090,350) | 99.61 | % | $ | 221,559,193 | ||||
Other Assets In Excess of Liabilities | 0.39 | % | 869,206 | |||||
Net Assets | 100.00 | % | $ | 222,428,399 |
1 | Foreign security denominated and/or traded in U.S. dollars. |
2 | 7 day current yield as of December 31, 2023 is disclosed. |
* | Non-income producing security. |
Percentages are stated as a percent of net assets.
Security Type | Percent of Net Assets | |||
Common Stocks | 99.46 | % | ||
Short Term Investments | 0.15 | % | ||
Total Investments | 99.61 | % | ||
Other Assets In Excess of Liabilities | 0.39 | % | ||
Net Assets | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
33 |
Driehaus Micro Cap Growth Fund
Schedule of Investments
December 31, 2023
Industry | Percent of Net Assets | |||
Aerospace & Defense | 3.53 | % | ||
Automobile Components | 2.26 | % | ||
Banks | 3.80 | % | ||
Beverages | 2.27 | % | ||
Biotechnology | 17.95 | % | ||
Capital Markets | 1.15 | % | ||
Chemicals | 0.84 | % | ||
Commercial Services & Supplies | 1.99 | % | ||
Communications Equipment | 2.02 | % | ||
Construction & Engineering | 4.20 | % | ||
Construction Materials | 0.85 | % | ||
Diversified Consumer Services | 4.29 | % | ||
Electrical Equipment | 0.61 | % | ||
Electronic Equipment, Instruments & Components | 1.53 | % | ||
Energy Equipment & Services | 1.45 | % | ||
Financial Services | 0.42 | % | ||
Food Products | 0.05 | % | ||
Ground Transportation | 1.26 | % | ||
Health Care Equipment & Supplies | 5.04 | % | ||
Health Care Providers & Services | 1.45 | % |
Industry | Percent of Net Assets | |||
Hotels, Restaurants & Leisure | 1.93 | % | ||
Household Durables | 3.29 | % | ||
Insurance | 5.33 | % | ||
Interactive Media & Services | 1.23 | % | ||
IT Services | 2.56 | % | ||
Machinery | 3.94 | % | ||
Media | 0.76 | % | ||
Metals & Mining | 1.27 | % | ||
Money Market Fund | 0.15 | % | ||
Oil, Gas & Consumable Fuels | 1.64 | % | ||
Personal Care Products | 0.84 | % | ||
Pharmaceuticals | 2.76 | % | ||
Professional Services | 0.81 | % | ||
Semiconductors & Semiconductor Equipment | 5.09 | % | ||
Software | 3.65 | % | ||
Specialty Retail | 2.83 | % | ||
Trading Companies & Distributors | 4.57 | % | ||
Other Assets In Excess of Liabilities | 0.39 | % | ||
TOTAL | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
34 |
Driehaus Small Cap Growth Fund — Portfolio Managers’ Letter
Dear Fellow Shareholders,
The Driehaus Small Cap Growth Fund (“Fund”) Investor class (DVSMX) returned 18.92% and Institutional class (DNSMX) returned 19.12% for the year ended December 31, 2023. This return outperformed the Fund’s benchmark, the Russell 2000® Growth Index (the “Benchmark”), which returned 18.66% for the same period.
The substantial rally in the fourth quarter enabled 2023 to end up being a strong year for the U.S. equity market. This was a welcome bounce back after the sharp bear market decline of 2022. For the full year 2023, large caps outperformed micro and small caps as seven mega cap tech stocks (the Magnificent Seven) drove meaningful outperformance in the large cap indices and the Nasdaq. Interestingly, on an equal weighted basis, excluding the Magnificent Seven, the S&P 500 performed in a similar manner to small caps.
From a macro perspective, the U.S. economy continues to grow and there seem to be no immediate signs of recession. The labor market also appears resilient with recent strong job growth and low unemployment claims. While we believe that the inverted yield curve still needs to be respected due to its track record of consistently preceding recessions, we perceive multiple reasons why a recession may be avoided. These include tremendous fiscal stimulus, healthy consumer balance sheets, the strong labor market, the unique nature of the post-pandemic recovery, improving productivity, reshoring of manufacturing back to the U.S. and the idea that a number of key areas of the U.S. economy already experienced rolling recessions at different intervals and are now seeing a series of rolling expansions. Lower yields have been fueled in part by continued positive signs of disinflation towards the Fed’s target inflation level of two percent. This slowing inflation prompted Federal Reserve Chair Jay Powell at the December Federal Open Market Committee (FOMC) meeting to pivot away from raising interest rates and toward possibly cutting rates in 2024. This is an important change in the Fed’s monetary policy positioning.
Could the long bear market for micro and small caps be over? The bear market started in 2021 and was one of the longest and deepest micro/small cap bear markets in history. We believe that the recent price action in equities suggests that this the bear market may be over and a new market cycle may be underway. Again, while we continue to respect the inverted yield curve and the potential for a recession, we perceive compelling reasons to be bullish as 2024 gets underway.
During 2023, the key sector contributors to performance versus the Benchmark were the Fund’s selection of holdings in consumer staples, energy and materials sectors.
Super Micro Computer Inc. (Ticker: SMCI) was the top contributor to Fund performance for the year. The company engages in the distribution and manufacture of technology solutions and computing products, such as servers. SMCI was a top contributor after preannouncing positive earnings per share (EPS) that exceeded expectations and revenue for the June 2023 quarter beating expectations by 20%. SMCI further benefitted from being a close partner with mega-cap Nvidia and the growing buildout of AI infrastructure. During 2023, SMCI experienced record design wins and orders, with a fast-growing backlog for rack-scale AI servers.
e.l.f. Beauty, Inc. (Ticker: ELF) was another top contributor to the Fund’s performance for the year. The company is a leading manufacturer of mass market and clean beauty products. ELF reported multiple quarters that were well above initial earnings estimates and released guidance that exceeded consensus expectations. Specifically, the consensus estimate for earnings per share for the fiscal year ended March 2024 rose from $1.24 at the start of the year to $2.71 at the end of 2023.
In 2023, the Fund’s stock selection in consumer discretionary, communication services and financials under-performed the most versus the Benchmark.
The holding that detracted the most from the Fund’s return in 2023 was Calix, Inc. (ticker CALX). Calix, Inc. offers software-centric broadband communications access systems that enable service providers to transform their networks. While company-specific sales and earnings estimate revisions were positive, industry datapoints in the first half of 2023 showed a sharp contraction in new orders placed by service providers. With this weakness expected to persist, the stock experienced price weakness consistent with its network industry peers.
35 |
Halozyme Therapeutics (Ticker: HALO) also detracted from the Fund’s returns. Halozyme Therapeutics, inc. is a commercial-stage drug company that receives royalties and supply revenue from partners for their technology that enables intravenous drugs to be formulated for subcutaneous administration. HALO was a top detractor as the durability of their franchise came into greater doubt due to new interpretations of pharmaceutical pricing legislation and increased competitive intensity from novel technologies and companies pursuing better drug-like properties for antibodies.
Near-term the market appears to be somewhat overbought after the sharp year-end rally, but the market’s breadth and overall technical picture are the best we have seen since before the start of the recent bear market. Near-term market conditions should continue to be influenced by the direction of treasury yields, inflation, and of course, the Fed. Smaller cap valuations, however, remain appealing to us, especially compared to large caps. As detailed above, small cap stocks in general continue to trade at their second largest discount to large caps over the past 40 years. We believe that the case for small cap stocks is also very compelling as history shows that small caps typically outperform during the first five years or more of a new market cycle and post dovish policy shifts by the Fed.
There are multiple reasons to be constructive on the market as 2024 gets underway. Key reasons are lower inflation, potential rate cuts or at least more dovish Fed policy, the current economic strength, and the ample evidence that the widely expected recession is not here yet and may not materialize. In our view, there are multiple reasons we should continue to avoid a recession. That said, we do need to respect the impeccable record of the sharply inverted yield curve in predicting recessions. While we understand that, in light of the long and variable lag of monetary policy, it would be historically unique for a recession to be avoided, we nonetheless believe that the reasons for economic growth remain persuasive.
Overall, we still see many dynamic investment opportunities which have attractive valuations. We believe that these holdings nicely fit our investment philosophy of companies exhibiting growth inflections, differentiation, market share gains, strong revenues and expanding profitability.
Thank you for investing alongside us in the Fund. We appreciate your continued confidence in our management capabilities.
Sincerely, | |
Jeff James | Michael Buck |
Lead Portfolio Manager | Portfolio Manager |
Prakash Vijayan | |
Assistant Portfolio Manager |
Performance is historical and does not represent future results.
Please see the following performance overview page for index description.
36 |
Driehaus Small Cap Growth Fund
Performance Overview (unaudited)
The performance summarized below is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares. Performance data presented measures the change in the value of an investment in the Fund, assuming reinvestment of all dividends and capital gains. Average annual total return reflects annualized change. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The graph compares the results of a $10,000 investment (minimum investment) in the Fund over the last 10 fiscal year periods (which includes performance of the Predecessor Partnership), with all dividends and capital gains reinvested, with the indicated index (and dividends reinvested) for the same period.
The performance data shown represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Performance data represents the rate that an investor would have earned (or lost), during the given periods, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change. Since Fund performance is subject to change after the period-end, please call (800) 560-6111 or visit www.driehaus.com/performance for more current performance information. The gross expense ratios for the Investor Class and Institutional Class are 1.00% and 0.75%, respectively, as of the most recent prospectus dated April 30, 2023, as supplemented through the date of this report.
Fund Only | Including Predecessor Limited Partnership | ||||
Average Annual Total Returns as of 12/31/23 | 1 Year | 3 Years | 5 Years | Since Inception (8/21/17 - 12/31/23) | 10 Years |
Driehaus Small Cap Growth Fund Investor Class (DVSMX)1 | 18.92% | -1.73% | 16.86% | 16.63% | 12.98% |
Driehaus Small Cap Growth Fund Institutional Class (DNSMX)1 | 19.19% | -1.50% | 17.18% | 16.94% | 13.17% |
Russell 2000® Growth Index2 | 18.66% | -3.50% | 9.22% | 7.86% | 7.16% |
1 | The Driehaus Small Cap Growth Fund (“the Fund”) performance shown above includes the performance of the Driehaus Institutional Small Cap, L.P. (the “Predecessor Partnership”), one of the Fund’s predecessors, for the periods before the Fund’s registration statement became effective. The Predecessor Partnership was managed by the same investment team with substantially the same investment objective, policies and philosophies as are followed by the Fund. The Fund succeeded to the Predecessor Partnership’s assets together with the assets of the Driehaus Institutional Small Cap Recovery Fund, L.P., Driehaus Small Cap Recovery Fund, L.P. and Driehaus Small Cap Investors, L.P. (together, the “Limited Partnerships”) on August 21, 2017. The investment portfolios of the Limited Partnerships were identical and therefore had similar performance. The performance of the Predecessor Partnership is shown here because it has been in operation the longest. The Predecessor Partnership was not registered under the Investment Company Act of 1940, as amended (“1940 Act”), and thus was not subject to certain investment and operational restrictions that are imposed by the 1940 Act. If the Predecessor Partnership had been registered under the 1940 Act, its performance may have been adversely affected. The Predecessor Partnership’s performance has not been restated to reflect estimated expenses applicable to each class of shares of the Fund. The returns reflect fee waivers and/or reimbursements without which performance would have been lower. |
2 | The Russell 2000® Growth Index measures the performance of the small cap growth segment of the US Equity universe. It includes those Russell 2000® companies with higher price-value ratio and higher forecasted growth values. The Russell 2000® Index is constructed to provide a comprehensive and unbiased barometer for the small cap growth segment of the market. Data is calculated with net dividend reinvestment. Source: FTSE Russell. |
37 |
Driehaus Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
COMMON STOCKS — 98.19% | ||||||||
INDUSTRIALS — 26.62% | ||||||||
Trading Companies & Distributors — 6.94% | ||||||||
Applied Industrial | ||||||||
Technologies, Inc. | 48,689 | $ | 8,408,103 | |||||
Boise Cascade Co. | 49,818 | 6,444,456 | ||||||
Core & Main, Inc. - A * | 141,417 | 5,714,661 | ||||||
FTAI Aviation Ltd. | 191,914 | 8,904,810 | ||||||
Herc Holdings, Inc. | 27,169 | 4,045,192 | ||||||
MSC Industrial Direct Co., Inc. - A | 30,946 | 3,133,592 | ||||||
SiteOne Landscape Supply, Inc. * | 14,295 | 2,322,938 | ||||||
38,973,752 | ||||||||
Construction & Engineering — 5.63% | ||||||||
API Group Corp. * | 106,365 | 3,680,229 | ||||||
Arcosa, Inc. | 43,517 | 3,596,245 | ||||||
Comfort Systems USA, Inc. | 38,570 | 7,932,692 | ||||||
EMCOR Group, Inc. | 26,382 | 5,683,474 | ||||||
Fluor Corp. * | 209,491 | 8,205,762 | ||||||
Sterling Infrastructure, Inc. * | 28,401 | 2,497,300 | ||||||
31,595,702 | ||||||||
Aerospace & Defense — 3.97% | ||||||||
Axon Enterprise, Inc. * | 36,312 | 9,380,479 | ||||||
Curtiss-Wright Corp. | 19,034 | 4,240,585 | ||||||
Leonardo DRS, Inc. * | 266,582 | 5,342,303 | ||||||
Moog, Inc. - A | 23,197 | 3,358,462 | ||||||
22,321,829 | ||||||||
Machinery — 3.91% | ||||||||
Chart Industries, Inc. * | 26,407 | 3,600,066 | ||||||
Crane Co. | 27,611 | 3,261,964 | ||||||
Federal Signal Corp. | 97,855 | 7,509,393 | ||||||
SPX Technologies, Inc. * | 74,910 | 7,566,659 | ||||||
21,938,082 | ||||||||
Ground Transportation — 2.00% | ||||||||
Saia, Inc. * | 25,580 | 11,209,668 | ||||||
Commercial Services & Supplies — 1.66% | ||||||||
MSA Safety, Inc. | 16,623 | 2,806,461 | ||||||
Tetra Tech, Inc. | 39,172 | 6,538,982 | ||||||
9,345,443 | ||||||||
Building Products — 1.47% | ||||||||
AAON, Inc. | 36,050 | 2,663,013 | ||||||
The AZEK Co., Inc. * | 80,507 | 3,079,393 | ||||||
Zurn Elkay Water Solutions Corp. | 84,576 | 2,487,380 | ||||||
8,229,786 | ||||||||
Electrical Equipment — 1.04% | ||||||||
Enovix Corp. * | 174,795 | 2,188,433 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
NEXTracker, Inc. - A * | 78,241 | $ | 3,665,591 | |||||
5,854,024 | ||||||||
Total INDUSTRIALS | ||||||||
(Cost $113,128,294) | 149,468,286 | |||||||
INFORMATION TECHNOLOGY — 23.88% | ||||||||
Software — 11.73% | ||||||||
Agilysys, Inc. * | 43,686 | 3,705,446 | ||||||
Appfolio, Inc. - A * | 37,868 | 6,560,252 | ||||||
Braze, Inc. - A * | 126,168 | 6,703,306 | ||||||
CyberArk Software Ltd. * | 40,113 | 8,786,753 | ||||||
Elastic NV 1,* | 41,055 | 4,626,898 | ||||||
Freshworks, Inc. - A * | 187,159 | 4,396,365 | ||||||
Gitlab, Inc. - A * | 136,972 | 8,623,757 | ||||||
Marathon Digital Holdings, Inc. * | 140,142 | 3,291,936 | ||||||
Monday.com Ltd. * | 56,269 | 10,567,881 | ||||||
Sprout Social, Inc. - A * | 45,818 | 2,815,058 | ||||||
SPS Commerce, Inc. * | 30,056 | 5,826,055 | ||||||
65,903,707 | ||||||||
Semiconductors & Semiconductor Equipment — 5.35% | ||||||||
Camtek Ltd. 1,* | 163,900 | 11,371,382 | ||||||
Onto Innovation, Inc. * | 75,322 | 11,516,734 | ||||||
Rambus, Inc. * | 104,476 | 7,130,487 | ||||||
30,018,603 | ||||||||
Technology Hardware, Storage & Peripherals — 2.86% | ||||||||
Super Micro Computer, Inc. * | 56,601 | 16,089,400 | ||||||
Electronic Equipment, Instruments & Components — 2.52% | ||||||||
Badger Meter, Inc. | 25,982 | 4,010,842 | ||||||
Celestica, Inc. 1,* | 48,240 | 1,412,467 | ||||||
Fabrinet 1,* | 45,755 | 8,708,549 | ||||||
14,131,858 | ||||||||
IT Services — 0.74% | ||||||||
Endava PLC - SP ADR 1,* | 53,304 | 4,149,716 | ||||||
Communications Equipment — 0.68% | ||||||||
Applied Optoelectronics, Inc. * | 197,817 | 3,821,825 | ||||||
Total INFORMATION | ||||||||
TECHNOLOGY | ||||||||
(Cost $105,568,250) | 134,115,109 | |||||||
HEALTH CARE — 19.27% | ||||||||
Biotechnology — 12.66% | ||||||||
Apellis Pharmaceuticals, Inc. * | 61,379 | 3,674,147 | ||||||
Apogee Therapeutics, Inc. * | 107,673 | 3,008,384 | ||||||
Biomea Fusion, Inc. * | 103,974 | 1,509,702 | ||||||
Crinetics Pharmaceuticals, Inc. * | 249,638 | 8,882,120 | ||||||
Cytokinetics, Inc. * | 40,389 | 3,372,078 | ||||||
Halozyme Therapeutics, Inc. * | 66,269 | 2,449,302 | ||||||
Karuna Therapeutics, Inc. * | 8,837 | 2,796,999 | ||||||
Krystal Biotech, Inc. * | 39,210 | 4,864,392 | ||||||
Merus NV 1,* | 125,642 | 3,455,155 |
Notes to Financial Statements are an integral part of this Schedule.
38 |
Driehaus Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Natera, Inc. * | 70,408 | $ | 4,410,357 | |||||
Nuvalent, Inc. - A * | 104,652 | 7,701,341 | ||||||
Ultragenyx Pharmaceutical, Inc. * | 72,056 | 3,445,718 | ||||||
Vaxcyte, Inc. * | 158,804 | 9,972,891 | ||||||
Xenon Pharmaceuticals, Inc. 1,* | 251,183 | 11,569,489 | ||||||
71,112,075 | ||||||||
Health Care Equipment & Supplies — 4.86% | ||||||||
Alphatec Holdings, Inc. * | 259,058 | 3,914,367 | ||||||
Axonics, Inc. * | 85,874 | 5,343,939 | ||||||
Glaukos Corp. * | 70,443 | 5,599,514 | ||||||
Inspire Medical Systems, Inc. * | 23,953 | 4,872,759 | ||||||
TransMedics Group, Inc. * | 96,024 | 7,579,174 | ||||||
27,309,753 | ||||||||
Pharmaceuticals — 1.75% | ||||||||
Axsome Therapeutics, Inc. * | 53,334 | 4,244,853 | ||||||
Structure Therapeutics, Inc. * | 136,684 | 5,571,240 | ||||||
9,816,093 | ||||||||
Total HEALTH CARE | ||||||||
(Cost $80,406,597) | 108,237,921 | |||||||
CONSUMER DISCRETIONARY — 8.71% | ||||||||
Hotels, Restaurants & Leisure — 2.84% | ||||||||
Cava Group, Inc. * | 89,224 | 3,834,848 | ||||||
Dutch Bros, Inc. - A * | 182,979 | 5,794,945 | ||||||
Wingstop, Inc. | 24,652 | 6,325,210 | ||||||
15,955,003 | ||||||||
Diversified Consumer Services — 1.75% | ||||||||
Duolingo, Inc. * | 29,693 | 6,735,857 | ||||||
Grand Canyon Education, Inc. * | 23,385 | 3,087,755 | ||||||
9,823,612 | ||||||||
Household Durables — 1.53% | ||||||||
Installed Building Products, Inc. | 15,121 | 2,764,421 | ||||||
Meritage Homes Corp. | 33,567 | 5,847,372 | ||||||
8,611,793 | ||||||||
Specialty Retail — 1.40% | ||||||||
American Eagle Outfitters, Inc. | 136,137 | 2,880,659 | ||||||
Carvana Co. * | 52,892 | 2,800,103 | ||||||
The Gap, Inc. | 103,009 | 2,153,918 | ||||||
7,834,680 | ||||||||
Broadline Retail — 0.65% | ||||||||
Ollie’s Bargain Outlet Holdings, Inc. * | 48,336 | 3,668,219 | ||||||
Automobile Components — 0.54% | ||||||||
Modine Manufacturing Co. * | 50,332 | 3,004,820 | ||||||
Total CONSUMER | ||||||||
DISCRETIONARY | ||||||||
(Cost $39,759,137) | 48,898,127 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
CONSUMER STAPLES — 6.85% | ||||||||
Personal Care Products — 4.59% | ||||||||
BellRing Brands, Inc. * | 228,462 | $ | 12,663,649 | |||||
elf Beauty, Inc. * | 61,893 | 8,933,635 | ||||||
Inter Parfums, Inc. | 29,205 | 4,205,812 | ||||||
25,803,096 | ||||||||
Food Products — 1.01% | ||||||||
Freshpet, Inc. * | 65,249 | 5,661,003 | ||||||
Consumer Staples Distribution & Retail — 0.68% | ||||||||
Sprouts Farmers Market, Inc. * | 79,498 | 3,824,649 | ||||||
Beverages — 0.57% | ||||||||
Celsius Holdings, Inc. * | 58,520 | 3,190,511 | ||||||
Total CONSUMER STAPLES | ||||||||
(Cost $22,420,739) | 38,479,259 | |||||||
FINANCIALS — 5.17% | ||||||||
Banks — 1.79% | ||||||||
Customers Bancorp, Inc. * | 58,106 | 3,348,068 | ||||||
Western Alliance Bancorp | 101,669 | 6,688,803 | ||||||
10,036,871 | ||||||||
Insurance — 1.61% | ||||||||
HCI Group, Inc. | 36,288 | 3,171,571 | ||||||
Kinsale Capital Group, Inc. | 7,824 | 2,620,336 | ||||||
Skyward Specialty Insurance Group, Inc. * | 95,448 | 3,233,778 | ||||||
9,025,685 | ||||||||
Capital Markets — 1.08% | ||||||||
Evercore, Inc. – A | 35,637 | 6,095,709 | ||||||
Financial Services — 0.69% | ||||||||
Flywire Corp. * | 93,030 | 2,153,645 | ||||||
Remitly Global, Inc. * | 89,498 | 1,738,051 | ||||||
3,891,696 | ||||||||
Total FINANCIALS | ||||||||
(Cost $24,574,814) | 29,049,961 | |||||||
ENERGY — 4.74% | ||||||||
Oil, Gas & Consumable Fuels — 2.91% | ||||||||
Cameco Corp. 1 | 254,180 | 10,955,158 | ||||||
Uranium Energy Corp. * | 845,825 | 5,413,280 | ||||||
16,368,438 | ||||||||
Energy Equipment & Services — 1.83% | ||||||||
TechnipFMC PLC 1 | 272,705 | 5,492,279 | ||||||
Weatherford International PLC * | 48,815 | 4,775,571 | ||||||
10,267,850 | ||||||||
Total ENERGY | ||||||||
(Cost $16,683,071) | 26,636,288 | |||||||
MATERIALS — 2.95% | ||||||||
Metals & Mining — 2.44% | ||||||||
ATI, Inc. * | 152,225 | 6,921,670 |
Notes to Financial Statements are an integral part of this Schedule.
39 |
Driehaus Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Carpenter Technology Corp. | 95,586 | $ | 6,767,489 | |||||
13,689,159 | ||||||||
Construction Materials — 0.51% | ||||||||
Summit Materials, Inc. - A * | 73,905 | 2,842,386 | ||||||
Total MATERIALS | ||||||||
(Cost $11,663,279) | 16,531,545 | |||||||
Total COMMON STOCKS | ||||||||
(Cost $414,204,181) | 551,416,496 | |||||||
SHORT TERM INVESTMENTS — 1.37% | ||||||||
Northern Institutional U.S. Government Select Portfolio (Shares Class), 5.24% 2 | ||||||||
(Cost $7,728,396) | 7,728,396 | 7,728,396 | ||||||
TOTAL INVESTMENTS | ||||||||
(Cost $421,932,577) | 99.56 | % | $ | 559,144,892 | ||||
Other Assets In Excess of Liabilities | 0.44 | % | 2,444,719 | |||||
Net Assets | 100.00 | % | $ | 561,589,611 |
PLC Public Limited Company
SP ADR Sponsored American Depositary Receipt
1 | Foreign security denominated and/or traded in U.S. dollars. |
2 | 7 day current yield as of December 31, 2023 is disclosed. |
* | Non-income producing security. |
Percentages are stated as a percent of net assets.
Security Type | Percent of Net Assets | |||
Common Stocks | 98.19 | % | ||
Short Term Investments | 1.37 | % | ||
Total Investments | 99.56 | % | ||
Other Assets In Excess of Liabilities | 0.44 | % | ||
Net Assets | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
40 |
Driehaus Small Cap Growth Fund
Schedule of Investments
December 31, 2023
Industry | Percent of Net Assets | |||
Aerospace & Defense | 3.97 | % | ||
Automobile Components | 0.54 | % | ||
Banks | 1.79 | % | ||
Beverages | 0.57 | % | ||
Biotechnology | 12.66 | % | ||
Broadline Retail | 0.65 | % | ||
Building Products | 1.47 | % | ||
Capital Markets | 1.08 | % | ||
Commercial Services & Supplies | 1.66 | % | ||
Communications Equipment | 0.68 | % | ||
Construction & Engineering | 5.63 | % | ||
Construction Materials | 0.51 | % | ||
Consumer Staples Distribution & Retail | 0.68 | % | ||
Diversified Consumer Services | 1.75 | % | ||
Electrical Equipment | 1.04 | % | ||
Electronic Equipment, Instruments & Components | 2.52 | % | ||
Energy Equipment & Services | 1.83 | % | ||
Financial Services | 0.69 | % | ||
Food Products | 1.01 | % | ||
Ground Transportation | 2.00 | % |
Industry | Percent of Net Assets | |||
Health Care Equipment & Supplies | 4.86 | % | ||
Hotels, Restaurants & Leisure | 2.84 | % | ||
Household Durables | 1.53 | % | ||
Insurance | 1.61 | % | ||
IT Services | 0.74 | % | ||
Machinery | 3.91 | % | ||
Metals & Mining | 2.44 | % | ||
Money Market Fund | 1.37 | % | ||
Oil, Gas & Consumable Fuels | 2.91 | % | ||
Personal Care Products | 4.59 | % | ||
Pharmaceuticals | 1.75 | % | ||
Semiconductors & Semiconductor Equipment | 5.35 | % | ||
Software | 11.73 | % | ||
Specialty Retail | 1.40 | % | ||
Technology Hardware, Storage & Peripherals | 2.86 | % | ||
Trading Companies & Distributors | 6.94 | % | ||
Other Assets In Excess of Liabilities | 0.44 | % | ||
TOTAL | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
41 |
Driehaus Small/Mid Cap Growth Fund — Portfolio Managers’ Letter
Dear Fellow Shareholders,
The Driehaus Small/Mid Cap Growth Fund (the “Fund”) returned 20.71% for the year ended December 31, 2023. This return outperformed the Fund’s benchmark, the Russell 2500® Growth Index (the “Benchmark”), which returned 18.93% for the same period.
The substantial rally in the fourth quarter enabled 2023 to end up being a strong year for the U.S. equity market. This was a welcome bounce back after the sharp bear market decline of 2022. For the full year 2023, large caps outperformed micro and small caps as the seven mega cap tech stocks (the Magnificent Seven) drove meaningful outperformance in the large cap indices and the Nasdaq. Interestingly, on an equal weighted basis, excluding the Magnificent Seven, the S&P 500 performed in a similar manner to small caps.
From a macro perspective, the U.S. economy continues to grow, and there seem to be no immediate signs of recession. The labor market also appears very resilient with recent strong job growth and low unemployment claims. While we believe that the inverted yield curve still needs to be respected due to its track record of consistently preceding recessions, we perceive multiple reasons why a recession may be avoided. These include tremendous fiscal stimulus, healthy consumer balance sheets, the strong labor market, the unique nature of the post-pandemic recovery, improving productivity, reshoring of manufacturing back to the U.S. and the idea that a number of key areas of the U.S. economy already experienced rolling recessions at different intervals and are now seeing a series of rolling expansions. Lower yields have been fueled in part by continued positive signs of disinflation towards the Fed’s target inflation level of two percent. This slowing inflation prompted Federal Reserve Chair Jay Powell at the December Federal Open Market Committee (FOMC) meeting to pivot away from raising interest rates and toward possibly cutting rates in 2024. This is an important change in the Fed’s monetary policy positioning.
