<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
Dusko Culafic
Assistant Treasurer
Jennifer L. Billingsley
Assistant Secretary
Investment Advisor
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.
103 Bellevue Parkway
Wilmington, DE 19809
Custodian
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, NY 11245
ANNUAL REPORT TO SHAREHOLDERS
DECEMBER 31, 1999
LOGO
DRIEHAUS INTERNATIONAL GROWTH FUND
DRIEHAUS INTERNATIONAL DISCOVERY FUND
DRIEHAUS EUROPEAN OPPORTUNITY FUND
DRIEHAUS ASIA PACIFIC GROWTH FUND
DRIEHAUS EMERGING MARKETS GROWTH FUND
Distributed by:
DRIEHAUS SECURITIES CORPORATION
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
- --------------------------------------------------------------------------------
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
Last year, 1999, was truly outstanding for all of the Driehaus Mutual Funds.
At the beginning of the year we launched two new funds, Driehaus International
Discovery Fund and Driehaus European Opportunity Fund, bringing us to five
international funds. All five funds produced strong performance for
shareholders, on an absolute and relative basis, each exceeding their respective
benchmarks by wide margins. In addition to the spectacular performance, our
family of funds reached several important milestones during the year. Our
flagship fund, the Driehaus International Growth Fund, received Morningstar's
highest ratings in both the broader international stock fund category and the
more specific foreign stock fund category. All Driehaus Mutual Funds ranked
within the top 3% for the year in their respective categories, as compiled by
Lipper Analytical Services, with two of the funds, Driehaus Asia Pacific Growth
Fund and Driehaus European Opportunity Fund, ranking as the number one fund in
their Lipper categories.
During the year, we continued to develop our mutual fund organization to
better serve our shareholders. We added an international technology analyst as
well as additional support staff for the international portfolio managers and
research team. We also added experienced sales, marketing, and client servicing
professionals and support staff during 1999, including the hiring of a director
of sales to oversee the sales effort for all of our products, and a mutual fund
sales specialist dedicated to our mutual fund products. The information
technology team continues to enhance our own proprietary systems as well as seek
technology tools from outside that can improve our performance.
I'd like to thank all of you for your support as shareholders and encourage
you to read this report further to learn about our exciting family of
international funds. While we have been successfully investing internationally
since 1989, we are still relatively new to the mutual fund business. We
appreciate your interest and investment in our products. Although 1999 was
characterized by a favorable environment for our style of investing, we proved
that we were able to achieve superior performance relative to our competitors
during this period. However, we believe that the exceptional market of 1999 will
not be easily duplicated, and the most reasonable way to think of an investment
in these funds is over a full market cycle. It is important for all investors to
appreciate that time, not market timing, leads to superior returns. We hope that
you will remain satisfied investors.
Sincerely,
Richard H. Driehaus
Richard H. Driehaus
President
Driehaus Mutual Funds
<PAGE> 3
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Driehaus International Growth Fund
Portfolio Manager's Letter....................... 1
Schedule of Investments.......................... 4
Driehaus International Discovery Fund
Portfolio Managers' Letter....................... 11
Schedule of Investments.......................... 14
Driehaus European Opportunity Fund
Portfolio Manager's Letter....................... 21
Schedule of Investments.......................... 24
Driehaus Asia Pacific Growth Fund
Portfolio Manager's Letter....................... 31
Schedule of Investments.......................... 34
Driehaus Emerging Markets Growth Fund
Portfolio Manager's Letter....................... 41
Schedule of Investments.......................... 44
Each Fund section includes:
Schedule of Investments by Industry
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements............................... 51
Report of Independent Public Accountants.................... 57
</TABLE>
<PAGE> 4
ANNUAL REPORT TO SHAREHOLDERS
DECEMBER 31, 1999
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, under appropriate market conditions, in companies
that meet these criteria. Investors should note that investments
in overseas markets can pose more risks than U.S. investments, and
the Funds' share prices are expected to be more volatile than that
of U.S.-only funds. In addition, the Funds' returns will fluctuate
with changes in stock market conditions, currency values, interest
rates, foreign government regulations, and economic and political
conditions in countries in which the Funds invest. These risks are
generally greater when investing in emerging markets.
