Long/Short Credit Approach

Background on the Long/Short Credit Funds

The market environment poses significant challenges for investors including low yields, heightened volatility and below trend return forecasts.
Although duration risks are heightened taxable bond funds have been the investment of choice for mutual fund investors since 2008.
To diversify their fixed income exposures we believe U.S. and ex-U.S. fixed-income investors need to maintain exposure to credit risk while reducing interest rate risks.
We believe sound fundamental credit analysis and a flexible, volatility-managed, long/short hedged portfolio management approach will be the key to producing satisfactory fixed income related performance outcomes, particularly in a rising interest rate environment.
For the Driehaus Long/Short Credit Funds, we target specific volatility levels, manage exposures to interest rates, and seek to deliver absolute returns that are uncorrelated to fixed income and equity benchmarks.
As such, our Credit Funds have carved out an important diversifying niche within investors’ fixed income and alternatives asset allocations.

Long/Short Credit Investment Philosophy

Our Core Beliefs:
Pricing anomalies exist in the global credit markets that can be exploited through a disciplined, relative value approach to portfolio management.
The application of in-depth, fundamental research is paramount in selecting the best investment opportunities.
Attractive returns with modest volatility can be generated by employing a combination of sophisticated investment strategies in different interest rate, credit, macroeconomic and volatility environments.
Investing in highly liquid securities is critical in managing volatility; it allows for nimbleness in portfolio management and enhances the ability to manage risk.

Overview of the Driehaus Long/Short Credit Funds

Driehaus Fund (Fund Inception Date)	Portfolio Concentraton	Duration Target	Volatility Objective
Active Income Fund (11/8/05)*	Flexible, best ideas approach, generally 50-60 trades	+/- 1 year	≤ 5%
Select Credit Fund (9/30/10)	Flexible, best ideas approach, generally 30-40 trades	+/- 3 year	≤ 8%

Trade Types Employed (U.S. Long/Short Credit Funds)
Capital Structure Arbitrage – attempt to exploit pricing inefficiencies between two securities of the same company. Example: buying a debt instrument that is believed to be undervalued while simultaneously shorting a subordinated debt instrument of the same issuer that is believed to be overvalued.
Convertible Arbitrage – attempt to profit from changes in a company's equity volatility or credit quality by purchasing a convertible bond and simultaneously shorting the same issuer's common stock.
Directional Trading – taking long or short positions in equity or corporate debt instruments in anticipation of profiting from movements in the prices of these assets.
Event Driven – attempt to profit from the consummation of a given event, e.g. a takeover, merger, reorganization or conclusion of material litigation, or based upon the perceptions of a potential pending corporate event.
Pairs Trading – attempt to exploit pricing inefficiencies between the securities of two similar companies by buying the security of one company and shorting the security of the other.
Interest Rate Hedging – attempt to reduce the performance impact of rising or falling interest rates
Volatility Hedging – attempt to profit from extreme market volatility

* The Driehaus Active Income Fund commenced operations on June 1, 2009 following the receipt of the assets and liabilities of the Lotsoff Capital Management Active Income Fund through a reorganization into the Driehaus Active Income Fund.

Please consider the investment objectives, risks, fees and expenses of the Fund carefully prior to investing. The prospectus and summary prospectus contain this and other important information about the Fund. To obtain a copy of the prospectus/summary prospectus, please call us at (877) 779-0079. Please read the prospectus and summary prospectus carefully before investing.

To view the risks associated with these Funds, please click here.

Driehaus Securities LLC, Distributor

Related Document:

Related Information:

Background on the Long/Short Credit Funds

Long/Short Credit Investment Philosophy

Our Core Beliefs:

Overview of the Driehaus Long/Short Credit Funds

Driehaus Mutual Funds

Driehaus Institutional Strategies

Performance

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