<PAGE> 1
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
DRIEHAUS MUTUAL FUNDS LOGO
DRIEHAUS INTERNATIONAL GROWTH FUND
DRIEHAUS ASIA PACIFIC GROWTH FUND
DRIEHAUS EMERGING
MARKETS GROWTH 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.
<PAGE> 2
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Driehaus International Growth Fund:
Portfolio Manager's Letter........................ 1
Average Annual Return Table, Graph and
Commentary......................................... 3
Schedule Of Investments........................... 4
Schedule Of Investments By Industry............... 6
Driehaus Asia Pacific Growth Fund:
Portfolio Manager's Letter........................ 7
Average Annual Return Table, Graph and
Commentary......................................... 9
Schedule Of Investments........................... 10
Schedule Of Investments By Industry............... 12
Driehaus Emerging Markets Growth Fund:
Portfolio Manager's Letter........................ 13
Average Annual Return Table, Graph and
Commentary......................................... 15
Schedule Of Investments........................... 16
Schedule Of Investments By Industry............... 18
Combined Statements of Assets and Liabilities............... 19
Combined Statements of Operations........................... 20
Combined Statements of Changes in Net Assets................ 22
Driehaus International Growth Fund Financial Highlights..... 24
Driehaus Asia Pacific Growth Fund Financial Highlights...... 25
Driehaus Emerging Markets Growth Fund Financial
Highlights................................................ 26
Combined Notes to Financial Statements...................... 27
Report of Independent Public Accountants.................... 33
</TABLE>
Investment Philosophy: The Adviser seeks 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
judgement, have the ability to continue or accelerate their growth rates in the
future. The Adviser manages the portfolios actively (above average turnover) to
insure that the Funds are fully invested in companies that meet these criteria.
<PAGE> 3
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND -- PORTFOLIO MANAGER'S LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
In this report, we focus on fund activity during the period between August
31, 1998, the end-date of our last report to shareholders, and the fund's newly
established fiscal year end of December 31. The change to a December 31 fiscal
year end, which is being implemented across all Driehaus mutual funds, is
intended to allow us to provide shareholders with enhanced reporting efficiency
in a more meaningful calendar year timeframe. For the period from September 1,
1998, through December 31, 1998, the Driehaus International Growth Fund returned
- -2.04%. This compares with a return of 16.96% for the Morgan Stanley Capital
International Europe, Australia, Far East Index, and 11.91% for the Lipper
International Fund Index over this same period. Since inception the
International Growth Fund posted an annualized return of 15.67%. This compares
with an annualized return of 6.91% for the Morgan Stanley Capital International
Europe, Australia, Far East Index and 8.14% for the Lipper International Fund
Index over this same period.
After performing very well in the first part of the year, the fund's
performance in these last four months was disappointing. We would point to three
factors which contributed to this. First, the fund declined somewhat more than
the market during the financial crisis of mid-1998. Many shares in the portfolio
had made significant moves early in the year and corrected sharply in the broad
market sell-off. (We had reduced some positions in shares that we considered
overvalued during the market decline). Second, when the market recovered in
October, the fund's underweight position in Japan hurt its relative performance.
While economic fundamentals remain generally weak in Japan, the twenty percent
increase in the value of the Yen during the period had a substantial impact on
the benchmarks that the fund is measured against. Finally, the fund's relative
performance was hurt by its underweight position in financial sector shares
following the market bottom in early October. We had reduced our holdings in
this sector due to weaker earnings prospects resulting from the financial
crisis. However, these shares rallied strongly following the market bottom and,
like the Japanese market, are a big component of the benchmarks.
Throughout this period of economic and financial turmoil, the fund remained
focused on industries where we believed the prospects for growth were very
strong and on companies that continued to benefit from strong secular growth
somewhat independent of short-term economic trends. Many of these shares have
been among the first to recover following last summer's crisis. While the
portfolio lagged the market in October due to some shifts we had implemented
during the crisis, performance resurged in November and December, and we believe
we are well positioned.
As of year end, our largest weighting was in the telecommunication sector,
both in the UK and continental Europe, where we are seeing some exciting
developments, including deregulation, growth of wireless services, and explosive
growth in Internet and data traffic. Over these four months, we have continued
to broaden our exposure to the various groups within this sector, increasing our
holdings in:
- - Nokia Corp., a wireless telecom equipment manufacturer.
- - COLT Telecom Group PLC, an alternative telecom service provider.
- - Vodafone Group PLC, a cellular and mobile service provider doing business in
the UK as well as continental Europe that recently made a successful bid for
the U. S. -based AirTouch Communications Inc., becoming the largest worldwide
provider of cellular telephone services.
Another major sector move in the fourth quarter was our recommitment to
financial shares following the Asian and emerging markets crises, where we
continue to emphasize the fastest growing economies in Europe, specifically
Ireland, Spain, and Italy.
The fund continues to have its heaviest weightings in Europe, and our
European shares, which had lagged the market early in the fourth quarter,
performed well in November and December, as the recovery focused on high-growth
shares in the telecommunications, technology, and consumer sectors. During the
last part of the year, we increased our weightings in both Japan and Southeast
Asia. While it is still premature to expect a general turnaround in the Japanese
economy, there are hopeful signs of much needed reforms in certain key sectors.
At the same time, we are finding Japanese companies that we believe will perform
well despite the difficult economic environment. In Southeast Asia, we believe
our investments in Hong Kong, South Korea,
1
<PAGE> 4
Thailand, and Singapore reflect our opinion that these economies are the
region's most promising turnaround candidates.
The volatility of the past year has left us more committed than ever to our
investment philosophy of searching for companies with strong, sustainable growth
in sales and revenues. This is what has produced our excellent long-term record.
We firmly believe that the prospects for companies which are innovative,
industrious, resourceful, and which are addressing new or rapidly changing
markets are as good or better than they have ever been. Our experience has been
that such prospects are eventually recognized by rising share values.
Sincerely,
William R Anderson
William R. Andersen
Portfolio Manager
February 19, 1999
2
<PAGE> 5
DRIEHAUS INTERNATIONAL GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DRIEHAUS INTERNATIONAL MSCI LIPPER
GROWTH FUND EAFE INTERNATIONAL
(DIGF) INDEX FUND INDEX
---------------------- ----- -------------
<S> <C> <C> <C>
Year ended 12/31/98 15.15% 20.00% 12.66%
Three Years ended 12/31/98 17.92% 9.00% 11.40%
Five Years ended 12/31/98 10.83% 9.19% 8.59%
Since Inception (7/1/90 -- 12/31/98) 15.67% 6.91% 8.14%
</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>
LIPPER INTERNATIONAL
DIGF MSCI EAFE INDEX FUND INDEX
---- --------------- --------------------
<S> <C> <C> <C>
Jun 1990 100000.00 100000.00 100000.00
86601.00 78801.00 81729.00
89754.80 87099.00 85405.00
102746.00 93573.00 91999.00
Jun 1991 105643.00 88467.00 89596.00
105258.00 96051.00 95356.00
109228.00 97661.00 96654.00
117111.00 86071.00 94687.00
Jun 1992 126030.00 87891.00 98946.00
118282.00 89216.00 93676.00
118606.00 85773.00 92514.00
135240.00 96054.00 100444.00
Jun 1993 142834.00 105716.00 105962.00
163373.00 112727.00 116121.00
206030.00 113701.00 128763.00
175484.00 117676.00 127382.00
Jun 1994 170382.00 123688.00 128499.00
190949.00 123808.00 133501.00
177981.00 122545.00 127815.00
169343.00 124827.00 124638.00
Jun 1995 186111.00 125734.00 130987.00
207588.00 130976.00 138125.00
210166.00 136279.00 140625.00
239371.00 140217.00 146824.00
Jun 1996 268940.00 142436.00 152817.00
253440.00 142257.00 152934.00
261596.00 144520.00 160915.00
270985.00 142257.00 164901.00
Jun 1997 307522.00 160718.00 183358.00
320208.00 159586.00 186871.00
299239.00 147090.00 172578.00
368797.00 168726.00 198181.00
Jun 1998 404569.00 170518.00 199863.00
327062.00 146280.00 168329.00
Dec 1998 344570.00 176503.00 194428.00
</TABLE>
The Driehaus International Growth Fund (the "Fund" or "DIGF") performance
data shown above 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 compares 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 MSCI EAFE Index with dividends reinvested and
the Lipper International Fund Index with dividends reinvested for the same
period.
The EAFE Index (Morgan Stanley Capital International Europe, Australia and
Far East Index) is a widely recognized benchmark of non-U.S. stock markets. It
is an unmanaged index composed of a sample of companies representative of the
market structure of 20 European and Pacific Basin countries. Data is in U.S.
dollars and includes reinvestment of dividends. Source: Morgan Stanley Capital
International.
The Lipper International Funds Index is an equally weighted managed index of
the 30 largest qualifying international funds that invest in securities with
primary trading markets outside of the United States. Data is in U.S. dollars
and includes reinvestment of dividends. Source: Lipper Analytical Services.