Could the long bear market for micro and small caps be over? The bear market started in 2021 and was one of the longest and deepest micro/small cap bear markets in history. We believe that the recent price action in equities suggests that this bear market may be over and a new market cycle may be underway. Again, while we continue to respect the inverted yield curve and the potential for a recession, we perceive compelling reasons to be bullish as 2024 gets underway.
For the year 2023, key contributors to the Fund’s performance versus the Benchmark were stock selection in the information technology, energy and consumer staples sectors.
Super Micro Computer Inc. (Ticker: SMCI) was the top contributor to Fund performance for the year. The company engages in the distribution and manufacture of technology solutions and computing products, such as servers. SMCI was a top contributor after preannouncing positive earnings per share (EPS) that exceeded expectations and revenue for the June 2023 quarter beating expectations by 20%. SMCI further benefitted from being a close partner with mega-cap Nvidia and the growing buildout of AI infrastructure. During 2023, SMCI experienced record design wins and orders, with a fast-growing backlog for rack-scale AI servers.
Builders FirstSource, Inc. (Ticker: BLDR) was also a top contributor to Fund performance for the year. Builders FirstSource, Inc. is a distributor and manufacturer of building materials for homebuilders and subcontractors in the United States serving the single family, multi-family, and repair and remodel markets. BLDR was a top contributor after reporting substantial earnings per share (EPS) upside for the first three quarters in 2023, resulting in the 2023 consensus EPS estimate rising from $6.05 at the start of the year to $13.26 at year end. In addition to strong earnings growth, the price to earnings multiple expanded from under 11x next-twelve-month EPS to 14x. Growth was driven by stronger than expected single and multi-family construction starts and better margin performance.
During the year, security selection in healthcare, financials and consumer discretionary detracted the most from the Fund’s performance versus the Benchmark.
The holding that detracted the most from the Fund’s return in 2023 was Calix, Inc. (ticker CALX). Calix, Inc. offers software-centric broadband communications access systems that enable service providers to transform their networks. While company-specific sales and earnings estimate revisions were positive, industry datapoints in the first half of 2023 showed a sharp contraction in new orders placed by service providers. With this weakness expected to persist, the stock experienced price weakness consistent with its network industry peers.
Halozyme Therapeutics (Ticker: HALO) also detracted from the Fund’s returns. Halozyme Therapeutics, Inc. is a commercial-stage drug company that receives royalties and supply revenue from partners for their technology that enables intravenous drugs to be formulated for subcutaneous administration. HALO was a top detractor as the durability of their franchise came into greater doubt due to new interpretations of pharmaceutical pricing legislation and increased competitive intensity from novel technologies and companies pursuing better drug-like properties for antibodies.
42 |
Near-term the market appears somewhat overbought after the sharp year-end rally, but the market’s breadth and overall technical picture are the best we have seen since before the start of the recent bear market. Near-term market conditions should continue to be influenced by the direction of treasury yields, inflation, and of course, the Fed. Smaller cap valuations, however, remain appealing to us, especially compared to large caps. As detailed above, small cap stocks in general continue to trade at their second largest discount to large caps over the past 40 years. We believe that the case for small cap stocks is also very compelling as history shows that small caps typically outperform during the first five years or more of a new market cycle and post dovish policy shifts by the Fed.
There are multiple reasons to be constructive on the market as 2024 gets underway. Key reasons are lower inflation, potential rate cuts or at least more dovish Fed policy, the current economic strength, and the ample evidence that the widely expected recession is not here yet and may not materialize. In our view, there are multiple reasons we should continue to avoid a recession. That said, we do need to respect the impeccable record of the sharply inverted yield curve in predicting recessions. While we understand that, in light of the long and variable lag of monetary policy, it would be historically unique for a recession to be avoided, we nonetheless believe that the reasons for economic growth remain persuasive.
Overall, we still see many dynamic investment opportunities which have attractive valuations. We believe that these holdings nicely fit our investment philosophy of companies exhibiting growth inflections, differentiation, market share gains, strong revenues and expanding profitability.
Thank you for investing alongside us in the Fund. We appreciate your continued confidence in our management capabilities.
Sincerely, | |
Jeff James | Michael Buck |
Lead Portfolio Manager | Portfolio Manager |
Prakash Vijayan | |
Assistant Portfolio Manager |
Performance is historical and does not represent future results.
Please see the following performance overview page for index description.
43 |
Driehaus Small/Mid Cap Growth Fund
Performance Overview (unaudited)
The performance summarized below is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares. Performance data presented measures the change in the value of an investment in the Fund, assuming reinvestment of all dividends and capital gains. Average annual total return reflects annualized change. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The graph compares the results of a $10,000 investment (minimum investment) in the Fund since May 1, 2020 (the date of the fund’s inception), with all dividends and capital gains reinvested, with the indicated index (and dividends reinvested) for the same period.
The performance data shown represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Performance data represents the rate that an investor would have earned (or lost), during the given periods, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change. Since Fund performance is subject to change after the period-end, please call (800) 560-6111 or visit www.driehaus.com/performance for more current performance information. The gross expense ratio is 1.54% as of the most recent prospectus dated April 30, 2023, as supplemented through the date of this report.
Average Annual Total Returns as of 12/31/23 | 1 Year | 3 Years | Since Inception (5/1/20 - 12/31/23) |
Driehaus Small/Mid Cap Growth Fund (DSMDX)1 | 20.79% | -0.71% | 15.65% |
Russell 2500® Growth Index2 | 18.93% | -2.68% | 10.72% |
1 | The returns for the period reflect fee waivers and/or reimbursements without which performance would have been lower. |
2 | The Russell 2500® Growth Index measures the performance of the small to midcap growth segment of the US Equity universe. It measures the performance of those Russell 2500® Index companies with higher growth earning potential as defined by FTSE Russell’s leading style methodology. The Russell 2500® Growth Index is constructed to provide a comprehensive and unbiased barometer for the small to midcap growth segment of the market. Data is calculated with net dividend reinvestment. Source: FTSE Russell. |
44 |
Driehaus Small/Mid Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
COMMON STOCKS — 98.59% | ||||||||
INDUSTRIALS — 28.92% | ||||||||
Aerospace & Defense — 6.35% | ||||||||
Axon Enterprise, Inc. * | 1,377 | $ | 355,720 | |||||
Curtiss-Wright Corp. | 839 | 186,921 | ||||||
HEICO Corp. | 410 | 73,337 | ||||||
Howmet Aerospace, Inc. | 3,143 | 170,099 | ||||||
Leonardo DRS, Inc. * | 6,979 | 139,859 | ||||||
925,936 | ||||||||
Building Products — 6.04% | ||||||||
A.O. Smith Corp. | 1,770 | 145,919 | ||||||
Advanced Drainage Systems, Inc. | 1,882 | 264,684 | ||||||
Builders FirstSource, Inc. * | 1,633 | 272,613 | ||||||
The AZEK Co., Inc. * | 2,280 | 87,210 | ||||||
Zurn Elkay Water Solutions Corp. | 3,721 | 109,435 | ||||||
879,861 | ||||||||
Machinery — 3.76% | ||||||||
Chart Industries, Inc. * | 787 | 107,292 | ||||||
Crane Co. | 870 | 102,782 | ||||||
Oshkosh Corp. | 1,845 | 200,016 | ||||||
Symbotic, Inc. * | 2,698 | 138,488 | ||||||
548,578 | ||||||||
Trading Companies & Distributors — 3.47% | ||||||||
Core & Main, Inc. - A * | 4,038 | 163,175 | ||||||
FTAI Aviation Ltd. | 1,609 | 74,658 | ||||||
SiteOne Landscape Supply, Inc. * | 286 | 46,475 | ||||||
Watsco, Inc. | 515 | 220,662 | ||||||
504,970 | ||||||||
Electrical Equipment — 2.55% | ||||||||
Enovix Corp. * | 4,615 | 57,780 | ||||||
nVent Electric PLC 1 | 1,216 | 71,854 | ||||||
Vertiv Holdings Co. | 5,044 | 242,263 | ||||||
371,897 | ||||||||
Ground Transportation — 2.50% | ||||||||
Saia, Inc. * | 676 | 296,237 | ||||||
XPO Logistics, Inc. * | 783 | 68,583 | ||||||
364,820 | ||||||||
Commercial Services & Supplies — 2.26% | ||||||||
Clean Harbors, Inc. * | 705 | 123,030 | ||||||
MSA Safety, Inc. | 590 | 99,610 | ||||||
Tetra Tech, Inc. | 638 | 106,501 | ||||||
329,141 | ||||||||
Construction & Engineering — 1.51% | ||||||||
Fluor Corp. * | 3,367 | 131,885 | ||||||
Quanta Services, Inc. | 405 | 87,399 | ||||||
219,284 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Professional Services — 0.48% | ||||||||
FTI Consulting, Inc. * | 353 | $ | 70,300 | |||||
Total INDUSTRIALS | ||||||||
(Cost $3,276,713) | 4,214,787 | |||||||
INFORMATION TECHNOLOGY — 24.84% | ||||||||
Software — 12.82% | ||||||||
Appfolio, Inc. - A * | 829 | 143,616 | ||||||
Braze, Inc. - A * | 1,324 | 70,344 | ||||||
CyberArk Software Ltd. 1,* | 1,243 | 272,279 | ||||||
Dynatrace, Inc. * | 4,062 | 222,151 | ||||||
Elastic NV 1,* | 1,155 | 130,169 | ||||||
Fair Isaac Corp. * | 126 | 146,665 | ||||||
Gitlab, Inc. - A * | 4,164 | 262,165 | ||||||
Marathon Digital Holdings, Inc. * | 3,314 | 77,846 | ||||||
Monday.com Ltd. 1,* | 1,395 | 261,995 | ||||||
Nutanix, Inc. - A * | 3,139 | 149,699 | ||||||
SPS Commerce, Inc. * | 676 | 131,036 | ||||||
1,867,965 | ||||||||
Semiconductors & Semiconductor Equipment — 4.97% | ||||||||
Camtek Ltd. 1,* | 4,224 | 293,061 | ||||||
Onto Innovation, Inc. * | 1,780 | 272,162 | ||||||
Rambus, Inc. * | 2,324 | 158,613 | ||||||
723,836 | ||||||||
Technology Hardware, Storage & Peripherals — 2.74% | ||||||||
Super Micro Computer, Inc. * | 1,404 | 399,101 | ||||||
IT Services — 1.89% | ||||||||
MongoDB, Inc. * | 673 | 275,156 | ||||||
Electronic Equipment, Instruments & Components — 1.31% | ||||||||
Fabrinet 1,* | 1,007 | 191,662 | ||||||
Communications Equipment — 1.11% | ||||||||
Arista Networks, Inc. * | 690 | 162,502 | ||||||
Total INFORMATION | ||||||||
TECHNOLOGY | ||||||||
(Cost $2,789,385) | 3,620,222 | |||||||
HEALTH CARE — 15.91% | ||||||||
Biotechnology — 10.82% | ||||||||
Alnylam Pharmaceuticals, Inc. * | 367 | 70,247 | ||||||
Apellis Pharmaceuticals, Inc. * | 1,619 | 96,913 | ||||||
Argenx SE - ADR 1,* | 261 | 99,292 | ||||||
Crinetics Pharmaceuticals, Inc. * | 6,139 | 218,426 | ||||||
Exact Sciences Corp. * | 962 | 71,169 | ||||||
Incyte Corp. * | 1,406 | 88,283 | ||||||
Karuna Therapeutics, Inc. * | 486 | 153,824 | ||||||
Natera, Inc. * | 2,381 | 149,146 | ||||||
Neurocrine Biosciences, Inc. * | 606 | 79,847 | ||||||
Nuvalent, Inc. - A * | 831 | 61,153 | ||||||
Vaxcyte, Inc. * | 3,671 | 230,539 |
Notes to Financial Statements are an integral part of this Schedule.
45 |
Driehaus Small/Mid Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Xenon Pharmaceuticals, Inc. 1,* | 5,609 | $ | 258,350 | |||||
1,577,189 | ||||||||
Health Care Equipment & Supplies — 3.93% | ||||||||
Glaukos Corp. * | 2,198 | 174,719 | ||||||
Inspire Medical Systems, Inc. * | 457 | 92,967 | ||||||
Insulet Corp. * | 367 | 79,632 | ||||||
Penumbra, Inc. * | 322 | 80,996 | ||||||
TransMedics Group, Inc. * | 1,832 | 144,600 | ||||||
572,914 | ||||||||
Pharmaceuticals — 1.16% | ||||||||
Structure Therapeutics, Inc. * | 4,155 | 169,358 | ||||||
Total HEALTH CARE | ||||||||
(Cost $1,881,726) | 2,319,461 | |||||||
CONSUMER DISCRETIONARY — 10.35% | ||||||||
Hotels, Restaurants & Leisure — 2.76% | ||||||||
DraftKings, Inc. - A * | 4,693 | 165,428 | ||||||
Wingstop, Inc. | 920 | 236,054 | ||||||
401,482 | ||||||||
Specialty Retail — 2.15% | ||||||||
American Eagle Outfitters, Inc. | 3,615 | 76,493 | ||||||
Carvana Co. * | 1,376 | 72,846 | ||||||
Murphy USA, Inc. | 302 | 107,681 | ||||||
The Gap, Inc. | 2,725 | 56,980 | ||||||
314,000 | ||||||||
Textiles, Apparel & Luxury Goods — 1.92% | ||||||||
Deckers Outdoor Corp. * | 419 | 280,072 | ||||||
Household Durables — 1.67% | ||||||||
DR Horton, Inc. | 928 | 141,037 | ||||||
TopBuild Corp. * | 273 | 102,173 | ||||||
243,210 | ||||||||
Diversified Consumer Services — 1.22% | ||||||||
Duolingo, Inc. * | 781 | 177,170 | ||||||
Broadline Retail — 0.63% | ||||||||
Ollie’s Bargain Outlet Holdings, Inc. * | 1,210 | 91,827 | ||||||
Total CONSUMER | ||||||||
DISCRETIONARY | ||||||||
(Cost $1,073,794) | 1,507,761 | |||||||
FINANCIALS — 6.56% | ||||||||
Capital Markets — 3.32% | ||||||||
Evercore, Inc. - A | 662 | 113,235 | ||||||
Houlihan Lokey, Inc. | 1,220 | 146,290 | ||||||
Tradeweb Markets, Inc. - A | 2,471 | 224,565 | ||||||
484,090 | ||||||||
Insurance — 2.08% | ||||||||
Kinsale Capital Group, Inc. | 207 | 69,326 | ||||||
Ryan Specialty Holdings, Inc. * | 1,579 | 67,929 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
W. R. Berkley Corp. | 2,345 | $ | 165,838 | |||||
303,093 | ||||||||
Banks — 1.16% | ||||||||
Western Alliance Bancorp | 2,558 | 168,291 | ||||||
Total FINANCIALS | ||||||||
(Cost $827,853) | 955,474 | |||||||
CONSUMER STAPLES — 5.63% | ||||||||
Personal Care Products — 3.38% | ||||||||
BellRing Brands, Inc. * | 5,999 | 332,524 | ||||||
elf Beauty, Inc. * | 1,108 | 159,929 | ||||||
492,453 | ||||||||
Food Products — 0.84% | ||||||||
Freshpet, Inc. * | 1,416 | 122,852 | ||||||
Beverages — 0.73% | ||||||||
Celsius Holdings, Inc. * | 1,951 | 106,369 | ||||||
Consumer Staples Distribution & Retail — 0.68% | ||||||||
Sprouts Farmers Market, Inc. * | 2,066 | 99,395 | ||||||
Total CONSUMER STAPLES | ||||||||
(Cost $592,285) | 821,069 | |||||||
ENERGY — 3.16% | ||||||||
Oil, Gas & Consumable Fuels — 2.24% | ||||||||
Cameco Corp. 1 | 7,594 | 327,301 | ||||||
Energy Equipment & Services — 0.92% | ||||||||
TechnipFMC PLC 1 | 6,639 | 133,710 | ||||||
Total ENERGY | ||||||||
(Cost $258,052) | 461,011 | |||||||
COMMUNICATION SERVICES — 1.78% | ||||||||
Interactive Media & Services — 1.78% | ||||||||
Pinterest, Inc. - A * | 6,997 | 259,169 | ||||||
Total COMMUNICATION | ||||||||
SERVICES | ||||||||
(Cost $185,931) | 259,169 | |||||||
MATERIALS — 1.44% | ||||||||
Metals & Mining — 0.76% | ||||||||
ATI, Inc. * | 2,449 | 111,356 | ||||||
Construction Materials — 0.68% | ||||||||
Summit Materials, Inc. - A * | 2,562 | 98,534 | ||||||
Total MATERIALS | ||||||||
(Cost $165,388) | 209,890 | |||||||
Total COMMON STOCKS | ||||||||
(Cost $11,051,127) | 14,368,844 |
Notes to Financial Statements are an integral part of this Schedule.
46 |
Driehaus Small/Mid Cap Growth Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
SHORT TERM INVESTMENTS — 3.02% | ||||||||
Northern Institutional | ||||||||
Government Portfolio (Shares | ||||||||
Class), 5.17% 2 | ||||||||
(Cost $440,421) | 440,421 | $ | 440,421 | |||||
TOTAL INVESTMENTS | ||||||||
(Cost $11,491,548) | 101.61 | % | $ | 14,809,265 | ||||
Liabilities In Excess of Other | ||||||||
Assets | (1.61 | )% | (234,215 | ) | ||||
Net Assets | 100.00 | % | $ | 14,575,050 |
ADR American Depositary Receipt
PLC Public Limited Company
1 | Foreign security denominated and/or traded in U.S. dollars. |
2 | 7 day current yield as of December 31, 2023 is disclosed. |
* | Non-income producing security. |
Percentages are stated as a percent of net assets.
Security Type | Percent of Net Assets | |||
Common Stocks | 98.59 | % | ||
Short Term Investments | 3.02 | % | ||
Total Investments | 101.61 | % | ||
Liabilities In Excess of Other Assets | (1.61 | )% | ||
Net Assets | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
47 |
Driehaus Small/Mid Cap Growth Fund
Schedule of Investments
December 31, 2023
Industry | Percent of Net Assets | |||
Aerospace & Defense | 6.35 | % | ||
Banks | 1.16 | % | ||
Beverages | 0.73 | % | ||
Biotechnology | 10.82 | % | ||
Broadline Retail | 0.63 | % | ||
Building Products | 6.04 | % | ||
Capital Markets | 3.32 | % | ||
Commercial Services & Supplies | 2.26 | % | ||
Communications Equipment | 1.11 | % | ||
Construction & Engineering | 1.51 | % | ||
Construction Materials | 0.68 | % | ||
Consumer Staples Distribution & Retail | 0.68 | % | ||
Diversified Consumer Services | 1.22 | % | ||
Electrical Equipment | 2.55 | % | ||
Electronic Equipment, Instruments & Components | 1.31 | % | ||
Energy Equipment & Services | 0.92 | % | ||
Food Products | 0.84 | % | ||
Ground Transportation | 2.50 | % | ||
Health Care Equipment & Supplies | 3.93 | % | ||
Hotels, Restaurants & Leisure | 2.76 | % |
Industry | Percent of Net Assets | |||
Household Durables | 1.67 | % | ||
Insurance | 2.08 | % | ||
Interactive Media & Services | 1.78 | % | ||
IT Services | 1.89 | % | ||
Machinery | 3.76 | % | ||
Metals & Mining | 0.76 | % | ||
Money Market Fund | 3.02 | % | ||
Oil, Gas & Consumable Fuels | 2.24 | % | ||
Personal Care Products | 3.38 | % | ||
Pharmaceuticals | 1.16 | % | ||
Professional Services | 0.48 | % | ||
Semiconductors & Semiconductor Equipment | 4.97 | % | ||
Software | 12.82 | % | ||
Specialty Retail | 2.15 | % | ||
Technology Hardware, Storage & Peripherals | 2.74 | % | ||
Textiles, Apparel & Luxury Goods | 1.92 | % | ||
Trading Companies & Distributors | 3.47 | % | ||
Liabilities In Excess of Other Assets | (1.61 | )% | ||
TOTAL | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
48 |
Driehaus Event Driven Fund — Portfolio Managers’ Letter
Dear Fellow Shareholders,
The Driehaus Event Driven Fund (“Fund”) returned 9.56% for the year ended December 31, 2023, while the S&P 500 Index (the “Benchmark”) returned 26.29% for the same period, and the FTSE 3-Month T-Bill Index, an additional index against which the Fund’s performance may be compared, returned 5.26%.
With 2023 behind us, we spent the last few weeks reflecting on yet another eventful year in the financial markets. As event driven investors, we can mitigate some of the interest rate driven market volatility because many of our investments have discrete timelines, such as the closing of a transaction, or a call date for a bond. The Fund may also benefit from equity volatility and dispersion as a source of new investment opportunities. We believe that periods of sustained volatility often result in indiscriminate selling of certain asset classes, sectors, or investment themes, which can invariably produce compelling risk adjusted return opportunities for investors that can identify value and catalysts amidst the market noise.
Across our three sub strategies – Arbitrage, Catalyst Driven Credit, and Catalyst Driven Equity – we continue to find a broad opportunity set, and briefly note the backdrop for each.
Arbitrage:
Lower antitrust risk: This past year was a difficult one for the litigious agenda of the U.S. Department of Justice and Federal Trade Commission. Time and again, the courts upheld precedent and sided with corporations seeking to consummate acquisitions over the objections of regulators. We expect that the recent string of losses for the regulators leading into an election year will set them on a more subdued course of action in 2024.
Lower financing risk: As interest rates have eased from peak levels, buyers can now finance transactions more easily. Further, equity valuations have regained some of the ground lost in 2022, and therefore the bid-ask spread has narrowed between likely buyers and sellers. These factors have created a facilitative backdrop for potential M&A activity.
Credit:
While the all-in yields are not as high as they were six months ago, corporate credit markets continue to offer compelling total returns that we believe attractively compensate for the associated risk. For the last two years, corporations have been unable and/or unwilling to address idiosyncratic balance sheet issues because debt capital markets were closed for most of 2022 and when they reopened in mid-2023, many CFOs decided it was too expensive to lock in financing at the new increased interest rate levels. This lack of balance sheet activity left a large wall of debt maturities that will need to be addressed in the coming year.
We expect that as rates normalize, corporations will be proactive in addressing these balance sheet and capital needs. We believe this will drive capital appreciation in existing positions and create opportunities for new investments in debt carrying enhanced credit protections and the potential for attractive total return.
Equity:
While uncertainty is an omnipresent feature of markets, the market has come down from “peak uncertainty” and market prices now reflect a better understanding of the interest rate playing field than they did a year ago. U.S. Treasury bonds traded like meme stocks for much of 2023, however the risk premia across markets have normalized and corporations now seem to be willing and able to plan, budget and effectuate corporate action.
While much has been written about the disproportionate impact of the seven mega cap technology stocks, also known as the magnificent seven, on the valuation of major large-cap indexes, less has been said about the modest-to-low valuations at which small- and mid-cap companies still trade. While we do not perceive these valuations to be at the “bargain” levels of a year ago, they still seem to present a very compelling opportunity for corporations to pursue synergistic M&A, capital investments and accretive capital allocation. The combination of stabilized financial conditions and undemanding valuations bode well for the opportunity set for catalyst driven equities.
During the year, the Fund was able to utilize our investment process across our three primary investment strategies: arbitrage, opportunistic credit, and catalyst driven equities. The largest contribution came from the credit portion of the portfolio, which had an average weight of 35% and contributed 474 basis points to the Fund’s return. Catalyst driven equities was the second largest contributor for the fund, with an average weight of 29%, contributed 333 basis points during 2023. Arbitrage also contributed 158 basis points to the Fund’s returns.
49 |
Within the Fund, we seek volatility below that of the Benchmark. In 2023, Fund volatility was 5.36% versus Benchmark volatility of 13.10%. The Fund’s 100-day volatility (as of December 31, 2023) was limited to 47% of that of the Benchmark. The Fund’s risk stats remained muted during the year, with a market beta* of 0.20 and a correlation** of 0.50 relative to the Benchmark.
To start 2024, the Fund’s allocation by strategy remains balanced across sub strategies. While catalyst driven equities now represent approximately 30% of the Fund, we have increased opportunistic credit exposure to approximately 39% and risk arbitrage sits at approximately 10%. As the Fund’s credit exposure increased and its overall volatility decreased, the Fund’s beta-adjusted net exposure trended lower throughout the year and averaged 26.6%
As the new year begins, volatility and change have once again come to the forefront of the investor psyche, and we remain encouraged by the level of activity we are seeing across capital markets. The backdrop has shifted – after much focus on interest rates throughout 2023, investors are now contending with a new normalized level of rates and associated economic implications. Even so, robust corporate activity seems to be one of the few constants in the sea of market changes. We remain encouraged by the outlook across our three primary areas of investment and believe that the Fund is positioned to act opportunistically to capitalize on this favorable outlook for idiosyncratic investments.
As always, we thank you for investing alongside us in the Fund and appreciate your continued confidence in our management capabilities.
Sincerely, | ||
Michael Caldwell | Tom McCauley | Yoav Sharon |
Portfolio Manager | Portfolio Manager | Portfolio Manager |
* | Beta: A measure describing the relation of a portfolio’s returns with that of the financial market as a whole. A portfolio with a beta of 0 means that its price is not at all correlated with the market. A positive beta means that the portfolio generally follows the market. A negative beta shows that the portfolio inversely follows the market; the portfolio generally decreases in value if the market goes up and vice versa. |
** | Correlation: shows the strength of a relationship between two variables and is expressed numerically by the correlation coefficient |
Performance is historical and does not represent future results.
Please see the following performance overview page for index description.
50 |
Driehaus Event Driven Fund
Performance Overview (unaudited)
The performance summarized below is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares. Performance data presented measures the change in the value of an investment in the Fund, assuming reinvestment of all dividends and capital gains. Average annual total return reflects annualized change. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The graph compares the results of a $10,000 investment (minimum investment) in the Fund over the last 10 fiscal year periods, with all dividends and capital gains reinvested, with the indicated indices (and dividends reinvested) for the same period.
The performance data shown represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Performance data represents the rate that an investor would have earned (or lost), during the given periods, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change. Since Fund performance is subject to change after the period-end, please call (800) 560-6111 or visit www.driehaus.com/performance for more current performance information. The gross expense ratio is 1.71% as of the most recent prospectus dated April 30, 2023, as supplemented through the date of this report.
