<PAGE> 1
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
The Driehaus International Growth Fund returned 6.8% for the period October
28, 1996 to March 31, 1997, which compared to the 1.0% return for the EAFE Index
during the period October 31, 1996 to March 31, 1997.
European markets have been very strong so far this year, although their
performance, for U.S. investors has been mostly offset by the dollar's strong
rise. We view the strength of these markets and the strength of the dollar as
being related. In particular, some of the best performing companies have been
those that have a large portion of their earnings in dollars. This includes the
auto sector, where we own Porsche, Volvo and BMW.
Southeast Asian markets have been disappointing performers so far this year.
While we continue to find shares that are attractive, we believe there are some
important reasons to be selective in these markets. In particular, the recent
experience of the Thai stock market is important to consider. After being a top
performer, this market has fallen more than 50% from its high. The primary
reason has been excess speculation in property and other assets, which in turn
led to problems in the banking and financial sectors. The potential for similar
problems exists in the other "tiger" economies as well, although we do not
expect any imminent repeat of the Thai experience.
Other emerging markets continue to perform well, however. The fund has had a
big weighting in Brazil this year, which has done very well. The Latin American
economies in general have shown very strong performances recently. Following the
crash of the Mexican market in 1994, it appeared to many that the economic
reforms begun early in the decade were not going to continue. In fact, there has
been no trend to re-nationalize companies or impose new trade barriers, and
market-oriented reforms have for the most part continued. It is extremely
positive that these economies have survived this "test", and we expect excellent
performance from these markets going forward.
I would like to highlight the following stocks in our portfolio which
demonstrate how we are implementing our investment style around the world.
Lippo Securities: Lippo Securities, a recent purchase, is one of the largest
stockbrokers in Indonesia. The Indonesian stock market has undergone a dramatic
boom recently with retail investors finally starting to invest in stocks. Lippo
is one of the largest retail brokers in Indonesia and has benefited from a 60%
surge in trading volume. The market has subsequently raised its net profits
estimates by a large margin and the stock has been an excellent performer.
FEMSA: Femento Economica Mexicana SA (FEMSA) produces, distributes and sells
soft drinks and beer. The company sells its beer in Mexico and exports to 63
countries throughout the world. FEMSA is a controlling shareholder of Coca Cola
FEMSA which bottles and sells Coca Cola products in Mexico and Argentina. Fourth
quarter results were outstanding with revenues advancing 16% while operating
results were up 78%. Operating margins improved from 8.3% during Q4 1995 to
12.8% during Q4 1996.
We appreciate your support.
Sincerely,
William R. Anderson
William R. Andersen
Portfolio Manager
April 22, 1997
Investment Philosophy: We seek to achieve superior investment returns primarily
by investing in companies outside the U.S. that are currently demonstrating
rapid growth in their sales and earnings and which, in our judgment, have the
ability to continue or accelerate their growth rates in the future. We manage
our portfolio actively (above average turnover) to insure that we are fully
invested in companies that meet these criteria.
1
<PAGE> 2
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DRIEHAUS EAFE
-------- ----
<S> <C> <C>
Year ended 3/31/97 13.21% 1.45%
Three Years ended 3/31/97 15.59% 6.53%
Five Years ended 3/31/97 18.27% 10.57%
Since Inception (7/1/90 - 3/31/97) 15.92% 5.36%
</TABLE>
Performance 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.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DRIEHAUS EAFE
(FISCAL YEAR COVERED)
<S> <C> <C>
JULY 1990 100000.00 100000.00
86601.02 78801.44
89754.80 87098.93
MAR 1991 102614.03 93572.94
105602.44 88466.98
105218.54 96051.34
109186.45 97660.58
MAR 1992 117066.13 86071.08
125981.92 87890.81
118237.08 89215.53
118560.94 85772.87
MAR 1993 135189.08 96054.29
142779.49 105715.74
163310.68 112727.08
205951.97 113701.00
MAR 1994 175416.95 117675.75
170317.78 123687.96
190876.43 123807.75
177912.96 122544.75
MAR 1995 169278.50 124827.48
186040.29 125733.79
207509.22 130975.58
210086.28 136279.28
MAR 1996 239280.38 140217.08
268838.01 142435.56
253344.15 142256.88
261497.17 144520.10
MAR 1997 270881.64 142256.54
</TABLE>
The quoted performance data includes the performance of the Driehaus
International Large Cap Fund, L.P. (the "Partnership"), the Fund's predecessor,
for the periods before the Fund's registration statement became effective. The
Partnership was established on July 1, 1990 and the Fund succeeded to the
Partnership's assets on October 28, 1996. The Partnership was not registered
under the Investment Company Act of 1940 and thus was not subject to certain
investment and operational restrictions that are imposed by the 1940 Act. If the
Partnership had been registered under the 1940 Act, its performance may have
been adversely affected. The Partnership's performance has been restated to
reflect the expenses of the Fund.
