Nikko AM ARK Global Disruptive Innovt (NIK1854AU) Report & Performance

The Fund outperformed broad based global equities during the month (net).

Key contributors to absolute performance:

• Roku rallied after the company released its secondquarter results. Roku’s platform revenue grew 11% year-over-year, as active accounts increased 16% to 73.5 million and streaming hours jumped 21%. Roku’s second-quarter results reaffirm ARK’s conviction in its potential to revolutionize digital streaming and displace linear TV incumbents. Moreover, the company also announced a partnership with Shopify to bring shoppable ads to its users earlier in the month.
• Coinbase and other crypto-related stocks like Block traded up after the company relisted Ripple’s XRP after a landmark ruling by a U.S. District Court, which states that the coin is not a security in terms of sales to the general public. ARK maintains conviction in Coinbase’s leadership across the crypto ecosystem.
• DraftKings appreciated after an analyst upgraded the stock, noting a materially faster ramp of new state openings and higher online betting from parlays and game mix.
• Gingko Bioworks shares rallied after the U.S. Intelligence Community awarded it a contract to develop a biosensor that can track the cellular histories of the microbial genome. As part of the collaboration, Gingko also intends to develop processes to retrieve this data so that the microbe’s past exposures can be analyzed.

Key detractors from absolute performance:

• Roblox traded down following relatively little company specific news. Roblox provides a creatorfirst digital entertainment platform and a 3D engine, both of which allow third-party developers around the world to create games and experiences for users.
• Materialise shares fell following a earnings miss. Second quarter earnings disappointed, with GAAP EPS of -$0.01, down 150% since reporting $0.02 per share in the same period a year ago, despite yearover-year revenue growth of 11.6%. The company maintained its previous revenue and adjusted EBITDA guidance for the rest of 2023. Materialise is a company in the 3D printing / additive manufacturing sector.
• 3D Systems continued to trade down after it announced its intention to acquire Stratasys last month. The company is targeting Aug 4th for the completion of talks with Stratasys. ARK continues to monitor these developments closely.
• Beam Therapeutics traded down on relatively little company-specific news. Beam Therapeutics is a clinical stage pharmaceutical company developing gene editing therapies that employ a cutting-edge, next generation base-editing technique, which could be beneficial for allowing less off-target edits.
• Pacific Biosciences of California traded down on relatively little company-specific news. ARK believes that PacBio, which is already the dominant supplier of long-read sequencing (“LRS”) instruments and consumables, is well positioned to capitalise on what ARK predicts will be a continued growth trend in the demand for LRS.

The Fund outperformed broad based global equities during the month (net).

Key contributors to absolute performance:

• Tesla shares rallied after the company opened its Supercharger network to General Motors and Ford. Later in the month, SAE International, an automotive industry body that sets and reviews engineering standards, announced that it would standardize Tesla’s North American Charging Standard connector.

• Unity shares soared after the company unveiled its artificial intelligence (AI) marketplace. The stock was also upgraded to “outperform” by an analyst, citing a meaningful mobile cross-sell opportunity, cost synergies, and an increasing total addressable market.

Key detractors from absolute performance:

• CRISPR Therapeutics detracted from performance this month. CRISPR and Vertex Pharmaceuticals announced that their Biologics License Applications for gene-edited blood disorder candidate exa-cel has been accepted by the FDA. The FDA has issued a Priority Review for its BLA in severe sickle cell disease with a target action date on December 8, 2023, and a standard review for that in transfusiondependent beta-thalassemia with a target action date on March 30, 2024.

• Twilio depreciated on little company specific news. The company agreed to sell its Value First business and allocate its resources to other strategic priorities. Twilio is a leading provider of customer-focused IP and programmatic communications with developerfriendly APIs, global connectivity, and industryleading reliability.

The Fund outperformed broad based global equities during the month (net).

Key contributors to absolute performance:
• Tesla shares rallied following a positive response to the company’s annual shareholder meeting, where co-founder J.B. Straubel was elected to the board of directors. The company reaffirmed its promise to deliver its first Cybertrucks this year, and announced that the company will begin advertising.

• CRISPR Therapeutics shares rallied on the back of strong first quarter results. The Swiss biotech reported $100 million in revenue from its collaboration with Vertex Pharmaceuticals ahead of a potential FDA review for the gene-editing therapy exa-cel.

Key detractors from absolute performance:

• Shares of Teladoc traded down on relatively little company-specific news. ARK believes Teladoc’s focus on data science at scale across multiple care categories (e.g. acute, ambulatory, and chronic settings) will offer the broadest, most entrenched care package in the virtual healthcare market.