Average Annual Total Returns as of 12/31/23 | 1 Year | 3 Years | 5 Years | 10 Years |
Driehaus Event Driven Fund (DEVDX)1 | 9.56% | 1.90% | 9.55% | 4.51% |
S&P 500 Index2 | 26.29% | 10.00% | 15.69% | 12.03% |
FTSE 3-Month T-Bill Index3 | 5.26% | 2.24% | 1.91% | 1.26% |
1 | The returns for the periods prior to March 1, 2014, reflect fee waivers and/or reimbursements without which performance would have been lower. |
2 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity and industry group. It is a market-weighted index, with each stock’s weight in the index proportionate to its market value. |
3 | The FTSE 3-Month T-Bill Index is designed to mirror the performance of the 3-month U.S. Treasury Bill. The FTSE 3-Month T-Bill Index is unmanaged and its returns reflect reinvestment of all distributions and changes in market prices. |
51 |
Driehaus Event Driven Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
CORPORATE BONDS — 33.43% | ||||||||
Apparel & Textile Products — 0.17% | ||||||||
Michael Kors USA, Inc. | ||||||||
4.25%, 11/1/24 1 | $ | 386,000 | $ | 377,315 | ||||
Commercial Support Services — 5.80% | ||||||||
Arrow Bidco LLC | ||||||||
10.75%, 6/15/25 1 | 7,888,000 | 8,164,080 | ||||||
Williams Scotsman | ||||||||
International, Inc. | ||||||||
6.13%, 6/15/25 1 | 4,388,000 | 4,396,644 | ||||||
12,560,724 | ||||||||
Electric Utilities — 6.98% | ||||||||
NRG Energy, Inc. | ||||||||
10.25%, (U.S. Treasury Yield | ||||||||
Curve Rate CMT 5Y + 592 | ||||||||
basis points), 3/15/28 1,2,3 | 5,970,133 | 6,215,422 | ||||||
Vistra Corp. | ||||||||
7.00%, (U.S. Treasury Yield | ||||||||
Curve Rate CMT 5Y + 574 | ||||||||
basis points), 12/15/26 1,2,3,4 | 9,050,000 | 8,914,250 | ||||||
15,129,672 | ||||||||
Electrical Equipment — 1.75% | ||||||||
WESCO Distribution, Inc. | ||||||||
7.13%, 6/15/25 1 | 3,766,000 | 3,793,978 | ||||||
Leisure Facilities & Services — 11.47% | ||||||||
Cinemark USA, Inc. | ||||||||
5.88%, 3/15/26 1 | 4,449,000 | 4,349,468 | ||||||
Full House Resorts, Inc. | ||||||||
8.25%, 2/15/28 1 | 11,840,000 | 11,129,600 | ||||||
Golden Entertainment, Inc. | ||||||||
7.63%, 4/15/26 1 | 6,204,000 | 6,219,510 | ||||||
Six Flags Theme Parks, Inc. | ||||||||
7.00%, 7/1/25 1 | 3,144,000 | 3,157,614 | ||||||
24,856,192 | ||||||||
Oil & Gas Producers — 2.22% | ||||||||
Calumet Specialty Products Partners L.P./Calumet Finance Corp. | ||||||||
11.00%, 4/15/25 1 | 4,756,000 | 4,818,806 | ||||||
Oil, Gas Services & Equipment — 2.02% | ||||||||
Shelf Drilling Holdings Ltd. | ||||||||
9.63%, 4/15/29 1,5 | 4,465,000 | 4,369,285 | ||||||
Retail - Discretionary — 0.61% | ||||||||
Kohl’s Corp. | ||||||||
4.63%, 5/1/31 | 1,666,000 | 1,311,075 | ||||||
Specialty Finance — 2.41% | ||||||||
Enact Holdings, Inc. | ||||||||
6.50%, 8/15/25 1 | 5,240,000 | 5,223,757 | ||||||
Total CORPORATE BONDS | ||||||||
(Cost $71,493,358) | 72,440,804 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
COMMON STOCKS — 38.67% | ||||||||
Apparel & Textile Products — 1.44% | ||||||||
Capri Holdings Ltd. * | 62,153 | $ | 3,122,567 | |||||
Asset Management — 4.52% | ||||||||
Ares Acquisition Corp. II * | 200,376 | 2,091,925 | ||||||
Haymaker Acquisition Corp. 4 * | 207,657 | 2,130,561 | ||||||
Screaming Eagle Acquisition | ||||||||
Corp. - A * | 525,785 | 5,573,321 | ||||||
9,795,807 | ||||||||
Banking — 6.79% | ||||||||
Blue Foundry Bancorp 4,* | 707,334 | 6,839,920 | ||||||
Kearny Financial Corp./MD 4 | 765,114 | 6,863,073 | ||||||
New York Community | ||||||||
Bancorp, Inc. | 98,289 | 1,005,496 | ||||||
14,708,489 | ||||||||
Biotechnology & Pharmaceuticals — 10.71% | ||||||||
Apogee Therapeutics, Inc. * | 58,700 | 1,640,078 | ||||||
Calidi Biotherapeutics, Inc. * | 24,357 | 36,779 | ||||||
Crinetics Pharmaceuticals, Inc. * | 230,465 | 8,199,945 | ||||||
ImmunoGen, Inc. * | 82,852 | 2,456,562 | ||||||
Relay Therapeutics, Inc. 4,* | 159,877 | 1,760,246 | ||||||
Structure Therapeutics, Inc. * | 65,035 | 2,650,826 | ||||||
Xenon Pharmaceuticals, Inc. 4,5,* | 140,314 | 6,462,863 | ||||||
23,207,299 | ||||||||
Commercial Support Services — 1.34% | ||||||||
GXO Logistics, Inc. * | 47,501 | 2,905,161 | ||||||
Industrial Intermediate Products — 2.03% | ||||||||
Hillman Solutions Corp. 4,* | 477,958 | 4,401,993 | ||||||
Industrial Support Services — 4.55% | ||||||||
MRC Global, Inc. * | 153,655 | 1,691,741 | ||||||
WillScot Mobile Mini Holdings Corp. 4,* | 183,532 | 8,167,174 | ||||||
9,858,915 | ||||||||
Leisure Facilities & Services — 5.67% | ||||||||
Caesars Entertainment, Inc. * | 22,692 | 1,063,801 | ||||||
Golden Entertainment, Inc. 4 | 253,120 | 10,107,082 | ||||||
Playa Hotels & Resorts NV 5,* | 130,439 | 1,128,297 | ||||||
12,299,180 | ||||||||
Retail - Consumer Staples — 1.62% | ||||||||
Albertsons Cos, Inc. - A | 152,357 | 3,504,211 | ||||||
Total COMMON STOCKS | ||||||||
(Cost $81,739,924) | 83,803,622 |
Notes to Financial Statements are an integral part of this Schedule.
52 |
Driehaus Event Driven Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
MASTER LIMITED PARTNERSHIPS — 0.47% | ||||||||
Oil & Gas Producers — 0.47% | ||||||||
Calumet Specialty Products Partners LP * | 56,686 | $ | 1,012,979 | |||||
Total MASTER LIMITED | ||||||||
PARTNERSHIPS | ||||||||
(Cost $1,093,863) | 1,012,979 | |||||||
PREFERRED STOCKS — 2.51% | ||||||||
Industrial Support Services — 2.51% | ||||||||
WESCO International, | ||||||||
Inc.(U.S. Treasury Yield | ||||||||
Curve Rate CMT 5Y + 1033 | ||||||||
basis points), 3 | 205,943 | 5,441,014 | ||||||
Total PREFERRED STOCKS | ||||||||
(Cost $5,536,501) | 5,441,014 | |||||||
PURCHASED PUT OPTIONS — 0.30% | ||||||||
Biotechnology & Pharmaceuticals — 0.30% | ||||||||
Structure Therapeutics Inc. | ||||||||
Exercise Price: $50.00, | ||||||||
Notional Amount: $2,649,400, | ||||||||
Expiration Date: January 19, | ||||||||
2024 | ||||||||
$ | 650 | 653,250 | ||||||
Total PURCHASED PUT | ||||||||
OPTIONS | ||||||||
(Cost $527,169) | 653,250 | |||||||
SOVEREIGN BOND — 2.86% | ||||||||
Transportation & Logistics — 2.86% | ||||||||
Danaos Corp. | ||||||||
8.50%, 3/1/28 1,5 | 6,114,000 | 6,205,710 | ||||||
Total SOVEREIGN BOND | ||||||||
(Cost $6,134,152) | 6,205,710 | |||||||
PURCHASED CALL OPTIONS — 0.01% | ||||||||
Commercial Support Services — 0.01% | ||||||||
Target Hospitality Corp. | ||||||||
Exercise Price: $15.00, | ||||||||
Notional Amount: $1,610,315, | ||||||||
Expiration Date: January 19, 2024 | 1,655 | 8,275 | ||||||
Total PURCHASED CALL | ||||||||
OPTIONS | ||||||||
(Premiums paid $340,980) | 8,275 | |||||||
WARRANTS — 0.09% | ||||||||
Ares Acquisition Corp. II, Exp. | ||||||||
4/21/28, Strike $0.00 * | 100,188 | 15,239 | ||||||
Bridger Aerospace Group | ||||||||
Holdings, Inc., Exp. 12/31/27, | ||||||||
Strike 11.50 * | 151,497 | 33,329 |
Shares, Principal Amount, or Number of Contracts | Value | |||||||
Calidi Biotherapeutics, Inc., | ||||||||
Exp. 9/10/26, Strike $11.50 * | 193,125 | $ | 7,725 | |||||
Haymaker Acquisition Corp. 4, | ||||||||
Exp. 5/31/28, Strike $11.50 * | 103,829 | 15,585 | ||||||
Inspirato, Inc., Exp. 1/1/30, | ||||||||
Strike $11.50 * | 35,733 | 196 | ||||||
Pagaya Technologies Ltd., Exp. | ||||||||
5/31/27, Strike $0.00 5,* | 121,900 | 26,806 | ||||||
REVOLUTION Medicines, Inc., | ||||||||
Exp. 11/14/28, Strike $11.50 * | 26,680 | 8,804 | ||||||
Screaming Eagle Acquisition | ||||||||
Corp. - A, Exp. 5/1/27, Strike | ||||||||
$11.50 * | 175,261 | 78,885 | ||||||
SomaLogic, Inc., Exp. 12/31/27, | ||||||||
Strike $11.50 * | 22,690 | 2,723 | ||||||
X4 Pharmaceuticals, Inc., Exp. | ||||||||
4/12/24, Strike $13.20 * | 5,547 | 7 | ||||||
ZeroFox Holdings, Inc., Exp. | ||||||||
5/23/27, Strike $11.50 * | 65,250 | 646 | ||||||
Total WARRANTS | ||||||||
(Cost $9,328) | 189,945 | |||||||
SHORT TERM INVESTMENTS — 19.20% | ||||||||
Northern Institutional Treasury | ||||||||
Portfolio (Premier Class), | ||||||||
5.22% 6 | ||||||||
(Cost $41,611,057) | 41,611,057 | 41,611,057 | ||||||
TOTAL INVESTMENTS | ||||||||
(Cost $208,486,332) | 97.54 | % | $ | 211,366,656 | ||||
Other Assets In Excess of | ||||||||
Liabilities | 2.46 | % | 5,339,041 | |||||
Net Assets | 100.00 | % | $ | 216,705,697 |
INVESTMENT SECURITIES SOLD SHORT — (7.91)% | ||||||||
WRITTEN CALL OPTIONS — (0.00)% | ||||||||
Commercial Support Services — (0.00)% | ||||||||
Target Hospitality Corp. | ||||||||
Exercise Price: $20.00, | ||||||||
Notional Amount: $1,610,315, | ||||||||
Expiration Date: January 19, | ||||||||
2024 | (1,655 | ) | (8,275 | ) | ||||
Total WRITTEN CALL OPTIONS | ||||||||
(Premiums received | ||||||||
$(126,557)) | (8,275 | ) | ||||||
EXCHANGE-TRADED FUNDS — (7.91)% | ||||||||
iShares Russell 2000 ETF | (30,208 | ) | (6,063,048 | ) | ||||
SPDR S&P Biotech ETF | (54,235 | ) | (4,842,643 | ) | ||||
SPDR S&P Regional Banking | ||||||||
ETF | (92,648 | ) | (4,857,535 | ) |
Notes to Financial Statements are an integral part of this Schedule.
53 |
Driehaus Event Driven Fund
Schedule of Investments
December 31, 2023
Shares, Principal Amount, or Number of Contracts | Value | |||||||
VanEck Oil Services ETF | (4,445 | ) | $ | (1,375,816 | ) | |||
Total EXCHANGE-TRADED | ||||||||
FUNDS | ||||||||
(Proceeds $18,705,679) | (17,139,042 | ) | ||||||
TOTAL INVESTMENT | ||||||||
SECURITIES SOLD SHORT | ||||||||
(Proceeds $18,832,236) | (7.91 | )% | $ | (17,147,317 | ) |
CMT Constant Maturity
1 | Security is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. The total value of these securities is $77,335,439, which represents 36% of Net Assets (see Note F in the Notes to Financial Statements). |
2 | Perpetual security. Maturity date shown is the next call date or final legal maturity date, whichever comes first. |
3 | Variable rate security. Rates disclosed as of December 31, 2023. |
4 | All or a portion of this security is pledged as collateral for short sales or derivatives transactions. |
5 | Foreign security denominated and/or traded in U.S. dollars. |
6 | 7 day current yield as of December 31, 2023 is disclosed. |
* | Non-income producing security. |
Percentages are stated as a percent of net assets.
Security Type | Percent of Net Assets | |||
Corporate Bonds | 33.43 | % | ||
Purchased Call Options | 0.01 | % | ||
Purchased Put Options | 0.30 | % | ||
Sovereign Bond | 2.86 | % | ||
Common Stocks | 38.67 | % | ||
Master Limited Partnerships | 0.47 | % | ||
Preferred Stocks | 2.51 | % | ||
Warrants | 0.09 | % | ||
Short Term Investments | 19.20 | % | ||
Total Investments | 97.54 | % | ||
Other Assets In Excess of Liabilities | 2.46 | % | ||
Net Assets | 100.00 | % |
Notes to Financial Statements are an integral part of this Schedule.
54 |
Driehaus Event Driven Fund
Schedule of Investments
December 31, 2023
TOTAL RETURN SWAPS
OTC SWAP CONTRACTS
Pay Rate Index/Pay Rate | Receive Rate/Receive Rate Index | Maturity Date | Counterparty | Currency | Notional Amount | Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||
GSCNNED3 Basket* | Financing Index: SOFR - 0.5% | 8/30/2024 | GSC | USD | 6,489,680 | $ | 76,829 | $ | — | $ | 76,829 | |||||||||||||||||
Subtotal Appreciation | $ | 76,829 | $ | — | $ | 76,829 | ||||||||||||||||||||||
GSCBGDEN Basket** | Financing Index: 1-Day US Federal Fund Effective Rate - 0.45% | 1/23/2024 | GSC | USD | 4,776,398 | $ | (24,969 | ) | $ | — | $ | (24,969 | ) | |||||||||||||||
Financing | ||||||||||||||||||||||||||||
Index: SOFR +0.6% | Cannae Holdings,Inc. (Monthly) | 8/30/2024 | GSC | USD | 5,590,621 | (124,495 | ) | — | (124,495 | ) | ||||||||||||||||||
Subtotal | ||||||||||||||||||||||||||||
Depreciation | $ | (149,464 | ) | $ | — | $ | (149,464 | ) | ||||||||||||||||||||
Net Total Return Swaps outstanding at December 31, 2023 | $ | (72,635 | ) | $ | — | $ | (72,635 | ) |
GSC - Goldman Sachs International | ||
* | GSCNNED3 Basket consists of a portfolio of: | |
Dun & Bradstreet Holdings, Inc. | 51% | |
Alight, Inc. | 25% | |
Dayforce, Inc. | 21% | |
Paysafe Ltd. | 3% | |
100% | ||
** | GSCBGDEN Basket consists of a portfolio of: | |
Red Rock Resorts, Inc. | 30% | |
Boyd Gaming Corp. | 28% | |
Churchill Downs, Inc. | 26% | |
Penn Entertainment, Inc. | 16% | |
100% |
Notes to Financial Statements are an integral part of this Schedule.
55 |
Driehaus Mutual Funds
Statements of Assets and Liabilities
December 31, 2023
Driehaus Emerging Markets Growth Fund | Driehaus Emerging Markets Small Cap Growth Fund | |||||||
ASSETS: | ||||||||
Investments, at cost | $ | 2,007,041,725 | $ | 84,963,361 | ||||
Investments securities, at fair value | $ | 2,496,610,762 | $ | 103,387,802 | ||||
Short-term securities, at fair value1 | 80,637,430 | 3,910,328 | ||||||
Purchased options, at fair value2 | — | — | ||||||
Warrant securities, at fair value3 | — | — | ||||||
Foreign currency, at fair value4 | 4,570,559 | 1 | ||||||
Unrealized appreciation on open OTC swap contracts | — | — | ||||||
Cash | 3,256,811 | 470,054 | ||||||
Deposit at broker for securities sold short | — | — | ||||||
Receivable for investment securities sold | 8,441,842 | — | ||||||
Receivable for foreign capital gains taxes | — | — | ||||||
Receivable for fund shares sold | 2,263,866 | 134,396 | ||||||
Receivable for interest and dividends | 3,792,028 | 111,941 | ||||||
Due from broker | — | — | ||||||
Prepaid expenses | 247,070 | 21,799 | ||||||
TOTAL ASSETS | 2,599,820,368 | 108,036,321 | ||||||
LIABILITIES: | ||||||||
Payable for investment securities sold short, proceeds | — | — | ||||||
Payable for investment securities sold short, at fair value | — | — | ||||||
Written options, at fair value5 | — | — | ||||||
Cash overdraft | — | — | ||||||
Unrealized depreciation on open OTC swap contracts | — | — | ||||||
Payable for fund shares redeemed | 2,907,201 | 21,029 | ||||||
Payable for investment securities purchased | 5,204,288 | — | ||||||
Due to broker | — | — | ||||||
Advisory fees payable, net | 1,982,541 | 89,066 | ||||||
Accrued shareholder services plan fees | 193,532 | — | ||||||
Accrued administration and accounting fees | 267,938 | 18,987 | ||||||
Accrued foreign capital gains taxes | 9,545,958 | 43,025 | ||||||
Accrued expenses | 214,040 | 50,225 | ||||||
TOTAL LIABILITIES | 20,315,498 | 222,332 | ||||||
NET ASSETS | $ | 2,579,504,870 | $ | 107,813,989 | ||||
NET ASSETS CONSISTED OF THE FOLLOWING AT DECEMBER 31, 2023: | ||||||||
Paid-in-capital | $ | 2,447,298,022 | $ | 124,311,388 | ||||
Total distributable earnings (deficit) | 132,206,848 | (16,497,399 | ) | |||||
NET ASSETS | $ | 2,579,504,870 | $ | 107,813,989 | ||||
NET ASSETS | $ | — | $ | 107,813,989 | ||||
SHARES OUTSTANDING (Unlimited shares authorized, no par value) | — | 5,675,802 | ||||||
NET ASSET VALUE | $ | — | $ | 19.00 | ||||
INVESTOR CLASS SHARES | ||||||||
NET ASSETS | $ | 570,926,939 | $ | — | ||||
SHARES OUTSTANDING (Unlimited shares authorized, no par value) | 16,508,097 | — | ||||||
NET ASSET VALUE | $ | 34.58 | $ | — | ||||
INSTITUTIONAL CLASS SHARES | ||||||||
NET ASSETS | $ | 2,008,577,931 | $ | — | ||||
SHARES OUTSTANDING (Unlimited shares authorized, no par value) | 57,717,779 | — | ||||||
NET ASSET VALUE | $ | 34.80 | $ | — |
1 | The cost of short-term securities was $80,637,430, $3,910,328, $2,838,798, $5,332,031, $331,796, $7,728,396, $440,421 and $41,611,057, respectively. |
2 | The cost of purchased options was $0, $0, $0, $0, $0, $0, $0 and $868,149, respectively. |
3 | The cost of warrants was $0, $0, $0, $0, $0, $0, $0 and $9,328, respectively. |
4 | The cost of foreign currency was $4,570,559, $1, $1,585, $1, $0, $0, $0 and $0, respectively. |
5 | The proceeds of written options was $0, $0, $0, $0, $0, $0, $0 and $126,557, respectively. |
Notes to Financial Statements are an integral part of this Statement.
56 |
Driehaus Mutual Funds
Statements of Assets and Liabilities
December 31, 2023
Driehaus Global Fund | Driehaus International Small Cap Growth Fund | Driehaus Micro Cap Growth Fund | Driehaus Small Cap Growth Fund | Driehaus Small/Mid Cap Growth Fund | Driehaus Event Driven Fund | |||||||||||||||||
$ | 40,803,577 | $ | 180,701,098 | $ | 165,758,554 | $ | 414,204,181 | $ | 11,051,127 | $ | 165,997,798 | |||||||||||
$ | 49,654,139 | $ | 210,803,418 | $ | 221,227,397 | $ | 551,416,496 | $ | 14,368,844 | $ | 168,904,129 | |||||||||||
2,838,798 | 5,332,031 | 331,796 | 7,728,396 | 440,421 | 41,611,057 | |||||||||||||||||
— | — | — | — | — | 661,525 | |||||||||||||||||
— | — | — | — | — | 189,945 | |||||||||||||||||
1,585 | 1 | — | — | — | — | |||||||||||||||||
— | — | — | — | — | 76,829 | |||||||||||||||||
709 | 408,149 | — | 211,741 | — | 311,038 | |||||||||||||||||
— | — | — | — | — | 20,793,865 | |||||||||||||||||
— | — | 3,680,535 | 5,301,799 | — | 1,260,000 | |||||||||||||||||
2,332 | — | — | — | — | — | |||||||||||||||||
657 | 5,127,532 | 39,886 | 1,141,523 | 1,636 | 133,636 | |||||||||||||||||
74,290 | 479,481 | 16,696 | 39,607 | 720 | 1,866,180 | |||||||||||||||||
— | — | — | — | — | 498,761 | |||||||||||||||||
14,540 | 27,603 | 60,345 | 63,267 | 9,044 | 25,992 | |||||||||||||||||
52,587,050 | 222,178,215 | 225,356,655 | 565,902,829 | 14,820,665 | 236,332,957 | |||||||||||||||||
— | — | — | — | — | 18,705,679 | |||||||||||||||||
— | — | — | — | — | 17,139,042 | |||||||||||||||||
— | — | — | — | — | 8,275 | |||||||||||||||||
— | — | 1,328,044 | — | — | — | |||||||||||||||||
— | — | — | — | — | 149,464 | |||||||||||||||||
29,870 | 102,609 | 181,931 | 323,748 | — | 93,800 | |||||||||||||||||
— | 612,466 | 1,118,833 | 3,582,235 | 201,956 | 1,261,575 | |||||||||||||||||
— | — | — | — | — | 628,707 | |||||||||||||||||
19,605 | 178,685 | 234,338 | 274,022 | 3,763 | 186,117 | |||||||||||||||||
— | — | — | 32,857 | — | 68,225 | |||||||||||||||||
4,551 | 22,228 | 18,673 | 32,544 | 2,268 | 16,217 | |||||||||||||||||
— | 172,801 | — | — | — | — | |||||||||||||||||
41,055 | 49,256 | 46,437 | 67,812 | 37,628 | 75,838 | |||||||||||||||||
95,081 | 1,138,045 | 2,928,256 | 4,313,218 | 245,615 | 19,627,260 | |||||||||||||||||
$ | 52,491,969 | $ | 221,040,170 | $ | 222,428,399 | $ | 561,589,611 | $ | 14,575,050 | $ | 216,705,697 | |||||||||||
$ | 44,842,007 | $ | 231,972,308 | $ | 190,158,911 | $ | 558,233,353 | $ | 14,877,452 | $ | 220,163,520 | |||||||||||
7,649,962 | (10,932,138 | ) | 32,269,488 | 3,356,258 | (302,402 | ) | (3,457,823 | ) | ||||||||||||||
$ | 52,491,969 | $ | 221,040,170 | $ | 222,428,399 | $ | 561,589,611 | $ | 14,575,050 | $ | 216,705,697 | |||||||||||
$ | 52,491,969 | $ | 221,040,170 | $ | 222,428,399 | $ | — | $ | 14,575,050 | $ | 216,705,697 | |||||||||||
3,935,303 | 25,302,180 | 20,036,993 | — | 972,642 | 17,529,822 | |||||||||||||||||
$ | 13.34 | $ | 8.74 | $ | 11.10 | $ | — | $ | 14.99 | $ | 12.36 | |||||||||||
$ | — | $ | — | $ | — | $ | 91,507,883 | $ | — | $ | — | |||||||||||
— | — | — | 5,037,035 | — | — | |||||||||||||||||
$ | — | $ | — | $ | — | $ | 18.17 | $ | — | $ | — | |||||||||||
$ | — | $ | — | $ | — | $ | 470,081,728 | $ | — | $ | — | |||||||||||
— | — | — | 25,374,483 | — | — | |||||||||||||||||
$ | — | $ | — | $ | — | $ | 18.53 | $ | — | $ | — |
Notes to Financial Statements are an integral part of this Statement.
57 |
Driehaus Mutual Funds
Statements of Operations
For the Year Ended December 31, 2023
Driehaus Emerging Markets Growth Fund | Driehaus Emerging Markets Small Cap Growth Fund | |||||||
INVESTMENT INCOME: | ||||||||
Interest income | $ | 1,824,305 | $ | 78,058 | ||||
Dividend income1 | 58,936,711 | 2,078,716 | ||||||
Non-cash dividend income | 3,090,080 | — | ||||||
Rebates on short sales, net of fees | — | — | ||||||
Total investment income | 63,851,096 | 2,156,774 | ||||||
Expenses: | ||||||||
Investment advisory fees | 22,388,195 | 1,176,726 | ||||||
Shareholder services fees | 1,283,801 | — | ||||||
Administration fees | 809,037 | 35,418 | ||||||
Transfer agent fees | 232,275 | 10,085 | ||||||
Trustees fees | 382,238 | 16,874 | ||||||
Custody fees | 727,704 | 63,044 | ||||||
Reports to shareholders | 161,325 | 10,361 | ||||||
Professional fees | 276,703 | 27,139 | ||||||
Audit and tax fees | 128,066 | 60,629 | ||||||
Federal and state registration fees | 77,782 | 26,350 | ||||||
Dividends and interest on short positions | — | — | ||||||
Miscellaneous | 610,793 | 29,910 | ||||||
Total expenses | 27,077,919 | 1,456,536 | ||||||
Investment advisory fees recoupment (reimbursement) | — | (125,610 | ) | |||||
Fees paid indirectly | (241,124 | ) | (4,436 | ) | ||||
Net expenses | 26,836,795 | 1,326,490 | ||||||
Net investment income (loss) | 37,014,301 | 830,284 | ||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS: | ||||||||
Net realized gain (loss) on transactions from: | ||||||||
Investments2 | (102,031,583 | ) | (2,554,472 | ) | ||||
Warrants | — | — | ||||||
Purchased options contracts | — | — | ||||||
Securities sold short | — | — | ||||||
Swap contracts | — | — | ||||||
Foreign currency | (1,529,085 | ) | (217,985 | ) | ||||
Net realized gain (loss) on investment transactions | (103,560,668 | ) | (2,772,457 | ) | ||||
Change in net unrealized appreciation (depreciation) on: | ||||||||
Investments3 | 316,341,307 | 11,837,472 | ||||||
Warrants | — | — | ||||||
Securities sold short | — | — | ||||||
Purchased options contracts | — | — | ||||||
Written options contracts | — | — | ||||||
Swap contracts | — | — | ||||||
Foreign currency | (82,377 | ) | 63,524 | |||||
Net change in unrealized appreciation (depreciation) on investment transactions | 316,258,930 | 11,900,996 | ||||||
Net realized and unrealized gain (loss) on investment transactions | 212,698,262 | 9,128,539 | ||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | $ | 249,712,563 | $ | 9,958,823 | ||||
1 | Net of $6,962,046, $163,568, $76,736, $587,552, $0, $5,096, $92 and $0 of non-reclaimable foreign taxes withheld, respectively. |
2 | Net realized gain (loss) on transactions from investments are net of $(3,366,873), $(154,278), $(94,737), $(1,075), $0, $0, $0 and $0 of foreign capital gains taxes, respectively. |
3 | Change in net unrealized appreciation (depreciation) on investments are net of $(6,766,039), $(750,962), $49,147, $(172,801), $0, $0, $0 and $0 of change in deferred foreign capital gains taxes, respectively. |
Notes to Financial Statements are an integral part of this Statement.