Performance data presented measures 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 graph comparing the results of a $100,000 investment in the Fund, on
July 1, 1990 (the date of the Partnership's inception), with all dividends and
capital gains reinvested, with the EAFE Index with dividends reinvested.
The EAFE Index (Morgan Stanley Capital International, Europe, Australia, Far
East Index) is an unmanaged index that is a generally accepted benchmark for
major overseas markets. Data is in U.S. dollars and includes reinvestment of
dividends. Source: Morgan Stanley Capital International.
2
<PAGE> 3
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
- ---------------------------------------------------------
EQUITY SECURITIES -- 98.0%
- ---------------------------------------------------------
EUROPE -- 37.2%
UNITED KINGDOM -- 5.7%
Dr. Solomon Group
PLC-ADR**................ 65,000 $ 1,600,625
Flextech PLC**............. 145,300 1,810,929
Iona Technology
PLC-ADR**................ 100,000 2,012,500
Millennium & Copthorne
Hotels PLC............... 200,000 1,226,788
PizzaExpress PLC........... 160,000 1,603,133
-----------
8,253,975
-----------
FINLAND -- 5.5%
Huhtamki OY................ 32,600 1,530,151
Raision Tehtaat OY......... 41,500 3,796,738
TT Tieto OY................ 30,000 2,571,599
-----------
7,898,488
-----------
SWEDEN -- 4.6%
Mo Och Domsjo AB........... 60,800 1,931,782
Pricer AB**................ 63,750 2,595,719
WM Data AB................. 24,000 2,185,110
-----------
6,712,611
-----------
GERMANY -- 3.8%
Porche AG.................. 3,150 3,612,428
SAP AG (Pref.)............. 11,799 1,817,436
-----------
5,429,864
-----------
NORWAY -- 3.7%
Nera ASA................... 38,950 1,897,150
Tomra Systems ASA.......... 185,000 3,502,695
-----------
5,399,845
-----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
- ---------------------------------------------------------
RUSSIA -- 3.1%
Rostelecom**............... 210,000 $ 825,300
Rostelecom (Pref.)**....... 300,000 867,000
Surgutneftegaz**........... 1,200,000 986,400
Unified Energy System**.... 4,000,000 912,000
Unified Energy System
(Pref.)**................ 5,050,000 949,400
-----------
4,540,100
-----------
SPAIN -- 2.7%
Tele Pizza SA**............ 86,500 3,922,766
-----------
FRANCE -- 2.6%
Dassault Systemes S.A. --
ADR**.................... 60,000 3,742,500
-----------
CZECH REPUBLIC -- 1.3%
SPT Telekom AS**........... 14,800 1,925,120
-----------
IRELAND -- 1.1%
CBT Group PLC -- ADR**..... 30,500 1,662,250
-----------
TURKEY -- 1.1%
Dogan Sirketler Grubu
Holdings AS.............. 43,949,000 1,544,843
-----------
NETHERLANDS -- 0.8%
ASM Lithograph Holding
NV**..................... 16,700 1,110,550
-----------
HUNGARY -- 0.7%
Richter Gedeon Rt. --
GDR**.................... 14,700 1,010,625
-----------
ITALY -- 0.5%
Telecom Italia Mobile SpA.. 284,000 743,240
-----------
Total Europe............... 53,896,777
-----------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
3
<PAGE> 4
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
- ---------------------------------------------------------
FAR EAST -- 31.4%
MALAYSIA -- 9.9%
Berjaya Sports Toto BHD.... 663,000 $ 3,845,491
IJM Corp. BHD.............. 141,000 377,674
Lityan Holdings BHD........ 88,000 1,311,475
MBF Capital BHD............ 1,914,000 3,931,768
Multi-Purpose Holdings
BHD...................... 877,000 2,084,142
Star Publications.......... 378,000 1,659,564
UMW Holdings BHD........... 222,000 1,171,386
-----------
14,381,500
-----------
HONG KONG -- 6.0%
China Everbrite -- IHD Pac
Ltd...................... 2,048,000 1,520,779
China Overseas Land &
Investment............... 4,776,000 2,790,945