• 2U missed its first quarter earnings and faces some regulatory uncertainty, which caused the stock to depreciate. In ARK’s view, 2U’s cloud infrastructure offers the best online education platform in the US and perhaps the world. ARK believes that its acquisition of edX, a massive online course provider created by Harvard and MIT, will be game-changing. 2U’s ability to help institutions lower costs should put it in a good light as the US reviews the regulatory framework around education.

The Fund underperformed broad based global equities during the month (net).

Key contributors to absolute performance:
• DraftKings shares appreciated on the back of Wall Street analysts becoming more optimistic about the company’s first quarter earnings. Given its plans to launch in Puerto Rico, ARK believes DraftKings will deliver another year of rapid growth. DraftKings is a sports betting, iGaming, and fantasy sports platform.
• Shares of CRISPR Therapeutics and other geneediting names, like Intellia Therapeutics, rallied as Wall Street analysts issued bullish views, noting that the sector had been disproportionately punished. Moreover, the company, alongside Vertex Pharmaceuticals, also completed a rolling submission of a Biologics License Application to the FDA for exagamglogene autotemcel (exa-cel) for sickle cell disease and transfusion-dependent beta-thalassemia.
• Schrodinger shares rallied on the back of little company-specific news. Schrodinger specializes in developing computational tools and software for drug discovery and materials science.
• Teladoc shares traded up after it announced the launch of its provider-based care for weight management and prediabetes for the third quarter. Moreover, the company beat its first quarter earnings, citing a 11% YoY revenue growth.

The Fund outperformed broad based global equities during the month (net).

Key contributors to absolute performance:
• Tesla shares saw gains on signs that recent price cuts are spurring demand for its Model Y. The stock also rallied after Ford announced that it halted production and shipments of its electric F-150 Lightning pickup due to a battery issue. Lastly, the Mexico President held a call with Tesla in anticipation of the announcement of a new plant near Monterrey. This will be one of eight new Gigafactories as part of the company’s goal to produce 20 million vehicles a year by the end of 2030.
• Roku shares rallied after the company delivered a fourth quarter earnings beat, topping Wall Street expectations. During the quarter active accounts jumped 16% year over year, and streaming hours rose 23% year over year. The company also reaffirmed its commitment to deliver positive adjusted EBITDA in 2024 through a combination of operating expense control and revenue growth.

Key detractors from absolute performance:
• Shopify traded down after the company reported fourthquarter earnings. Gross merchandise volume (GMV) across Shopify merchants and total revenue grew 13% and 25%, respectively, on a year-over-year basis. For the first quarter, management expects total revenue growth to decelerate to the high teens. That said, Shopify has developed several business lines that could reaccelerate growth—Shopify Fulfilment Network and Shopify Components—as could the continued adoption of Shop Pay and a cyclical rebound in ecommerce demand.
• Unity Software traded down after the company’s fourth quarter report, which included recently acquired ironSource, revenue growth was 43% year-over-year and, according to management, will accelerate in the range of 47% to 50% in the first quarter and 47% to 58% for the year, both growth rates were lower than consensus expectations. Management explained that the assumptions behind those forecasts are conservative, including no recovery in the mobile gaming market even though it seems to have stabilized. Meanwhile, strong execution has increased non-gaming to 30% of Create revenue. ARK’s conviction remains high that Unity will maintain leadership as the 2D and 3D asset engine and monetization platform of choice for developers across many verticals.

The Fund outperformed broad based global equities during the month (net).
Key contributors to absolute performance:
• Roku shares rallied after the company announced it surpassed 70 million active accounts globally, marking a 16% YoY growth. Roku also announced plans to release its own line of TVs this year. ARK believes Roku is a dominant player in the connected TV space, and it continues to operate the most successful independent TV OS in the U.S.
• Tesla rallied on the back of strong fourth quarter results, where Elon Musk told investors that Tesla had the ability to produce up to 2 million vehicles this year, assuming no hiccups. On that note, the company confirmed that the Cybertruck is on track to start production later in the year in its Austin, Texas factory. The company also provided an optimistic outlook on profits, citing that hardware-related profits are expected to be accompanied by an acceleration of software-related profits. This aligns with ARK’s thesis on autonomous driving. Lastly, the company is slated to share details on its next generation vehicle, which ARK believes could be a purpose-built robotaxi, during its Investor Day in March.

Key detractors from absolute performance:
• Cerus traded down after the company reported earnings and described 2023 as a “bridge year” in which the outlook remains unclear. In ARK’s view, foreign exchange (FX) pressures and inventory issues in the international blood industry are weighing on the short-term outlook. Cerus is a biomedical products company supplying hardware and consumables under its flagship blood transfusion safety brand, INTERCEPT.
• Prime Medicine traded down on relatively little company specific news. Prime Medicine is a biotechnology company committed to delivering a new class of differentiated, onetime, curative genetic therapies to address the widest spectrum of diseases.