3
<PAGE> 6
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DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 97.7%
- ----------------------------------------------------------
EUROPE -- 75.2%
UNITED KINGDOM -- 16.7%
Bank of Scotland............ 305,092 $ 3,639,600
COLT Telecom Group
PLC -- ADR**.............. 69,486 4,160,474
Dixons Group PLC............ 243,700 3,428,253
Energis PLC**............... 231,025 5,169,934
Granada Group PLC........... 129,330 2,286,293
Kingfisher PLC.............. 377,515 4,085,877
Logica PLC.................. 339,050 2,947,500
Orange PLC**................ 221,900 2,578,858
TeleWest Communications
PLC**..................... 1,106,720 3,194,780
Vodafone Group PLC -- ADR... 35,979 5,797,116
------------
37,288,685
------------
FRANCE -- 15.8%
Atos SA**................... 9,992 2,389,776
Business Objects SA --
ADR**..................... 5,611 182,358
Canal Plus.................. 10,204 2,785,727
Cap Gemini SA............... 27,584 4,429,431
Castorama Dubois
Investisse................ 9,125 2,082,770
Equant NV**................. 31,895 2,220,541
Equant NV -- ADR**.......... 30,322 2,056,211
Etablissements Economiques
du Casino Guichard --
Perrachon SA.............. 36,430 3,795,600
Lafarge SA.................. 37,610 3,575,165
Renault SA.................. 100,895 4,533,584
Societe Television
Francaise................. 14,660 2,611,291
Unibail (Union du Credit --
Bail Immobilier).......... 2,576 375,839
Vivendi..................... 16,433 4,265,630
------------
35,303,923
------------
ITALY -- 9.7%
Arnoldo Mondadori Editore
SpA....................... 223,520 2,961,935
Banca Commerciale
Italiana.................. 273,405 1,890,249
Banca di Roma**............. 1,188,600 2,018,373
Istituto Bancario San Paolo
di Torino................. 151,946 2,690,790
Olivetti SpA**.............. 1,201,775 4,190,817
Telecom Italia SpA.......... 255,800 2,187,395
Telecom Italia Mobile SpA... 777,068 5,749,453
------------
21,689,012
------------
GERMANY -- 6.4%
DaimlerChrysler AG**........ 44,762 4,447,927
Mannesmann AG............... 49,499 5,728,501
MobilCom AG................. 4,115 1,309,471
SAP AG (Pref.).............. 3,886 1,865,398
Teles AG**.................. 5,780 966,503
------------
14,317,800
------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Number Market
of Value
Shares (Note A)
<S> <C> <C>
SWITZERLAND -- 4.9%
Adecco SA................... 7,521 $ 3,433,371
Baloise Holding Ltd......... 4,077 4,229,931
Schweizerische
Rueckversicherungs --
Gesellschaft.............. 1,242 3,238,199
------------
10,901,501
------------
IRELAND -- 4.3%
Allied Irish Banks PLC...... 342,845 6,149,518
Bank of Ireland............. 154,691 3,399,943
------------
9,549,461
------------
SWEDEN -- 4.2%
Gambro AB -- A.............. 38,105 413,697
Gambro AB -- B.............. 171,465 1,861,556
Hennes & Mauritz AB -- B.... 66,890 5,463,076
Kinnevik AB -- B............ 58,867 1,379,887
Societe Europeenne de
Communication SA A --
ADR**..................... 2,174 36,879
Societe Europeenne de
Communication SA B --
ADR**..................... 19,566 362,086
------------
9,517,181
------------
FINLAND -- 3.8%
Nokia Corp. -- ADR.......... 53,920 6,493,991
Raisio Group PLC............ 189,960 2,100,958
------------
8,594,949
------------
SPAIN -- 3.7%
Banco Bilbao Vizcaya SA..... 191,740 3,010,922
Banco Central
Hispanoamericano SA....... 286,430 3,406,240
Tele Pizza SA**............. 206,121 1,963,870
------------
8,381,032
------------
NETHERLANDS -- 2.4%
ING Groep NV................ 53,680 3,275,142
VNU NV...................... 53,475 2,017,419
------------
5,292,561
------------
GREECE -- 1.1%
Hellenic Telecommunication
Organization SA........... 91,533 2,435,069
------------
BELGIUM -- 1.0%
Fortis -- B**............... 6,560 2,377,452
------------
HUNGARY -- 0.5%
Mol Magyar Olaj-Es Gazipari
RT........................ 39,200 1,075,189
------------
POLAND -- 0.4%
Telekomunikacja Polska
SA -- GDR**............... 193,190 985,269
------------
TURKEY -- 0.3%
Yapi Ve Kredi Bankasi AS.... 52,590,400 608,626
------------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
4
<PAGE> 7
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
RUSSIA -- 0.0%
Novosibirsk Telephone**..... 4,000 $ 16,000
------------
Total Europe................ 168,333,710
------------
FAR EAST -- 16.3%
JAPAN -- 9.8%
Alps Electric Co., Ltd. .... 28,000 515,086
Daiwa House Industry Co.,
Ltd. ..................... 33,000 351,952
Fancl Corp. ................ 7,000 601,348
Fujitsu Support & Service
Inc. ..................... 29,000 2,095,364
Kao Corp. .................. 174,000 3,933,629
Kirin Brewery Co., Ltd. .... 223,000 2,846,894
Matsushita Communication
Industrial Co., Ltd. ..... 61,000 2,882,445
Mitsubishi Estate Co.,
Ltd....................... 60,000 538,846
NTT Data Corp. ............. 225 1,119,050
NTT Mobile Communications
Network Inc. ............. 41 1,690,210
Ryohin Keikaku Co., Ltd. ... 9,300 1,240,862
Takeda Chemical
Industries................ 107,000 4,126,454
------------
21,942,140
------------
HONG KONG -- 1.9%
First Pacific Co., Ltd. .... 753,000 359,635
Hutchison Whampoa Ltd. ..... 565,000 3,992,987
------------
4,352,622
------------
AUSTRALIA -- 1.7%
AAPT Ltd.**................. 79,400 204,543
Cable & Wireless Optus
Ltd.**.................... 596,767 1,255,493
Coca -- Cola Amatil Ltd. ... 612,620 2,284,600
------------
3,744,636
------------
SINGAPORE -- 0.9%
City Developments Ltd. ..... 454,010 1,967,424
Natsteel Electronics
Ltd. ..................... 44,400 113,021
------------
2,080,445
------------
THAILAND -- 0.9%
Krung Thai Bank Public Co.,
Ltd. (Foreign)**.......... 3,714,300 2,018,979
------------
SOUTH KOREA -- 0.9%
Pohang Iron & Steel Co.,
Ltd. -- ADR............... 118,260 1,995,638
------------
PHILIPPINES -- 0.2%
Ayala Land Inc. ............ 1,525,700 431,445
------------
Total Far East.............. 36,565,905
------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Number Market
of Value
Shares (Note A)
<S> <C> <C>
MIDDLE EAST -- 3.6%
ISRAEL -- 3.6%
Check Point Software
Technologies Ltd.**....... 79,103 $ 3,623,906
ECI Telecommunications
Ltd. ..................... 90,380 3,219,788
Gilat Satellite Networks
Ltd.**.................... 21,810 1,202,276
------------
8,045,970
------------
Total Middle East........... 8,045,970
------------
NORTH AMERICA -- 1.5%
MEXICO -- 1.5%
Cifra SA de CV -- V**....... 1 1
Corporacion Interamericana
de Entretenimiento SA --
B**....................... 77 210
Grupo Financiero Banamex
Accival SA de CV -- B**... 192 252
Grupo Televisa SA -- GDR**.. 131,405 3,244,062
------------
3,244,525
------------
Total North America......... 3,244,525
------------
SOUTH AMERICA -- 0.9%
BRAZIL -- 0.9%
Telecomunicacoes de Sao
Paulo SA (Pref.).......... 7,300,465 995,188
Telesp Celular Participacoes
SA -- ADR................. 47,898 838,215
Telesp Celular Participacoes
SA (Pref.)**.............. 36,814,500 271,188
------------
2,104,591
------------
Total South America......... 2,104,591
------------
AFRICA -- 0.2%
SOUTH AFRICA -- 0.2%
Sanlam Ltd.**............... 489,400 486,686
------------
Total Africa................ 486,686
------------
- ----------------------------------------------------------
TOTAL INVESTMENTS (COST
$182,990,946)............... 97.7% 218,781,387
Other Assets in Excess of
Liabilities................. 2.3 5,049,827
---------- ------------
Net Assets...................... 100.0% $223,831,214
==========================================================
The federal income tax basis and unrealized appreciation
(depreciation) for all securities is as follows;
</TABLE>
<TABLE>
<S> <C>
Basis.................................... $182,990,946
============
Gross Appreciation....................... $ 38,496,730
Gross Depreciation....................... (2,706,289)
------------
Net Appreciation..................... $ 35,790,441
============
</TABLE>
** Non-income producing security.
Notes to Financial Statements are an integral part of this Schedule.
5
<PAGE> 8
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Automobiles............................ 4.0%
Banking................................ 12.9%
Basic Industry......................... 0.6%
Beverages & Tobacco.................... 2.3%
Broadcast & Publishing Services........ 6.1%
Building Materials..................... 1.6%
Business & Publishing Services......... 5.0%
Communications......................... 0.5%
Construction........................... 0.2%
Consumer Services / Multi-Industry..... 1.9%
Cosmetics.............................. 2.0%
Data Processing........................ 1.9%
Drugs.................................. 1.8%
Electrical & Electronics............... 1.3%
Electronic Components.................. 1.6%
Financial Services..................... 1.5%
Foods & Household Products............. 0.9%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Health Care............................ 1.0%
Insurance.............................. 4.6%
Leisure & Tourism...................... 1.0%
Machinery & Engineering................ 2.6%
Merchandising.......................... 6.0%
Metals -- Steel........................ 0.9%
Office / Communications Equipment...... 1.4%
Oil.................................... 0.5%
Real Estate............................ 1.5%
Retailing -- Foods..................... 0.9%
Retailing -- Goods..................... 3.0%
Software & EDP Services................ 7.4%
Telecommunications..................... 20.4%
Telephone Utilities.................... 0.4%
Other Assets Less Liabilities.......... 2.3%
------
TOTAL.................................. 100.0%
======
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
6
<PAGE> 9
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND -- PORTFOLIO MANAGER'S LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
In this report, we focus on fund activity during the period between
September 30, 1998, the end-date of our last report to shareholders, and the
fund's newly established fiscal year end of December 31. The change to a
December 31 fiscal year end, which is being implemented across all Driehaus
mutual funds, is intended to allow us to provide shareholders with enhanced
reporting efficiency in a more meaningful calendar year timeframe. For the
period from October 1, 1998, through December 31, 1998, the Driehaus Asia
Pacific Growth Fund returned 19.28%, compared with a return of 26.62% for the
Morgan Stanley Capital International Asia Pacific Index and 20.09% for the
Lipper Pacific Region Fund Index. For the year ended, December 31, 1998, the
Asia Pacific Growth Fund returned -1.00%, compared with a return of 2.03% for
the Morgan Stanley Capital International Asia Pacific Index and -2.95% for the
Lipper Pacific Region Fund Index.