China Resources Enterprises
Ltd...................... 660,000 1,483,069
Cosco Pacific Group........ 730,000 1,018,157
Guangnan Holdings.......... 1,200,000 1,689,181
Silver Grant International
Industries Ltd........... 219,000 234,742
-----------
8,736,873
-----------
INDONESIA -- 6.0%
PT Bank Dagang Nasional
Indonisia (Foreign)...... 832,500 859,949
PT Lippo Securities
(Local).................. 5,000,000 3,495,409
PT Ramayana Lestari Sentosa
(Local)**................ 300,000 723,079
PT Ramayana Lestari Sentosa
(Foreign)**.............. 1,321,500 3,185,169
PT Steady Safe
Transportation Service
(Foreign)................ 293,300 385,599
-----------
8,649,205
-----------
SINGAPORE -- 3.9%
Datacraft Asia Ltd......... 1,260,000 2,772,000
Steamers Maritime
Holdings................. 1,450,000 1,494,217
Thakral Corporation Ltd.... 1,340,000 1,353,400
-----------
5,619,617
-----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
- ---------------------------------------------------------
PHILIPPINES -- 3.4%
Bank Of Philippine
Islands.................. 143,000 $ 1,032,295
Belle Corp.**.............. 3,687,500 1,176,862
International Container
Terminal Services, Inc... 1,082,500 658,055
La Tondena Distillers
Inc...................... 726,000 2,027,394
-----------
4,894,606
-----------
JAPAN -- 2.0%
Sony Corp.................. 20,000 1,442,172
TDK Corp................... 22,000 1,471,645
-----------
2,913,817
-----------
TAIWAN -- 0.2%
ASE Test Ltd.**............ 10,000 218,750
-----------
Total Far East............. 45,414,368
-----------
SOUTH AMERICA -- 12.2%
BRAZIL -- 9.4%
Companhia Paulista de Forca
e Luz**.................. 9,960,000 1,374,937
Eletricidade De Sao Paulo
S.A.**................... 8,190,000 1,589,535
Ericsson Telecommunicacoes
S.A...................... 41,796,000 1,116,972
Lojas Arapua S.A........... 60,000,000 1,455,618
Petroleo Brasileiro S.A.... 10,800,000 2,147,465
Telecommunicacoes
Brasileiras S.A.......... 29,900,000 2,782,057
Telecommunicacoes De Sao
Paulo S.A................ 8,280,000 2,245,076
Telecommunicacoes Rio de
Janeiro S.A.............. 3,862,000 562,159
Vitech America, Inc.**..... 25,000 343,750
-----------
13,617,569
-----------
CHILE -- 2.1%
Santa Isabel SA............ 100,000 3,000,000
-----------
PERU -- 0.7%
Telefonica De Peru S.A..... 50,000 1,100,000
-----------
Total South America........ 17,717,569
-----------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
4
<PAGE> 5
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
- ---------------------------------------------------------
NORTH AMERICA -- 11.6%
MEXICO -- 7.7%
Desc SA de CV.............. 156,000 $ 998,557
Femento Economica Mexicano
SA....................... 720,000 3,018,262
Grupo Financiero Banamex
ACCIVAL, SA de CV........ 770,000 1,814,948
Grupo Iusacell S.A. --
ADR**.................... 158,000 1,777,500
Panamerican Beverage Inc... 38,000 2,142,250
San Louis Corp. S.A. --
CPO...................... 240,000 1,439,849
-----------
11,191,366
-----------
CANADA -- 3.1%
Abacan Resources Corp.**... 133,000 1,207,056
Cott Corp.................. 250,000 2,460,938
Gulfstream Resources Ltd... 81,000 812,194
-----------
4,480,188
-----------
BERMUDA -- 0.8%
Central European Media
Enterprises Ltd.**....... 33,500 1,130,624
-----------
Total North America........ 16,802,178
-----------
AFRICA -- 3.3%
SOUTH AFRICA -- 3.3%
Dimension Data Holdings
Ltd.**................... 331,400 961,437
First Nationwide Bank...... 320,000 1,963,847
Investec Bank Ltd.......... 16,500 515,510
Nedcor Ltd................. 78,100 1,324,615
-----------
4,765,409
-----------
Total Africa............... 4,765,409
-----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