DRIEHAUS INTERNATIONAL GROWTH FUND
DRIEHAUS INTERNATIONAL DISCOVERY FUND
DRIEHAUS EUROPEAN OPPORTUNITY FUND
DRIEHAUS ASIA PACIFIC GROWTH FUND
DRIEHAUS EMERGING MARKETS GROWTH FUND
<PAGE> 5
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND - PORTFOLIO MANAGER'S LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
For the period January 1, 1999 through December 31, 1999, the Driehaus
International Growth Fund returned 98.94%. This compares with an annual return
of 26.96% for the Morgan Stanley Capital International (MSCI) Europe, Australia,
Far East (EAFE) Index and 37.83% for the Lipper International Fund Index for
1999. For the year, the Driehaus International Growth Fund ranked 12th among the
618 funds in its Lipper International Fund peer group.(1) In recognition of the
fund's three-year performance, the fund was awarded a Morningstar rating of five
stars, representing the fund's overall rating among 434 international equity
funds as of December 31, 1999.(2)
Because the Driehaus International Growth Fund is managed with a longer time
frame in mind, it is also important to note the fund's three-year and five-year
performance. For the three years ended December 31, 1999, the fund posted an
annualized return of 37.86%, while the five-year annualized return was 30.96%,
compared with the MSCI EAFE Index's 15.74% and 12.83%, respectively. Since the
fund's inception on July 1, 1990, the Driehaus International Growth Fund
returned 22.46% annualized, compared with the MSCI EAFE Index's 8.86% and the
Lipper International Fund Index's 10.93% over the same period.(3)
In 1999, the fund's outperformance was due largely to well-timed shifts in
regional asset allocation as well as superior stock selection. As we reported at
the end of the first half, we moved a large amount of the fund's assets out of
Europe and into Asia during the first and second quarters of 1999. This move was
based on what we judged to be slowing economic growth in Europe and the
beginnings of a recovery in Asia. On a broad basis, this regional shift
accounted for much of the fund's outperformance in the first three quarters of
1999. During this period, our Japanese investments focused primarily on the
service sector, including technology and retailing. In the rest of Asia, we
emphasized companies that we believed stood to benefit from the recovery from
the global economic crisis of 1997-1998. The positive fundamentals of our
Japanese holdings were recognized very quickly by the market and were
accompanied by a rapid rise in share prices. By the fourth quarter of 1999, many
of our Japanese stocks had reached levels where we thought it appropriate to cut
back our exposure. We also trimmed our positions in Southeast Asia as some of
the early signs of economic recovery stalled out.
Some of the proceeds from the reduction in our Asian holdings were then
reinvested in Europe during the fourth quarter. For much of 1999, Europe was a
mixed bag, with certain sectors continuing to produce reasonable performance,
including media, telecommunications, and technology. However, the performance of
the market as a whole was somewhat lackluster. This changed in the fourth
quarter as the markets started to show improved performance. While an economic
recovery in Europe has been predicted before, in 1999 we saw some very positive
economic news from this region and extremely strong fundamentals in selected
sectors.
The fund increased its exposure to emerging markets following their dramatic
decline in 1998. It is our view that emerging markets are becoming increasingly
decoupled from each other. This is different from the situation during much of
the 1990s, when they tended to move as a group. Going forward, we believe that
stock and market selection will be the key to successful performance in this
area. Our biggest weightings in emerging markets were in Israel and India, both
of which are producing a number of rapidly growing entrepreneurial companies.
Over the past several months, we have noticed that the links between the
stock markets of various countries and certain industries have become much
stronger. For example, following the rollout of a number of successful Internet
start-ups in the U.S. over the past several years, we are now seeing companies
adopt similar business models in Europe, Asia, and even the emerging markets.
Obviously, there has always been a link between what happens in technology and
other sectors of the U.S. market and what happens in other countries. However,
the growth of the Internet has now strengthened this link and shortened the
reaction time between markets. We believe that this development will be very
positive for growth investors internationally as entrepreneurs attempt to
replicate business models that have succeeded in the U.S. and create more growth
companies and opportunities to invest.
1999 was clearly the most outstanding year for the Driehaus International
Growth Fund since I began managing the fund at its inception in July 1990.
Looking ahead, our fundamental outlook for global investing is positive, as the
U.S. continues to exhibit strong growth and Europe proceeds with its recovery.
We are also looking for good performance in 2000 from Eastern Europe and
selectively from Latin America. Returns for
1
<PAGE> 6
1999 were unusual, and we would caution that it would be normal to experience
volatility or some amount of correction after the recent run-up in the
valuations of growth companies. We are optimistic about the fundamentals of the
companies in our portfolio, and we continue to find new and exciting companies
in which to invest.
I would like to extend a special welcome to our new shareholders and thank
our long-term investors. We appreciate the trust you have shown in us, and we
will continue to work to warrant that trust in the years ahead.
Sincerely,
William R Anderson
William R. Andersen
Portfolio Manager
February 18, 2000
- ---------------
(1) The Fund's total return for the period from 12/31/98 through 12/31/99 was
ranked number 12 out of 618 funds by Lipper Analytical Services, Inc. in the
Lipper International Fund category.
(2) Morningstar proprietary ratings reflect risk-adjusted performance through
12/31/99. Past performance does not guarantee future returns. Subject to change
every month, ratings are calculated from the Fund's three-, five-, and 10-year
(when available) average annual total returns in excess of 90-day treasury bill
returns with appropriate fee adjustments and a risk factor that reflects fund
performance below 90-day T-bill returns. The top 10% of the funds in an
investment category receive five stars; the next 22.5% receive four stars; the
next 35% receive three stars; the next 22.5% receive two stars; and the bottom
10% receive one star. For the three-year period ended 12/31/99, Driehaus
International Growth Fund received five stars among 434 International Stock
Funds. The Fund received an overall rating of five stars.
