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DRIEHAUS MUTUAL FUNDS
TRUSTEES & OFFICERS
Richard H. Driehaus
Chairman of the Board & President
Francis J. Harmon
Trustee
Robert F. Moyer
Senior 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
Robert H. Buchen
Vice President
Dusko Culafic
Assistant Treasurer
Jennifer L. Billingsley
Assistant 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 & TRANSFER AGENT
PFPC, Inc.
400 Bellevue Parkway
Suite 108
Wilmington, DE 19809
CUSTODIAN
Chase Manhattan Bank
One Pierrepont Plaza
Brooklyn, NY 11201
[LOGO]
DRIEHAUS MUTUAL FUNDS
DRIEHAUS INTERNATIONAL DISCOVERY FUND
DRIEHAUS EUROPEAN OPPORTUNITY FUND
Distributed by:
DRIEHAUS SECURITIES CORPORATION
ANNUAL REPORT TO SHAREHOLDERS
DECEMBER 31, 1998
This report has been prepared for the shareholders of the Funds and is not an
offering to sell or buy any Fund securities. Such offering is only made by the
Funds' prospectus.
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DRIEHAUS INTERNATIONAL DISCOVERY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
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<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Cash ..................................................... $10
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TOTAL ASSETS ......................................... $10
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TOTAL LIABILITIES .................................... --
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NET ASSETS ................................................. $10
============
SHARES OUTSTANDING ......................................... 1
============
NET ASSET VALUE PER SHARE .................................. $10.00
============
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NET ASSETS CONSISTED OF THE FOLLOWING AT DECEMBER 31, 1998:
Paid-in capital .......................................... $10
============
NET ASSETS .......................................... $10
============
==========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
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DRIEHAUS INTERNATIONAL DISCOVERY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
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<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Cash ..................................................... $10
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TOTAL ASSETS ......................................... $10
------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
TOTAL LIABILITIES .................................... --
------------
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NET ASSETS ................................................. $10
============
SHARES OUTSTANDING ......................................... 1
============
NET ASSET VALUE PER SHARE .................................. $10.00
============
==========================================================================
NET ASSETS CONSISTED OF THE FOLLOWING AT DECEMBER 31, 1998:
Paid-in capital .......................................... $10
============
NET ASSETS .......................................... $10
============
==========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this statement.
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DRIEHAUS INTERNATIONAL DISCOVERY FUND
DRIEHAUS EUROPEAN OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
FOR THE ONE-DAY PERIOD DECEMBER 31, 1998 (COMMENCEMENT OF OPERATIONS)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The DRIEHAUS INTERNATIONAL DISCOVERY FUND and the DRIEHAUS EUROPEAN
OPPORTUNITY FUND (individually, the "FUND" collectively, the "FUNDS") are
each a series of the Driehaus Mutual Funds (the "TRUST"), a registered
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 FUNDS commenced
operations and were initially offered on December 31, 1998, and each have
one share outstanding at a net asset value of $10.
The investment objective of the FUNDS is to maximize capital
appreciation.
The DRIEHAUS INTERNATIONAL DISCOVERY FUND seeks to achieve its
objective by investing primarily in the equity securities of foreign
companies with market capitalizations of less than $1 billion.
The DRIEHAUS EUROPEAN OPPORTUNITY FUND seeks to achieve its objective
by investing primarily in equity securities of European companies.
The FUNDS have not commenced investing as of December 31, 1998.
FEDERAL INCOME TAXES
It is the FUNDS' intention to qualify as regulated investment companies
under Subchapter M of the Internal Revenue Code and to make all the
required distributions to shareholders in amounts sufficient to relieve the
FUNDS from all or substantially all Federal income and excise taxes.
B. INVESTMENT ADVISORY FEES, TRANSACTIONS WITH AFFILIATES AND
ADMINISTRATIVE FEES
Richard H. Driehaus, the Chairman of the Board and President of the
Trust is also the Chairman of the Board, sole 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 FUNDS'
investment adviser. In return for its services to the FUNDS, DCM receives a
monthly fee, computed and accrued daily at an annual rate of 1.5% of
average net assets. DCM has agreed to absorb other operating expenses of
the FUNDS 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 2.5% and 2.1% of average net assets of the
DRIEHAUS INTERNATIONAL DISCOVERY FUND and the DRIEHAUS EUROPEAN OPPORTUNITY
FUND, respectively, on an annual basis for the first twelve months of the
FUNDS' operations after the effective date of the FUNDS' registration
statement.
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DRIEHAUS INTERNATIONAL DISCOVERY FUND AND
DRIEHAUS EUROPEAN OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
FOR THE ONE-DAY PERIOD DECEMBER 31, 1998 (COMMENCEMENT OF OPERATIONS)
DCM has agreed to absorb all organization costs of the FUNDS and will
not be reimbursed for such expenditures.
Driehaus Securities Corporation ("DSC") acts as a broker for the FUNDS
on certain domestically traded securities. During the period, DSC did not
trade any shares for the FUNDS and therefore earned no commission.
DSC also acts as the FUNDS' distributor.
Certain officers of the TRUST are also officers of the Adviser. No such
officers received compensation from the FUNDS.
PFPC Inc., a wholly owned, indirect subsidiary of PNC Bank, serves as
the FUNDS' administrative and accounting agent. PFPC Inc. has agreed to
waive its minimum fees during the first two years of the Funds' operations.
PFPC Inc. also acts as the transfer agent and dividend disbursing agent
for both FUNDS. PFPC Inc. has agreed to waive a portion of its monthly base
fee for transfer agency service for the first two years of the FUNDS'
operations.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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To the Shareholder and Board of Trustees of
Driehaus International Discovery Fund and Driehaus European Opportunity Fund:
We have audited the accompanying statements of assets and liabilities of
DRIEHAUS INTERNATIONAL DISCOVERY FUND and DRIEHAUS EUROPEAN OPPORTUNITY FUND
(the "Funds") as of December 31, 1998. These financial statements are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial positions of Driehaus International
Discovery Fund and Driehaus European Opportunity Fund as of December 31, 1998,
in conformity with generally accepted accounting principles.
/s/ Arthur Anderson LLPc
Chicago, Illinois
February 19, 1999