- ---------------------------------------------------------
MIDDLE EAST -- 2.2%
ISRAEL -- 2.2%
Bank Leumi Le, Israel...... 710,579 $ 1,173,316
Gilat Satellite Networks
Ltd.**................... 40,000 1,165,000
Memco Software Ltd.**...... 51,000 905,250
-----------
3,243,566
-----------
Total Middle East.......... 3,243,566
-----------
Total Equity Securities
(cost $127,190,473)...... 141,839,867
-----------
RIGHTS & WARRANTS -- 0.4%
- ---------------------------------------------------------
INDONESIA -- 0.3%
PT Bank Dagang Nasional
Indonesia (Rights)**..... 624,375 382,199
-----------
HONG KONG -- 0.1%
Guangnan Holdings
(Warrants)**............. 207,142 135,091
-----------
Total Rights & Warrants
(Cost $200,354).......... 517,290
-----------
- ---------------------------------------------------------
TOTAL INVESTMENTS (COST
$127,390,827*)............. 98.4% 142,357,157
Other Assets in Excess of
Liabilities................ 1.6% 2,393,641
---------- -----------
Net Assets................... 100.0% 144,750,798
=========================================================
* Aggregate cost for federal income tax purposes was
$125,188,474. The aggregate gross unrealized
appreciation (depreciation) for all securities is as
follows:
</TABLE>
<TABLE>
<CAPTION>
Book Basis Tax Basis
---------- ---------
<S> <C> <C>
Gross Appreciation.......... $17,102,483 $19,323,499
Gross Depreciation.......... 2,136,153 2,154,815
----------- -----------
Net Appreciation........ $14,966,330 $17,168,684
=========== ===========
</TABLE>
** Non-income producing security.
Notes to Financial Statements are an integral part of this Schedule.
5
<PAGE> 6
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
FEBRUARY 28, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
-------- ----------
<S> <C>
Agricultural.......................... 1.3%
Appliances............................ 1.0%
Automobiles........................... 3.3%
Banking............................... 3.3%
Beverages............................. 6.7%
Broadcast & Publishing................ 3.2%
Computer Manufacturers................ 0.2%
Computer Software..................... 10.3%
Construction.......................... 0.3%
Data Processing....................... 1.8%
Drugs................................. 0.7%
Electric Equipment.................... 2.9%
Electronic Systems/Devices............ 2.0%
Energy Sources........................ 3.6%
Financial Services.................... 8.1%
Foods & Households.................... 1.1%
Forest Products....................... 1.3%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
-------- ----------
<S> <C>
Leisure & Tourism..................... 3.5%
Machinery............................. 3.2%
Mining................................ 1.0%
Multi-Industry........................ 3.2%
Real Estate........................... 3.9%
Restaurants........................... 3.8%
Retailing - Foods..................... 4.7%
Retailing - Goods..................... 4.7%
Semi Conductors/Components............ 0.1%
Telecommunications.................... 13.6%
Telecommunications Equipment.......... 0.9%
Transportation........................ 2.0%
Transportation Shipping............... 0.5%
Utilities............................. 2.2%
Other Assets Less Liabilities......... 1.6%
------
TOTAL................................. 100.0%
======
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
6
<PAGE> 7
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For the period October 28, 1996 (commencement of operations) through February
28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
The Table below sets forth financial data for a share of capital stock
outstanding throughout the period presented.