58 |
Driehaus Mutual Funds
Statements of Operations
For the Year Ended December 31, 2023
Driehaus Global Fund | Driehaus International Small Cap Growth Fund | Driehaus Micro Cap Growth Fund | Driehaus Small Cap Growth Fund | Driehaus Small/Mid Cap Growth Fund | Driehaus Event Driven Fund | |||||||||||||||||
$ | 248,144 | $ | 184,183 | $ | 18,213 | $ | 177,174 | $ | — | $ | 6,609,050 | |||||||||||
745,264 | 3,253,086 | 474,191 | 1,875,297 | 55,357 | 3,241,499 | |||||||||||||||||
74,992 | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | 797,454 | |||||||||||||||||
1,068,400 | 3,437,269 | 492,404 | 2,052,471 | 55,357 | 10,648,003 | |||||||||||||||||
363,910 | 2,078,260 | 2,385,414 | 2,963,179 | 80,345 | 2,100,570 | |||||||||||||||||
— | — | — | 172,145 | — | 398,496 | |||||||||||||||||
16,740 | 69,808 | 65,970 | 165,332 | 4,635 | 69,911 | |||||||||||||||||
4,760 | 19,537 | 18,597 | 47,069 | 1,295 | 20,840 | |||||||||||||||||
7,939 | 33,274 | 29,943 | 79,903 | 2,123 | 33,705 | |||||||||||||||||
15,316 | 49,918 | 30,288 | 37,240 | 11,072 | 20,087 | |||||||||||||||||
8,886 | 11,319 | 9,939 | 49,748 | 2,544 | 22,485 | |||||||||||||||||
50,355 | 35,454 | 35,996 | 72,543 | 8,662 | 40,211 | |||||||||||||||||
53,481 | 51,262 | 38,600 | 38,600 | 38,600 | 56,100 | |||||||||||||||||
21,747 | 24,797 | 23,207 | 63,093 | 20,593 | 32,689 | |||||||||||||||||
— | — | — | — | — | 441,230 | |||||||||||||||||
18,499 | 54,986 | 45,474 | 112,286 | 6,256 | 47,096 | |||||||||||||||||
561,633 | 2,428,615 | 2,683,428 | 3,801,138 | 176,125 | 3,283,420 | |||||||||||||||||
(145,127 | ) | — | — | — | (53,555 | ) | — | |||||||||||||||
(4,301 | ) | (14,386 | ) | (95,514 | ) | (155,396 | ) | (1,823 | ) | (22,965 | ) | |||||||||||
412,205 | 2,414,229 | 2,587,914 | 3,645,742 | 120,747 | 3,260,455 | |||||||||||||||||
656,195 | 1,023,040 | (2,095,510 | ) | (1,593,271 | ) | (65,390 | ) | 7,387,548 | ||||||||||||||
2,312,254 | 1,851,092 | (2,437,918 | ) | (3,466,120 | ) | 324,014 | 6,953,627 | |||||||||||||||
— | — | 4,366 | — | — | — | |||||||||||||||||
— | — | — | — | — | (82,140 | ) | ||||||||||||||||
— | — | — | — | — | 3,595,519 | |||||||||||||||||
9,924 | — | — | — | — | (901,872 | ) | ||||||||||||||||
(17,864 | ) | (82,392 | ) | — | — | — | — | |||||||||||||||
2,304,314 | 1,768,700 | (2,433,552 | ) | (3,466,120 | ) | 324,014 | 9,565,134 | |||||||||||||||
5,918,449 | 20,521,240 | 25,827,834 | 93,485,843 | 2,263,076 | 7,278,882 | |||||||||||||||||
— | — | (7,641 | ) | — | — | 57,546 | ||||||||||||||||
— | — | — | — | — | (4,367,390 | ) | ||||||||||||||||
— | — | — | — | — | (206,624 | ) | ||||||||||||||||
— | — | — | — | — | 118,282 | |||||||||||||||||
— | — | — | — | — | (193,352 | ) | ||||||||||||||||
(7,585 | ) | 5,351 | — | — | — | — | ||||||||||||||||
5,910,864 | 20,526,591 | 25,820,193 | 93,485,843 | 2,263,076 | 2,687,344 | |||||||||||||||||
8,215,178 | 22,295,291 | 23,386,641 | 90,019,723 | 2,587,090 | 12,252,478 | |||||||||||||||||
$ | 8,871,373 | $ | 23,318,331 | $ | 21,291,131 | $ | 88,426,452 | $ | 2,521,700 | $ | 19,640,026 | |||||||||||
Notes to Financial Statements are an integral part of this Statement.
59 |
Driehaus Mutual Funds
Statements of Changes in Net Assets
Driehaus Emerging Markets Growth Fund | Driehaus Emerging Markets Small Cap Growth Fund | |||||||||||||||
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2023 | For the year ended December 31, 2022 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | 37,014,301 | $ | 19,481,856 | $ | 830,284 | $ | 557,977 | ||||||||
Net realized gain (loss) on investment transactions | (103,560,668 | ) | (192,085,380 | ) | (2,772,457 | ) | (10,931,470 | ) | ||||||||
Net change in unrealized appreciation | ||||||||||||||||
(depreciation) on investment transactions | 316,258,930 | (355,272,661 | ) | 11,900,996 | (15,290,292 | ) | ||||||||||
Net increase (decrease) in net assets resulting from operations | 249,712,563 | (527,876,185 | ) | 9,958,823 | (25,663,785 | ) | ||||||||||
Distributions from distributable earnings to | ||||||||||||||||
shareholders: | ||||||||||||||||
Fund | — | — | (1,149,999 | ) | — | |||||||||||
Investor Class Shares | (10,376,561 | ) | (4,378,459 | ) | — | — | ||||||||||
Institutional Class Shares | (39,623,469 | ) | (9,874,900 | ) | — | — | ||||||||||
Total distributions to shareholders | (50,000,030 | ) | (14,253,359 | ) | (1,149,999 | ) | — | |||||||||
Tax return of capital distributions to | ||||||||||||||||
shareholders: | ||||||||||||||||
Fund | — | — | — | — | ||||||||||||
Investor Class Shares | — | — | — | — | ||||||||||||
Institutional Class Shares | — | — | — | — | ||||||||||||
Total tax return of capital | ||||||||||||||||
distributions to shareholders | — | — | — | — | ||||||||||||
Capital share transactions: | ||||||||||||||||
Proceeds from shares sold: | ||||||||||||||||
Fund | — | — | 17,407,793 | 33,164,101 | ||||||||||||
Investor Class | 85,410,077 | 112,615,114 | — | — | ||||||||||||
Institutional Class | 601,018,546 | 619,503,005 | — | — | ||||||||||||
Reinvestment of distributions: | ||||||||||||||||
Fund | — | — | 969,895 | — | ||||||||||||
Investor Class | 9,875,397 | 4,133,447 | — | — | ||||||||||||
Institutional Class | 34,513,200 | 8,864,468 | — | — | ||||||||||||
Cost of shares redeemed: | ||||||||||||||||
Fund | — | — | (22,002,784 | ) | (21,520,461 | ) | ||||||||||
Investor Class | (146,015,399 | ) | (199,869,549 | ) | — | — | ||||||||||
Institutional Class | (261,731,122 | ) | (273,542,521 | ) | — | — | ||||||||||
Redemption fees: | ||||||||||||||||
Fund | — | — | 1,456 | 4,569 | ||||||||||||
Investor Class | 901 | 19,130 | — | — | ||||||||||||
Institutional Class | 5,485 | 17,659 | — | — | ||||||||||||
Net increase (decrease) in net assets | ||||||||||||||||
resulting from capital transactions | 323,077,085 | 271,740,753 | (3,623,640 | ) | 11,648,209 | |||||||||||
Total increase (decrease) in net assets | 522,789,618 | (270,388,791 | ) | 5,185,184 | (14,015,576 | ) | ||||||||||
NET ASSETS: | ||||||||||||||||
Beginning of period | $ | 2,056,715,252 | $ | 2,327,104,043 | $ | 102,628,805 | $ | 116,644,381 | ||||||||
End of period | $ | 2,579,504,870 | $ | 2,056,715,252 | $ | 107,813,989 | $ | 102,628,805 | ||||||||
Notes to Financial Statements are an integral part of this Statement.
60 |
Driehaus Mutual Funds
Statements of Changes in Net Assets
Driehaus Global Fund | Driehaus International Small Cap Growth Fund | Driehaus Micro Cap Growth Fund | ||||||||||||||||||||
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2023 | For the year ended December 31, 2022 | |||||||||||||||||
$ | 656,195 | $ | 912,697 | $ | 1,023,040 | $ | 1,758,334 | $ | (2,095,510 | ) | $ | (1,880,693 | ) | |||||||||
2,304,314 | (2,371,885 | ) | 1,768,700 | (42,464,765 | ) | (2,433,552 | ) | (14,959,984 | ) | |||||||||||||
5,910,864 | (9,199,102 | ) | 20,526,591 | (40,051,074 | ) | 25,820,193 | (93,979,223 | ) | ||||||||||||||
8,871,373 | (10,658,290 | ) | 23,318,331 | (80,757,505 | ) | 21,291,131 | (110,819,900 | ) | ||||||||||||||
(760,000 | ) | (960,775 | ) | (2,500,006 | ) | (12,266,913 | ) | — | (13,811,619 | ) | ||||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
(760,000 | ) | (960,775 | ) | (2,500,006 | ) | (12,266,913 | ) | — | (13,811,619 | ) | ||||||||||||
— | — | — | — | (1,999,999 | ) | — | ||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | (1,999,999 | ) | — | ||||||||||||||||
3,867,347 | 4,162,890 | 33,168,158 | 27,792,245 | 66,742,433 | 5,804,663 | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
159,247 | 445,299 | 2,412,410 | 10,992,388 | 1,563,826 | 10,997,421 | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
(6,288,521 | ) | (4,075,496 | ) | (52,173,501 | ) | (61,260,240 | ) | (41,378,205 | ) | (57,231,601 | ) | |||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
210 | 1,119 | 518 | 2,146 | 763 | 235 | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
(2,261,717 | ) | 533,812 | (16,592,415 | ) | (22,473,461 | ) | 26,928,817 | (40,429,282 | ) | |||||||||||||
5,849,656 | (11,085,253 | ) | 4,225,910 | (115,497,879 | ) | 46,219,949 | (165,060,801 | ) | ||||||||||||||
$ | 46,642,313 | $ | 57,727,566 | $ | 216,814,260 | $ | 332,312,139 | $ | 176,208,450 | $ | 341,269,251 | |||||||||||
$ | 52,491,969 | $ | 46,642,313 | $ | 221,040,170 | $ | 216,814,260 | $ | 222,428,399 | $ | 176,208,450 | |||||||||||
Notes to Financial Statements are an integral part of this Statement.
61 |
Driehaus Mutual Funds
Statements of Changes in Net Assets
Driehaus Small Cap Growth Fund | Driehaus Small/Mid Cap Growth Fund | |||||||||||||||
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2023 | For the year ended December 31, 2022 | |||||||||||||
INCREASE (DECREASE) IN NET ASSETS: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (1,593,271 | ) | $ | (1,564,453 | ) | $ | (65,390 | ) | $ | (76,533 | ) | ||||
Net realized gain (loss) on investment transactions | (3,466,120 | ) | (120,425,635 | ) | 324,014 | (3,577,319 | ) | |||||||||
Net change in unrealized appreciation | ||||||||||||||||
(depreciation) on investment transactions | 93,485,843 | (98,418,522 | ) | 2,263,076 | (3,707,745 | ) | ||||||||||
Net increase (decrease) in net assets | ||||||||||||||||
resulting from operations | 88,426,452 | (220,408,610 | ) | 2,521,700 | (7,361,597 | ) | ||||||||||
Distributions from distributable earnings to | ||||||||||||||||
shareholders: | ||||||||||||||||
Fund | — | — | — | (461,634 | ) | |||||||||||
Investor Class Shares | (317,274 | ) | (1,408,364 | ) | — | — | ||||||||||
Institutional Class Shares | (2,426,869 | ) | (7,803,434 | ) | — | — | ||||||||||
Total distributions to shareholders | (2,744,143 | ) | (9,211,798 | ) | — | (461,634 | ) | |||||||||
Tax return of capital distributions to | ||||||||||||||||
shareholders: | ||||||||||||||||
Fund | — | — | — | — | ||||||||||||
Investor Class Shares | (29,581 | ) | — | — | — | |||||||||||
Institutional Class Shares | (226,267 | ) | — | — | — | |||||||||||
Total tax return of capital | ||||||||||||||||
distributions to shareholders | (255,848 | ) | — | — | — | |||||||||||
Capital share transactions: | ||||||||||||||||
Proceeds from shares sold: | ||||||||||||||||
Fund | — | — | 1,022,052 | 3,852,192 | ||||||||||||
Investor Class | 34,622,739 | 33,296,643 | — | — | ||||||||||||
Institutional Class | 143,644,059 | 223,937,354 | — | — | ||||||||||||
Reinvestment of distributions: | ||||||||||||||||
Fund | — | — | — | 435,076 | ||||||||||||
Investor Class | 346,282 | 1,406,995 | — | — | ||||||||||||
Institutional Class | 2,450,870 | 7,140,572 | — | — | ||||||||||||
Cost of shares redeemed: | ||||||||||||||||
Fund | — | — | (1,902,267 | ) | (6,707,620 | ) | ||||||||||
Investor Class | (24,107,129 | ) | (29,782,290 | ) | — | — | ||||||||||
Institutional Class | (134,247,341 | ) | (162,493,695 | ) | — | — | ||||||||||
Redemption fees: | ||||||||||||||||
Fund | — | — | — | — | ||||||||||||
Investor Class | 3,597 | 25,376 | 122 | 3,277 | ||||||||||||
Institutional Class | 11,766 | 216,119 | — | — | ||||||||||||
Net increase (decrease) in net assets | ||||||||||||||||
resulting from capital transactions | 22,724,843 | 73,747,074 | (880,093 | ) | (2,417,075 | ) | ||||||||||
Total increase (decrease) in net assets | 108,151,304 | (155,873,334 | ) | 1,641,607 | (10,240,306 | ) | ||||||||||
NET ASSETS: | ||||||||||||||||
Beginning of period | $ | 453,438,307 | $ | 609,311,641 | $ | 12,933,443 | $ | 23,173,749 | ||||||||
End of period | $ | 561,589,611 | $ | 453,438,307 | $ | 14,575,050 | $ | 12,933,443 | ||||||||
Notes to Financial Statements are an integral part of this Statement.
62 |
Driehaus Mutual Funds
Statements of Changes in Net Assets
Driehaus Event Driven Fund | |||||||
For the year ended December 31, 2023 | For the year ended December 31, 2022 | ||||||
$ | 7,387,548 | $ | 2,850,600 | ||||
9,565,134 | (11,866,743 | ) | |||||
2,687,344 | (12,229,343 | ) | |||||
19,640,026 | (21,245,486 | ) | |||||
(9,649,997 | ) | (3,000,010 | ) | ||||
— | — | ||||||
— | — | ||||||
(9,649,997 | ) | (3,000,010 | ) | ||||
— | — | ||||||
— | — | ||||||
— | — | ||||||
— | — | ||||||
68,502,217 | 127,169,234 | ||||||
— | — | ||||||
— | — | ||||||
9,514,053 | 2,898,519 | ||||||
— | — | ||||||
— | — | ||||||
(75,589,464 | ) | (105,167,933 | ) | ||||
— | — | ||||||
— | — | ||||||
— | — | ||||||
— | — | ||||||
— | — | ||||||
2,426,806 | 24,899,820 | ||||||
12,416,835 | 654,324 | ||||||
$ | 204,288,862 | $ | 203,634,538 | ||||
$ | 216,705,697 | $ | 204,288,862 | ||||
Notes to Financial Statements are an integral part of this Statement.
63 |
Driehaus Emerging Markets Growth Fund — Investor Class
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | For the year ended December 31, 2019 |
| |||||||||||||||
Net asset value, beginning of period | $ | 31.69 | $ | 41.20 | $ | 49.09 | $ | 39.53 | $ | 31.80 | ||||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||||||
Net investment income (loss)1 | 0.45 | 0.28 | (0.07 | ) | (0.09 | ) | 0.30 | |||||||||||||
Net realized and unrealized gain (loss) on | ||||||||||||||||||||
investments | 3.07 | (9.56 | ) | (0.93 | ) | 10.87 | 7.76 | |||||||||||||
Total income (loss) from investment operations | 3.52 | (9.28 | ) | (1.00 | ) | 10.78 | 8.06 | |||||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||||||
Net investment income | (0.63 | ) | (0.20 | ) | — | — | (0.33 | ) | ||||||||||||
Net realized gain | — | (0.03 | ) | (6.89 | ) | (1.22 | ) | — | ||||||||||||
Total distributions | (0.63 | ) | (0.23 | ) | (6.89 | ) | (1.22 | ) | (0.33 | ) | ||||||||||
Redemption fees added to paid-in capital | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | ||||||||||
Net asset value, end of period | $ | 34.58 | $ | 31.69 | $ | 41.20 | $ | 49.09 | $ | 39.53 | ||||||||||
Total Return | 11.14 | % | (22.54 | )% | (1.90 | )% | 27.31 | % | 25.34 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 570,927 | $ | 572,323 | $ | 844,522 | $ | 951,998 | $ | 863,535 | ||||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 1.30 | % | 1.35 | % | 1.29 | % | 1.39 | % | 1.41 | % | ||||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets3 | 1.29 | % | 1.34 | % | 1.28 | % | 1.38 | % | 1.40 | % | ||||||||||
Ratio of net investment income (loss) (including interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets3 | 1.37 | % | 0.81 | % | (0.13 | )% | (0.24 | )% | 0.85 | % | ||||||||||
Portfolio turnover | 126 | % | 160 | % | 169 | % | 203 | % | 167 | % | ||||||||||
1 | Net investment income (loss) per share has been calculated using the average shares method. |
2 | Amount represents less than $0.01 per share. |
3 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The ratio for the Fund includes the effect of fees paid indirectly which impacted the ratio by 0.01% for the years 2019, 2020, 2021, 2022 and 2023. |
Notes to Financial Statements are an integral part of this Schedule.
64 |
Driehaus Emerging Markets Growth Fund — Institutional Class
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | For the year ended December 31, 2019 |
| |||||||||||||||
Net asset value, beginning of period | $ | 31.88 | $ | 41.36 | $ | 49.14 | $ | 39.48 | $ | 31.76 | ||||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||||||
Net investment income (loss)1 | 0.54 | 0.37 | 0.05 | (0.01 | ) | 0.38 | ||||||||||||||
Net realized and unrealized gain (loss) on investments | 3.09 | (9.61 | ) | (0.94 | ) | 10.89 | 7.75 | |||||||||||||
Total income (loss) from investment operations | 3.63 | (9.24 | ) | (0.89 | ) | 10.88 | 8.13 | |||||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||||||
Net investment income | (0.71 | ) | (0.21 | ) | — | — | (0.41 | ) | ||||||||||||
Net realized gain | — | (0.03 | ) | (6.89 | ) | (1.22 | ) | — | ||||||||||||
Total distributions | (0.71 | ) | (0.24 | ) | (6.89 | ) | (1.22 | ) | (0.41 | ) | ||||||||||
Redemption fees added to paid-in capital | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | 0.00 | 2 | ||||||||||
Net asset value, end of period | $ | 34.80 | $ | 31.88 | $ | 41.36 | $ | 49.14 | $ | 39.48 | ||||||||||
Total Return | 11.42 | % | (22.36 | )% | (1.67 | )% | 27.60 | % | 25.60 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 2,008,578 | $ | 1,484,392 | $ | 1,482,582 | $ | 1,331,263 | $ | 928,230 | ||||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 1.08 | % | 1.12 | % | 1.07 | % | 1.17 | % | 1.20 | % | ||||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets3 | 1.07 | % | 1.11 | % | 1.06 | % | 1.16 | % | 1.19 | % | ||||||||||
Ratio of net investment income (loss) (including interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets3 | 1.61 | % | 1.07 | % | 0.10 | % | (0.02 | )% | 1.07 | % | ||||||||||
Portfolio turnover | 126 | % | 160 | % | 169 | % | 203 | % | 167 | % | ||||||||||
1 | Net investment income (loss) per share has been calculated using the average shares method. |
2 | Amount represents less than $0.01 per share. |
3 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The ratio for the Fund includes the effect of fees paid indirectly which impacted the ratio by 0.01% for the years 2019, 2020, 2021, 2022 and 2023. |
Notes to Financial Statements are an integral part of this Schedule.
65 |
Driehaus Emerging Markets Small Cap Growth Fund
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | For the year ended December 31, 2019 |
| |||||||||||||||
Net asset value, beginning of period | $ | 17.43 | $ | 22.11 | $ | 19.08 | $ | 14.38 | $ | 10.80 | ||||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||||||
Net investment income (loss) | 0.16 | 0.09 | 0.06 | 0.02 | 0.06 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.62 | (4.77 | ) | 2.98 | 4.80 | 3.58 | ||||||||||||||
Total income (loss) from investment operations | 1.78 | (4.68 | ) | 3.04 | 4.82 | 3.64 | ||||||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||||||
Net investment income | (0.21 | ) | — | (0.01 | ) | (0.12 | ) | (0.06 | ) | |||||||||||
Total distributions | (0.21 | ) | — | (0.01 | ) | (0.12 | ) | (0.06 | ) | |||||||||||
Redemption fees added to paid-in capital | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | — | 0.00 | 1 | |||||||||||
Net asset value, end of period | $ | 19.00 | $ | 17.43 | $ | 22.11 | $ | 19.08 | $ | 14.38 | ||||||||||
Total Return | 10.23 | % | (21.17 | )% | 15.93 | % | 33.56 | % | 33.71 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 107,814 | $ | 102,629 | $ | 116,644 | $ | 89,729 | $ | 62,407 | ||||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 1.36 | % | 1.44 | % | 1.37 | % | 1.72 | % | 1.80 | %2 | ||||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets3,4 | 1.24 | % | 1.24 | %5 | 1.24 | %5 | 1.45 | %5 | 1.45 | %2,5 | ||||||||||
Ratio of net investment income (loss) (including interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets4 | 0.78 | % | 0.53 | %5 | 0.28 | %5 | 0.12 | %5 | 0.52 | %5 | ||||||||||
Portfolio turnover | 161 | % | 149 | % | 178 | % | 248 | % | 220 | % | ||||||||||
1 | Amount represents less than $0.01 per share. |
2 | Ratio of expenses to average net assets includes interest expense of 0.01% for the year ended December 31, 2019. The interest expense is from utilizing the line of credit (see Note G in the Notes to Financial Statements). |
3 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The ratio for the Fund includes the effect of fees paid indirectly which impacted the ratio by 0.01%, 0.00%, 0.01%, 0.00% and 0.00% for the years 2019, 2020, 2021, 2022 and 2023. |
4 | Effective December 31, 2020, the Adviser has contractually agreed to waive its investment advisory fee or absorb other operating expenses to the extent necessary to ensure that total annual Fund operating expenses (other than interest, taxes, brokerage commissions, dividends and interest on short sales, other investment-related expenses, acquired fund fees and expenses, and extraordinary expenses such as litigation and other expenses not incurred in the ordinary course of the Fund’s business) would not exceed the Fund’s operating expense cap of 1.24% of average daily net assets until April 30, 2024. From November 1, 2018, to December 31, 2020, the annual operating expense limitation was 1.45%. |
5 | Such ratios are after administrative and transfer agent waivers and adviser expense reimbursements and recoupments, when applicable. BNY Mellon Investment Servicing (US) Inc., the prior administrative agent and transfer agent, waived a portion of its fees beginning with the Fund’s commencement of operations, August 22, 2011 through July 31, 2020. |
Notes to Financial Statements are an integral part of this Schedule.
66 |
Driehaus Global Fund
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | For the year ended December 31, 2019 |
| |||||||||||||||
Net asset value, beginning of period | $ | 11.33 | $ | 14.25 | $ | 15.17 | $ | 11.94 | $ | 9.93 | ||||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||||||
Net investment income (loss) | 0.17 | 0.22 | 0.12 | 0.16 | 0.29 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.03 | (2.90 | ) | (0.21 | ) | 3.43 | 1.86 | |||||||||||||
Total income (loss) from investment operations | 2.20 | (2.68 | ) | (0.09 | ) | 3.59 | 2.15 | |||||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||||||
Net investment income | (0.19 | ) | (0.24 | ) | (0.22 | ) | (0.11 | ) | (0.14 | ) | ||||||||||
Net realized gain | — | — | (0.61 | ) | (0.25 | ) | — | |||||||||||||
Total distributions | (0.19 | ) | (0.24 | ) | (0.83 | ) | (0.36 | ) | (0.14 | ) | ||||||||||
Redemption fees added to paid-in capital | 0.00 | 1 | 0.00 | 1 | — | — | — | |||||||||||||
Net asset value, end of period | $ | 13.34 | $ | 11.33 | $ | 14.25 | $ | 15.17 | $ | 11.94 | ||||||||||
Total Return | 19.46 | % | (18.86 | )% | (0.53 | )% | 30.09 | % | 21.64 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 52,492 | $ | 46,642 | $ | 57,728 | $ | 53,221 | $ | 39,043 | ||||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 1.13 | % | 1.36 | % | 1.31 | % | 1.62 | % | 1.89 | % | ||||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets2,3 | 0.83 | % | 0.99 | % | 0.99 | % | 0.99 | % | 1.23 | % | ||||||||||
Ratio of net investment income (loss) (including interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets2 | 1.32 | % | 1.90 | % | 0.92 | % | 1.47 | % | 2.67 | % | ||||||||||
Portfolio turnover | 179 | % | 92 | % | 101 | % | 135 | % | 155 | % | ||||||||||
1 | Amount represents less than $0.01 per share. |
2 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The expense ratio impacts of fees paid indirectly were 0.00%, 0.00%, 0.01%, 0.01% and 0.01% for the years 2019, 2020, 2021, 2022 and 2023. |
3 | Effective April 30, 2023, the Adviser has contractually agreed to waive its investment advisory fee or absorb other operating expenses to the extent necessary to ensure that total annual Fund operating expenses (other than interest, taxes, brokerage commissions, dividends and interest on short sales, other investment-related expenses, acquired fund fees and expenses, and extraordinary expenses such as litigation and other expenses not incurred in the ordinary course of the Fund’s business) would not exceed the Fund’s operating expense cap of 0.75% of average daily net assets until April 30, 2024. From May 1, 2019 to April 29, 2023, the annual operating expense limitation was 0.99%, and prior to May 1, 2019 the annual operating expense limitation was 1.75%. |
Notes to Financial Statements are an integral part of this Schedule.
67 |
Driehaus International Small Cap Growth Fund
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | For the year ended December 31, 2019 |
| |||||||||||||||
Net asset value, beginning of period | $ | 7.90 | $ | 11.06 | $ | 12.59 | $ | 10.52 | $ | 8.13 | ||||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||||||
Net investment income (loss) | 0.05 | 0.06 | 0.04 | 0.01 | 0.06 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.89 | (2.75 | ) | 1.42 | 3.10 | 2.41 | ||||||||||||||
Total income (loss) from investment operations | 0.94 | (2.69 | ) | 1.46 | 3.11 | 2.47 | ||||||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||||||
Net investment income | (0.10 | ) | — | (0.04 | ) | (0.08 | ) | (0.01 | ) | |||||||||||
Net realized gain | — | (0.47 | ) | (2.95 | ) | (0.96 | ) | (0.07 | ) | |||||||||||
Total distributions | (0.10 | ) | (0.47 | ) | (2.99 | ) | (1.04 | ) | (0.08 | ) | ||||||||||
Redemption fees added to paid-in capital | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | ||||||||||
Net asset value, end of period | $ | 8.74 | $ | 7.90 | $ | 11.06 | $ | 12.59 | $ | 10.52 | ||||||||||
Total Return | 11.95 | % | (24.40 | )% | 12.49 | % | 29.71 | % | 30.41 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 221,040 | $ | 216,814 | $ | 332,312 | $ | 288,855 | $ | 268,229 | ||||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 1.17 | % | 1.16 | % | 1.15 | % | 1.23 | % | 1.24 | % | ||||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets2 | 1.16 | % | 1.16 | % | 1.14 | % | 1.23 | % | 1.24 | % | ||||||||||
Ratio of net investment income (loss) (including interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets2 | 0.49 | % | 0.72 | % | 0.32 | % | 0.02 | % | 0.65 | % | ||||||||||
Portfolio turnover | 80 | % | 75 | % | 93 | % | 104 | % | 96 | % |
1 | Amount represents less than $0.01 per share. |
2 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The ratio for the Fund includes the effect of fees paid indirectly which impacted the ratio by 0.00%, 0.00%, 0.01%, 0.01% and 0.01% for the years 2019, 2020, 2021, 2022 and 2023. |
Notes to Financial Statements are an integral part of this Schedule.
68 |
Driehaus Micro Cap Growth Fund
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | For the year ended December 31, 2019 |
| |||||||||||||||
Net asset value, beginning of period | $ | 10.05 | $ | 16.33 | $ | 19.99 | $ | 12.95 | $ | 11.11 | ||||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||||||
Net investment income (loss) | (0.11 | ) | (0.11 | ) | (0.22 | ) | (0.20 | ) | (0.16 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments | 1.26 | (5.35 | ) | 4.44 | 11.20 | 3.90 | ||||||||||||||
Total income (loss) from investment operations | 1.15 | (5.46 | ) | 4.22 | 11.00 | 3.74 | ||||||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||||||
Net investment income | — | — | — | — | (0.02 | ) | ||||||||||||||
Net realized gain | — | (0.82 | ) | (7.88 | ) | (3.96 | ) | (1.88 | ) | |||||||||||
Tax return of capital | (0.10 | ) | — | — | — | — | ||||||||||||||
Total distributions | (0.10 | ) | (0.82 | ) | (7.88 | ) | (3.96 | ) | (1.90 | ) | ||||||||||
Redemption fees added to paid-in capital | 0.00 | 1 | 0.00 | 1 | — | 0.00 | 1 | 0.00 | 1 | |||||||||||
Net asset value, end of period | $ | 11.10 | $ | 10.05 | $ | 16.33 | $ | 19.99 | $ | 12.95 | ||||||||||
Total Return | 11.44 | % | (33.53 | )% | 24.73 | % | 85.60 | % | 33.89 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 222,428 | $ | 176,208 | $ | 341,269 | $ | 334,391 | $ | 269,120 | ||||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 1.41 | % | 1.42 | % | 1.38 | % | 1.46 | % | 1.48 | % | ||||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets2 | 1.36 | % | 1.37 | % | 1.35 | % | 1.43 | % | 1.43 | % | ||||||||||
Ratio of net investment income (loss) (including interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets2 | (1.10 | )% | (0.87 | )% | (1.26 | )% | (1.33 | )% | (1.32 | )% | ||||||||||
Portfolio turnover | 128 | % | 108 | % | 109 | % | 141 | % | 165 | % |
1 | Amount represents less than $0.01 per share. |
2 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The ratio for the Fund includes the effect of fees paid indirectly which impacted the ratio by 0.05%, 0.03%, 0.03%, 0.05% and 0.05% for the years 2019, 2020, 2021, 2022 and 2023. |
Notes to Financial Statements are an integral part of this Schedule.