During this three-month period, the Asian markets produced excellent
returns, spurred by the dramatic decline in interest rates across the region
following the U.S. Federal Reserve's three rate cuts. Two primary examples of
this can be found in South Korea, where short-term rates fell from 10% to 6%,
and in Singapore, where rates declined from 6% to 2%, below July 1997
pre-currency crisis levels. This helped boost investor confidence that the
economies in these regions will recover faster than previously expected.
The fund underperformed the indices due to its relatively underweight
position in Japan. This hurt the fund's performance when the Japanese Yen
appreciated by 20% in October. The Yen's dramatic move does not appear to have
been caused by a fundamental improvement in the Japanese economy but instead by
hedge funds covering their Yen short positions after the Russian default. We
remain relatively underweight in Japan because we think that the potential for
an economic recovery in Southeast Asia is better than in Japan.
Even though underweight in Japan, the fund maintained its largest percent
invested there. The appreciation of the Yen led us to sell our holdings in
Japanese export-oriented auto stocks, such as Fuji Heavy Industries Ltd. and
Mazda Motor Corp. We added several Japanese stocks that should benefit from the
stronger Yen, such as Nissin Food Products Co., Ltd., Osaka Gas Co., Ltd. and
Tokyo Electric Power Co. Despite a sluggish economy, we continued to find new
companies to invest in which exhibited rapid sales and earnings growth such as:
- - Fancl Corp., a natural cosmetics/health food company, saw first-half sales
jump 25% for cosmetics and 37% for health products as Japanese consumers
became more health-conscious. The company's introduction of a new line of
men's cosmetics/toiletries should foster continued growth. In addition, Fancl
is planning to increase its store outlets to 75 -- a 50% increase -- over the
next two years.
- - Nihon Unisys Ltd., the distributor of Unisys computer products in Japan, is
benefiting from rising margins as the strong Yen makes American products less
expensive to import. In addition, the company has changed its focus from large
mainframe computers to software products, which also offer higher margins. In
the first half, parent company operating profits increased 57%.
- - Hikari Tsushin Inc., a cellular telephone distributor, reported a recurring
profit increase of 60% for the fiscal year ended August 1998. This was due to
rising use of cellular phones and phone sales.
One investment that failed to meet our expectations was Computer Engineering
and Consulting Ltd., ("CEC"), a Japanese computer consulting company. Although
demand for consulting is rising in Japan, CEC suffered a greater than forecast
slowdown in orders due to its dependence upon the depressed manufacturing
sector. We have subsequently sold our position in CEC.
Over the quarter, the fund increased its investments in Southeast Asia,
including India, from 15% to 24% based on indications of a
faster-than-anticipated recovery. We increased our investments in India due to
its stable economic outlook in contrast with devaluation worries in China. The
fund also maintained an overweight position in Australia, where the economy
proved much more resilient than expected. Third quarter 1998 GDP growth for
Australia reached 5% due to strong job growth and lower interest rates, and
robust domestic consumption compensated for weak commodity exports to Asia. Two
of the fund's new investments in this market included Cable & Wireless Optus
Ltd., the second largest Australian cellular phone company that saw a 30%
increase in digital subscribers, and Aristocrat Leisure Ltd., a gaming machine
company that recorded a 50% rise in net profit in the second half of 1998.
7
<PAGE> 10
We believe that 1998 may have provided the bottom for Southeast Asian
markets. In 1999, we expect the economic recovery to create many opportunities
for the fund to increase its investments in these markets.
Sincerely,
Eric J. Ritter
Eric J. Ritter
Portfolio Manager
February 19, 1999
8
<PAGE> 11
DRIEHAUS ASIA PACIFIC GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DRIEHAUS ASIA LIPPER PACIFIC
PACIFIC GROWTH MSCI ASIA REGION FUND
FUND (DAPGF) PACIFIC INDEX INDEX
-------------- ------------- --------------
<S> <C> <C> <C>
Year ended 12/31/98 (since inception) -1.00% 2.03% -2.95%
</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>
LIPPER PACIFIC REGION
DAPGF MSCI ASIA PACIFIC INDEX FUND INDEX
----- ----------------------- ---------------------
<S> <C> <C> <C>
Dec 1997 100000.00 100000.00 100000.00
Mar 1998 99500.00 104617.00 102817.00
Jun 1998 85000.00 92608.00 88795.00
Sep 1998 83000.00 80577.00 80813.00
Dec 1998 99000.00 102028.00 97051.00
</TABLE>
Performance data presented measures change in the value of an investment in
the Fund, assuming reinvestment of all dividends and capital gains.
The graph compares the results of a $100,000 investment in the Fund, on
December 31, 1997 (the date of the Fund's commencement of operations), with all
dividends and capital gains reinvested, with the MSCI Asia Pacific Index with
dividends reinvested and the Lipper Pacific Region Fund Index with dividends
reinvested for the same period.
The Morgan Stanley Capital International Asia Pacific Index is a recognized
benchmark of Asian and Pacific Basin stock markets. It is an unmanaged index of
a sample of companies representative of the market structure of 15 Asian and
Pacific Basin countries. Data is in U.S. dollars and includes reinvestment of
dividends. Source: Morgan Stanley Capital International.
The Lipper Pacific Region Index is an equally weighted managed index of the
10 largest qualifying funds that invest in securities with primary trading
markets concentrated in the Western Pacific Basin or a single country within
this region. Data is in U.S. dollars and includes reinvestment of dividends.
Source: Lipper Analytical Services.
9
<PAGE> 12
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 89.3%
- ----------------------------------------------------------
FAR EAST -- 89.3%
JAPAN -- 55.6%
Acom Co., Ltd................... 800 $ 51,491
Alps Electric Co., Ltd.......... 4,000 73,584
Asahi Optical Co., Ltd.......... 12,000 42,448
Avex Inc........................ 1,200 54,257
Chugai Pharmaceutical Co.,
Ltd........................... 9,000 90,162
Circle K Japan Co., Ltd......... 2,500 110,154
Daikin Industries Ltd........... 5,000 49,647
DDI Corp........................ 15 55,853
Don Quijote Co., Ltd............ 1,300 144,065
Enix Corp....................... 1,700 55,613
Fancl Corp...................... 1,000 85,907
Fujisawa Pharmaceutical Co.,
Ltd........................... 6,000 85,109
Fujitsu Support & Service
Inc........................... 2,000 144,508
Hikari Tsushin Inc.............. 900 55,454
Hosiden Corp.................... 5,000 87,414
Itoen Ltd....................... 1,800 93,035
K's Denki Corp.................. 3,400 32,554
Kao Corp........................ 7,000 158,249
Kirin Brewery Co., Ltd.......... 8,000 102,131
Matsushita Communication
Industrial Co., Ltd........... 2,000 94,506
Ministop Co., Ltd............... 1,800 46,916
Moshi Moshi Hotline Inc......... 1,000 38,033
Nihon Unisys Ltd................ 7,000 98,673
Nissin Food Products Co.,
Ltd........................... 4,000 100,890
NTT Mobile Communications
Network Inc................... 2 82,449
Osaka Gas Co., Ltd.............. 21,000 72,422
Ryohin Keikaku Co., Ltd......... 400 53,370
Sekisui House Ltd............... 4,000 42,377
Shin-Etsu Chemical Co., Ltd..... 2,000 48,228
Sumitomo Bank Ltd............... 4,000 41,136
Takeda Chemical Industries...... 2,000 77,130
Takefuji Corp................... 700 51,198
Terumo Corp..................... 2,000 47,165
Tokio Marine & Fire Insurance
Co............................ 6,000 71,811
Tokyo Electric Power Co......... 2,600 64,310
Toshiba Corp.................... 10,000 59,665
Trend Micro Inc.**.............. 500 34,354
York-Benimaru Co., Ltd.......... 2,000 63,654
----------
2,759,922
----------
AUSTRALIA -- 11.7%
AAPT Ltd.**..................... 16,400 42,248
Aristocrat Leisure Ltd.......... 12,700 53,749
Brambles Industries Ltd......... 1,695 41,326
Cable & Wireless Optus Ltd.**... 30,088 63,300
Cochlear Ltd.................... 18,600 104,958
Computershare Ltd............... 22,200 109,110
Data Advantage Ltd.**........... 32,400 77,743
LibertyOne Ltd.**............... 18,400 44,015
TABCORP Holdings Ltd............ 7,600 46,615
----------
583,064
----------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Number Market
of Value
Shares (Note A)
<S> <C> <C>
HONG KONG -- 5.8%
First Pacific Co., Ltd.......... 90,000 $ 42,984
Guangdong Kelon Electrical
Holdings Co., Ltd. -- H....... 51,000 45,424
IDT International Ltd. ......... 649,000 87,125
Johnson Electric Holdings
Ltd........................... 27,000 69,356
Lerado Group Holding Co.,
Ltd.**........................ 386,000 43,847
----------
288,736
----------
SOUTH KOREA -- 3.9%
Korea Electric Power Corp....... 1,700 42,130
Pohang Iron & Steel Co., Ltd. --
ADR........................... 2,500 42,187
Samsung Electronics............. 880 59,059
Ssangyong Oil Refining Co.,
Ltd........................... 2,500 47,819
----------
191,195
----------
SINGAPORE -- 3.3%
Inchcape Motors Ltd............. 23,000 26,625
Keppel Tatlee Bank Ltd.......... 46,000 80,293
Natsteel Electronics Ltd........ 2,000 5,091
Sembcorp Industries Ltd.**...... 45,000 51,274
----------
163,283
----------
THAILAND -- 3.2%
Krung Thai Bank Public Co., Ltd.
(Foreign)**................... 75,000 40,768
National Finance Public Co.,
Ltd. (Foreign)**.............. 149,200 47,223
Siam Cement Public Co., Ltd.