<TABLE>
<S> <C>
Net asset value, beginning of period........................ $ 10.00
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss....................................... $ (0.04)
Net gains on investments (both realized and unrealized)... 1.16
--------
Total from investment operations........................ 1.12
--------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... --
Distributions from capital gains.......................... --
--------
Total distributions..................................... --
--------
Net asset value, end of period.............................. $ 11.12
========
Total Return................................................ 11.20%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...................... $144,751
Ratio of expenses to average net assets................... 2.01%*
Ratio of net investment loss to average net assets........ (1.34)%*
Portfolio turnover........................................ 135.53%**
</TABLE>
- --------------------------------------------------------------------------------
* Annualized
** Not Annualized
Average commission rate paid per share on stock transactions for the period
ended February 28, 1997 was $0.0027. Foreign commissions usually are lower than
U.S. commissions when expressed as cents per share due to the lower per share
price of many non-U.S. securities.
This report has been prepared for Shareholders and may be distributed to others
only preceded or accompanied by a current prospectus.
Notes to Financial Statements are an integral part of this Schedule.
7
<PAGE> 8
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (Cost $127,390,827)........ $142,357,157
Cash.................................................... 893,021
Receivables:
Dividends.......................................... 18,318
Interest........................................... 49,988
Investment securities sold......................... 4,340,333
Prepaid insurance....................................... 20,578
Deferred organizational costs........................... 92,434
------------
- ----------------------------------------------------------------------------
TOTAL ASSETS................................... 147,771,829
------------
- ----------------------------------------------------------------------------
LIABILITIES:
Investment securities purchased......................... 2,277,934
Accrued expenses........................................ 176,803
Payable to affiliates................................... 566,294
------------
- ----------------------------------------------------------------------------
TOTAL LIABILITIES.............................. 3,021,031
------------
- ----------------------------------------------------------------------------
NET ASSETS.................................................. $144,750,798
============
SHARES OUTSTANDING.......................................... 13,015,084
============
NET ASSET VALUE PER SHARE................................... $ 11.12
============
============================================================================
NET ASSETS CONSISTED OF THE FOLLOWING AT FEBRUARY 28, 1997:
Paid-in capital......................................... $133,449,095
Undistributed net investment loss....................... (492,085)
Undistributed net realized loss*........................ (2,837,441)
Undistributed net realized foreign exchange loss........ (334,839)
Unrealized foreign exchange loss........................ (262)
Unrealized appreciation on investments.................. 14,966,330
------------
NET ASSETS..................................... $144,750,798
============
* Undistributed net realized gain for federal income tax
purposes was $588,563.
============================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
8
<PAGE> 9
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the period October 28, 1996 (commencement of operations) through February
28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends.......................................... $ 119,888
Interest........................................... 125,374
-----------
- ---------------------------------------------------------------------------
Total income..................................... 245,262
-----------
- ---------------------------------------------------------------------------
Expenses:
Investment advisory fee............................ 548,536
Administration fee (net of waived fees of
$11,100)........................................... 45,749
Professional fees.................................. 23,645
Federal and state registration fees................ 15,154
Custodian fee...................................... 61,246
Transfer agent fees................................ 900
Trustees' fees..................................... 13,052
Amortization of organization costs................. 7,566
Miscellaneous...................................... 21,499
-----------
- ---------------------------------------------------------------------------
Total expenses................................... 737,347
-----------
- ---------------------------------------------------------------------------
Net investment loss....................... (492,085)
-----------
- ---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from security transactions............ (2,837,441)
Net realized foreign exchange loss...................... (334,839)
Net unrealized foreign exchange loss.................... (262)
Change in unrealized appreciation of investments........ 14,966,330
-----------
- ---------------------------------------------------------------------------
Net gain on investments................... 11,793,788
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $11,301,703
===========
===========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
9
<PAGE> 10
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period October 28, 1996 (commencement of operations) through February
28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss................................ $ (492,085)
Net realized loss from security transactions....... (2,837,441)
Net realized foreign exchange loss................. (334,839)
Net unrealized foreign exchange loss............... (262)
Change in unrealized appreciation of investments... 14,966,330
------------
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations................................... 11,301,703
------------
- -----------------------------------------------------------------------------------------------
Capital share transactions:
Net increase in net assets derived from capital
share transactions............................... 133,348,683
------------
Total increase in net assets....................... 144,650,386
------------
- -----------------------------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------------------------
Beginning of period..................................... 100,412
------------
End of period........................................... $144,750,798
============
===============================================================================================
</TABLE>
Capital share transactions are as follows:
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
Shares purchased................................... 13,027,460 $133,578,683
Shares reinvested.................................. -- --
Shares redeemed.................................... (22,417) (230,000)
---------- ------------
Net increase from capital share transactions... 13,005,043 $133,348,683
========== ============
=============================================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
10
<PAGE> 11
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Driehaus International Growth Fund (the "Fund") is a series of the
Driehaus Mutual Funds (the "Trust"), an open-end management investment company.
