Small Cap Growth Commentary

December 31, 2009

The Driehaus Small Cap Growth Composite (the “Strategy”) outperformed its benchmark, the Russell 2000 Growth Index (the “Index”), during the fourth quarter by 458 basis points.

Performance of the Strategy benefited from holdings in the Industrials and Energy sectors. Key detractors from performance for the quarter included stock selection and an underweight allocation to the Consumer Staples sector versus the Index.

Changes in sector weightings over the quarter were driven by both company-specific and industry-wide factors. The Strategy increased its exposure to the Industrials and Energy sectors. By quarter-end, the Information Technology sector represented the largest weighting in the Strategy.

During the quarter, the Strategy identified many interesting themes including: energy companies (specifically exploration and production (E&Ps) and service companies) benefitting from the strong growth in terms of new reserves and production (for E&Ps) and increased capital expenditures and drilling activity for select oil and gas service companies in the shale regions of the U.S.; technology companies, as the wireless Internet continues to be a powerful trend benefiting many companies in areas such as semiconductors, network equipment, security and software; financial companies (specifically regional banks) are an attractive area as many banks face improving credit trends, favorable net interest margins, and consolidation as healthy banks are often acquiring failed banks via FDIC brokered deals; and the auto sector is returning to health and many auto suppliers are well positioned for growth. Auto sales and production continue to improve from very depressed levels last year. At the same time, inventories remain very low and the restructured industry has, for the first time, removed major amounts of supply and capacity from the industry.

Exposure to the Health Care and Information Technology sectors was lower at the end of the fourth quarter relative to the previous quarter. The reduction in exposure to these sectors resulted from a combination of industry-specific weaknesses and company-specific fundamental earnings disappointments.

The Strategy maintained an overweight commitment to holdings in the Consumer Discretionary and Energy sectors and was underweight in exposure to the Health Care and Information Technology sectors relative to the Index.

NOTES

Sources: Driehaus Capital Management LLC, FactSet, Morgan Stanley Capital International and Standard & Poor’s Global Industry Classification Standard, Russell Indices, and the Wall Street Journal.

The performance numbers represent a composite of small cap growth accounts managed by Driehaus Capital Management LLC.  These numbers are estimated for the period as all underlying accounts have not yet been reconciled. All rates of return include reinvested dividends and other earnings and are net of fees and brokerage commissions. The performance data shown above represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted.

The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The performance data includes reinvested dividends. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index.