69 |
Driehaus Small Cap Growth Fund — Investor Class
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | For the year ended December 31, 2019 |
| |||||||||||||||
Net asset value, beginning of period | $ | 15.34 | $ | 23.76 | $ | 23.62 | $ | 15.37 | $ | 11.66 | ||||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||||||
Net investment income (loss) | (0.09 | )1 | (0.09 | )1 | (0.14 | ) | (0.18 | )1 | (0.13 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments | 2.99 | (8.01 | ) | 4.80 | 9.98 | 4.81 | ||||||||||||||
Total income (loss) from investment operations | 2.90 | (8.10 | ) | 4.66 | 9.80 | 4.68 | ||||||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||||||
Net investment income | (0.06 | ) | — | — | — | — | ||||||||||||||
Net realized gain | — | (0.33 | ) | (4.52 | ) | (1.55 | ) | (0.97 | ) | |||||||||||
Tax return of capital | (0.01 | ) | — | — | — | — | ||||||||||||||
Total distributions | (0.07 | ) | (0.33 | ) | (4.52 | ) | (1.55 | ) | (0.97 | ) | ||||||||||
Redemption fees added to paid-in capital | 0.00 | 2 | 0.01 | — | — | 0.00 | 2 | |||||||||||||
Net asset value, end of period | $ | 18.17 | $ | 15.34 | $ | 23.76 | $ | 23.62 | $ | 15.37 | ||||||||||
Total Return | 18.92 | % | (34.11 | )% | 21.12 | % | 63.77 | % | 40.25 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 91,508 | $ | 67,143 | $ | 96,371 | $ | 28,088 | $ | 10,899 | ||||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 0.97 | % | 1.00 | % | 0.99 | % | 1.35 | % | 1.59 | % | ||||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets3,4 | 0.94 | % | 0.96 | %5 | 1.11 | %5 | 1.20 | %5 | 1.17 | %5 | ||||||||||
Ratio of net investment income (loss) (including interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets3,4 | (0.52 | )% | (0.54 | )%5 | (0.97 | )%5 | (1.04 | )%5 | (0.95 | )%5 | ||||||||||
Portfolio turnover | 154 | % | 169 | % | 149 | % | 164 | % | 206 | % |
1 | Net investment income (loss) per share has been calculated using the average shares method. |
2 | Amount represents less than $0.01 per share. |
3 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The ratio for the Fund includes the effect of fees paid indirectly which impacted the ratio by 0.03%, 0.02%, 0.02%, 0.04% and 0.03% for the years 2019, 2020, 2021, 2022, and 2023. |
4 | The Adviser has contractually agreed to waive its investment advisory fee or absorb other operating expenses to the extent necessary to ensure that total annual operating expenses for the Investor Class (other than interest, taxes, brokerage commissions and other portfolio transaction expenses, capital expenditures, and extraordinary expenses) would not exceed the Investor Class’s operating expense cap of 1.20% of average daily net assets until April 30, 2023. |
5 | Such ratios are after administrative and transfer agent waivers and adviser expense reimbursements and recoupments, when applicable. BNY Mellon Investment Servicing (US) Inc., the prior administrative agent and transfer agent, waived a portion of its fees beginning with the Fund’s commencement of operations, August 21, 2017 through July 31, 2020. |
Notes to Financial Statements are an integral part of this Schedule.
70 |
Driehaus Small Cap Growth Fund — Institutional Class
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | For the year ended December 31, 2019 |
| |||||||||||||||
Net asset value, beginning of period | $ | 15.64 | $ | 24.15 | $ | 23.88 | $ | 15.47 | $ | 11.70 | ||||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||||||
Net investment income (loss) | (0.05 | )1 | (0.05 | )1 | (0.11 | ) | (0.11 | )1 | (0.10 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments | 3.05 | (8.14 | ) | 4.90 | 10.07 | 4.84 | ||||||||||||||
Total income (loss) from investment operations | 3.00 | (8.19 | ) | 4.79 | 9.96 | 4.74 | ||||||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||||||
Net investment income | (0.10 | ) | — | — | — | — | ||||||||||||||
Net realized gain | — | (0.33 | ) | (4.52 | ) | (1.55 | ) | (0.97 | ) | |||||||||||
Tax return of capital | (0.01 | ) | — | — | — | — | ||||||||||||||
Total distributions | (0.11 | ) | (0.33 | ) | (4.52 | ) | (1.55 | ) | (0.97 | ) | ||||||||||
Redemption fees added to paid-in capital | 0.00 | 2 | 0.01 | — | — | 0.00 | 2 | |||||||||||||
Net asset value, end of period | $ | 18.53 | $ | 15.64 | $ | 24.15 | $ | 23.88 | $ | 15.47 | ||||||||||
Total Return | 19.19 | % | (33.93 | )% | 21.44 | % | 64.39 | % | 40.62 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 470,082 | $ | 386,295 | $ | 512,941 | $ | 327,155 | $ | 161,821 | ||||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 0.73 | % | 0.75 | % | 0.73 | % | 0.80 | % | 0.89 | % | ||||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets3,4 | 0.70 | % | 0.71 | %5 | 0.71 | %5 | 0.81 | %5 | 0.92 | %5 | ||||||||||
Ratio of net investment income (loss) (including interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets3,4 | (0.29 | )% | (0.28 | )%5 | (0.58) | %5 | (0.64 | )%5 | (0.70 | )%5 | ||||||||||
Portfolio turnover | 154 | % | 169 | % | 149 | % | 164 | % | 206 | % |
1 | Net investment income (loss) per share has been calculated using the average shares method. |
2 | Amount represents less than $0.01 per share. |
3 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The ratio for the Fund includes the effect of fees paid indirectly which impacted the ratio by 0.03%, 0.01%, 0.02%, 0.04% and 0.03% for the years 2019, 2020, 2021, 2022, and 2023. |
4 | The Adviser has contractually agreed to waive its investment advisory fee or absorb other operating expenses to the extent necessary to ensure that total annual operating expenses for the Institutional Class (other than interest, taxes, brokerage commissions and other portfolio transaction expenses, capital expenditures, and extraordinary expenses) would not exceed the Institutional Class’s operating expense cap of 0.95% of average daily net assets until April 30, 2023. |
5 | Such ratios are after administrative and transfer agent waivers and adviser expense reimbursements and recoupments, when applicable. BNY Mellon Investment Servicing (US) Inc., the prior administrative agent and transfer agent, waived a portion of its fees beginning with the Fund’s commencement of operations, August 21, 2017 through July 31, 2020. |
Notes to Financial Statements are an integral part of this Schedule.
71 |
Driehaus Small/Mid Cap Growth Fund
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the period May 1, 2020* through December 31, 2020 | |||||||||||||
Net asset value, beginning of period | $ | 12.41 | $ | 18.75 | $ | 17.19 | $ | 10.00 | ||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||
Net investment income (loss) | (0.07 | ) | (0.07 | ) | (0.12 | ) | (0.04 | ) | ||||||||
Net realized and unrealized gain (loss) on investments | 2.65 | (5.81 | ) | 3.17 | 7.47 | |||||||||||
Total income (loss) from investment operations | 2.58 | (5.88 | ) | 3.05 | 7.43 | |||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||
Net investment income | — | — | — | — | ||||||||||||
Net realized gain | — | (0.46 | ) | (1.49 | ) | (0.24 | ) | |||||||||
Total distributions | — | (0.46 | ) | (1.49 | ) | (0.24 | ) | |||||||||
Redemption fees added to paid-in capital | 0.00 | 1 | 0.00 | 1 | — | — | ||||||||||
Net asset value, end of period | $ | 14.99 | $ | 12.41 | $ | 18.75 | $ | 17.19 | ||||||||
Total Return | 20.79 | % | (31.45 | )% | 18.32 | % | 74.23 | %2 | ||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||
Net assets, end of period (000’s) | $ | 14,575 | $ | 12,933 | $ | 23,174 | $ | 14,845 | ||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 1.32 | % | 1.54 | % | 1.31 | % | 2.58 | %3 | ||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets4,5 | 0.90 | % | 0.95 | %6 | 0.95 %6 | 0.95 | %3,6 | |||||||||
Ratio of net investment income (loss) (including interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets4,5 | (0.49 | )% | (0.48 ) | %6 | (0.70 ) | %6 | (0.73 ) | %3,6 | ||||||||
Portfolio turnover | 148 | % | 188 | % | 191 | % | 96 | %2 |
* | Fund commenced operations on May 1, 2020. |
1 | Amount represents less than $0.01 per share. |
2 | Not annualized. |
3 | Annualized. |
4 | Such ratios are after administrative and transfer agent waivers and adviser expense reimbursements, when applicable. BNY Mellon Investment Servicing (US) Inc., the prior administrative agent and transfer agent, and The Northern Trust Company, the current administrative agent and transfer agent, waived a portion of its fees beginning with the Fund’s commencement of operations, May 1, 2020 through July 31, 2020. Effective September 7, 2023, the Adviser contractually agreed to waive its investment advisory fee or absorb other operating expenses to the extent necessary to ensure that total annual Fund operating expenses (other than interest, taxes, brokerage commissions and other portfolio transaction expenses, capital expenditures, and extraordinary expenses) would not exceed the Fund’s operating expense cap of 0.80% of average daily net assets until April 30, 2025. Prior to September 7, 2023, the annual expense limitation was 0.95%. |
5 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The ratio for the Fund includes the effect of fees paid indirectly which impacted the ratio by 0.00%, 0.01%, 0.04% and 0.01% for the years 2020, 2021, 2022 and 2023. |
6 | Such ratios are after administrative and transfer agent waivers and adviser expense reimbursements and recoupments, when applicable. BNY Mellon Investment Servicing (US) Inc., the prior administrative agent and transfer agent, waived a portion of its fees beginning with the Fund’s commencement of operations, May 1, 2020 through July 31, 2020. |
Notes to Financial Statements are an integral part of this Schedule.
72 |
Driehaus Event Driven Fund
Financial Highlights
For the year ended December 31, 2023 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | For the year ended December 31, 2019 | ||||||||||||||||
Net asset value, beginning of period | $ | 11.79 | $ | 13.29 | $ | 13.93 | $ | 11.55 | $ | 9.99 | ||||||||||
INCOME (LOSS) FROM INVESTMENT OPERATIONS: | ||||||||||||||||||||
Net investment income (loss) | 0.42 | 0.16 | 0.04 | 0.12 | 0.26 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.70 | (1.49 | ) | 0.93 | 2.74 | 1.69 | ||||||||||||||
Total income (loss) from investment operations | 1.12 | (1.33 | ) | 0.97 | 2.86 | 1.95 | ||||||||||||||
LESS DISTRIBUTIONS: | ||||||||||||||||||||
Net investment income | (0.55 | ) | (0.02 | ) | (0.15 | ) | (0.17 | ) | (0.39 | ) | ||||||||||
Net realized gain | — | (0.15 | ) | (1.46 | ) | (0.31 | ) | — | ||||||||||||
Total distributions | (0.55 | ) | (0.17 | ) | (1.61 | ) | (0.48 | ) | (0.39 | ) | ||||||||||
Net asset value, end of period | $ | 12.36 | $ | 11.79 | $ | 13.29 | $ | 13.93 | $ | 11.55 | ||||||||||
Total Return | 9.56 | % | (9.98 | )% | 7.21 | % | 24.84 | % | 19.53 | % | ||||||||||
RATIOS/SUPPLEMENTAL DATA: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 216,706 | $ | 204,289 | $ | 203,635 | $ | 142,064 | $ | 69,455 | ||||||||||
Ratio of total expenses before reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets | 1.56 | % | 1.69 | % | 1.49 | % | 1.59 | % | 1.93 | % | ||||||||||
Ratio of total expenses net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets1,2 | 1.55 | % | 1.66 | % | 1.42 | % | 1.57 | % | 1.90 | % | ||||||||||
Ratio of net investment income (loss) (including dividends and interest on short positions and interest expense) net of reimbursements, waivers, recoupments and/or fees paid indirectly to average net assets1,2 | 3.52 | % | 1.43 | % | 0.10 | % | 0.67 | % | 2.63 | % | ||||||||||
Portfolio turnover | 105 | % | 81 | % | 109 | % | 136 | % | 111 | % |
1 | The ratio for the fund includes the effect of dividends and interest on short positions, and interest expense which increased the expense ratios by 0.30%, 0.13%, 0.10%, 0.30% and 0.21% for the years 2019, 2020, 2021, 2022 and 2023. |
2 | Such ratios are net of fees paid indirectly (see Note C in the Notes to Financial Statements). The ratio for the fund includes the effect of fees paid indirectly which impacted the expense ratios by 0.03%, 0.02%, 0.07%, 0.03% and 0.01% for the years 2019, 2020, 2021, 2022 and 2023. |
Notes to Financial Statements are an integral part of this Schedule.
73 |
Driehaus Mutual Funds
Notes to Financial Statements
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Driehaus Mutual Funds (the “Trust”) is an open-end registered management investment company under the Investment Company Act of 1940 (the “1940 Act”), as amended, organized as a Delaware statutory trust, with eight separate series currently in operation. The Trust was organized under an Agreement and Declaration of Trust dated May 31, 1996, as subsequently amended and restated as of June 6, 2013, and as further amended to date, and may issue an unlimited number of full and fractional units of beneficial interest (shares) without par value. The eight series (each a “Fund”, and collectively, the “Funds”) included in this report are as follows:
Fund | Commencement of Operations |
Emerging Markets Growth Fund | 12/31/97 |
Emerging Markets Small Cap Growth Fund | 08/22/11 |
Global Fund | 04/10/17 |
International Small Cap Growth Fund | 09/17/07 |
Micro Cap Growth Fund | 11/18/13 |
Small Cap Growth Fund | 08/21/17 |
Small/Mid Cap Growth Fund | 05/01/20 |
Event Driven Fund | 08/26/13 |
The Emerging Markets Growth Fund and Small Cap Growth Fund each offer two classes of shares, designated as Institutional Class and Investor Class. Each class of shares represents an interest in the same portfolio of investments of the respective Fund and voting privileges with respect to the Fund in general. Each class of shares has exclusive voting rights with respect to any matters involving only that class. The classes of each Fund pay pro rata the costs of management of that Fund’s portfolio, including the investment advisory fee. Each class of a Fund bears the cost of its own transfer agency and shareholder servicing arrangements, and any other class-specific expenses, which will result in differing expenses by class.
The Emerging Markets Growth Fund seeks to maximize capital appreciation by investing primarily in equity securities of emerging markets companies.
The Emerging Markets Small Cap Growth Fund seeks to maximize capital appreciation by investing primarily in equity securities of small capitalization emerging markets companies.
The Global Fund (formerly, Emerging Markets Opportunities Fund) seeks to maximize capital appreciation by investing primarily in common stocks and sponsored or unsponsored American Depositary Receipts (“ADRs”), European Depositary Receipts (“EDRs”) or Global Depositary Receipts (“GDRs”).
The International Small Cap Growth Fund seeks to maximize capital appreciation by investing primarily in equity securities of smaller capitalization non-U.S. companies.
The Micro Cap Growth Fund seeks to maximize capital appreciation by investing primarily in equity securities of micro capitalization U.S. companies.
The Small Cap Growth Fund seeks to maximize capital appreciation by investing primarily in equity securities of small capitalization U.S. companies.
The Small/Mid Cap Growth Fund seeks to maximize capital appreciation by investing in primarily in equity securities of small/medium capitalization U.S. companies.
The Event Driven Fund seeks to provide positive returns over full-market cycles by investing primarily in a broad range of asset classes and securities, including derivatives.
The presentation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses. Actual results may differ from those estimates. The Funds, which are investment companies within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2013-08, follow accounting and reporting guidance under FASB Accounting Standards Codification Topic 946, Financial Services-Investment Companies.
74 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Securities Valuation
Investments in securities traded on a national securities exchange, including exchange-traded futures and options (including warrants), are valued at the last reported sales or settlement price on the day of valuation and are generally classified as level 1. North and South American exchange-traded securities for which no sale was reported are valued at the most recent closing bid price from the exchange the security is primarily traded on and are generally classified as level 1. All other exchange-traded securities for which no sale was reported are valued at the mean between closing bid and ask prices from the exchange the security is primarily traded on and are also generally classified as level 1. Equity certificates are valued at the last sale price of the underlying security as of the close of the primary exchange. Long-term U.S. fixed income securities are valued at the representative quoted bid price when held long or the representative quoted ask price if sold short or, if such prices are not available, at prices for securities of comparable maturity, quality and type or as determined by an independent pricing service. Long-term non-U.S. fixed income securities are valued at the mean of the representative quoted bid and ask prices when held long or sold short or, if such prices are not available, at prices for securities of comparable maturity, quality and type or as determined by an independent pricing service. The pricing service provider may employ methodologies that utilize actual market transactions, broker-dealer supplied valuations or other techniques. Such techniques generally consider factors such as composite security prices, yields, maturities, call features, credit ratings and developments relating to specific securities, in arriving at valuations. Fixed income securities are generally classified as level 2. The fair value analysis includes an analysis of the value of any unfunded commitments.
Short-term investments with remaining maturities of 60 days or less at the time of purchase are stated at amortized cost, which approximates fair value. If amortized cost does not approximate fair value, short-term securities are reported at fair value. These securities are generally classified as level 2. Swaps, forward foreign currency contracts and other financial derivatives are valued daily, primarily by an independent pricing service using pricing models and are generally classified as level 2. The pricing models use inputs that are observed from actively quoted markets such as issuer details, indices, spreads, interest rates, yield curves, dividends and exchange rates. If valuations are not available from the independent pricing service or values received are deemed not representative of fair value, values will be obtained from a third-party broker-dealer or counterparty.
Investments initially valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from an independent pricing service. In addition, for the Emerging Markets Growth Fund, Emerging Markets Small Cap Growth, Global Fund, and International Small Cap Growth Fund, if quotations are not readily available or if the values have been materially affected by events occurring after the closing of a foreign market assets may be valued at fair value as determined in good faith by the investment adviser of the Funds. Events that may materially affect asset values that could cause a fair value determination include, but are not limited to: corporate announcements relating to a specific security; natural and other disasters which may impact an entire market or region; and political and other events which may be global or impact a particular country or region. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. These funds also use an independent pricing service to provide fair value estimates for relevant foreign equity securities. This pricing service uses correlations between the movement of prices of foreign equity securities and indexes of U.S. traded securities and other indicators, such as closing prices of ADRs and futures contracts, to determine the fair value of relevant foreign equity securities. To the extent utilized, securities would be classified as level 2 in the hierarchy described below.
Securities for which market quotations are not readily available are valued at fair value as determined in good faith in accordance with procedures adopted by the “valuation designee” appointed by the Trust’s Board of Trustees and are generally classified as level 3. Under these procedures, the Funds primarily employ a market-based approach, which may use related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant information for the investment to determine the fair value of the investment. In addition, level 3 investments in certain early stage companies may be valued based upon initial transaction prices with management conducting ongoing assessments to determine whether new information is available to support a fair value adjustment. The information management may consider in its ongoing assessments may include, but are not limited to, actual or upcoming financing or third-party sale transactions, current or forecasted performance, or regulatory approval status updates. It is possible that estimated values may differ significantly from the values that would have been used had a ready market existed for the investments, and such differences could be material.
75 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Each Fund is subject to fair value accounting standards that define fair value, establish the framework for measuring fair value and provide a three-level hierarchy for fair valuation based upon the inputs to the valuation as of the measurement date. The three levels of the fair value hierarchy are as follows:
Level 1 – quoted prices for active markets for identical securities
Level 2 – significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
The following is a summary of the inputs used to value the Emerging Markets Growth Fund’s investments as of December 31, 2023:
Assets | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks | ||||||||||||||||
Africa | $ | 23,107,736 | $ | — | $ | 23,107,736 | $ | — | ||||||||
Europe | ||||||||||||||||
Austria | �� | 29,225,687 | — | 29,225,687 | — | |||||||||||
Greece | 34,351,610 | — | 34,351,610 | — | ||||||||||||
Ireland | 13,947,301 | 13,947,301 | — | — | ||||||||||||
Poland | 24,977,521 | — | 24,977,521 | — | ||||||||||||
Russia | — | — | — | — | * | |||||||||||
Spain | 26,037,164 | — | 26,037,164 | — | ||||||||||||
Turkey | 20,188,193 | — | 20,188,193 | — | ||||||||||||
United Kingdom | 34,539,933 | — | 34,539,933 | — | ||||||||||||
Far East | ||||||||||||||||
China | 379,259,000 | 90,189,741 | 289,069,259 | — | ||||||||||||
India | 454,200,629 | 53,443,320 | 400,757,309 | — | ||||||||||||
Indonesia | 53,541,555 | — | 53,541,555 | — | ||||||||||||
Japan | 13,362,303 | — | 13,362,303 | — | ||||||||||||
Macau | 15,738,879 | — | 15,738,879 | — | ||||||||||||
Philippines | 22,214,073 | — | 22,214,073 | — | ||||||||||||
South Korea | 271,767,206 | — | 271,767,206 | — | ||||||||||||
Taiwan | 369,989,863 | 157,735,240 | 212,254,623 | — | ||||||||||||
Thailand | 11,365,926 | — | 11,365,926 | — | ||||||||||||
Middle East | ||||||||||||||||
Qatar | 7,499,120 | — | 7,499,120 | — | ||||||||||||
Saudi Arabia | 57,552,296 | 7,187,407 | 50,364,889 | — | ||||||||||||
United Arab Emirates | 57,342,795 | 27,389,634 | 29,953,161 | — | ||||||||||||
North America | ||||||||||||||||
Canada | 27,161,118 | 27,161,118 | — | — | ||||||||||||
Mexico | 183,130,531 | 183,130,531 | — | — | ||||||||||||
United States | 123,193,148 | 111,676,882 | 11,516,266 | — | ||||||||||||
South America | ||||||||||||||||
Argentina | 6,671,334 | 6,671,334 | — | — | ||||||||||||
Brazil | 228,742,670 | 60,670,643 | 168,072,027 | — |
76 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Assets | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Preferred Stocks | ||||||||||||||||
South America | $ | 7,503,171 | $ | 7,503,171 | $ | — | $ | — | ||||||||
Short Term Investments | 80,637,430 | 80,637,430 | — | — | ||||||||||||
Total | $ | 2,577,248,192 | $ | 827,343,752 | $ | 1,749,904,440 | $ | — |
* | Level 3 security has zero value. |
The following is a summary of the inputs used to value the Emerging Markets Small Cap Growth Fund’s investments as of December 31, 2023:
Assets | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks | ||||||||||||||||
Africa | $ | 478,100 | $ | — | $ | 478,100 | $ | — | ||||||||
Europe | ||||||||||||||||
Greece | 512,731 | — | 512,731 | — | ||||||||||||
Norway | 833,830 | 833,830 | — | — | ||||||||||||
Poland | 844,303 | — | 844,303 | — | ||||||||||||
Far East | ||||||||||||||||
Australia | 1,259,170 | — | 1,259,170 | — | ||||||||||||
China | 5,891,750 | — | 5,891,750 | — | ||||||||||||
India | 35,784,401 | 2,629,645 | 33,154,756 | — | ||||||||||||
Kazakhstan | 2,039,272 | 2,039,272 | — | — | ||||||||||||
South Korea | 5,518,869 | — | 5,518,869 | — | ||||||||||||
Taiwan | 14,689,584 | — | 14,689,584 | — | ||||||||||||
Thailand | 740,072 | — | 740,072 | — | ||||||||||||
Vietnam | 3,217,526 | — | 3,217,526 | — | ||||||||||||
Middle East | ||||||||||||||||
Qatar | 901,316 | — | 901,316 | — | ||||||||||||
Saudi Arabia | 1,906,106 | 1,359,255 | 546,851 | — | ||||||||||||
United Arab Emirates | 2,794,582 | 2,794,582 | — | — | ||||||||||||
North America | 11,147,626 | 11,147,626 | — | — | ||||||||||||
South America | 12,597,404 | — | 12,597,404 | — | ||||||||||||
Preferred Stocks | ||||||||||||||||
South America | 2,231,160 | — | 2,231,160 | — | ||||||||||||
Short Term Investments | 3,910,328 | 3,910,328 | — | — | ||||||||||||
Total | $ | 107,298,130 | $ | 24,714,538 | $ | 82,583,592 | $ | — |
The following is a summary of the inputs used to value the Global Fund’s investments as of December 31, 2023:
Assets | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks | ||||||||||||||||
Europe | ||||||||||||||||
France | $ | 1,440,954 | $ | — | $ | 1,440,954 | $ | — |
77 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Assets | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Germany | $ | 399,707 | $ | — | $ | 399,707 | $ | — | ||||||||
Ireland | 350,746 | 350,746 | — | — | ||||||||||||
Italy | 552,599 | — | 552,599 | — | ||||||||||||
Jersey, C.I. | 439,620 | 439,620 | — | — | ||||||||||||
Netherlands | 1,312,668 | — | 1,312,668 | — | ||||||||||||
Spain | 1,625,101 | — | 1,625,101 | — | ||||||||||||
United Kingdom | 3,365,597 | 305,634 | 3,059,963 | — | ||||||||||||
Far East | ||||||||||||||||
China | 609,854 | — | 609,854 | — | ||||||||||||
India | 545,823 | 322,269 | 223,554 | — | ||||||||||||
Indonesia | 282,171 | — | 282,171 | — | ||||||||||||
Japan | 2,494,583 | — | 2,494,583 | — | ||||||||||||
Philippines | 367,523 | — | 367,523 | — | ||||||||||||
South Korea | 1,047,420 | — | 1,047,420 | — | ||||||||||||
Taiwan | 781,185 | — | 781,185 | — | ||||||||||||
North America | ||||||||||||||||
Canada | 1,985,020 | 1,985,020 | — | — | ||||||||||||
Mexico | 1,046,092 | 1,046,092 | — | — | ||||||||||||
United States | 30,456,128 | 29,886,834 | 569,294 | — | ||||||||||||
South America | 551,348 | 551,348 | — | — | ||||||||||||
Short Term Investments | 2,838,798 | 2,838,798 | — | — | ||||||||||||
Total | $ | 52,492,937 | $ | 37,726,361 | $ | 14,766,576 | $ | — |
The following is a summary of the inputs used to value the International Small Cap Growth Fund’s investments as of December 31, 2023:
Assets | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks | ||||||||||||||||
Europe | ||||||||||||||||
Austria | $ | 3,551,999 | $ | 3,551,999 | $ | — | $ | — | ||||||||
Belgium | 3,145,523 | — | 3,145,523 | — | ||||||||||||
Finland | 2,510,797 | — | 2,510,797 | — | ||||||||||||
France | 4,228,580 | — | 4,228,580 | — | ||||||||||||
Germany | 19,160,919 | — | 19,160,919 | — | ||||||||||||
Ireland | 6,289,870 | — | 6,289,870 | — | ||||||||||||
Italy | 9,790,652 | — | 9,790,652 | — | ||||||||||||
Jersey, C.I. | 1,947,350 | — | 1,947,350 | — | ||||||||||||
Netherlands | 9,020,019 | — | 9,020,019 | — | ||||||||||||
Norway | 6,886,605 | 2,992,068 | 3,894,537 | — | ||||||||||||
Spain | 7,698,529 | — | 7,698,529 | — | ||||||||||||
Sweden | 3,153,114 | — | 3,153,114 | — | ||||||||||||
Switzerland | 9,348,627 | — | 9,348,627 | — | ||||||||||||
United Kingdom | 17,601,901 | 1,193,207 | 16,408,694 | — | ||||||||||||
Far East |
78 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Assets | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Australia | $ | 4,886,077 | $ | — | $ | 4,886,077 | $ | — | ||||||||
China | 801,642 | ��� | 801,642 | — | ||||||||||||
India | 8,740,907 | — | 8,740,907 | — | ||||||||||||
Indonesia | 3,024,114 | 1,585,049 | 1,439,065 | — | ||||||||||||
Japan | 46,058,080 | — | 46,058,080 | — | ||||||||||||
Singapore | 960,347 | — | 960,347 | — | ||||||||||||
South Korea | 3,251,761 | — | 3,251,761 | — | ||||||||||||
Taiwan | 4,899,092 | — | 4,899,092 | — | ||||||||||||
Thailand | 1,389,178 | — | 1,389,178 | — | ||||||||||||
Middle East | 2,999,418 | 2,999,418 | — | — | ||||||||||||
North America | ||||||||||||||||
Canada | 17,094,596 | 17,094,596 | — | — | ||||||||||||
Mexico | 3,765,033 | 3,765,033 | — | — | ||||||||||||
United States | 2,116,121 | — | 2,116,121 | — | ||||||||||||
South America | ||||||||||||||||
Brazil | 4,030,102 | 2,378,629 | 1,651,473 | — | ||||||||||||
Preferred Stocks | ||||||||||||||||
Europe | 2,452,465 | — | 2,452,465 | — | ||||||||||||
Short Term Investments | 5,332,031 | 5,332,031 | — | — | ||||||||||||
Total | $ | 216,135,449 | $ | 40,892,030 | $ | 175,243,419 | $ | — |
The following is a summary of the inputs used to value the Micro Cap Growth Fund’s investments as of December 31, 2023:
Assets* | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks | $ | 221,227,397 | $ | 221,227,397 | $ | — | $ | — | ||||||||
Short Term Investments | 331,796 | 331,796 | — | — | ||||||||||||
Total | $ | 221,559,193 | $ | 221,559,193 | $ | — | $ | — |
* | See Schedule of Investments for industry breakout. |
The following is a summary of the inputs used to value the Small Cap Growth Fund’s investments as of December 31, 2023:
Assets* | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks | $ | 551,416,496 | $ | 551,416,496 | $ | — | $ | — | ||||||||
Short Term Investments | 7,728,396 | 7,728,396 | — | — | ||||||||||||
Total | $ | 559,144,892 | $ | 559,144,892 | $ | — | $ | — |
* | See Schedule of Investments for industry breakout. |
79 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
The following is a summary of the inputs used to value the Small/Mid Cap Growth Fund’s investments as of December 31, 2023:
Assets* | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks | $ | 14,368,844 | $ | 14,368,844 | $ | — | $ | — | ||||||||
Short Term Investments | 440,421 | 440,421 | — | — | ||||||||||||
Total | $ | 14,809,265 | $ | 14,809,265 | $ | — | $ | — |
* | See Schedule of Investments for industry breakout. |
The following is a summary of the inputs used to value the Event Driven Fund’s investments as of December 31, 2023:
Assets* | Total Value at December 31, 2023 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks | ||||||||||||||||
Apparel & Textile Products | $ | 3,122,567 | $ | 3,122,567 | $ | — | $ | — | ||||||||
Asset Management | 9,795,807 | 7,665,246 | 2,130,561 | — | ||||||||||||
Banking | 14,708,489 | 14,708,489 | — | — | ||||||||||||
Biotechnology & Pharmaceuticals | 23,207,299 | 23,207,299 | — | — | ||||||||||||
Commercial Support Services | 2,905,161 | 2,905,161 | — | — | ||||||||||||
Industrial Intermediate Products | 4,401,993 | 4,401,993 | — | — | ||||||||||||
Industrial Support Services | 9,858,915 | 9,858,915 | — | — | ||||||||||||
Leisure Facilities & Services | 12,299,180 | 12,299,180 | — | — | ||||||||||||
Retail - Consumer Staples | 3,504,211 | 3,504,211 | — | — | ||||||||||||
Corporate Bonds | 72,440,804 | — | 72,440,804 | — | ||||||||||||
Master Limited Partnerships | 1,012,979 | 1,012,979 | — | — | ||||||||||||
Preferred Stocks | 5,441,014 | 5,441,014 | — | — | ||||||||||||
Purchased Call Options | 8,275 | 8,275 | — | — | ||||||||||||
Purchased Put Options | 653,250 | 653,250 | — | — | ||||||||||||
Short Term Investments | 41,611,057 | 41,611,057 | — | — | ||||||||||||
Sovereign Bond | 6,205,710 | — | 6,205,710 | — | ||||||||||||
Warrants | 189,945 | 166,635 | 23,310 | — | ||||||||||||
Total | $ | 211,366,656 | $ | 130,566,271 | $ | 80,800,385 | $ | — | ||||||||
Liabilities | ||||||||||||||||
Exchange-Traded Funds Sold Short | $ | (17,139,042 | ) | $ | (17,139,042 | ) | $ | — | $ | — | ||||||
Written Call Options | (8,275 | ) | (8,275 | ) | — | — | ||||||||||
Total | $ | (17,147,317 | ) | $ | (17,147,317 | ) | $ | — | $ | — | ||||||
Other Financial Instruments | ||||||||||||||||
Total Return Swaps - Assets** | $ | 76,829 | $ | — | $ | 76,829 | $ | — | ||||||||
Total Return Swaps - Liabilities** | (149,464 | ) | — | (149,464 | ) | — | ||||||||||
Total Other Financial Instruments | $ | (72,635 | ) | $ | — | $ | (72,635 | ) | $ | — |
* | See Schedule of Investments for industry breakout. |
** | Swaps are reflected as the unrealized appreciation (depreciation) on the instrument. |
80 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
As of December 31, 2023, none of the Funds held Level 3 investments, other than as disclosed for Emerging Markets Growth Fund.