The Trust is a Delaware business trust organized under an Agreement and
Declaration of Trust dated May 31, 1996 and may issue an unlimited number of
full and fractional units of beneficial interest (shares) without par value. The
Fund was seeded on September 13, 1996 with the sale and issuance of 10,000
shares of its common stock to Richard H. Driehaus, the Chairman of the Board and
President of the Fund. The Fund commenced operations on October 28, 1996, as the
successor to the assets of the Driehaus International Large Cap Fund, L.P. (the
"Partnership"), a limited partnership organized on July 1, 1990, through a
transfer of $85,727,972 of assets in exchange for 8,572,797.2 shares of the
Fund.
The Fund's investment objective is to maximize capital appreciation by
investing primarily in the equity securities of foreign companies with market
capitalizations of more than $300 million (U.S.) using growth style investment
criteria.
The year end of the Fund is August 31.
SECURITIES VALUATION AND TRANSACTIONS
Depending upon local convention or regulation, equity securities may be
valued at the last sale price, last bid price, or the mean between the last bid
and asked prices as of, in each case, the close of the appropriate exchange or
other designated time. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Trust's Board of Trustees.
Securities transactions are accounted for on trade date. The cost of
investments sold is determined by the use of specific identification method for
both financial reporting and income tax purposes. Interest income is recorded on
an accrual basis. Dividend income, net of non-reclaimable foreign taxes
withheld, is recorded on the ex-dividend date. For the period from inception to
February 28, 1997, $30,333 of non-reclaimable foreign taxes were withheld.
The Fund determines income and expenses, daily. This change in net asset
value is allocated daily.
FEDERAL INCOME TAXES
No provision is made for Federal income taxes as it is the Fund's intention
to qualify as a regulated investment company and to make all the required
distributions to its shareholders in amounts sufficient to relieve the Fund from
all or substantially all Federal income and excise taxes.
FOREIGN CURRENCY TRANSLATION
Foreign currency is translated into U.S. dollar values based upon the
current rates of exchange on the date of the Fund's valuation. Net realized
foreign exchange gains or losses which are reported by the Fund result from
sales of foreign currencies, currency gains and losses arising from changes in
exchange rates between the trade and settlement dates on forward contracts
underlying securities transactions, and the difference between the amounts
accrued for dividends, interest, and reclaimable foreign withholding 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.
11
<PAGE> 12
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DRIEHAUS INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
The Fund does not isolate that portion of the results of operations which
results from fluctuations in foreign exchange rates on investments held. These
fluctuations are included with the net realized and unrealized gains or losses
which result from changes in the market prices of investments.
DEFERRED ORGANIZATION COSTS
Organization costs incurred by the Fund have been deferred and are amortized
over a period of 60 months from the date the Fund commenced operations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of net increases or decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
B. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND TRANSACTIONS WITH
AFFILIATES
Richard H. Driehaus, the Chairman and President of the Fund, is also the
Chairman of the Board, director, and sole shareholder of Driehaus Capital
Management, Inc., a registered investment adviser, and of Driehaus Securities
Corporation, a registered broker-dealer.