(Foreign)**................... 3,200 72,571
----------
160,562
----------
INDIA -- 1.9%
Mahanagar Telephone Nigam
Ltd. -- GDR................... 4,200 51,240
Reliance Industries Ltd. --
GDR**......................... 7,200 40,824
----------
92,064
----------
PHILIPPINES -- 1.3%
DMCI Holdings Inc.**............ 893,000 37,649
Filinvest Land Inc.**........... 495,000 27,996
----------
65,645
----------
NEW ZEALAND -- 1.0%
Auckland International Airport
Ltd.**........................ 36,000 50,396
----------
INDONESIA -- 1.0%
PT Ramayana Lestari Sentosa
Tbk........................... 200,000 48,429
----------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
10
<PAGE> 13
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
TAIWAN -- 0.6%
Far Eastern Textile Ltd......... 40,000 $ 32,654
----------
Total Far East.................. 4,435,950
----------
- ----------------------------------------------------------
TOTAL INVESTMENTS (COST
$3,566,661)..................... 89.3% 4,435,950
Other Assets in Excess of
Liabilities..................... 10.7% 528,953
------- ----------
Net Assets.......................... 100.0% $4,964,903
==========================================================
</TABLE>
<TABLE>
<S> <C> <C>
The federal income tax basis and unrealized appreciation
(depreciation) for all securities is as follows:
</TABLE>
<TABLE>
<S> <C>
Basis...................................... $3,566,661
==========
Gross Appreciation......................... $ 898,098
Gross Depreciation......................... (28,809)
----------
Net Appreciation....................... $ 869,289
==========
</TABLE>
** Non-income producing security.
Notes to Financial Statements are an integral part of this Schedule.
11
<PAGE> 14
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Airlines............................... 1.0%
Banking................................ 3.3%
Beverages.............................. 1.9%
Beverages & Tobacco.................... 2.0%
Building Materials..................... 1.5%
Business & Publishing Services......... 1.1%
Chemicals.............................. 1.0%
Communications......................... 0.8%
Construction........................... 1.6%
Consumer Services/Multi-Industry....... 0.9%
Cosmetics.............................. 4.9%
Data Processing........................ 2.0%
Drugs.................................. 5.1%
Electrical & Electronics............... 5.7%
Electronic Components.................. 2.3%
Electronic Systems/Devices............. 1.7%
Energy Sources......................... 1.0%
Finance & Loan......................... 2.1%
Finance/Multi-Industry................. 1.0%
Financial Services..................... 2.5%
Foods & Household Products............. 4.5%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Home Products.......................... 0.9%
Insurance.............................. 1.4%
International Trading.................. 0.5%
Leisure & Tourism...................... 2.0%
Machinery & Engineering................ 1.0%
Medical Supplies....................... 3.0%
Merchandising.......................... 4.5%
Metals -- Steel........................ 0.8%
Real Estate............................ 0.6%
Recreation............................. 0.9%
Retailing -- Goods..................... 5.1%
Software & EDP Services................ 5.1%
Technology /Multi-Industry............. 0.9%
Telecommunications..................... 8.8%
Textiles............................... 0.8%
Textiles & Apparel..................... 0.7%
Transportation/Multi-Industry.......... 0.8%
Utilities.............................. 3.6%
Other Assets Less Liabilities.......... 10.7%
------
TOTAL.................................. 100.0%
======
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
12
<PAGE> 15
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND --
PORTFOLIO MANAGER'S LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
In this report, we focus on fund activity during the period between
September 30, 1998, the end-date of our last report to shareholders, and the
fund's newly established fiscal year end of December 31. The change to a
December 31 fiscal year end, which is being implemented across all Driehaus
mutual funds, is intended to allow us to provide shareholders with enhanced
reporting efficiency in a more meaningful calendar year timeframe. For the
period beginning October 1, 1998, through December 31, 1998, the Driehaus
Emerging Markets Growth Fund returned 15.48%. This compares with a return of
18.06% for the Morgan Stanley Capital International Emerging Markets Index, and
a 15.51% return for the Lipper Emerging Markets Fund Index. During the calendar
year 1998, the Driehaus Emerging Markets Growth Fund lost -12.70% versus -23.21%
for the Morgan Stanley Capital International Index and -26.87% for the Lipper
Emerging Markets Fund Index.
The performance versus the Morgan Stanley Index can be attributed to a
relatively underweighted position in Latin America. In the fourth quarter, Latin
American markets rallied off an extremely low base, as local speculators bought
stock based on their belief that share values had fully discounted a possible
Brazilian currency devaluation. At the same time, weakness in the commodities
markets created continued stress in Latin American economies and other emerging
markets dependent on commodity exports. While the underweighted position in
Latin America negatively affected the fourth quarter performance, it worked to
enhance the full year results.
During the fourth quarter of 1998, emerging markets rebounded from the
five-year lows reached in early October. This recovery was initiated by a series
of interest rate cuts by the U.S. Federal Reserve, followed by credit easings
across Europe. These lower interest rates prompted a rally in the Japanese Yen,
which in turn sparked a recovery in many emerging market currencies, especially
for Japan's trading partners in Southeast Asia. Stronger currencies were
accompanied by dramatically lower interest rates in Southeast Asian countries,
including Hong Kong, South Korea, and Thailand, as well as European emerging
markets. All of this created the stage for a broad-based rally across most
emerging markets in these regions.
Over this period, we increased our weighting in South Korea, buying small
and mid-cap stocks that then rallied in the fourth quarter. The fund's
performance was also enhanced by our increased holdings of Israeli technology
stocks, which rallied in line with U.S. technology stocks in the last part of
the year. At December 31, 1998, Israel technology stocks represented 7.6% of the
fund. The fund also had a good weighting in telecommunications stocks,
especially mobile telephone companies. As of year end, approximately 33% of the
fund was in shares representing Israel, Greece, Poland, Hungary, and South
Korea, while less than 15% was invested in Latin America.
During the fourth quarter, our stock selection focused on strong growth
companies in the technology sector, including:
- - Sofbank SA (Poland), which provides software to the financial industry in
Poland through joint ventures with Western financial software companies, saw
stronger than anticipated revenue and earnings growth.
- - Check Point Software Technologies Ltd. (Israel), the world's largest provider
of firewall software, successfully negotiated contracts with several large
well-known firms to provide security for integrated systems and virtual
private networks.
- - Gilat Satellite Networks Ltd. (Israel), a market leader in the manufacture of
terminals for data, voice, and video transmission and satellite phone systems,
was awarded a major contract by South African Telecom and recently acquired
U.S.-based GE Spacenet.
One stock that we sold during the quarter was Vtech Holdings Ltd., an
electronics firm based in Hong Kong. Vtech has been a market leader in cordless
phones as well as electronic educational toys. However, blistering competition
in the 900 mhz cordless phone segment and a negative sales trend for one of
Vtech's largest customers prompted a sell.
13
<PAGE> 16
Looking ahead, we continue to be optimistic regarding the investment in
companies that have excellent prospects for earnings and revenue growth.
Although we believe that the emerging markets may be nearing a bottom in
economic activity, a broad based recovery maybe some time away. Thus, companies
that can demonstrate solid growth in a lackluster environment should perform
well. We look forward to the investment opportunities of the coming year. Thank
you for your continued support.
Sincerely,
Emery R. Brewer
Emery R. Brewer
Portfolio Manager
February 19, 1999
14
<PAGE> 17
DRIEHAUS EMERGING MARKETS GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DRIEHAUS EMERGING
MARKETS GROWTH MSCI EMERGING LIPPER EMERGING
FUND (DEMGF) MARKETS INDEX MARKETS FUND INDEX
----------------- ------------- ------------------
<S> <C> <C> <C>
Year ended 12/31/98 (since inception) -12.70% -23.21% -26.87%
</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>
MSCI EMERGING LIPPER EMERGING
DRIEHAUS MARKETS INDEX MARKETS FUND INDEX
-------- ------------- ------------------
<S> <C> <C> <C>
Dec 1997 100000.00 100000.00 100000.00
Mar 1998 105500.00 107222.00 105120.00
Jun 1998 95200.00 81832.00 83000.00
Sep 1998 75600.00 65043.00 63313.00
Dec 1998 87300.00 76788.00 73132.00
</TABLE>
Performance data presented measures change in the value of an investment in
the Fund, assuming reinvestment of all dividends and capital gains.
The graph compares the results of a $100,000 investment in the Fund, on
December 31, 1997, (the date of the Fund's commencement of operations), with all
dividends and capital gains reinvested, with the MSCI Emerging Markets Index
with dividends reinvested and the Lipper Emerging Markets Fund Index with
dividends reinvested for the same period.
The Morgan Stanley Capital International Emerging Markets Index is a
recognized benchmark of Emerging Markets stock markets. It is an unmanaged index
of a sample of companies representative of the market structure of 26 Emerging
Markets countries. Data is in U.S. dollars and includes reinvestment of
dividends. Source: Morgan Stanley Capital International.
The Lipper Emerging Markets Funds Index is an equally weighted managed index
of the 30 largest qualifying funds. Funds in this index seek long-term capital
appreciation by investing at least 65% of their total assets in emerging market
equity securities, where "emerging markets" is defined by a country's per-capita
GNP or other economic measure. Data is in U.S. dollars and includes reinvestment
of dividends. Source: Lipper Analytical Services.
