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Vedder Price
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Vedder Price P.C. |
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222 NORTH LASALLE STREET |
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CHICAGO, Illinois 60601-1003 |
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312-609-7500 |
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FAX: 312-609-5005 |
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CHICAGO NEW YORK CITY WASHINGTON, D.C. |
April 29, 2009
VIA EDGAR
Mr. Vince DiStefano
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
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Re:
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Driehaus Mutual Funds (the Registrant or the Trust) |
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Registration Nos. 333-05265 and 811-07655 |
Dear Mr. DiStefano:
On behalf of the Registrant, this letter is in response to the comments you relayed during our
telephone conference on April 15, 2009, regarding the Registrants Post-Effective Amendment No. 39
to its Registration Statement on Form N-1A filed on March 6, 2009 (the PEA), pursuant to Rule
485(a)(2) under the Securities Act of 1933 for the purpose of registering shares of a new series of
the Trust, the Driehaus Active Income Fund (the Fund). As you requested, this letter is being
filed via EDGAR.
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1. |
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Comment: As the Fund is actively traded, please include disclosure regarding
the risks associated with high portfolio turnover. |
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Response: Please see the following disclosure on page 3 of the Prospectus: |
High Portfolio Turnover. It is anticipated that the Fund will experience
high rates of portfolio turnover, which may result in payment by the Fund of
above-average transaction costs and could result in the payment by
shareholders of taxes on above-average amounts of realized investment gains,
including net short-term capital gains, which are taxed as ordinary income
for federal income tax purposes.
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Comment: Please disclose the risks associated with the Funds long/short
strategy. |
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Response: In addition to the principal risks associated with the types of
securities in which the Fund invests, which are listed under Principal Risk
Factors
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Vedder Price
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beginning on page 2 of the prospectus, the Registrant has moved the following short
sale risk disclosure from the Related Risks section to the Principal Risks
Factors section, as it was also determined to be a principal risk: |
Short Sale Risk. The Fund may make short sales. A short sale involves
selling a security it does not own, in anticipation that the securitys
price will decline. Short sales expose the Fund to the risk that it will be
required to buy the security sold short (also known as covering the short
position) at a time when the security has appreciated in value, thus
resulting in a loss to the Fund.
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Comment: Please add disclosure regarding the risks associated with each type
of derivatives transaction. |
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Response: The Fund has added the following disclosure under the Portfolio
Investments and Other Risk Considerations section on page 9 of the Prospectus: |
Options, Futures and Options on Futures. The Fund may use futures and
options for hedging or speculation. Participation in the options or futures
markets involves investment risks and transaction costs to which the Fund
would not be subject absent the use of these strategies. In particular, the
loss from investing in futures contracts is potentially unlimited. If the
Advisers prediction of movements in the securities and interest rate
markets is inaccurate, the Fund could be in a worse position than if such
strategies were not used.
Risks inherent in the use of options, futures contracts and options on
futures contracts include: (1) imperfect correlation between the price of
options and futures contracts and options thereon and movements in the
prices of the securities being hedged; (2) the fact that skills needed to
use these strategies are different from those needed to select portfolio
securities; and (3) the possible absence of a liquid secondary market for
any particular instrument at any time.
Swap Agreements. The Fund may enter into swap agreements for hedging or
speculation. Swap agreements are agreements between two parties
(counterparties) to exchange payments at specified dates (periodic payment
dates) on the basis of a specified amount (notional amount) with the
payments calculated with reference to a specified asset, reference rate, or
index. The swaps market is largely unregulated. It is possible that
developments in the swaps market, including potential government regulation,
could adversely affect the Funds ability to terminate existing swap
agreements or to realize amounts to be received under such agreements.
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Comment: Please expand the risk disclosure relating to the Funds arbitrage
strategies. |
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Response: With the exception of merger arbitrage, the Registrant believes that the
risks associated with the Funds arbitrage strategies involve the same types of
risks as the Funds other investment strategies. Accordingly, the Registrant has
disclosed this on page 7 of the Prospectus and in connection with the merger
arbitrage risk disclosure on page 9 of the Prospectus. |
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Comment: Please add disclosure relating to counterparty risk. |
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Response: The following disclosure has been added to page 8 of the Prospectus: |
Counterparty Risk. The use of a derivative involves the risk that a loss
may be sustained as a result of the insolvency or bankruptcy of the other
party to the contract (usually referred to as a counterparty) or the
failure of the counterparty to make required payments or otherwise comply
with the terms of the contract.
* * * * *
If you have any questions regarding these responses, please call me at (312) 609-7732.
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Very truly yours, |
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/s/Jennifer M. Goodman |
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JLG/srt |
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cc:
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Michelle L. Cahoon |
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Cathy G. OKelly |
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Karin J. Flynn |