Securities Sold Short
The Event Driven Fund is engaged in selling securities short, which obligates it to replace a borrowed security by purchasing it at market price at the time of replacement. The Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Gains are limited to the price at which the Fund sold the security short, while losses are potentially unlimited in size.
The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale and the Fund must maintain a deposit with the broker consisting of cash and securities having a value equal to a specified percentage of the value of the securities sold short. Such deposit is included in “Deposits at broker for securities sold short” in the Statement of Assets and Liabilities. The Fund is obligated to pay any dividends or interest due on securities sold short. Such dividends and interest are recorded as an expense to the Fund in the Statement of Operations.
The Fund may also incur stock loan fees which represent the cost of borrowing securities used for short sale transactions. The Fund may also earn rebates as an element of the custodian arrangement, which are recorded as an offset to stock loan fees on short sales transactions. The stock loan fees on short sales are recognized on the Statements of Operations. In the event that rebates exceed the stock loan fees on short sales, the net rebates are recognized as a component of investment income on the Statements of Operations.
Federal Income Taxes
No provision is made for Federal income taxes since each Fund has elected to be taxed as a “regulated investment company” under Subchapter M of the Internal Revenue Code (the “Code”) and has made and declared all the required distributions to its shareholders in amounts sufficient to relieve each Fund from all or substantially all Federal income and excise taxes under provisions of current Federal tax law.
Each Fund is subject to accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. Taxable years ending 2023, 2022, 2021, and 2020 remain open to Federal and state audit. As of December 31, 2023, management has evaluated the application of these standards to each Fund, and has determined that no provision for income tax is required in each Fund’s financial statements for uncertain tax provisions. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations. During the year, the Funds did not incur any interest or penalties. The Funds may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes are provided for based on the Funds’ understanding of the tax rules and regulations that exist in the foreign markets in which they invest. Any deferred foreign capital gains tax is accrued based upon net unrealized gains, and is payable upon sale of such investment.
The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with Federal income tax regulations, which may differ from U.S. GAAP.
81 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
For the year ended December 31, 2023, reclassifications were recorded to distributable earnings (deficit) and paid-in capital for any permanent tax differences. These reclassifications relate primarily to net operating losses and non-deductible expenses. Results of operations and net assets were not affected by these reclassifications.
Emerging Markets Growth Fund | Emerging Markets Small Cap Growth Fund | Global Fund | International Small Cap Growth Fund | |||||||||||||
Paid-in capital | $ | (88,891 | ) | $ | — | $ | (992 | ) | $ | — | ||||||
Total distributable earnings (deficit) | 88,891 | — | 992 | — |
Micro Cap Growth Fund | Small Cap Growth Fund | Small/Mid Cap Growth Fund | Event Driven Fund | |||||||||||||
Paid-in capital | $ | (173,961 | ) | $ | — | $ | (53,221 | ) | $ | — | ||||||
Total distributable earnings (deficit) | 173,961 | — | 53,221 | — |
Accumulated capital losses represent net capital loss carryovers that may be available for an unlimited period to offset future realized capital gains and thereby reduce future capital gains distributions. Capital loss carryovers retain the character of the original loss. The following table shows the amounts of capital loss carryovers, if any, by each of the applicable Funds as of December 31, 2023:
Not Subject to Expiration | ||||||||
Fund | Short-Term | Long-Term | ||||||
Emerging Markets Growth Fund | $ | 299,336,755 | $ | 24,694,819 | ||||
Emerging Markets Small Cap Growth Fund | 33,727,013 | — | ||||||
Global Fund | 1,041,006 | — | ||||||
International Small Cap Growth Fund | 38,661,035 | 1,792,333 | ||||||
Micro Cap Growth Fund | 19,120,137 | — | ||||||
Small Cap Growth Fund | 124,876,213 | — | ||||||
Small/Mid Cap Growth Fund | 3,504,013 | — | ||||||
Event Driven Fund | 4,479,596 | 2,159,344 |
During the year ended December 31, 2023, the Global Fund, International Small Cap Growth Fund, Small/Mid Cap Growth Fund and Event Driven Fund utilized $2,361,650, $1,232,944, $262,585 and $9,968,476, respectively, of capital loss carryforwards.
82 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Pursuant to Federal income tax rules applicable to regulated investment companies, the Funds may elect to treat capital losses between November 1 and December 31 as occurring on the first day of the following tax year. For the year ended December 31, 2023, no qualified late-year losses were deferred and recognized on January 1, 2024.
Distributions to Shareholders
The tax character of distributions paid during the years ended December 31, 2023, and December 31, 2022, were as follows:
Fund | Year | Ordinary Income | Long-Term Capital Gain | Return of Capital | Total Distributions | |||||||||||||
Emerging Markets Growth Fund | 2023 | $ | 50,000,030 | $ | — | $ | — | $ | 50,000,030 | |||||||||
2022 | 12,237,699 | 2,015,660 | — | 14,253,359 | ||||||||||||||
Emerging Markets Small Cap Growth Fund | 2023 | 1,149,999 | — | — | 1,149,999 | |||||||||||||
2022 | — | — | — | — | ||||||||||||||
Global Fund | 2023 | 760,000 | — | — | 760,000 | |||||||||||||
2022 | 960,775 | — | — | 960,775 | ||||||||||||||
International Small Cap Growth Fund | 2023 | 2,500,006 | — | — | 2,500,006 | |||||||||||||
2022 | 5,367,703 | 6,899,210 | — | 12,266,913 | ||||||||||||||
Micro Cap Growth Fund | 2023 | — | — | 1,999,999 | 1,999,999 | |||||||||||||
2022 | — | 13,811,619 | — | 13,811,619 | ||||||||||||||
Small Cap Growth Fund | 2023 | 2,744,143 | — | 255,848 | 2,999,991 | |||||||||||||
2022 | — | 9,211,798 | — | 9,211,798 | ||||||||||||||
Small/Mid Cap Growth Fund | 2023 | — | — | — | — | |||||||||||||
2022 | — | 461,634 | — | 461,634 | ||||||||||||||
Event Driven Fund | 2023 | 9,649,997 | — | — | 9,649,997 | |||||||||||||
2022 | 417,644 | * | 2,582,366 | — | 3,000,010 |
* | The amount does not include tax equalization utilized of $21,251 in ordinary income in which the Fund designated as being distributed to shareholders on their redemption of shares. |
As of December 31, 2023, the components of net assets on a tax basis were as follows:
Emerging Markets Growth Fund | Emerging Markets Small Cap Growth Fund | Global Fund | International Small Cap Growth Fund | |||||||||||||
Undistributed ordinary income | $ | 6,823,955 | $ | 349,938 | $ | 6,580 | $ | 1,103,252 | ||||||||
Undistributed long-term capital gain | — | — | — | — | ||||||||||||
Accumulated earnings | 6,823,955 | 349,938 | 6,580 | 1,103,252 | ||||||||||||
Paid-in capital | 2,447,298,022 | 124,311,388 | 44,842,007 | 231,972,308 | ||||||||||||
Accumulated capital and other losses | (324,031,574 | ) | (33,727,013 | ) | (1,041,006 | ) | (40,453,368 | ) | ||||||||
Unrealized appreciation (depreciation) on investments, securities sold short, | ||||||||||||||||
warrants and swaps | 449,414,467 | 16,879,676 | 8,684,388 | 28,417,978 | ||||||||||||
Net assets | $ | 2,579,504,870 | $ | 107,813,989 | $ | 52,491,969 | $ | 221,040,170 |
83 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Micro Cap Growth Fund | Small Cap Growth Fund | Small/Mid Cap Growth Fund | Event Driven Fund | |||||||||||||
Undistributed ordinary income | $ | — | $ | — | $ | — | $ | 130,106 | ||||||||
Undistributed long-term capital gain | — | — | — | — | ||||||||||||
Accumulated earnings | — | — | — | 130,106 | ||||||||||||
Paid-in capital | 190,158,911 | 558,233,353 | 14,877,452 | 220,163,520 | ||||||||||||
Accumulated capital and other losses | (19,120,137 | ) | (124,876,213 | ) | (3,504,013 | ) | (6,638,940 | ) | ||||||||
Unrealized appreciation (depreciation) on investments, securities sold short, warrants and swaps | 51,389,625 | 128,232,471 | 3,201,611 | 3,051,011 | ||||||||||||
Net assets | $ | 222,428,399 | $ | 561,589,611 | $ | 14,575,050 | $ | 216,705,697 |
The aggregate cost of investments and the composition of unrealized appreciation and depreciation on investments and net unrealized appreciation and/or depreciation on derivatives for Federal income tax purposes as of December 31, 2023, were as follows:
Fund | Tax Cost Basis | Gross Appreciation | Gross Depreciation | Net Appreciation/ Depreciation | ||||||||||||
Emerging Markets Growth Fund | $ | 2,116,996,061 | $ | 503,202,193 | $ | (42,950,060 | ) | $ | 460,252,133 | |||||||
Emerging Markets Small Cap Growth Fund | 89,664,703 | 18,886,660 | (1,253,233 | ) | 17,633,427 | |||||||||||
Global Fund | 43,808,309 | 8,878,102 | (193,474 | ) | 8,684,628 | |||||||||||
International Small Cap Growth Fund | 187,523,325 | 33,679,723 | (5,067,603 | ) | 28,612,120 | |||||||||||
Micro Cap Growth Fund | 170,169,568 | 54,350,704 | (2,961,079 | ) | 51,389,625 | |||||||||||
Small Cap Growth Fund | 430,912,421 | 131,098,662 | (2,866,191 | ) | 128,232,471 | |||||||||||
Small/Mid Cap Growth Fund | 11,607,655 | 3,285,129 | (83,518 | ) | 3,201,611 | |||||||||||
Event Driven Fund | 191,095,693 | 3,560,088 | (509,077 | ) | 3,051,011 |
The differences between book-basis and tax-basis unrealized appreciation are attributable primarily to the tax deferral of losses on wash sales and PFIC mark-to-market.
Foreign Currency Spot Contracts
The Funds enter into foreign currency spot contracts to facilitate transactions in foreign currency denominated securities. These spot contracts are typically open for 2 to 5 days, depending on the settlement terms of the underlying security transaction. On December 31, 2023, the Funds had foreign currency spot contracts outstanding under which they are obligated to exchange currencies at specified future dates. The net unrealized appreciation or depreciation on spot contracts is reflected as receivable for investment securities sold or payable for investment securities purchased in the Statements of Assets and Liabilities.
Foreign Currency Translation
The value of securities, currencies and other assets and liabilities not denominated in U.S. dollars are translated into U.S. dollar values based upon the current rates of exchange on the date of the Funds’ valuations.
Net realized foreign exchange gains or losses which are reported by the Funds result from currency gains and losses on transaction hedges arising from changes in exchange rates between the trade and settlement dates on forward contract transactions, and the difference between the amounts accrued for dividends, interest, and foreign taxes and the amounts actually received or paid in U.S. dollars for these items. Net unrealized foreign exchange gains and losses result from changes in the U.S. dollar value of assets and liabilities (other than investments in securities), which are denominated in foreign currencies, as a result of changes in exchange rates.
84 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Net realized gain (loss) on foreign currency contracts on portfolio hedges result from the use of forward contracts to hedge portfolio positions denominated or quoted in a particular currency in order to reduce or limit exposure in that currency.
The Funds do not isolate that portion of the results of operations which results from fluctuations in foreign exchange rates on investments. These fluctuations are included with the net realized gain (loss) on investments and the net change in unrealized appreciation (depreciation) on investments.
Indemnifications
Under the Trust’s organizational documents, the officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business, the Trust enters into contracts that provide general indemnifications to other parties. A Fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against a Fund that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
Securities Transactions, Income and Commitments
The Trust records security transactions on trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Dividend income is recognized on the ex-dividend date, and interest income is recognized on an accrual basis. Premiums on securities are amortized over the period remaining until first call date, if any, or if none, the remaining life of the security and discounts are accreted over the remaining life of the security for financial reporting purposes. Withholding taxes on foreign dividends and interest have been provided for in accordance with the Trust’s understanding of the applicable country’s tax rules and rates. Non-cash dividends are recognized as investment income at the fair value of the property received.
Pursuant to the terms of certain of the senior unsecured loan agreements, certain Funds may have unfunded loan commitments, which are callable on demand. Each such Fund will have available with its custodian, cash and/or liquid securities having an aggregate value at least equal to the amount of the unfunded senior loan commitments. At December 31, 2023, the Funds had no unfunded senior loan commitments.
Certain Funds may invest in early-stage companies that may require additional contributions or funding if certain performance milestones are met. Management continuously assesses whether these companies will achieve these performance milestones and considers the impact of these commitments as they become due. Additionally, in connection with certain investments a Fund may provide commitments for future investments. At December 31, 2023, the Funds had no such outstanding commitments.
B. INVESTMENTS IN DERIVATIVES
Certain Funds use derivative instruments such as swaps, futures, options, swaptions, and forward foreign currency contracts in connection with their respective investment strategies. During the period January 1, 2023, through April 29, 2023, the Global Fund primarily utilized: 1) interest rate swaps to hedge against interest rate fluctuation and enable the parties involved to exchange fixed and floating cash flows. During the period January 1, 2023, through December 31, 2023, the Micro Cap Growth Fund primarily utilized: 1) warrants to both hedge exposure and provide exposure to certain market segments or specific securities. During the period January 1, 2023, through December 31, 2023, the Event Driven Fund primarily utilized: 1) total return swaps to gain exposure to certain sectors and manage volatility; and 2) options, including warrants, to both hedge exposure and provide exposure to certain market segments or specific securities. Detail regarding each derivative type is included below.
Swap Contracts
The Global Fund (through April 29, 2023) engaged in and Event Driven Fund continues to engage in various swap transactions, including forward rate agreements and interest rate, currency, volatility, index, and total return swaps, primarily to manage duration and yield curve risk, or as alternatives to direct investments. Swaps that are centrally cleared are exposed to the creditworthiness of the clearing organizations (and, consequentially, that of their members generally, banks and broker-dealers) involved in the transaction. Centrally cleared swaps are valued daily and unrealized gains or losses are recorded in a variation margin account. The Fund receives from or pays to the clearing organization a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss.
85 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Interest rate swaps are agreements between two parties to exchange cash flows based on a notional principal amount. A Fund may elect to pay a fixed rate and receive a floating rate or receive a fixed rate and pay a floating rate on a notional principal amount. The net interest received or paid on interest rate swap agreements is accrued daily as interest income/expense. Interest rate swaps are marked-to-market daily using fair value estimates provided by an independent pricing service. Changes in value, including accrued interest, are recorded as changes in net unrealized appreciation (depreciation) on the Statements of Operations. Unrealized appreciation is reported as an asset and unrealized depreciation is reported as a liability on the Statements of Assets and Liabilities. Gains or losses are realized upon termination of the contracts. The risk of loss under a swap contract may exceed the amount recorded as an asset or a liability.
Total return swap contracts are arrangements to exchange a market or security linked return for a periodic payment, based on a notional principal amount, in order to hedge sector exposure and to manage exposure to specific sectors or industries and/or to gain exposure to specific markets/countries and to specific sectors/industries. To the extent that the total return of the security, index, or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty. Total return swap contracts are marked to market daily based upon quotations from market makers and the change, if any, is recorded as a change in net unrealized appreciation (depreciation) on the Statements of Operations. Unrealized appreciation is reported as an asset and unrealized depreciation is reported as a liability on the Statements of Assets and Liabilities. Payments received or made are recorded as realized gains or losses. Gains or losses are realized upon termination of the contracts. Each Fund’s maximum risk of loss from counterparty risk is the fair value of the contract.
Volatility swaps are forward contracts on the future realized volatility of an underlying instrument. Volatility swaps are generally used to speculate on future volatility levels, trade the spread between realized and implied volatility or hedge volatility exposure of other positions. Changes in value are recorded as changes in net unrealized appreciation (depreciation) on the Statements of Operations. Unrealized gains are reported as an asset and unrealized losses are reported as a liability on the Statements of Assets and Liabilities. Gains or losses are realized upon termination of the contracts. The risk of loss under a volatility swap contract is dependent upon the volatility of the underlying instrument.
Under the terms of a credit default swap, one party acts as a guarantor receiving a periodic payment that is a fixed percentage applied to a notional amount. In return, the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the contract. A Fund may enter into credit default swaps in which the Fund acts as guarantor (a seller of protection), and may enter into credit default swaps in which the counterparty acts as guarantor (a buyer of protection). Premiums paid to or by the Funds are accrued daily and included in net realized gain (loss) on swap contracts. The contracts are marked-to-market daily using fair value estimates provided by an independent pricing service. Changes in value are recorded as unrealized appreciation (depreciation) on the Statements of Operations. Unrealized gains are reported as an asset and unrealized losses are reported as a liability on the Statements of Assets and Liabilities. Gains or losses are realized upon termination of the contracts. The risk of loss under a swap contract may exceed the amount recorded as an asset or a liability. The notional amount of a swap contract is the reference amount pursuant to which the counterparties make payments. For swaps in which the referenced obligation is an index, in the event of default of any debt security included in the corresponding index, the Fund pays or receives the percentage of the corresponding index that the defaulted security comprises (1) multiplied by the notional value and (2) multiplied by the ratio of one minus the ratio of the market value of the defaulted debt security to its par value.
Risks associated with swap contracts include changes in the returns of underlying instruments and/or interest rates, failure of the counterparties to perform under the contracts’ terms and the possible lack of liquidity with respect to the contracts. For centrally cleared swap contracts, counterparty risk is limited due to the role of the clearinghouse. Credit default swaps can involve greater risks than if an investor had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to counterparty credit risk, leverage risk, hedging risk, correlation risk, and liquidity risk. The Funds disclose swap contracts on a gross basis, with no netting of contracts held with the same counterparty.
86 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Options Contracts
The Funds may use options contracts, which include warrants, to hedge downside risk, produce incremental earnings or protect against market changes in the value of equities or interest rates. The Funds may write covered call and put options on futures, swaps, securities, or currencies the Funds own or in which they may invest. Writing put options tends to increase a Fund’s exposure to the underlying instrument. Writing call options tends to decrease a Fund’s exposure to the underlying instrument. When a Fund writes a call or put option, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. These liabilities are reflected as written options outstanding in the Schedules of Investments. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are exercised or closed are added to the proceeds or offset against amounts paid on the underlying future, swap, security or currency transaction to determine the realized gain or loss. A Fund, as a writer of an option, has no control over whether the underlying future, swap, security, or currency may be sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the future, swap, security, or currency underlying the written option. The risk exists that a Fund may not be able to enter into a closing transaction because of an illiquid market. In addition, to the extent a Fund purchases an over-the-counter (“OTC”) option, it is subject to credit risk that the counterparty to the trade does not perform under the contract’s terms. The Funds are not subject to credit risk on OTC options written as the counterparty has already performed its obligation by paying the premium at the inception of the contract.
The Funds may also purchase put and call options. Purchasing call options tends to increase a Fund’s exposure to the underlying instrument. Purchasing put options tends to decrease a Fund’s exposure to the underlying instrument. A Fund pays a premium, which is included in its Schedule of Investments as an investment and subsequently marked-to-market to reflect the current value of the option. Premiums paid for purchasing options that expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options that are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying future, swap, security or currency transaction to determine the realized gain or loss. When entering into purchased option contracts, a Fund bears the risk of securities prices moving unexpectedly, in which case, a Fund may not achieve the anticipated benefits of the purchased option contracts; however, the risk of loss is limited to the premium paid.
Forward Foreign Currency Contracts
Certain Funds use forward foreign currency contracts to manage foreign currency, to produce incremental earnings or to hedge existing positions. A forward foreign currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are principally traded in the inter-bank market conducted directly between currency traders (usually large commercial banks) and their customers.
The market value of a forward foreign currency contract fluctuates with changes in currency exchange rates. Outstanding forward foreign currency contracts are valued daily at current market rates and the resulting change in market value is recorded as change in net unrealized appreciation or depreciation on the Statements of Operations. When a forward foreign currency contract is settled, the Fund records a realized gain or loss equal to the difference between the value at the time the forward foreign currency contract was opened and the value at the time it was settled. A forward foreign currency contract may involve market risk in excess of the unrealized appreciation (depreciation) reflected on the Statements of Assets and Liabilities. In addition, the Funds could be exposed to credit risk if the counterparties are unable or unwilling to meet the terms of the contracts or market risk if the value of the foreign currency changes unfavorably.
Equity Certificates
Certain Funds may invest in equity certificates, which allow the Funds to participate in the appreciation (depreciation) of the underlying security without actually owning the underlying security. These instruments are purchased pursuant to an agreement with a financial institution and are valued at a calculated market price based on the value of the underlying security in accordance with the agreement. These equity certificates are subject to the credit risk of the issuing financial institution. There is no off-balance sheet risk associated with equity certificates and the Funds’ potential loss is limited to the purchase price of the securities. The Funds are exposed to credit risk associated with the counterparty to the transaction, which is monitored by the Funds’ management on a periodic basis. A Fund’s equity certificates are not subject to any master netting agreement.
87 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Derivative Investment Holdings Categorized by Risk Exposure
Each Fund is subject to the FASB’s “Disclosures about Derivative Instruments and Hedging Activities” (the “Derivatives Statement”). The Derivatives Statement amends and expands disclosures about derivative instruments and hedging activities. The Derivatives Statement is intended to improve financial reporting about derivative instrument by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Funds’ financial position and results of operations. Each Fund’s derivative holdings do not qualify for hedge accounting treatment and as such are recorded at current fair value.