15
<PAGE> 18
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 91.6%
- ----------------------------------------------------------
EUROPE -- 27.6%
GREECE -- 8.4%
Chipita International SA...... 1,870 $ 60,766
Delta Informatics SA.......... 2,530 54,658
Infoquest SA**................ 770 45,355
Intrasoft SA.................. 1,600 36,852
Panafon Hellenic Telecom
SA**........................ 2,000 53,563
Rokas SA...................... 3,320 39,063
STET Hellas Telecommunications
SA -- ADR**................. 1,450 46,944
----------
337,201
----------
POLAND -- 6.4%
Art Marketing Syndicate
SA**........................ 3,500 41,881
ComputerLand SA**............. 2,231 27,332
Elektrim Spolka Akcyjna SA.... 4,250 46,012
Prokom Software -- GDR........ 2,500 47,125
Softbank SA -- GDR............ 2,100 55,650
Telekomunikacja Polska SA --
GDR**....................... 7,935 40,468
----------
258,468
----------
PORTUGAL -- 4.6%
Corticeira Amorim SGPS SA..... 4,500 64,577
Portugal Telecom SA -- ADR.... 1,000 44,625
Telecel-Comunicacoes Pessoais
SA.......................... 370 75,635
----------
184,837
----------
HUNGARY -- 3.4%
Magyar Tavkozlesi RT -- ADR... 2,100 62,606
Mol Magyar Olaj-Es Gazipari
RT -- GDR................... 2,710 74,877
----------
137,483
----------
TURKEY -- 3.0%
Carsi Buyuk Magazacilik AS.... 385,000 16,174
Efes Sinai Yatrim Holding
AS -- GDR**................. 30,450 26,796
Vestel Elektronik Sanayi Ve
Ticaret AS**................ 424,000 34,953
Yapi Ve Kredi Bankasi AS --
GDR......................... 3,949 44,944
----------
122,867
----------
CZECH REPUBLIC -- 1.5%
Ceske Radiokomunikace --
GDR**....................... 650 20,963
SPT Telecom AS -- GDR**....... 2,500 38,375
----------
59,338
----------
RUSSIA -- 0.3%
LUKoil Holding -- ADR......... 900 13,951
----------
Total Europe.................. 1,114,145
----------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Number Market
of Value
Shares (Note A)
<S> <C> <C>
FAR EAST -- 25.8%
SOUTH KOREA -- 6.0%
Dong-A Pharmaceutical Co.,
Ltd. ....................... 6,600 $ 58,729
Pacific Corp.................. 2,700 43,561
Pohang Iron & Steel Co.,
Ltd. -- ADR................. 2,200 37,125
Samsung Electronics -- GDR.... 3,870 58,553
SK Telecom Co., Ltd. -- ADR... 4,120 41,973
----------
239,941
----------
INDIA -- 4.0%
BSES Ltd. -- GDR.............. 3,000 38,250
ITC Ltd. -- GDR............... 3,700 82,399
Mahanagar Telephone Nigam
Ltd. -- GDR................. 3,410 41,602
----------
162,251
----------
HONG KONG -- 3.7%
Esprit Holdings Ltd........... 92,000 39,783
IDT International Ltd......... 400,000 53,698
VTech Holdings Ltd............ 13,000 56,719
----------
150,200
----------
THAILAND -- 3.3%
Bangkok Bank Public Co., Ltd.
(Foreign)**................. 26,000 53,669
Cogeneration Public Co., Ltd.
(Foreign)**................. 70,000 53,944
Thai Storage Battery Public
Co., Ltd. (Foreign)**....... 26,000 23,972
----------
131,585
----------
PHILIPPINES -- 2.5%
International Container
Terminal Services Inc.**.... 520,000 43,446
SPI Technologies Inc.......... 112,000 55,426
----------
98,872
----------
SINGAPORE -- 2.3%
Datacraft Asia Ltd. .......... 32,032 56,697
Sembcorp Industries Ltd.**.... 33,000 37,601
----------
94,298
----------
TAIWAN -- 1.9%
Asustek Computer Inc. -- GDR.. 4,555 42,270
Compal Electronics Inc.**..... 11,000 35,851
----------
78,121
----------
AUSTRALIA -- 1.3%
LibertyOne Ltd.**............. 21,000 50,234
----------
INDONESIA -- 0.8%
PT Telekomunikasi
Indonesia -- ADR............ 5,000 32,500
----------
Total Far East................ 1,038,002
----------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
16
<PAGE> 19
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
SOUTH AMERICA -- 11.6%
BRAZIL -- 8.5%
Companhia Energetica de Minas
Gerais -- ADR............... 3,100 $ 59,013
Compania de Minas Buenaventura
SA -- ADR................... 3,000 39,000
Eletropaulo Metropolitana --
Eletricidade de Sao Paulo SA
(Pref.)..................... 800,000 37,080
Petroleo Brasileiro
SA -- ADR................... 3,600 40,821
Telecomunicacoes Brasileiras
SA (Pref.) -- ADR........... 665 48,337
Telemig Celular Participacoes
SA -- ADR**................. 1,870 39,738
Tele Norte Leste Participacoes
SA -- ADR**................. 2,700 33,581
Telesp Celular Participacoes
SA (Pref.)**................ 3,500,000 25,782
Telesp Celular Participacoes
SA -- ADR................... 1,000 17,500
----------
340,852
----------
ARGENTINA -- 1.9%
Telefonica de Argentina SA --
ADR......................... 1,270 35,481
YPF SA -- ADR................. 1,430 39,951
----------
75,432
----------
CHILE -- 1.2%
Sociedad Quimica Y Minera De
Chile SA -- ADR............. 1,480 49,858
----------
Total South America........... 466,142
----------
AFRICA -- 9.3%
SOUTH AFRICA -- 9.3%
Bidvest Group Ltd............. 8,700 63,150
Comparex Holdings Ltd. ....... 7,500 60,942
Nedcor Ltd. .................. 3,225 54,823
Sanlam Ltd.**................. 10,600 10,541
Softline Ltd.**............... 44,000 47,496
South African Breweries
Ltd......................... 3,200 53,962
Specialised Outsourcing
Ltd......................... 8,815 52,072
Super Group Ltd............... 18,000 31,670
----------
374,656
----------
Total Africa.................. 374,656
----------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Number Market
of Value
Shares (Note A)
<S> <C> <C>
MIDDLE EAST -- 9.0%
ISRAEL -- 9.0%
Bank Hapoalim Ltd............. 18,000 $ 32,582
Check Point Software
Technologies Ltd.**......... 1,700 77,881
ECI Telecommunications Ltd.... 1,600 57,000
First International Bank of
Israel Ltd.................. 25,000 25,841
Fundtech Ltd.**............... 2,100 43,313
Gilat Satellite Networks
Ltd.**...................... 1,150 63,394
TTI Team Telecom International
Ltd.**...................... 8,000 63,500
----------
363,511
----------
Total Middle East............. 363,511
----------
NORTH AMERICA -- 8.3%
MEXICO -- 8.3%
Corporacion Interamericana de
Entretenimiento SA -- B**... 21,780 59,462
Fomento Economico Mexicano SA
de CV -- ADR................ 2,400 63,900
Grupo Continental SA.......... 21,000 50,856
Grupo Televisa SA -- GDR**.... 2,070 51,103
Desc SA de CV -- ADR.......... 2,400 46,050
TV Azteca SA de CV -- ADR..... 5,000 33,438
Vitro SA -- ADR............... 6,700 30,569
----------
335,378
----------
Total North America........... 335,378
----------
Total Equity Securities (Cost
$3,467,211)................. 3,691,834
----------
RIGHTS --0.0%
- ----------------------------------------------------------
TAIWAN -- 0.0%
Compal Electronics Inc. --
Rights**.................... 22 17
----------
Total Rights (Cost $0)........ 17
----------
- ----------------------------------------------------------
TOTAL INVESTMENTS (COST
$3,467,211)................... 91.6% 3,691,851
Other Assets in Excess of
Liabilities................... 8.4 336,625
---------- ----------
Net Assets........................ 100.0% $4,028,476
==========================================================
</TABLE>
<TABLE>
<S> <C> <C>
The federal income tax basis and unrealized appreciation
(depreciation) for all securities is as follows:
</TABLE>
<TABLE>
<S> <C>
Basis...................................... $3,467,211
==========
Gross Appreciation......................... $ 532,998
Gross Depreciation......................... (308,358)
----------
Net Appreciation....................... $ 224,640
==========
</TABLE>
** Non-income producing security.
Notes to Financial Statements are an integral part of this Schedule.