Driehaus Capital Management, Inc. ("DCM") serves as the Fund's investment
adviser. In return for its services to the Fund, DCM receives a monthly fee,
computed and accrued daily at an annual rate of 1.5% of average net assets. The
amount accrued to DCM during the period from inception to February 28, 1997 is
$548,536 and is included in Payable to affiliates. DCM agreed to reduce its fee
and absorb other operating expenses to the extent necessary to ensure that the
total Fund operating expenses (other than interest, taxes, brokerage commissions
and other portfolio transaction expenses, capital expenditures and extraordinary
expenses) will not exceed 2.25% of the average net assets of the Fund on an
annual basis for the first twelve months of the Fund's operations after the
effective date of the Fund's registration statement. As of February 28, 1997, no
fees have yet been absorbed.
PFPC Inc., a wholly owned, indirect subsidiary of PNC Bank, serves as the
Fund's administrative and accounting agent. In compensation for its services,
PFPC receives a monthly fee based upon average net assets, with a minimum
monthly fee of $9,500, plus out-of-pocket expenses. PFPC has agreed to waive a
portion of its minimum fees during the first year of the Fund's operations. As
of February 28, 1997, $11,100 has been waived. PFPC Inc. also acts as the Fund's
transfer agent and dividend disbursing agent.
DCM advanced certain organization costs to the Fund. As of February 28,
1997, $17,758 of organizational costs advanced is included in Payable to
affiliates.
Certain officers of the Trust are also officers of the Adviser. No such
officers received compensation from the Fund.
Driehaus Securities Corporation ("DSC") acts as the Fund's distributor and
underwriter. In addition, DSC executes all domestic exchange agency trades for
the Fund in American Depository Receipts (ADR'S) or other publicly traded equity
interests representing shares in foreign companies and, if applicable, any U.S.
securities the Fund might trade. For these brokerage services, DSC charges
commissions at a rate equal to 8 cents/share. For the period ended February 28,
1997, DSC received $74,960 in commissions. A portion of these commissions is
paid to DSC's clearing broker for clearing charges.
12
<PAGE> 13
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DRIEHAUS INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
C. INVESTMENT TRANSACTIONS
The aggregate purchases, excluding the securities transferred from the
Partnership, and sales of investments securities, other than short-term
obligations, for the period October 28, 1996 through February 28, 1997, were as
follows:
<TABLE>
<S> <C> <C>
Purchases -- $188,868,026
Sales -- $141,202,069
</TABLE>
D. RESTRICTED SECURITIES
The Fund may purchase securities that have been privately placed but that
are eligible for purchase and sale under rule 144A under the Securities and
Exchange Act of 1933. At February 28, 1997, there were no such securities in the
Fund's portfolio.
E. OFF BALANCE SHEET RISKS
The Fund's investments in foreign securities 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. It is the Advisor's policy to continuously
monitor its exposure to these risks.
13
<PAGE> 14
Directors & Officers
Richard H. Driehaus
Chairman of the Board & President
Arthur B. Mellin
Trustee
Robert F. Moyer
Vice President & Trustee
A.R. Umans
Trustee
Daniel Zemanek
Trustee
William R. Andersen
Vice President
Diane L. Wallace
Vice President & Treasurer
Mary H. Weiss
Vice President & Secretary
Investment Adviser
DRIEHAUS CAPITAL
MANAGEMENT, INC.
25 East Erie Street
Chicago, IL 60611
Distributor
DRIEHAUS SECURITIES
CORPORATION
25 East Erie Street
Chicago, IL 60611
Administrator
PFPC INC.
400 Bellevue Parkway
Suite 108
Wilmington, DE 19809
Custodian
MORGAN STANLEY
TRUST COMPANY
One Pierrepont Plaza
Brooklyn, NY 11201
DRIEHAUS MUTUAL FUNDS LOGO
DRIEHAUS INTERNATIONAL GROWTH FUND
Distributed by:
DRIEHAUS SECURITIES CORPORATION
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
FEBRUARY 28, 1997