The following table sets forth the fair value and the location in the Statements of Assets and Liabilities of the Event Driven Fund’s derivative contracts by primary risk exposure as of December 31, 2023:
Asset derivatives | ||||||
Risk exposure category | Statements of Assets and Liabilities location | Fair Value | ||||
Equity contracts | Purchased options, at fair value | $ | 661,525 | |||
Equity contracts | Warrant securities, at fair value | 189,945 | ||||
Equity contracts | Unrealized appreciation on open OTC swap contracts | 76,829 | ||||
Total | $ | 928,299 |
Liabilities derivatives | ||||||
Risk exposure category | Statements of Assets and Liabilities location | Fair Value | ||||
Equity contracts | Unrealized depreciation on open OTC swap contracts | $ | 149,464 | |||
Equity contracts | Written options, at fair value | 8,275 | ||||
Total | $ | 157,739 |
The following table sets forth the Global Fund’s net realized gain (loss) by primary risk exposure and by type of derivative contract for the period January 1, 2023 through May 4, 2023:
Amount of net realized gain (loss) on derivatives
Risk exposure category | ||||||||
Derivative | Interest rate contracts | Total | ||||||
Swap contracts | $ | 9,924 | $ | 9,924 | ||||
Total | $ | 9,924 | $ | 9,924 |
The following sets forth the Micro Cap Growth Fund’s net realized gain (loss) by primary risk exposure and by type of derivative contract for the period January 1, 2023 through December 31, 2023:
Amount of net realized gain (loss) on derivatives
Risk exposure category | ||||||||
Derivative | Equity contracts | Total | ||||||
Warrants | $ | 4,366 | $ | 4,366 | ||||
Total | $ | 4,366 | $ | 4,366 |
88 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
The following table sets forth the Event Driven Fund’s net realized gain (loss) by primary risk exposure and by type of derivative contract for the period January 1, 2023 through December 31, 2023:
Amount of net realized gain (loss) on derivatives
Risk exposure category | ||||||||
Derivative | Equity contracts | Total | ||||||
Purchased options contracts | $ | (82,140 | ) | $ | (82,140 | ) | ||
Swap contracts | (901,872 | ) | (901,872 | ) | ||||
Total | $ | (984,012 | ) | $ | (984,012 | ) |
The following table sets forth the Micro Cap Growth Fund’s change in net unrealized appreciation (depreciation) by primary risk exposure and by type of derivative contract for the period January 1, 2023 through December 31, 2023:
Change in net unrealized appreciation (depreciation) on derivatives
Risk exposure category | ||||||||
Derivative | Equity contracts | Total | ||||||
Warrants | $ | (7,641 | ) | $ | (7,641 | ) | ||
Total | $ | (7,641 | ) | $ | (7,641 | ) |
The gross notional amount and/or the number of contracts for the Micro Cap Growth Fund as of December 31, 2023, are included on the Schedule of Investments. The quarterly average values of derivative investments for the period January 1, 2023 through December 31, 2023, is set forth in the table below:
Quarterly Derivative Averages
Derivative | Quarterly Average | $ Amount/ Number | ||||
Warrants | number of contracts | 12,595 |
The following table sets forth the Event Driven Fund’s change in net unrealized appreciation (depreciation) by primary risk exposure and by type of derivative contract for the period January 1, 2023 through December 31, 2023:
Change in net unrealized appreciation (depreciation) on derivatives
Risk exposure category | ||||||||
Derivative | Equity contracts | Total | ||||||
Written options contracts | $ | 118,282 | $ | 118,282 | ||||
Purchased options contracts | (206,624 | ) | (206,624 | ) | ||||
Swap contracts | (193,352 | ) | (193,352 | ) | ||||
Warrants | 57,546 | 57,546 | ||||||
Total | $ | (224,148 | ) | $ | (224,148 | ) |
89 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
The gross notional amount and/or the number of contracts for the Event Driven Fund as of December 31, 2023, are included on the Schedule of Investments. The quarterly average values of derivative investments for the period January 1, 2023 through December 31, 2023, is set forth in the table below:
Quarterly Derivative Averages
Derivative | Quarterly Average | $ Amount/ Number | ||||
Written options contracts | number of contracts | (662 | ) | |||
Purchased options contracts | number of contracts | 792 | ||||
Swap contracts | gross notional amount | $ | 16,341,768 | |||
Warrants | number of contracts | 1,011,704 |
Disclosures about Offsetting Assets and Liabilities
The Funds are party to various agreements, including International Swaps and Derivatives Association Agreements and related Credit Support Annexes (“Master Netting Agreements” or “MNA”), which govern the terms of certain transactions with select counterparties. MNAs are designed to reduce counterparty risk associated with the relevant transactions by establishing credit protection mechanisms and providing standardization as a means of improving legal certainty. As MNAs are specific to the unique operations of different asset types, they allow each Fund to close out and net its total exposure to a counterparty in the event of default with respect to all of the transactions governed under a single agreement with that counterparty. MNAs can also help reduce counterparty risk by specifying collateral posting requirements at pre-arranged exposure levels. Securities and cash pledged as collateral are reflected as assets in the Statements of Assets and Liabilities as either a component of “Investment securities at fair value” or “Deposits at broker for securities sold short”.
For financial reporting purposes, the Funds do not offset financial assets and financial liabilities that are subject to MNAs or similar arrangements on the Statements of Assets and Liabilities. The settlement of futures contracts, swap contracts and exchange-traded purchased options is guaranteed by the clearinghouse or exchange the instrument is traded on and is not subject to arrangements with particular counterparties. For that reason, these instruments are excluded from the below disclosure.
The following table presents the Event Driven Fund’s financial and derivative assets subject to Master Netting Agreements by type, net of amounts available for offset under a MNA and net of the related collateral received by the Event Driven Fund as of December 31, 2023:
Description | Gross Amounts Recognized in Statements of Assets | Derivatives Available for Offset | Collateral Received/ (Pledged) | Net Amount | ||||||||||||
Unrealized appreciation on open OTC swap contracts | $ | 76,829 | $ | (76,829 | ) | $ | — | $ | — |
The following table presents the Event Driven Fund’s financial and derivative liabilities subject to Master Netting Agreements by type, net of amounts available for offset under a MNA and net of the related collateral received by the Event Driven Fund as of December 31, 2023:
Description | Gross Amounts Recognized in Statements of Assets and Liabilities | Derivatives Available for Offset | Collateral Received/ (Pledged) | Net Amount | ||||||||||||
Unrealized depreciation on open OTC swap contracts | $ | (149,464 | ) | $ | 76,829 | $ | — | $ | (72,635 | ) |
90 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
C. INVESTMENT ADVISORY FEES, TRANSACTIONS WITH AFFILIATES, AND ADMINISTRATIVE FEES
Driehaus Capital Management LLC (“DCM” or the “Adviser”), a registered investment adviser, serves as the investment adviser and valuation designee to the Funds. As of December 31, 2023, the Driehaus Trust Company (“DTC”) has authority over a controlling interest in the Adviser that is owned by Driehaus Capital Holdings LLLP. As of December 31, 2023, DTC and other affiliates together had authority over a controlling interest in the Global Fund and Small/Mid Cap Growth Fund and substantial, non-controlling interests in certain other Funds.
In return for its services to the Funds, the Adviser receives monthly fees. Emerging Markets Growth Fund pays the Adviser a monthly fee computed and accrued daily at an annual rate of 1.05% on the first $1.5 billion, 0.75% over $1.5 billion and up to $2.5 billion, and effective September 7, 2023, 0.50% in excess of $2.5 billion of average daily net assets. Emerging Markets Small Cap Growth Fund pays the Adviser a monthly fee computed and accrued daily at the annual rate of 1.10% of average daily net assets. From January 1, 2023 to April 29, 2023, the Global Fund paid the Adviser a management fee computed and accrued daily at the annual rate of 0.90% of average daily net assets. Effective April 30, 2023, the Global Fund pays the Adviser a management fee computed and accrued daily at the annual rate of 0.65% of average daily net assets. International Small Cap Growth Fund pays the Adviser a monthly fee computed and accrued daily at an annual rate of 1.00% of average daily net assets. Micro Cap Growth Fund pays the Adviser a monthly fee computed and accrued daily at an annual rate of 1.25% of average daily net assets. Small Cap Growth Fund and Small/Mid Cap Growth pay the Adviser a monthly fee computed and accrued daily at an annual rate of 0.60% of average daily net assets. Event Driven Fund pays the Adviser a monthly fee computed and accrued daily at the annual rate of 1.00% of average daily net assets.
DCM entered into a contractual agreement to cap Emerging Markets Small Cap Growth Fund’s annual operating expenses (other than interest, taxes, brokerage commissions, dividends and interest on short sales and other portfolio transaction expenses and extraordinary expenses such as litigation and other expenses not incurred in the ordinary course of the Fund’s business) at 1.24% of average daily net assets until April 30, 2024. Prior to December 31, 2020, the cap was 1.45%. DCM is entitled to recoupment for previously waived fees and reimbursed expenses to the extent that the Fund’s expense ratio remains below the operating expense cap in place at the time of the waiver and the current operating expense cap for a period not to exceed three years from the date on which the waiver or reimbursement was made. For the period January 1, 2023 through December 31, 2023, DCM waived fees for Emerging Markets Small Cap Growth Fund totaling $125,610 under this agreement.
DCM entered into a contractual agreement to cap the Global Fund’s annual ordinary operating expenses (other than interest, taxes, brokerage commissions, dividends and interest on short sales, other investment-related costs, acquired fund fees and expenses, and extraordinary expenses such as litigation and other expenses not incurred in the ordinary course of the Fund’s business) at 0.75% of average daily net assets until April 30, 2024. Prior to April 30, 2023, the cap was 0.99%. DCM is entitled to recoupment for previously waived fees and reimbursed expenses to the extent that the Fund’s expense ratio remains below the operating expense cap in place at the time of the waiver and the current operating expense cap for a period not to exceed three years from the date on which the waiver or reimbursement was made. For the period January 1, 2023 through December 31, 2023, DCM waived fees for Global Fund totaling $145,127 under this agreement.
DCM entered into a contractual agreement to cap Small Cap Growth Fund’s annual operating expenses (other than interest, taxes, brokerage commissions, dividends and interest on short sales and other portfolio transaction expenses and extraordinary expenses such as litigation and other expenses not incurred in the ordinary course of the Fund’s business) at 1.20% of average daily net assets for the Investor Class and 0.95% of average daily net assets for the Institutional Class until April 30, 2023. DCM was entitled to recoupment for previously waived fees and reimbursed expenses to the extent that the Fund’s expense ratio remained below the operating expense cap in place at the time of the waiver and the current operating expense cap for a period not to exceed three years from the date on which the waiver or reimbursement was made. For the period January 1, 2023 through December 31, 2023, DCM did not reimburse or recoup any fees for the Investor or Institutional Class shares of the Small Cap Growth Fund under this agreement, as there were no such fees or expenses outstanding on April 30, 2023.
DCM entered into a contractual agreement to cap Small/Mid Cap Growth Fund’s annual operating expenses (other than interest, taxes, brokerage commissions, dividends and interest on short sales and other portfolio transaction expenses and extraordinary expenses such as litigation and other expenses not incurred in the ordinary course of the Fund’s business) at 0.80% of average daily net assets until April 30, 2025. Prior to September 6, 2023, the cap was 0.95%.
91 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
For a period of three years subsequent to the Fund’s commencement of operations on May 1, 2020, DCM is entitled to recoupment of previously waived fees and reimbursed expenses to the extent that the expense ratio remains below the operating expense cap in place at the time of the waiver and the current operating expense cap for a period not to exceed three years from the date on which the waiver or reimbursement was made. For the period January 1, 2023 through December 31, 2023, DCM waived fees for Small/Mid Cap Growth Fund totaling $53,555 under this agreement.
The table below indicates the amount of fees available for recoupment by DCM in future periods:
Period ended December 31 | Emerging Markets Small Cap Growth Fund | Global Fund | Small/Mid Cap Growth Fund | |||||||||
2024 | $ | 126,032 | $ | 191,639 | $ | 75,963 | ||||||
2025 | 207,973 | 174,550 | 87,616 | |||||||||
2026 | 125,610 | 145,128 | 53,555 | |||||||||
Total | $ | 459,615 | $ | 511,317 | $ | 217,134 |
The Emerging Markets Growth Fund incurred $22,388,195 for investment advisory fees during the year ended December 31, 2023, of which $1,982,541 was payable to DCM at December 31, 2023. The Emerging Markets Small Cap Growth Fund incurred $1,176,726 for investment advisory fees during the year ended December 31, 2023, of which $89,066 was payable to DCM at December 31, 2023. The Global Fund incurred $363,910 for investment advisory fees during the year ended December 31, 2023, of which $19,605 was payable to DCM at December 31, 2023. The International Small Cap Growth Fund incurred $2,078,260 for investment advisory fees during the year ended December 31, 2023, of which $178,685 was payable to DCM at December 31, 2023. The Micro Cap Growth Fund incurred $2,385,414 for investment advisory fees during the year ended December 31, 2023, of which $234,338 was payable to DCM at December 31, 2023. The Small Cap Growth Fund incurred $2,963,179 for investment advisory fees during the year ended December 31, 2023, of which $274,022 was payable to DCM at December 31, 2023. The Small/Mid Cap Growth Fund incurred $80,345 for investment advisory fees during the year ended December 31, 2023, of which $3,763 was payable to DCM at December 31, 2023. The Event Driven Fund incurred $2,100,570 for investment advisory fees during the year ended December 31, 2023, of which $186,117 was payable to DCM at December 31, 2023.
The Funds direct certain portfolio trades, subject to obtaining the best price and execution, to brokers who have agreed to pay a portion of the Funds’ operating expenses using part of the commissions generated. For the year ended December 31, 2023, these arrangements reduced the expenses of Emerging Markets Growth Fund, Emerging Markets Small Cap Growth Fund, Global Fund, International Small Cap Growth Fund, Micro Cap Growth Fund, Small Cap Growth Fund, Small/Mid Cap Growth Fund and Event Driven Fund by $241,124 (0.9%), $4,436 (0.3%), $4,301 (0.8%), $14,386 (0.6%), $95,514 (3.6%), $155,396 (4.1%), $1,823 (1.0%) and $22,965 (0.7%), respectively.
The Funds are permitted to purchase or sell securities from or to certain affiliated funds under specified conditions outlined in procedures adopted by the Board of Trustees. The procedures have been designed to ensure that any purchase or sale of securities by a Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under these procedures, each transaction is effected at the current market price to minimize trading costs, where permissible. For the year ended December 31, 2023, the Funds did not engage in any purchases and sales of securities, pursuant to Rule 17a-7 of the 1940 Act.
The Adviser is a party to a Fee Reimbursement Agreement (“Agreement”) with the Emerging Markets Growth Fund, the Small Cap Growth Fund, and the Event Driven Fund. Under the Agreement, the Funds reimburse the Adviser for certain fees paid to intermediaries who provide shareholder administrative and/or sub-transfer agency services to the Funds. The amount to be reimbursed will not exceed 0.25% of the average daily net assets held by such intermediaries. The amounts incurred and payable to the Adviser during the period January 1, 2023, through December 31, 2023, are as follows:
92 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Fund | Shareholder services plan fees | Accrued shareholder services plan fees | ||||||
Emerging Markets Growth Fund | $ | 1,283,801 | $ | 193,532 | ||||
Small Cap Growth Fund | 172,145 | 32,857 | ||||||
Event Driven Fund | 398,496 | 68,225 |
Certain officers of the Trust are also officers of DCM. The Funds pay a portion of the Chief Compliance Officer’s salary. No other officers received compensation from the Funds during the period January 1, 2023, through December 31, 2023. The Independent Trustees are compensated for their services to the Trust and such compensation is reflected as Trustees’ fees in the Statements of Operations.
The Northern Trust Company (“Northern”) serves as fund accounting and administration services provider and transfer agent for the Funds. Under the terms of the Fund Administration and Accounting Services Agreement, Northern is entitled to receive fees, computed daily and payable monthly, based upon the average daily net assets of each Fund. The fees, excluding out of pocket expenses, range between 0.0175% and 0.045% of average daily net assets. For its services as Transfer Agent, Northern receives a fee, computed daily and payable monthly, based upon the average daily net assets of each Fund. The fees, excluding out of pocket expenses, range between 0.002% and 0.0175% of average daily net assets of each Fund.
D. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding derivatives, short term securities and U.S. government obligations) for the year ended December 31, 2023 were as follows:
Fund | Purchases | Sales | ||||||
Emerging Markets Growth Fund | 3,161,558,141 | 2,839,192,475 | ||||||
Emerging Markets Small Cap Growth Fund | 163,031,229 | 166,927,044 | ||||||
Global Fund | 84,353,255 | 85,508,117 | ||||||
International Small Cap Growth Fund | 161,929,186 | 186,655,748 | ||||||
Micro Cap Growth Fund | 264,535,654 | 241,998,917 | ||||||
Small Cap Growth Fund | 764,972,814 | 751,660,456 | ||||||
Small/Mid Cap Growth Fund | 19,568,879 | 20,540,350 | ||||||
Event Driven Fund | 193,392,455 | 209,458,978 |
The Funds had no purchases and sales of U.S. government obligations for the year January 1, 2023, through December 31, 2023.
93 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
E. CAPITAL SHARE TRANSACTIONS
For the years ended December 31, 2023 and 2022, transactions in capital shares (authorized shares unlimited) were as follows:
Emerging Markets Growth Fund | Emerging Markets Small Cap Growth Fund | Global Fund | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Fund | ||||||||||||||||||||||||
Shares issued | — | — | 941,612 | 1,798,191 | 314,720 | 358,360 | ||||||||||||||||||
Shares reinvested | — | — | 52,314 | — | 12,037 | 38,688 | ||||||||||||||||||
Shares redeemed | — | — | (1,205,698 | ) | (1,186,044 | ) | (508,899 | ) | (329,939 | ) | ||||||||||||||
Net increase (decrease) | — | — | (211,772 | ) | 612,147 | (182,142 | ) | 67,109 | ||||||||||||||||
Investor Class | ||||||||||||||||||||||||
Shares issued | 2,569,796 | 3,247,646 | — | — | — | — | ||||||||||||||||||
Shares reinvested | 291,482 | 127,497 | — | — | — | — | ||||||||||||||||||
Shares redeemed | (4,415,301 | ) | (5,810,486 | ) | — | — | — | — | ||||||||||||||||
Net increase (decrease) | (1,554,023 | ) | (2,435,343 | ) | — | — | — | — | ||||||||||||||||
Institutional Class | ||||||||||||||||||||||||
Shares issued | 17,992,754 | 18,312,464 | — | — | — | — | ||||||||||||||||||
Shares reinvested | 1,012,414 | 271,749 | — | — | — | — | ||||||||||||||||||
Shares redeemed | (7,845,573 | ) | (7,874,410 | ) | — | — | — | — | ||||||||||||||||
Net increase (decrease) | 11,159,595 | 10,709,803 | — | — | — | — | ||||||||||||||||||
Total net increase (decrease) | 9,605,572 | 8,274,460 | — | — | — | — |
International Small Cap Growth Fund | Micro Cap Growth Fund | Small Cap Growth Fund | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Fund | ||||||||||||||||||||||||
Shares issued | 3,998,996 | 3,305,607 | 6,290,637 | 486,092 | — | — | ||||||||||||||||||
Shares reinvested | 283,147 | 1,367,213 | 145,068 | 1,068,748 | — | — | ||||||||||||||||||
Shares redeemed | (6,435,111 | ) | (7,252,338 | ) | (3,933,992 | ) | (4,917,525 | ) | — | — | ||||||||||||||
Net increase (decrease) | (2,152,968 | ) | (2,579,518 | ) | 2,501,713 | (3,362,685 | ) | — | — | |||||||||||||||
Investor Class | ||||||||||||||||||||||||
Shares issued | — | — | — | — | 2,098,855 | 1,890,262 | ||||||||||||||||||
Shares reinvested | — | — | — | — | 19,822 | 87,718 | ||||||||||||||||||
Shares redeemed | — | — | — | — | (1,458,618 | ) | (1,656,490 | ) | ||||||||||||||||
Net increase (decrease) | — | — | — | — | 660,059 | 321,490 | ||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||
Shares issued | — | — | — | — | 8,496,069 | 12,619,228 | ||||||||||||||||||
Shares reinvested | — | — | — | — | 137,612 | 436,732 | ||||||||||||||||||
Shares redeemed | — | — | — | — | (7,962,420 | ) | (9,590,296 | ) | ||||||||||||||||
Net increase (decrease) | — | — | — | — | 671,261 | 3,465,664 | ||||||||||||||||||
Total net increase (decrease) | — | — | — | — | 1,331,320 | 3,787,154 |
94 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
Small/Mid Cap Growth Fund | Event Driven Fund | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Fund | ||||||||||||||||
Shares issued | 73,361 | 276,302 | 5,623,843 | 10,275,917 | ||||||||||||
Shares reinvested | — | 33,544 | 775,391 | 241,947 | ||||||||||||
Shares redeemed | (143,132 | ) | (503,594 | ) | (6,193,625 | ) | (8,515,544 | ) | ||||||||
Net increase (decrease) | (69,771 | ) | (193,748 | ) | 205,609 | 2,002,320 | ||||||||||
Investor Class | ||||||||||||||||
Shares issued | — | — | — | — | ||||||||||||
Shares reinvested | — | — | — | — | ||||||||||||
Shares redeemed | — | — | — | — | ||||||||||||
Net increase (decrease) | — | — | — | — | ||||||||||||
Institutional Class | ||||||||||||||||
Shares issued | — | — | — | — | ||||||||||||
Shares reinvested | — | — | — | — | ||||||||||||
Shares redeemed | — | — | — | — | ||||||||||||
Net increase (decrease) | — | — | — | — | ||||||||||||
Total net increase (decrease) | — | — | — | — |
F. RESTRICTED SECURITIES
Restricted securities are securities that are not registered for sale under the Securities Act of 1933, as amended, or applicable foreign law and that may be resold only in transactions exempt from applicable registration. Restricted securities include Rule 144A securities which may be sold normally to qualified institutional buyers. At December 31, 2023, the Funds held restricted securities as denoted on the Schedules of Investments.
G. LINE OF CREDIT
The Funds obtained a committed line of credit in the amount of $50,000,000. The line of credit is available primarily to meet large, unexpected shareholder redemptions subject to certain restrictions. Interest is charged at a rate per annum equal to the Federal Funds Rate in effect at the time of the borrowings plus 1.5% or 1.75%, whichever is greater. There is a commitment fee of 0.10% of the excess of the $50,000,000 committed amount over the sum of the average daily balance of any loans, which is allocated amongst the Funds based on average net assets. The Credit Agreement will expire on March 20, 2024 unless extended or renewed. The Funds did not borrow under the line of credit during the period January 1, 2023 through December 31, 2023 and thus had no outstanding balances as of that date.
H. FOREIGN INVESTMENT RISKS
To the extent a Fund invests in foreign securities, it may entail risks due to the potential for political and economic instability in the countries where the issuers of these securities are located. In addition, foreign exchange fluctuations could affect the value of positions held. These risks are generally intensified in emerging markets.
I. REDEMPTION FEES
The Driehaus Micro Cap Growth Fund will charge a redemption fee of 2.00% of the redemption amount for shares redeemed within 60 days of purchase. The Board of Trustees of the Funds eliminated the 2.00% redemption fee previously applicable to shareholders of: (i) the Driehaus Emerging Markets Growth Fund, effective February 1, 2023; and (ii) the Driehaus Emerging Markets Small Cap Growth Fund, Driehaus Global Fund, Driehaus International Small Cap Growth Fund, Driehaus Small Cap Growth Fund and the Driehaus Small/Mid Cap Growth Fund, effective October 6, 2023, who sold their shares within 60 days of purchase. Assessed redemption fees are recorded in paid-in capital and reflected in the Statements of Changes in Net Assets.
95 |
Driehaus Mutual Funds
Notes to Financial Statements — (Continued)
J. SUBSEQUENT EVENTS
Events or transactions that occurred after the date of this report through the date the report was issued have been evaluated for potential impact to the financial statements. There are no subsequent events that require recognition or disclosure in the financial statements.
96 |
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of Driehaus Mutual Funds
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of Driehaus Mutual Funds (the “Trust”) (comprising Driehaus Emerging Markets Growth Fund, Driehaus Emerging Markets Small Cap Growth Fund, Driehaus Global Fund (formerly, Driehaus Emerging Markets Opportunities Fund), Driehaus International Small Cap Growth Fund, Driehaus Micro Cap Growth Fund, Driehaus Small Cap Growth Fund, Driehaus Small/Mid Cap Growth Fund and Driehaus Event Driven Fund (collectively referred to as the “Funds”)), including the schedules of investments, as of December 31, 2023, and the related statements of operations and changes in net assets, and the financial highlights for each of the periods indicated in the table below and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds comprising Driehaus Mutual Funds at December 31, 2023, the results of their operations, changes in net assets and financial highlights for each of the periods indicated in the table below, in conformity with U.S. generally accepted accounting principles.
Funds comprising Driehaus Mutual Funds | Statement of operations | Statements of changes in net assets | Financial highlights | |||
Driehaus Emerging Markets Growth Fund | For the year ended December 31, 2023 | For each of the two years in the period ended December 31, 2023 | For each of the five years in the period ended December 31, 2023 | |||
Driehaus Emerging Markets Small Cap Growth Fund | ||||||
Driehaus Global Fund (formerly, Driehaus Emerging Markets Opportunities Fund) | ||||||
Driehaus International Small Cap Growth Fund | ||||||
Driehaus Micro Cap Growth Fund | ||||||
Driehaus Small Cap Growth Fund | ||||||
Driehaus Event Driven Fund | ||||||
Driehaus Small/Mid Cap Growth Fund | For the year ended December 31, 2023 | For each of the two years in the period ended December 31, 2023 | For each of the two years in the period ended December 31, 2023 and the period from May 1, 2020 (commencement of operations) through December 31, 2020 |
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on each of the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
97 |
Report of Independent Registered Public Accounting Firm — (Continued)
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and counterparties; when replies were not received from brokers, we performed other audit procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Driehaus investment companies since 2002.
Chicago, Illinois
February 27, 2024
98 |
Interested and Independent Trustees of the Trust (unaudited)
The following table sets forth certain information with respect to the Trustees of the Trust as of December 31, 2023:
Name, Address and Year of Birth | Position(s) Held with the Trust | Term of Office* and Length of Time Served | Principal Occupation(s) During the Past 5 Years | Other Directorships Held by Trustee During the Past 5 Years | ||||
Interested Trustee:** | ||||||||
Stephen T. Weber Driehaus Capital Management LLC 25 East Erie Street Chicago, IL 60611 YOB: 1970 | Trustee and President | Since Dec. 2020 Since Feb. 2020 | Director of Driehaus Trust Company, LLC since March 2021; Chief Executive Officer of the Adviser since March 2021; President of the Advisor since February 2020; Head of Distribution of the Adviser from February 2020 through October 2021; Director of Sales and Relationship Management of the Adviser from 2006 through February 2020; President and Chief Executive Officer of Driehaus Securities LLC from 2018 through 2019. | None. | ||||
Independent Trustees: | ||||||||
Theodore J. Beck c/o Driehaus Capital Management LLC 25 East Erie Street Chicago, IL 60611 YOB: 1952 | Trustee Chair Vice Chair | Since 2012 Since June 2021 2020 to June 2021 | Retired; President and Chief Executive Officer, National Endowment for Financial Education, 2005 to July 2018. | None. | ||||
Dawn M. Vroegop c/o Driehaus Capital Management LLC 25 East Erie Street Chicago, IL 60611 YOB: 1966 | Trustee | Since 2012 | Private Investor. | Independent Trustee, Brighthouse Funds Trust I since December 2000 and Brighthouse Funds Trust II since May 2009. | ||||
Christopher J. Towle, CFA c/o Driehaus Capital Management LLC 25 East Erie Street Chicago, IL 60611 YOB: 1957 | Trustee | Since 2016 | Retired; Portfolio Manager. | None. |
* | Each Trustee will serve as a Trustee until (i) termination of the Trust, or (ii) the Trustee’s retirement, resignation, or death, or (iii) as otherwise specified in the Trust’s governing documents. |
** | Mr. Weber became President of the Advisor on February 24, 2020 and a Trustee of the Trust on December 3, 2020. Mr. Weber is an “interested person” of the Trust and the Adviser, as defined in the 1940 Act, because he is an officer of the Adviser. |
As of December 31, 2023, the number of portfolios in the complex overseen by all Trustees is eight.