17
<PAGE> 20
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Appliances............................. 0.9%
Automobiles............................ 2.2%
Auto Parts Manufacturing............... 1.2%
Banking................................ 4.6%
Basic Industry......................... 1.0%
Beverages.............................. 3.5%
Beverages & Tobacco.................... 1.4%
Broadcast & Publishing................. 3.1%
Chemicals.............................. 2.3%
Communications Equipment............... 1.6%
Computer Manufacturing................. 4.4%
Computer Software & EDP Services....... 7.6%
Construction........................... 1.6%
Data Processing........................ 1.2%
Electrical & Electronics............... 1.1%
Electrical Utilities................... 2.4%
Electronic Components.................. 5.8%
Electronic Systems/Devices............. 2.7%
Energy Sources......................... 1.3%
Finance/Multi-Industry................. 0.9%
Financial Services..................... 1.9%
Foods & Household Products............. 1.5%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Health Care............................ 1.5%
Home Products.......................... 0.8%
Information Technology................. 1.1%
Insurance.............................. 0.3%
Leisure & Tourism...................... 1.5%
Merchandising.......................... 1.0%
Metals -- Steel........................ 0.9%
Office/Communications Equipment........ 1.4%
Oil.................................... 4.2%
Precious Metals........................ 1.0%
Retailing -- Goods..................... 0.4%
Technology/Multi-Industry.............. 1.2%
Telecommunications..................... 10.8%
Telephone Utilities.................... 6.5%
Tobacco................................ 2.0%
Transportation -- Shipping............. 1.1%
Transportation -- Trucking............. 0.8%
Utilities.............................. 0.9%
Other Assets Less Liabilities.......... 8.4%
------
TOTAL.................................. 100.0%
======
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
18
<PAGE> 21
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Asia Pacific Emerging Markets
Growth Fund Growth Fund Growth Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at market value (Cost $182,990,946;
$3,566,661; $3,467,211; respectively)............. $218,781,387 $4,435,950 $3,691,851
Foreign currency (Cost $0; $49,996; $39,443;
respectively)..................................... -- 50,037 34,978
Cash................................................ 5,576,490 749,683 320,163
Receivables:
Dividends...................................... 400,496 3,199 8,845
Interest....................................... 6,699 549 272
Investment securities sold..................... 2,795,513 3,077 96,851
Due from affiliates............................ -- 8,721 12,275
Net unrealized appreciation on unsettled
foreign currency forward contracts from
transaction hedges........................... -- 2,481 --
Fund shares sold............................... 1,545,535 -- --
Prepaid insurance................................... 41,734 11,433 11,470
Deferred organizational costs....................... 69,775 23,435 23,483
------------ ---------- ----------
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSETS............................... 229,217,629 5,288,565 4,200,188
------------ ---------- ----------
- -------------------------------------------------------------------------------------------------------------
LIABILITIES:
Foreign currency payable (Cost $129,799; $0; $0;
respectively)..................................... 130,574 -- --
Payables:
Investment securities purchased................ 4,794,104 295,445 144,220
Fund shares redeemed........................... 12,513 -- --
Due to affiliates.............................. 270,128 -- --
Net unrealized depreciation on unsettled
foreign currency forward contracts from
transaction hedges........................... 84,851 -- 345
Accrued expenses.................................... 94,245 28,217 27,147
------------ ---------- ----------
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES.......................... 5,386,415 323,662 171,712
------------ ---------- ----------
- -------------------------------------------------------------------------------------------------------------
NET ASSETS.............................................. $223,831,214 $4,964,903 $4,028,476
============ ========== ==========
SHARES OUTSTANDING...................................... 19,385,212 501,412 461,247
============ ========== ==========
NET ASSET VALUE PER SHARE............................... $ 11.55 $ 9.90 $ 8.73
============ ========== ==========
=============================================================================================================
NET ASSETS CONSISTED OF THE FOLLOWING AT DECEMBER 31,
1998:
Paid-in capital..................................... $199,367,380 $4,802,579 $4,704,016
Undistributed net realized loss..................... (8,643,972) (510,267) (841,208)
Undistributed net realized foreign exchange loss.... (2,661,685) (196,010) (54,225)
Unrealized foreign exchange loss.................... (20,950) (688) (4,747)
Unrealized appreciation on investments.............. 35,790,441 869,289 224,640
------------ ---------- ----------
NET ASSETS................................. $223,831,214 $4,964,903 $4,028,476
============ ========== ==========
=============================================================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
19
<PAGE> 22
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Growth Fund
--------------------------------------------
For the four month period
September 1, 1998 For the year
through ended
December 31, 1998 August 31, 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME (LOSS):
Income:
Dividends (net of non-reclaimable foreign taxes of
$21,034; $122,120; $165; $1,712; $1,391; $2,665
respectively).................................... $ 177,401 $ 2,300,361
Interest........................................... 193,244 678,841
----------- -----------
- ------------------------------------------------------------------------------------------------------------
Total income..................................... 370,645 2,979,202
----------- -----------
- ------------------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fee............................ 1,029,285 3,343,049
Administration fee................................. 84,672 268,069
Professional fees.................................. 84,542 128,982
Federal and state registration fees................ 5,005 33,258
Custodian fee...................................... 91,504 212,518
Transfer agent fees................................ 14,752 41,646
Trustees' fees..................................... 20,464 45,734
Amortization of organization costs................. 8,457 28,630
Miscellaneous...................................... 34,899 79,628
----------- -----------
- ------------------------------------------------------------------------------------------------------------
Total expenses before fees waived and
reimbursements................................... 1,373,580 4,181,514
----------- -----------
Administration fee waived.......................... -- --
Transfer agent fees waived......................... -- --
Expense reimbursement from adviser................. -- --
----------- -----------
Total expenses net of fees waived and
reimbursements................................. 1,373,580 4,181,514
----------- -----------
- ------------------------------------------------------------------------------------------------------------
Net investment loss............................ (1,002,935) (1,202,312)
----------- -----------
- ------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from security transactions..... (6,684,701) 8,389,493
Net realized foreign exchange loss...................... (1,276,925) (1,384,760)
Net realized foreign exchange loss on portfolio
hedges................................................ -- --
Net change in unrealized foreign exchange gain (loss)... (23,572) 26,693
Net change in unrealized foreign exchange loss on
portfolio hedges...................................... -- --
Change in unrealized appreciation of investments........ 2,860,625 23,608,944
----------- -----------
- ------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments................. (5,124,573) 30,640,370
- ------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $(6,127,508) $29,438,058
=========== ===========
============================================================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
20
<PAGE> 23
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Asia Pacific Growth Fund Emerging Markets Growth Fund
------------------------------------------------ ------------------------------------------------
For the period For the period
from the from the
commencement commencement
For the three month period of operations For the three month period of operations
October 1, 1998 December 31, 1997 October 1, 1998 December 31, 1997
through through through through
December 31, 1998 September 30, 1998 December 31, 1998 September 30, 1998
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 5,460 $ 28,808 $ 10,779 $ 37,001
6,901 21,558 3,834 17,822
--------- --------- --------- -----------
-------------------------------------------------------------------------------------
12,361 50,366 14,613 54,823
--------- --------- --------- -----------
-------------------------------------------------------------------------------------
16,552 30,175 14,459 36,373
28,500 85,500 28,500 85,500
15,545 32,652 15,556 33,062
908 5,041 742 7,204
11,647 27,796 9,692 32,237
9,056 27,084 9,025 27,046
2,697 3,702 2,457 3,702
1,476 4,379 1,466 4,386
6,199 17,476 6,296 17,131
--------- --------- --------- -----------
-------------------------------------------------------------------------------------
92,580 233,805 88,193 246,641
--------- --------- --------- -----------
(26,955) (82,684) (27,150) (82,105)
(7,800) (23,400) (7,800) (23,400)
(25,273) (68,376) (26,735) (74,452)
--------- --------- --------- -----------
32,552 59,345 26,508 66,684
--------- --------- --------- -----------
-------------------------------------------------------------------------------------
(20,191) (8,979) (11,895) (11,861)
--------- --------- --------- -----------
-------------------------------------------------------------------------------------
203,567 (713,834) (178,838) (662,370)
(123,986) (51,529) (10,805) (43,420)
-- (20,494) -- --
14,396 319 (3,802) (945)
-- (15,404) -- --
698,924 170,365 746,762 (522,122)
--------- --------- --------- -----------
-------------------------------------------------------------------------------------
792,901 (630,577) 553,317 (1,228,857)
-------------------------------------------------------------------------------------
$ 772,710 $(639,556) $ 541,422 $(1,240,718)
========= ========= ========= ===========
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
21
<PAGE> 24
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Growth Fund
--------------------------------------------------------------
For the period
from the
commencement
For the four month period of operations
September 1, 1998 For the year October 28, 1996
through ended through
December 31, 1998 August 31, 1998 August 31, 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss.............................. $ (1,002,935) $ (1,202,312) $ (784,650)
Net realized and unrealized gain (loss) on
investments.................................... (5,124,573) 30,640,370 22,693,875
------------ ------------ ------------
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations.................. (6,127,508) 29,438,058 21,909,225
------------ ------------ ------------
- -------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income............................ -- -- --
Capital gains.................................... (9,922,354) (18,667,191) --
------------ ------------ ------------
Total distributions to shareholders.......... (9,922,354) (18,667,191) --
------------ ------------ ------------
- -------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Proceeds from shares sold........................ 58,317,866 86,666,536 166,480,305
Reinvestment of distributions.................... 9,838,003 18,666,482 --
Cost of shares redeemed.......................... (57,363,037) (67,560,735) (7,944,848)
------------ ------------ ------------
Net increase in net assets derived from
capital share transactions................. 10,792,832 37,772,283 158,535,457
------------ ------------ ------------
Total increase (decrease) in net assets...... (5,257,030) 48,543,150 180,444,682
------------ ------------ ------------
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------------------------------------------------
Beginning of period.................................. $229,088,244 $180,545,094 $ 100,412
------------ ------------ ------------
End of period........................................ $223,831,214 $229,088,244 $180,545,094
============ ============ ============
=========================================================================================================================
Capital share transactions are as follows:
Shares issued.................................... 5,245,917 6,694,016 15,894,033
Shares reinvested................................ 909,243 1,840,876 --
Shares redeemed.................................. (5,254,104) (5,222,930) (731,880)
------------ ------------ ------------
Net increase from capital share
transactions............................... 901,056 3,311,962 15,162,153
============ ============ ============
=========================================================================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
22
<PAGE> 25
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Asia Pacific Growth Fund Emerging Markets Growth Fund
------------------------------------------------ ------------------------------------------------
For the period For the period
from the from the
commencement commencement
For the three month period of operations For the three month period of operations
October 1, 1998 December 31, 1997 October 1, 1998 December 31, 1997
through through through through
December 31, 1998 September 30, 1998 December 31, 1998 September 30, 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ (20,191) $ (8,979) $ (11,895) $ (11,861)
792,901 (630,577) 553,317 (1,228,857)
---------- ---------- ---------- -----------
- -------------------------------------------------------------------------------------------------------
772,710 (639,556) 541,422 (1,240,718)
---------- ---------- ---------- -----------
- -------------------------------------------------------------------------------------------------------
-- -- -- --
-- -- -- --
---------- ---------- ---------- -----------
-- -- -- --
---------- ---------- ---------- -----------
- -------------------------------------------------------------------------------------------------------
610,000 4,318,619 -- 4,737,772
-- -- -- --
-- (96,870) -- (10,000)
---------- ---------- ---------- -----------
610,000 4,221,749 -- 4,727,772
---------- ---------- ---------- -----------
1,382,710 3,582,193 541,422 3,487,054
---------- ---------- ---------- -----------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
$3,582,193 $ -- $3,487,054 $ --
---------- ---------- ---------- -----------
$4,964,903 $3,582,193 $4,028,476 $ 3,487,054
========== ========== ========== ===========
=======================================================================================================
69,795 442,994 -- 462,301
-- -- -- --
-- (11,377) -- (1,054)
---------- ---------- ---------- -----------
69,795 431,617 -- 461,247
========== ========== ========== ===========
=======================================================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
23
<PAGE> 26
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Table below sets forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
For the period
For the four from the
month period commencement
September 1, 1998 operations
through For the year October 28, 1996
December 31, ended through
1998 August 31, 1998 August 31, 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 12.39 $ 11.90 $ 10.00
-------- -------- --------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss.............................. (0.04) (0.07) (0.05)
Net gains (losses) on investments (both realized
and unrealized)................................ (0.25) 1.77 1.95
-------- -------- --------
Total Income (Loss) from investment
operations.............................. (0.29) 1.70 1.90
-------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income............. 0.00 0.00 0.00
Distributions from capital gains................. (0.55) (1.21) 0.00
-------- -------- --------
Total distributions....................... (0.55) (1.21) 0.00
-------- -------- --------
Net asset value, end of period..................... $ 11.55 $ 12.39 $ 11.90
======== ======== ========
Total Return.............................. (2.04)%** 16.50% 19.00%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)............. $223,831 $229,088 $180,545
Ratio of expenses to average assets.............. 2.00%* 1.88% 2.11%*
Ratio of net investment loss to average net
assets......................................... (1.46)%* (0.54)% (0.67)%*
Portfolio turnover............................... 116.28%** 219.78% 380.02%**
Annualized portfolio turnover.................... 347.89% 219.78% 450.35%
</TABLE>
- --------------------------------------------------------------------------------
* Annualized
** Not Annualized
Notes to Financial Statements are an integral part of this Schedule.
24
<PAGE> 27
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Table below sets forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
For the period
For the three from the
month period commencement
October 1, 1998 of operations
through December 31, 1997
December 31, 1998 through
- --------------------------------------------------------------------------------- September 30, 1998
<S> <C> <C>
Net asset value, beginning of period........................ $ 8.30 $ 10.00
------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss....................................... (0.04) (0.02)
Net gains (losses) on securities (both realized and
unrealized)............................................. 1.64 (1.68)
------- -------
Total Income (Loss) from investment operations..... 1.60 (1.70)
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... 0.00 0.00
Distributions from capital gains.......................... 0.00 0.00
------- -------
Total distributions................................ 0.00 0.00
------- -------
Net asset value, end of period.............................. $ 9.90 $ 8.30
======= =======
Total Return....................................... 19.28 %** (17.00)%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)...................... $ 4,965 $ 3,582
Ratio of expenses to average assets....................... 2.95 %*+ 2.95 %*+
Ratio of net investment loss to average net assets........ (2.64)%*+ (0.45)%*+
Portfolio turnover........................................ 92.40 %** 283.59 %**
Annualized portfolio turnover............................. 366.60 % 379.16 %
</TABLE>
- --------------------------------------------------------------------------------
* Annualized
** Not Annualized
+ Such ratios are after administrative agent and transfer agent waivers and
Adviser expense reimbursements.
PFPC Inc., the administrative agent and transfer agent, waived a portion of its
fees. The Adviser agreed to 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 2.95% of the net assets
of the Driehaus Asia Pacific Growth Fund for the first twenty four months of its
operations.
Notes to Financial Statements are an integral part of this Schedule.
25
<PAGE> 28
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Table below sets forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
For the period
from the
For the three month period commencement
October 1, 1998 of operations
through December 31, 1997
December 31, 1998 through
- --------------------------------------------------------------------------------------- September 30, 1998
<S> <C> <C>
Net asset value, beginning of period....................... $ 7.56 $ 10.00
------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)............................. (0.03) (0.03)
Net gains (losses) on securities (both realized and
unrealized)............................................ 1.20 (2.41)
------- -------
Total Income (Loss) from investment operations.... 1.17 (2.44)
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... 0.00 0.00
Distributions from capital gains......................... 0.00 0.00
------- -------
Total distributions............................... 0.00 0.00
------- -------
Net asset value, end of period............................. $ 8.73 $ 7.56
======= =======
Total Return...................................... 15.48 %** (24.40)%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)..................... $ 4,028 $ 3,487
Ratio of expenses to average assets...................... 2.75 %*+ 2.75 %*+
Ratio of net investment loss to average net assets....... (1.23)%*+ (0.49)%*+
Portfolio turnover....................................... 82.60 %** 261.21 %**
Annualized portfolio turnover............................ 327.69 % 349.24 %
</TABLE>
- --------------------------------------------------------------------------------
* Annualized
** Not Annualized
+ Such ratios are after administrative agent and transfer agent waivers and
Adviser expense reimbursements.
PFPC Inc., the administrative agent and transfer agent, waived a portion of its
fees. The Adviser agreed to 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 2.75% of the net assets
of the Driehaus Emerging Markets Growth Fund for the first twenty four months of
its operations.
Notes to Financial Statements are an integral part of this Schedule.
26
<PAGE> 29
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
DRIEHAUS ASIA PACIFIC GROWTH FUND
DRIEHAUS EMERGING MARKETS GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The DRIEHAUS INTERNATIONAL GROWTH FUND, the DRIEHAUS ASIA PACIFIC GROWTH
FUND and the DRIEHAUS EMERGING MARKETS GROWTH 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
as follows:
------------------------------------
<TABLE>
<CAPTION>
Fund Commencement of Operations
----------------------------------------------------------------------------------------
<S> <C>
*THE DRIEHAUS INTERNATIONAL GROWTH FUND 10/28/96
THE DRIEHAUS ASIA PACIFIC GROWTH FUND 12/31/97
THE DRIEHAUS EMERGING MARKETS GROWTH FUND 12/31/97
----------------------------------------------------------------------------------------
</TABLE>
* The DRIEHAUS INTERNATIONAL GROWTH FUND was the successor to the assets of the
Driehaus International Large Cap Fund, L.P. (the "Partnership"), a Limited
Partnership organized on July 1, 1990.
------------------------------------
The investment objective of the FUNDS is to maximize capital appreciation.
The DRIEHAUS INTERNATIONAL GROWTH FUND seeks to achieve its objective by
investing primarily in the equity securities of foreign companies.
The DRIEHAUS ASIA PACIFIC GROWTH FUND seeks to achieve its objective by
investing primarily in equity securities of Asia Pacific companies.
The DRIEHAUS EMERGING MARKETS GROWTH FUND seeks to achieve its objective by
investing primarily in the equity securities of emerging market companies.
FISCAL YEAR END
Effective September 1, 1998, the DRIEHAUS INTERNATIONAL GROWTH FUND changed
its fiscal year end to December 31. Effective October 1, 1998, the DRIEHAUS ASIA
PACIFIC GROWTH FUND and the DRIEHAUS EMERGING MARKETS GROWTH FUND each changed
their fiscal year ends to December 31. As a result, these financial statements
and related notes to financial statements include these respective transition to
calendar year periods ("respective transition periods") ending December 31,
1998.
SECURITIES VALUATION AND TRANSACTIONS
Depending upon local convention or regulation, equity securities may be
valued at the last sale price, last bid or asked 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. At December 31, 1998,
there were no securities for which market quotations were not available.
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.
The FUNDS determine income and expenses, daily. This change in net asset
value is allocated daily.
FEDERAL INCOME TAXES
No provision is made for Federal income taxes since the FUNDS have already
elected or intended to be taxed as a "regulated investment company" under
Subchapter M of the Internal Revenue Code and have made all the required
distributions to their shareholders in amounts sufficient to relieve the FUNDS
from all or substantially all Federal income and excise taxes under provisions
of current Federal tax law.
The DRIEHAUS INTERNATIONAL GROWTH FUND, the DRIEHAUS ASIA PACIFIC GROWTH
FUND and the DRIEHAUS EMERGING MARKETS GROWTH FUND intend to utilize provisions
of the federal income tax laws, which allow them to carry a realized capital
loss
27
<PAGE> 30
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
DRIEHAUS ASIA PACIFIC GROWTH FUND
DRIEHAUS EMERGING MARKETS GROWTH FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
forward up to eight years following the year of the loss, and offset such losses
against any future realized gains. At December 31, 1998, the DRIEHAUS
INTERNATIONAL GROWTH FUND, the DRIEHAUS ASIA PACIFIC GROWTH FUND and the
DRIEHAUS EMERGING MARKETS GROWTH FUND had capital loss carryforwards of
approximately $2,663,000, $470,000 and $707,000 respectively, which may be
carried forward eight tax years.
During the year DRIEHAUS INTERNATIONAL GROWTH FUND, DRIEHAUS ASIA PACIFIC
GROWTH FUND and DRIEHAUS EMERGING MARKETS GROWTH FUND made reclassifications of
$2,205,247, $29,170 and $23,756, respectively from undistributed net investment
loss to paid in capital in accordance with the American Institute of Certified
Public Accountants' Statement of Position 93-2, "Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies."
FOREIGN CURRENCY TRANSLATION
Foreign currency is translated into U.S. dollar values based upon the
current rates of exchange on the date of the FUNDS' valuation.
Net realized foreign exchange gains or losses which are reported by the
FUNDS result from currency gains and losses on transaction hedges 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, which are denominated in foreign
currencies (other than investments in securities), as a result of changes in
exchange rates.
Net realized foreign exchange gains or losses on portfolio hedges result
from the non-speculative use of forward contracts with respect to portfolio
positions denominated or quoted in a particular currency in order to reduce or
limit exposure in that currency. The FUNDS had no open portfolio hedges at
December 31, 1998.
The FUNDS do not isolate that portion of the results of operations which
result 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 FUNDS have been deferred and are
amortized over a period of 60 months. The FUNDS' remaining amortization period
for these costs is as follows:
<TABLE>
<CAPTION>
Fund Remaining Amortization Period
- ---------------------------------------------------------------------------------------------
<S> <C>
THE DRIEHAUS INTERNATIONAL GROWTH FUND 33 Months
THE DRIEHAUS ASIA PACIFIC GROWTH FUND 48 Months
THE DRIEHAUS EMERGING MARKETS GROWTH FUND 48 Months
- ---------------------------------------------------------------------------------------------
</TABLE>
------------------------
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,
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.
28
<PAGE> 31
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
DRIEHAUS ASIA PACIFIC GROWTH FUND
DRIEHAUS EMERGING MARKETS GROWTH FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
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 each FUND'S average net
assets.
DCM agreed to absorb other operating expenses to the extent necessary to
ensure that total operating expenses (other than interest, taxes, brokerage
commissions and other portfolio transaction expenses, capital expenditures and
extraordinary expenses) for the DRIEHAUS ASIA PACIFIC GROWTH FUND and the
DRIEHAUS EMERGING MARKETS GROWTH FUND will not exceed, 2.95% and 2.75%,
respectively, of the average net assets of each FUND on an annual basis, for the
first twenty four months of each FUND'S operations after the effective date of
the each FUND'S registration statement.