99 |
Officers of the Trust (unaudited)
The following table sets forth certain information with respect to the officers of the Trust as of December 31, 2023:
Name, Address and Year of Birth | Position(s) Held with the Trust | Length of Time Served | Principal Occupation(s) During Past 5 Years | |||
Stephen T. Weber 25 East Erie Street Chicago, IL 60611 YOB: 1970 | President | Since Feb. 2020 | Director of Driehaus Trust Company, LLC since March 2021; Chief Executive Officer of the Adviser since March 2021; President of the Adviser since February 2020; Head of Distribution of the Adviser from February 2020 through October 2021; Director of Sales and Relationship Management of the Adviser from 2006 through February 2020; President and Chief Executive Officer of Driehaus Securities LLC from 2018 through 2019. | |||
Robert M. Kurinsky 25 East Erie Street Chicago, IL 60611 YOB: 1972 | Vice President and Treasurer | Since 2019 | Chief Operating Officer of the Adviser since February 2020, Chief Financial Officer and Treasurer of the Adviser since January 2019; Treasurer and Chief Financial Officer of Driehaus Securities LLC from January 2019 through December 2019; Treasurer, Secretary and Chief Legal Officer of the Keeley Funds, Inc. through December 2018; President and Chief Operating Officer of Keeley-Teton Advisors, LLC from March 2017 to December 2018. | |||
Janet L. McWilliams 25 East Erie Street Chicago, IL 60611 YOB: 1970 | Assistant Vice President and Chief Legal Officer | Since 2007 Since 2012 | General Counsel and Secretary of the Adviser since 2012; General Counsel and Secretary of Driehaus Securities LLC through December 2019. | |||
Anne S. Kochevar 25 East Erie Street Chicago, IL 60611 YOB: 1963 | Chief Compliance Officer and Anti-Money Laundering Compliance Officer | Since 2019 | Chief Compliance Officer of the Adviser since July 2019; Anti-Money Laundering Compliance Officer of Driehaus Securities LLC from July 2019 to December 2019; Chief Compliance Officer of Confluence Investment Management from January 2018 to June 2019; and Chief Compliance Officer of Henderson Global Investors U.S. from November 2014 to January 2018. | |||
Tanya S. Tancheff 333 South Wabash Avenue Chicago, IL 60604 YOB: 1973 | Secretary | Since December 2022 | The Northern Trust Company, Second Vice President since October 2022; ALPS Holdings, Inc., Senior Paralegal 2017 to September 2022. | |||
Malinda M. Sanborn 25 East Erie Street Chicago, IL 60611 YOB: 1965 | Assistant Treasurer | Since August 2020 | Director of Fund Administration of the Advisor since August 2014. | |||
Christina E. Algozine 25 East Erie Street Chicago, IL 60611 YOB: 1985 | Assistant Secretary | Since 2019 | Assistant Secretary of the Adviser since January 2019; Assistant Secretary of Driehaus Securities LLC from January 2019 to December 2019; Senior Attorney, Aegon USA Investment Management, LLC from December 2014 to January 2019. |
The Statement of Additional Information for Driehaus Mutual Funds contains more detail about the Trust’s Trustees and officers and is available upon request, without charge. For further information, please call 1-800-560-6111.
100 |
Fund Expense Examples (unaudited)
As a mutual fund shareholder, you may incur two types of costs: (1) transaction costs, including sales charges; redemption fees; and exchange fees and (2) ongoing costs, including management fees; distribution (12b-1) and/or service fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six month period ended December 31, 2023.
Actual Expenses
The first line of the table below (“Actual”) provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the tables below (“Hypothetical”) provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. You may use this information to compare the ongoing costs of investing in the Fund versus other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges, redemption fees or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Emerging Markets Growth Fund — Investor Class
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $ 1,000.00 | $ 1,046.00 | $ 6.65 |
Hypothetical Example, assuming a 5% return before expenses | $ 1,000.00 | $ 1,018.70 | $ 6.56 |
Emerging Markets Growth Fund — Institutional Class
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $ 1,000.00 | $ 1,046.90 | $ 5.52 |
Hypothetical Example, assuming a 5% return before expenses | $ 1,000.00 | $ 1,019.81 | $ 5.45 |
101 |
Fund Expense Examples (unaudited) — (Continued)
Emerging Markets Small Cap Growth Fund
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $1,000.00 | $1,031.80 | $6.35 |
Hypothetical Example, assuming a 5% return before expenses | $1,000.00 | $1,018.95 | $6.31 |
Global Fund
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $1,000.00 | $1,065.70 | $3.91 |
Hypothetical Example, assuming a 5% return before expenses | $1,000.00 | $1,021.42 | $3.82 |
International Small Cap Growth Fund
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $1,000.00 | $1,065.60 | $6.09 |
Hypothetical Example, assuming a 5% return before expenses | $1,000.00 | $1,019.31 | $5.96 |
Micro Cap Growth Fund
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $1,000.00 | $1,001.80 | $7.06 |
Hypothetical Example, assuming a 5% return before expenses | $1,000.00 | $1,018.15 | $7.12 |
Small Cap Growth Fund — Investor Class
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $1,000.00 | $1,046.00 | $4.95 |
Hypothetical Example, assuming a 5% return before expenses | $1,000.00 | $1,020.37 | $4.89 |
102 |
Fund Expense Examples (unaudited) — (Continued)
Small Cap Growth Fund — Institutional Class
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $1,000.00 | $1,046.70 | $3.77 |
Hypothetical Example, assuming a 5% return before expenses | $1,000.00 | $1,021.53 | $3.72 |
Small/Mid Cap Growth Fund
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $1,000.00 | $1,045.40 | $4.43 |
Hypothetical Example, assuming a 5% return before expenses | $1,000.00 | $1,020.87 | $4.38 |
Event Driven Fund
Beginning Account Value July 1, 2023 | Ending Account Value December 31, 2023 | Expenses Paid During Six Months Ended December 31, 2023* | |
Actual | $1,000.00 | $1,064.90 | $8.02 |
Hypothetical Example, assuming a 5% return before expenses | $1,000.00 | $1,017.44 | $7.83 |
* | Expenses are equal to the Funds’ annualized expense ratios for the six-month period in the table below multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (184), then divided by 365 to reflect the half-year period. These amounts exclude the reduction in expenses for fees paid indirectly and may differ from the Fund’s annualized ratio shown in the Financial Highlights. |
Emerging Markets Growth Fund – Investor Class | 1.29 | % | ||
Emerging Markets Growth Fund – Institutional Class | 1.07 | % | ||
Emerging Markets Small Cap Growth Fund | 1.24 | % | ||
Global Fund | 0.75 | % | ||
International Small Cap Growth Fund | 1.17 | % | ||
Micro Cap Growth Fund | 1.40 | % | ||
Small Cap Growth Fund – Investor Class | 0.96 | % | ||
Small Cap Growth Fund – Institutional Class | 0.73 | % | ||
Small/Mid Cap Growth Fund | 0.86 | % | ||
Event Driven Fund | 1.54 | % |
103 |
Shareholder Information (unaudited)
TAX INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2023
We are providing this information as required by the Internal Revenue Code. The amounts shown may differ from those elsewhere in this report because of differences between tax and financial reporting requirements.
The Funds designate the following amounts as a long-term capital gain distribution:
Emerging Markets Growth Fund | Emerging Markets Small Cap Growth Fund | Global Fund | International Small Cap Growth Fund | |||
$— | $— | $— | $— |
Micro Cap Growth Fund | Small Cap Growth Fund | Small/Mid Cap Growth Fund | Event Driven Fund | |||
$— | $— | $— | $— |
For taxable non-corporate shareholders, the following percentages of income represent qualified dividend income subject to the 15% rate category:
Emerging Markets Growth Fund | Emerging Markets Small Cap Growth Fund | Global Fund | International Small Cap Growth Fund | |||
86.40% | 41.07% | 70.72% | 100.00% |
Micro Cap Growth Fund | Small Cap Growth Fund | Small/Mid Cap Growth Fund | Event Driven Fund | |||
—% | 43.88% | —% | 14.15% |
For taxable non-corporate shareholders, the following percentages of short-term capital gains represent qualified dividend income subject to the 15% rate category:
Emerging Markets Growth Fund | Emerging Markets Small Cap Growth Fund | Global Fund | International Small Cap Growth Fund | |||
—% | —% | —% | —% |
Micro Cap Growth Fund | Small Cap Growth Fund | Small/Mid Cap Growth Fund | Event Driven Fund | |||
—% | —% | —% | —% |
For corporate shareholders, the following percentages of income and short-term capital gains qualified for the dividends-received deduction:
Emerging Markets Growth Fund | Emerging Markets Small Cap Growth Fund | Global Fund | International Small Cap Growth Fund | |||
1.57% | —% | 24.34% | —% |
Micro Cap Growth Fund | Small Cap Growth Fund | Small/Mid Cap Growth Fund | Event Driven Fund | |||
—% | 45.19% | —% | 14.15% |
104 |
Shareholder Information (unaudited) — (Continued)
DISTRIBUTION INFORMATION
For purposes of Section 19 of the 1940 Act, the Funds estimated the periodic sources of any dividends paid during the period covered by this report in accordance with good accounting practice. Driehaus Micro Cap Growth Fund and Driehaus Small Cap Growth Fund did not issue a Section 19(a) notice because at the time the Funds did not believe that such a notice was necessary. Pursuant to Rule 19a-1(e) under the 1940 Act, the information in the table below includes the sources of the Driehaus Micro Cap Growth Fund’s and Driehaus Small Cap Growth Fund’s distributions paid during the year ended December 31, 2023.
Please note that the information in the table below is for financial accounting purposes only. Form 1099-DIV received by shareholders for the calendar year specifies how shareholders should characterize and report distributions paid by the Funds during the year for U.S. federal income tax purposes.
The Funds’ distributions during the year ended December 31, 2023, were paid from:
Ex-Date | Ordinary Income | Return of Capital | |||
Driehaus Micro Cap Growth Fund | 12/13/2023 | 0.000000 | 0.097110 | ||
Driehaus Small Cap Growth Fund | |||||
Investor Class | 12/13/2023 | 0.063412 | 0.005912 | ||
Driehaus Small Cap Growth Fund | |||||
Institutional Class | 12/13/2023 | 0.097180 | 0.009060 |
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
A description of the Funds’ policies and procedures with respect to the voting of proxies relating to the Funds’ portfolio securities is available without charge, upon request, by calling 1-800-560-6111. This information is also available on the Funds’ website at http://www.driehaus.com.
Information regarding how the Funds voted proxies related to portfolio securities during the 12-month period ended June 30, 2019 is available without charge, upon request, by calling 1-800-560-6111. This information is also available on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
HOW TO OBTAIN QUARTERLY PORTFOLIO HOLDINGS
Each Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form NPORT-EX. The Funds’ Form NPORT-EX is available electronically on the SEC’s website at http://www.sec.gov. Each Fund’s complete schedule of portfolio holdings is also available on the Fund’s website at http://www.driehaus.com.
105 |
Board Considerations in Connection with the Approval of the Investment Advisory Agreement for
Driehaus Mutual Funds (unaudited)
The Board of Trustees (the “Board”) of the Driehaus Mutual Funds (the “Trust”), including a majority of the Trustees who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) (the “Independent Trustees”), approved the investment advisory agreement (the “Agreement”) with Driehaus Capital Management LLC (the “Adviser”) for Driehaus Emerging Markets Growth Fund, Driehaus Emerging Markets Small Cap Growth Fund, Driehaus Global Fund (formerly, Driehaus Emerging Markets Opportunities Fund), Driehaus International Small Cap Growth Fund, Driehaus Micro Cap Growth Fund, Driehaus Small Cap Growth Fund, Driehaus Small/Mid Cap Growth Fund and Driehaus Event Driven Fund (each a “Fund” and collectively, the “Funds”) on September 6, 2023 for a one-year term ending September 30, 2024. As part of its review process, the Board requested and evaluated all information it deemed reasonably necessary to evaluate the Agreement. The Board reviewed comprehensive materials received from the Adviser and from independent legal counsel. The Board also received extensive information throughout the year regarding performance and operating results of each Fund. The Independent Trustees held a meeting with their independent legal counsel on August 30, 2023 to review the materials provided in response to their request and identified areas for further response by Fund management. Following receipt of further information from Fund management, the Independent Trustees, represented by independent legal counsel, met independent of Fund management to consider renewal of the Agreement for each Fund. After their consideration of all the information received, the Independent Trustees presented their findings and their recommendation to renew the Agreement at the Board meeting.
In connection with the contract review process, the Board considered the factors discussed below, among others. The Board also considered that the Adviser has managed each Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious adviser is in the best interests of each Fund. The Board considered, generally, that shareholders invested in each Fund, knowing that the Adviser managed the Fund and knowing the investment advisory fee schedule.
Nature, Quality and Extent of Services. The Board considered the nature, extent and quality of services provided under the Agreement, including portfolio management services and certain administrative services. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of the Adviser to attract and retain high-quality personnel, and the organizational depth of the Adviser. The Board also considered the Trust’s compliance with legal and regulatory requirements, as well as the Adviser’s handling of portfolio brokerage, and noted the Adviser’s process for evaluating best execution. The Board noted the Adviser’s role in overseeing the Funds’ other service providers, including the Adviser’s review of expenses. The Board considered the Adviser’s risk management strategies and the process developed by the Adviser for analyzing, reviewing and assessing risk exposure for the Funds. The Board also considered the Funds’ process for fair valuation of portfolio securities.
The Board received and considered performance information provided for each Fund (and share class, as applicable), comparing it to the performance of a peer universe of funds (the “Performance Universe”) and a peer group of funds, as applicable, compiled by Barrington Partners (“Barrington”) using data from Morningstar, Inc., an independent provider of mutual fund data (“Morningstar”), and to each Fund’s primary benchmark index, as identified in reports to shareholders. The Board noted that the Adviser represented that, because the Funds’ performance can be volatile over shorter time periods, for Funds with longer performance records (except for Driehaus Global Fund, which had a change in investment strategy effective April 30, 2023, and Driehaus Event Driven Fund, which pursues an investment strategy that differs from its benchmark), it was also meaningful to analyze the performance over rolling time periods. The Board reviewed rolling performance for the Funds for the 1-, 3- and 5-year periods, as applicable, over the life of each covered Fund relative to its benchmark and noted that, in a majority of the time periods measured, each Fund outperformed its benchmark index. The Board also noted that the rolling performance information for Driehaus International Small Cap Growth Fund, Driehaus Micro Cap Growth Fund and Driehaus Small Cap Growth Fund included the performance of each Fund’s predecessor limited partnership. Because the predecessor limited partnerships did not operate as mutual funds and were not subject to certain investment and operational restrictions, the Board factored those differences into its evaluation of such Funds’ longer-term performance information. The Board also considered whether investment results were consistent with each Fund’s investment objective and policies.
As to the specific Funds, the Board considered that, as of June 30, 2023, Driehaus Emerging Markets Growth Fund (Investor Shares) outperformed its Performance Universe for the 5- and 10-year periods, ranking in the third, second and first quartiles for the 1-, 3- and 5-year periods, respectively (the first quartile being the best performers and the fourth quartile being the worst performers). The Board noted that Driehaus Emerging Markets Growth Fund (Investor Shares) outperformed its benchmark index, the MSCI Emerging Markets Index, for the 5- and 10-year periods. The Board further noted that, as of June 30, 2023, Driehaus Emerging Markets Growth Fund (Institutional Shares) outperformed its Performance Universe for the 5-year period (the Fund’s Institutional Shares inception date was July 17, 2017), ranking in the third, second and first quartiles for the 1-, 3- and 5-year periods, respectively, and that Driehaus Emerging Markets Growth Fund (Institutional Shares) outperformed its benchmark index for each of the above periods.
106 |
The Board considered that, as of June 30, 2023, Driehaus International Small Cap Growth Fund outperformed its Performance Universe for the 1-, 3-, 5- and 10-year periods, ranking in the third, first and first quartiles, respectively, for the 1-, 3- and 5-year periods. The Board noted that Driehaus International Small Cap Growth Fund outperformed its benchmark index, the MSCI All Country World ex USA Small Cap Growth Index, for each of the above periods.
The Board considered that, as of June 30, 2023, Driehaus Micro Cap Growth Fund outperformed its Performance Universe for the 1-, 3- and 5-year periods, ranking in the first quartile of its Performance Universe for each of the above periods (the Fund’s inception date was November 18, 2013). In addition, the Board noted that Driehaus Micro Cap Growth Fund outperformed its benchmark index, the Russell Microcap Growth Index, for each of the above periods.
The Board considered that, as of June 30, 2023, Driehaus Emerging Markets Small Cap Growth Fund outperformed its Performance Universe for the 3-, 5- and 10-year periods, ranking in the third, first and first quartiles of its Performance Universe for the 1-, 3- and 5-year periods, respectively. In addition, the Board noted that Driehaus Emerging Markets Small Cap Growth Fund outperformed its benchmark index, the MSCI Emerging Markets Small Cap Index, for the 5-year period and performed the same as its benchmark index for the 10-year period.
The Board considered that, as of June 30, 2023, Driehaus Small Cap Growth Fund’s (Investor Shares and Institutional Shares) outperformed its Performance Universe for the 1-, 3- and 5-year periods, ranking in the first quartile for each period (the Fund’s inception date was August 21, 2017). The Board noted that Driehaus Small Cap Growth Fund (Investor Shares and Institutional Shares) outperformed its benchmark index, the Russell 2000 Growth Index, for each of the above periods with the exception of the Investor Shares for the 1-year period.
The Board took into account that, effective April 30, 2023, the Driehaus Global Fund (formerly, Driehaus Emerging Markets Opportunities Fund) changed its investment strategy from an emerging markets opportunities long-short strategy to a global core equity strategy and that shareholders of the Fund approved the related change in the Fund’s investment objective. The Board noted that the Performance Universe provided by Barrington is no longer representative of the new investment strategy but noted that the Fund outperformed that Performance Universe for the 1-, 3- and 5-year periods ended June 30, 2023, ranking in the first quartile (the Fund’s inception date was April 10, 2017). The Board did not evaluate the Fund’s performance pursuing its new investment strategy since it was too new to judge.
The Board considered that, as of June 30, 2023, Driehaus Small/Mid Cap Growth Fund’s outperformed its Performance Universe for the 3-year period, ranking in the third and first quartiles for the 1- and 3-year periods, respectively (the Fund’s inception date was May 1, 2020). In addition, the Board noted that Driehaus Small/Mid Cap Growth Fund outperformed its benchmark index, the Russell 2500 Growth Index, for the 3-year period.
The Board considered that, as of June 30, 2023, Driehaus Event Driven Fund outperformed its Performance Universe for the 1-, 3- and 5-year periods, ranking in the first quartile of its Performance Universe for each of the above periods (the Fund’s inception date was August 26, 2013). In addition, the Board noted that Driehaus Event Driven Fund underperformed the S&P 500 Index for each of the above periods. The Board noted the Adviser’s statement that the benchmark for Driehaus Event Driven Fund is more representative for long-only funds and that the HFRX Event Driven Index is more representative of Driehaus Event Driven Fund than the benchmark index. The Board also reviewed performance for Driehaus Event Driven Fund for the 1-, 3- and 5-year and year-to-date periods ended June 30, 2023, relative to the HFRX Event Driven Index and noted that the Fund outperformed the HFRX Event Driven Index for each period. The Board considered that the Fund’s objective of a positive return over a full market cycle had been met and that the Fund’s volatility target, as measured by having a standard deviation of two-thirds or less than that of the S&P 500 Index, had been met for each of the 1-, 3- and 5-year periods.
As to the Funds in general, the Board concluded that the Adviser had consistently implemented its investment philosophy, and that over the long term, the investment philosophy produces value for shareholders.
On the basis of this evaluation and its ongoing review of investment results, the Board concluded that the nature, quality and extent of services provided by the Adviser supported approval of the Agreement for each Fund.
Fees. The Board considered each Fund’s contractual management fee rate, operating expenses and total expense ratio as of June 30, 2023 as compared to peer expense group information based on data compiled by Barrington using data from Morningstar (with the fourth quartile being the highest fee). The Board noted that Driehaus Small Cap Growth Fund’s (Investor Shares and Institutional Shares) and Driehaus Small/Mid Cap Growth Fund’s contractual management fee rates were in the first quartile of their respective peer groups, that Driehaus Emerging Markets Small Cap Growth Fund’s, Driehaus Global Fund’s and Driehaus Event Driven Fund’s contractual management fee rates were in the second quartile of their respective peer groups and that Driehaus Emerging Markets Growth Fund’s (Investor Shares and Institutional Shares), Driehaus International Small Cap Growth Fund’s and Driehaus Micro Cap Growth Fund’s contractual management fee rates were in the fourth quartile of their respective peer groups. With respect to Driehaus Emerging Markets Growth Fund, the Board considered that, effective September 7, 2023, the Fund’s contractual management fee schedule would be amended to include an additional breakpoint on assets of the Fund over $2.5 billion.
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The Board also considered that as of June 30, 2023, Driehaus Small Cap Growth Fund’s (Investor Shares and Institutional Shares) total expense ratios were in the first quartile of their respective peer groups, that Driehaus Emerging Markets Small Cap Growth Fund’s total expense ratio was in the second quartile of its peer group, that Driehaus Emerging Markets Growth Fund’s (Institutional Shares), Driehaus Small/Mid Cap Growth Fund’s and Driehaus Event Driven Fund’s total expense ratios were in the third quartile of their respective peer groups and that Driehaus Emerging Markets Growth Fund’s (Investor Shares), Driehaus Global Fund’s, Driehaus International Small Cap Growth Fund’s and Driehaus Micro Cap Growth Fund’s total expense ratios were in the fourth quartile of their respective peer groups. In addition, the Board considered the expense reimbursement arrangements with the Adviser for Driehaus Emerging Markets Small Cap Growth Fund, Driehaus Global Fund and Driehaus Small/Mid Cap Growth Fund, noting further expense cap reductions for the Driehaus Global Fund and Driehaus Small/Mid Cap Growth Fund, effective April 30, 2023 and September 7, 2023, respectively. In that regard, the Board noted that at the new expense caps, Driehaus Global Fund’s and Driehaus Small/MidCap Growth Fund’s expense ratios would be in the second and first quartiles of their respective peer groups, respectively.
The Board also considered the Funds’ advisory fee rates as compared to fees charged by the Adviser for similarly managed institutional accounts and sub-advised unaffiliated mutual funds, as applicable. With respect to institutional accounts and other mutual funds, the Board noted that the mix of services provided, the level of responsibility, the legal, reputational and regulatory risks and the resources required under the Agreement were significantly greater as compared to the Adviser’s obligations for managing the other accounts. In considering the reasonableness of the advisory fees, the Board took into account the Adviser’s substantial human and technological resources devoted to investing for the Funds, the relatively small amount of assets under management, the long-term performance of the Funds and the limited capacity of the investment style. In addition, the Board noted that the Adviser’s directed brokerage program had resulted in a total of approximately $656,000 in directed brokerage credits during calendar year 2022, which were used to reduce expenses of the Funds.
On the basis of the information reviewed, the Board concluded that the advisory fee schedule for each Fund was reasonable in light of the nature and quality of services provided by the Adviser.
Profitability. The Board reviewed information regarding revenues received by the Adviser under the Agreement from each Fund and discussed the Adviser’s methodology in allocating its costs to the management of the Funds. The Board considered the estimated costs to the Adviser of managing the Funds. The Board noted that Driehaus Micro Cap Growth Fund is currently closed to new investors in order to maintain assets at a level that the Adviser believes is prudent, which limits the Fund’s profitability to the Adviser. The Board also noted that the Funds do not have a Rule 12b‑1 fee or shareholder service fee (except for Investor Shares of Driehaus Emerging Markets Growth Fund and Driehaus Small Cap Growth Fund and for Driehaus Event Driven Fund) and that the Adviser provides compensation to intermediaries for distribution of Fund shares and for shareholder and administrative services to shareholders, except for Driehaus Emerging Markets Growth Fund (Investor Shares), Driehaus Small Cap Growth Fund (Investor Shares) and Driehaus Event Driven Fund, which reimburse the Adviser under a Shareholder Services Plan (the “Plan”) for certain amounts paid for shareholder services covered under the Plan. The Board concluded that, based on the profitability calculated for the Trust as well as for the Funds individually, the profitability was not excessive in light of the nature, extent and quality of the services provided to the Funds.
Economies of Scale. In considering the reasonableness of the advisory fee, the Board considered whether there are economies of scale with respect to the management of the Funds and whether the Funds benefit from any such economies of scale. Given the size of the Funds and the capacity constraints of their investment styles, as well as the fee waivers for certain of the Funds, the Board concluded that the advisory fee rates under the Agreement are reasonable and reflect an appropriate sharing of any such economies of scale.
Other Benefits to the Adviser. The Board also considered the character and amount of other incidental benefits received by the Adviser. The Board noted that payments to the Adviser under the Plan are in reimbursement of payments made to intermediaries for shareholder services. The Board also considered benefits to the Adviser related to soft dollar allocations. The Board concluded that the advisory fees were reasonable in light of these fall-out benefits.
Based on all of the information considered and the conclusions reached, the Board determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of each Fund. No single factor was determinative in the Board’s analysis.
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(b) | Not applicable. |
Item 2. Code of Ethics.
(a) | The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
(b) | No response required. |
(c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. |
(d) | The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item. |
(e) | Not applicable. |
(f) | The registrant’s Code of Ethics for Principal Executive and Principal Financial Officers is filed herewith. |
Item 3. Audit Committee Financial Expert.
The registrant’s Board of Trustees has designated Christopher J. Towle as an audit committee financial expert. Christopher J. Towle is “independent,” as defined by this Item 3. Mr. Towle is a CFA charterholder and his relevant experience includes prior audit committee experience, experience reviewing financial statements, performing company specific financial analysis and creating financial models, as well as coursework in accounting.
Item 4. Principal Accountant Fees and Services.
(a) | Audit Fees |
For the fiscal years ended December 31, 2023 and 2022, Ernst & Young LLP, the registrant’s principal accountant (“E&Y”), billed the registrant $265,500 and $255,000, respectively, for professional services rendered for the audit of the registrant’s annual financial statements or services that are normally provided in connection with statutory and regulatory filings.
(b) | Audit-Related Fees |
For the fiscal years ended December 31, 2023 and 2022, E&Y billed the registrant $0 and $0, respectively, for assurance and related services that are reasonably related to the performance of the audit of the registrant’s financial statements and that are not reported above.
For engagements that Driehaus Capital Management LLC, the registrant’s investment adviser (“DCM”) entered into with E&Y for fiscal years 2023 and 2022, E&Y provided no audit-related services to DCM that were for engagements directly related to the registrant’s operations and financial reporting.
(c) | Tax Fees |
For the fiscal years ended December 31, 2023 and 2022, E&Y billed the registrant $110,050 and $91,850 respectively, for professional services rendered for tax compliance, tax advice, and tax planning. Such services consisted of review of the registrant’s income tax returns and tax distribution requirements and analysis related to foreign tax liabilities and passive foreign investment company status. The Audit Committee pre-approved all tax services that E&Y provided to the registrant.
For fiscal years 2023 and 2022, E&Y provided no tax services to DCM that were for engagements directly related to the registrant’s operations and financial reporting.
(d) | All Other Fees |
For the fiscal years ended December 31, 2023 and 2022, E&Y billed the registrant $0 and $0, respectively, for products and services provided, other than the services reported above.
For fiscal years 2023 and 2022, E&Y provided no other services to DCM that were for engagements directly related to the registrant’s operations and financial reporting.
(e)(1) | Audit Committee Pre-Approval Policies and Procedures |
Pursuant to registrant’s Audit Committee Charter (the “Charter”), the Audit Committee is responsible for pre-approving any engagement of the principal accountant to provide non-prohibited services to the registrant, including the fees and other compensation to be paid to the principal accountant, to the extent required by Rule 2-01(c)(7) of Regulation S-X. The Chairperson of the Audit Committee may grant pre-approval for such engagements of $5,000 or less. All such delegated pre-approvals will be presented to the Audit Committee no later than the next Audit Committee meeting.
Pursuant to the Charter, the Audit Committee is also responsible for pre-approving any engagement of the principal accountant, including the fees and other compensation to be paid to the principal accountant, to provide non-audit services to the registrant’s investment adviser (or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant), if the engagement relates directly to the operations and financial reporting of the registrant, to the extent required by Rule 2-01(c)(7) of Regulation S-X. The Chairperson of the Audit Committee may grant pre-approval for engagements of $5,000 or less. All such delegated pre-approvals will be presented to the Audit Committee no later than the next Audit Committee meeting.
(e)(2) | The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X is 0%. |
(f) | Not applicable. |
(g) | Non-Audit Fees |
For the fiscal years ended December 31, 2023 and 2022, E&Y billed the registrant $110,050 and $91,850, respectively, in aggregate non-audit fees. For the fiscal years ended December 31, 2023 and 2022, E&Y billed DCM $0 and $0, respectively, in aggregate non-audit fees.
(h) | Not applicable. |
(i) | Not applicable. |
(j) | Not applicable. |
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1(a) of this form. |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(2) | The certifications for the Registrant’s required by to Rule 30a-2(a) of the Investment Company Act of1940 Act, as amended, are attached hereto as Ex99.Cert. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Driehaus Mutual Funds | ||
By: | /s/ Stephen T. Weber | |
Stephen T. Weber, President | ||
(principal executive officer) | ||
Date: | March 4, 2024 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Stephen T. Weber | |
Stephen T. Weber, President | ||
(principal executive officer) | ||
Date: | March 4, 2024 | |
By: | /s/ Robert M. Kurinsky | |
Robert M. Kurinsky, Vice President and Treasurer | ||
(principal financial officer) | ||
Date: | March 4, 2024 |