------------------------------------
The expense caps, amounts accrued and payable to DCM and amounts accrued and
receivable from DCM during the respective transition periods ended December 31,
1998 are as follows:
<TABLE>
<CAPTION>
Expense
Reimbursement
Advisory Fees Payable Receivable
(included in due (included in
Fund Advisory Fees to affiliates) Expense Cap due from affiliates)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DRIEHAUS INTERNATIONAL
GROWTH FUND $1,029,285 $270,128 Not Applicable --
DRIEHAUS ASIA PACIFIC GROWTH
FUND 16,552 -- 2.95% $ 8,721
DRIEHAUS EMERGING MARKETS
GROWTH FUND 14,459 -- 2.75 12,275
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
------------------------------------
Driehaus Securities Corporation ("DSC") has acted as the FUND'S distributor
since December 31, 1998. For the period December 18, 1997 to December 30, 1998,
the FUNDS' were self-distributed. Prior to December 18, 1997, DSC was the FUNDS'
distributor.
DSC acts as a broker for the FUNDS for domestically traded securities. For
the respective transition periods ended December 31, 1998, the FUNDS paid the
following brokerage commissions:
------------------------------------
<TABLE>
<CAPTION>
Total Commissions Shares Traded
Fund Commissions Paid to DSC through DSC
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DRIEHAUS INTERNATIONAL GROWTH FUND $1,206,835 $81,396 1,546,238
DRIEHAUS ASIA PACIFIC GROWTH FUND 36,688 1,432 25,500
DRIEHAUS EMERGING MARKETS GROWTH FUND 22,878 10,194 152,440
- -------------------------------------------------------------------------------------------------------------
</TABLE>
A portion of these commissions are, in turn paid by DSC to third parties for
clearing and floor brokerage services.
------------------------------------
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. In compensation for its services,
PFPC Inc. receives the larger of a monthly minimum fee or a monthly fee based
upon average net assets. PFPC Inc. has waived their minimum fees during the
first twenty four months of operations for the DRIEHAUS ASIA PACIFIC GROWTH FUND
and the DRIEHAUS EMERGING MARKETS GROWTH FUND. For the respective transition
periods ended December 31, 1998, $26,955 and $27,150 of these fees have been
waived by PFPC Inc. for the DRIEHAUS ASIA PACIFIC GROWTH FUND and the DRIEHAUS
EMERGING MARKETS GROWTH FUND, respectively.
PFPC Inc., also acts as the transfer agent and dividend dispensing agent for
the FUNDS. PFPC Inc. has waived a portion of its monthly fee for transfer
29
<PAGE> 32
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
DRIEHAUS ASIA PACIFIC GROWTH FUND
DRIEHAUS EMERGING MARKETS GROWTH FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
agent service, for the first twenty four months of operations, for the DRIEHAUS
ASIA PACIFIC GROWTH FUND and the DRIEHAUS EMERGING MARKETS GROWTH FUND. For the
respective transition periods ended December 31, 1998, $7,800 and $7,800 of
these fees were waived by PFPC Inc., for the DRIEHAUS ASIA PACIFIC GROWTH FUND
and the DRIEHAUS EMERGING MARKETS GROWTH FUND, respectively.
C. FOREIGN CURRENCY FORWARD CONTRACTS
At December 31, 1998 the FUNDS had foreign currency forward contracts
outstanding under which they are obligated to exchange currencies at specified
future dates. At December 31, 1998 the FUNDS' currency transactions are limited
to transaction hedges.
The contractual amounts of foreign currency forward contracts do not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered. Risks arise from the
possible inability of counter parties to meet the terms of their contracts and
from movements in currency values.
------------------------------------
The FUNDS had the following outstanding contracts at December 31, 1998:
DRIEHAUS INTERNATIONAL GROWTH FUND
Transaction Hedges:
Foreign Currency Purchases:
<TABLE>
<CAPTION>
Unrealized
Appreciation
US Dollars Settlement (Depreciation)
Sold Foreign Currency Purchased Date at December 31, 1998
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 362,156 215,826 Pounds Sterling January 1999 $ (3,410)
340,348 202,347 Pounds Sterling January 1999 (4,027)
169,885 101,002 Pounds Sterling January 1999 (2,010)
447,382 268,698 Pounds Sterling January 1999 (793)
595,079 357,405 Pounds Sterling January 1999 (1,054)
55,643 90,595 Australian Dollars January 1999 (177)
97,318 158,421 Australian Dollars January 1999 (315)
133,863 15,541,478 Japanese Yen January 1999 3,827
270,065 31,262,678 Japanese Yen January 1999 6,943
56,039 92,913 Singapore Dollars January 1999 296
28,616 47,202 Singapore Dollars January 1999 6
1,112,757 238,797,706 Hungarian Forints January 1999 (28,318)
--------
$(29,032)
- -------------------------------------------------------------------------------
</TABLE>
Foreign Currency Sales:
<TABLE>
<CAPTION>
Unrealized
Appreciation
US Dollars Settlement (Depreciation)
Purchased Foreign Currency Sold Date at December 31, 1998
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 747,054 86,732,915 Japanese Yen January 1999 $(21,359)
473,722 54,838,044 Japanese Yen January 1999 (12,179)
572,401 66,261,194 Japanese Yen January 1999 (14,715)
158,454 18,155,672 Japanese Yen January 1999 (2,437)
229,296 26,272,688 Japanese Yen January 1999 (3,527)
145,964 1,185,246 Swedish Krona January 1999 (391)
88,335 716,381 Swedish Krona January 1999 (129)
193,029 1,571,756 Swedish Krona January 1999 (1,082)
--------
$(55,819)
--------
Net unrealized depreciation $(84,851)
========
- -------------------------------------------------------------------------------
</TABLE>
30
<PAGE> 33
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
DRIEHAUS ASIA PACIFIC GROWTH FUND
DRIEHAUS EMERGING MARKETS GROWTH FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
Transaction Hedges:
Foreign Currency Purchases:
<TABLE>
<CAPTION>
Unrealized
Appreciation
US Dollars Settlement (Depreciation)
Sold Foreign Currency Purchased Date at December 31, 1998
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 44,206 71,961 Australian Dollars January 1999 $ (148)
4,280 6,968 Australian Dollars January 1999 (14)
7,526 12,251 Australian Dollars January 1999 (24)
74,035 8,595,496 Japanese Yen January 1999 2,117
34,035 3,899,725 Japanese Yen January 1999 524
4,998 8,286 Singapore Dollars January 1999 26
--------
$ 2,481
--------
Net unrealized appreciation $ 2,481
========
- -------------------------------------------------------------------------------
</TABLE>
DRIEHAUS EMERGING MARKETS GROWTH FUND
Transaction Hedges:
Foreign Currency Purchases:
<TABLE>
<CAPTION>
Unrealized
Appreciation
US Dollars Settlement (Depreciation)
Sold Foreign Currency Purchased Date at December 31, 1998
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 44,294 72,105 Australian Dollars January 1999 $ (148)
25,449 149,513 South African Rand January 1999 (6)
27,409 160,343 South African Rand January 1999 (123)
--------
$ (277)
- -------------------------------------------------------------------------------
</TABLE>
Foreign Currency Sales:
<TABLE>
<CAPTION>
Unrealized
Appreciation
US Dollars Settlement (Depreciation)
Purchased Foreign Currency Sold Date at December 31, 1998
- -------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 12,867 21,333 Singapore Dollars January 1999 $ (68)
--------
Net unrealized depreciation $ (345)
========
- -------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 34
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
DRIEHAUS ASIA PACIFIC GROWTH FUND
DRIEHAUS EMERGING MARKETS GROWTH FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
D. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments securities, other than
short-term obligations, for the respective transition periods ended December 31,
1998, were as follows:
<TABLE>
<CAPTION>
Fund Purchases Sales
- --------------------------------------------------------------------------------------------
<S> <C> <C>
DRIEHAUS INTERNATIONAL GROWTH FUND $240,249,703 $233,363,536
DRIEHAUS ASIA PACIFIC GROWTH FUND 4,323,443 3,467,875
DRIEHAUS EMERGING MARKETS GROWTH FUND 3,050,969 2,719,431
- --------------------------------------------------------------------------------------------
</TABLE>
------------------------------------
E. RESTRICTED SECURITIES
The FUNDS may purchase securities that have been privately placed but that
are eligible for purchase and sale under rule 144A under the Securities Act of
1933. At December 31, 1998 there were no such securities in the FUNDS'
portfolios.
F. LINES OF CREDIT
The DRIEHAUS INTERNATIONAL GROWTH FUND has a $5 million committed line of
credit and a $5 million uncommitted line of credit. These lines of credit are
available primarily to meet large, unexpected shareholder withdrawals. For the
four month period ended December 31, 1998, no borrowing was made on these lines
of credit.
G. LONG TERM CAPITAL GAINS DISTRIBUTION
The DRIEHAUS INTERNATIONAL GROWTH FUND distributed a total long term capital
gain dividend of $9,922,354 in December, 1998.
H. OFF BALANCE SHEET RISKS
The FUNDS' 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.
32
<PAGE> 35
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of Driehaus International Growth Fund,
Driehaus Asia Pacific Growth Fund and Driehaus Emerging Markets Growth Fund:
We have audited the accompanying statements of assets and liabilities of
DRIEHAUS INTERNATIONAL GROWTH FUND, DRIEHAUS ASIA PACIFIC GROWTH FUND AND
DRIEHAUS EMERGING MARKETS GROWTH FUND (the "Funds"), including the schedules of
investments and investments by industry on pages 4-6, 9-11 and 15-17, as of
December 31, 1998, and the related statements of operations, statements of
changes in net assets, and financial highlights for the periods indicated
thereon. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights 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 and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian. 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 and financial highlights referred
to above present fairly, in all material respects, the financial positions of
Driehaus International Growth Fund, Driehaus Asia Pacific Growth Fund and
Driehaus Emerging Markets Growth Fund as of December 31, 1998, and the results
of their operations, changes in their net assets, and financial highlights for
the periods indicated thereon, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Chicago, Illinois
February 19, 1999
33