(3) The Driehaus International Growth Fund performance data includes the
performance of the Driehaus International Large Cap Fund, L.P. (the
"Partnership"), the Fund's predecessor, for the periods before the Fund's
registration statement became effective. The Partnership, which was established
on July 1, 1990, was managed following substantially the same objective,
policies, and philosophies as are currently followed by the Driehaus
International Growth Fund, successor to the Partnership's assets on October 28,
1996. The Partnership was not registered under the Investment Company Act of
1940 ("1940 Act") 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 estimated expenses of
the Fund.
2
<PAGE> 7
DRIEHAUS INTERNATIONAL GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DRIEHAUS INTERNATIONAL MSCI LIPPER
GROWTH FUND EAFE INTERNATIONAL
(DRIGX) INDEX FUND INDEX
---------------------- ----- -------------
<S> <C> <C> <C>
One Year 98.94% 26.96% 37.83%
Three Years 37.86% 15.74% 18.53%
Five Years 30.96% 12.83% 15.96%
Since Inception (7/1/90 -- 12/31/99) 22.46% 8.86% 10.93%
</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
DRIGX MSCI EAFE INDEX FUND INDEX
----- --------------- --------------------
<S> <C> <C> <C>
Jul 1990 100000 100000 100000
86601 78801 81729
Dec 1990 89755 87099 85405
102746 93573 91999
105643 88467 89596
105259 96051 95356
Dec 1991 109228 97661 96654
117111 86071 94687
126030 87891 98947
118282 89216 93676
Dec 1992 118606 85773 92514
135240 96054 100444
142834 105716 105962
163373 112727 116121
Dec 1993 206030 113701 128763
175484 117676 127382
170382 123688 128499
190949 123808 133501
Dec 1994 177981 122545 127815
169343 124827 124638
186111 125734 130987
207588 130976 138125
Dec 1995 210166 136279 140625
239371 140217 146824
268940 142436 152817
253440 142257 152934
Dec 1996 261596 144520 160915
270985 142257 164901
307522 160718 183358
320208 159586 186871
Dec 1997 299239 147090 172578
368797 168726 198181
404569 170518 199863
327062 146280 168329
Dec 1998 344570 176503 194428
353222 178958 196919
388723 183506 207850
411993 191559 214857
Dec 1999 685472 224096 267988
</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, since
July 1, 1990, (the date of the Partnership's inception), with all dividends and
capital gains reinvested, with the Morgan Stanley Capital International (MSCI)
Europe, Australia and Far East (EAFE) Index with dividends reinvested and the
Lipper International Fund Index with dividends reinvested for the same period.
The MSCI EAFE 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. Source: Morgan Stanley Capital
International.
The Lipper International Fund 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.
Source: Lipper Analytical Services.
3
<PAGE> 8
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 94.5%
- ----------------------------------------------------------
EUROPE -- 46.8%
UNITED KINGDOM -- 14.1%
ARM Holdings PLC**......... 60,475 $ 4,080,314
COLT Telecom Group PLC**... 55,040 2,817,435
COLT Telecom Group PLC --
ADR**.................... 23,930 4,881,720
Eidos PLC**................ 57,510 5,062,827
Eidos PLC -- ADR**......... 6,860 569,380
Energis PLC**.............. 83,145 3,994,204
Freeserve PLC**............ 567,715 5,323,359
Kingston Communication
PLC**.................... 380,105 4,681,625
Logica PLC................. 232,840 6,006,420
Pearson PLC................ 49,535 1,603,478
Psion PLC.................. 120,470 5,036,124
QXL.com PLC**.............. 377,075 8,862,249
Thus PLC**................. 592,895 3,715,888
WPP Group PLC.............. 586,665 9,296,348
------------
65,931,371
------------
GERMANY -- 8.6%
Consors Discount Broker
AG**..................... 40,610 3,394,733
EM TV & Merchandising AG... 96,600 6,372,545
Intershop Communications
AG**..................... 28,830 8,246,268
Kamps AG................... 70,834 4,922,496
Mannesmann AG.............. 26,542 6,426,324
SAP AG..................... 7,855 3,860,651
Siemens AG................. 53,570 6,852,039
------------
40,075,056
------------
FRANCE -- 6.9%
Business Objects SA --
ADR**.................... 59,891 8,002,935
LVMH (Louis Vuitton Moet
Hennessy)................ 4,115 1,843,026
Societe Television
Francaise SA............. 18,473 9,674,650
STMicroelectronics NV...... 65,917 10,144,141
Thomson Multimedia**....... 46,662 2,514,268
------------
32,179,020
------------
NETHERLANDS -- 6.2%
ASM Lithography Holding
NV -- ADR**.............. 94,769 10,779,974
Equant NV**................ 24,703 2,766,736
Fox Kids Europe NV**....... 14,295 182,845
KPNQwest NV**.............. 65,745 4,376,820
United Pan-Europe
Communications NV**...... 83,344 10,660,377
------------
28,766,752
------------
SWEDEN -- 4.2%
Framfab AB**............... 1,025 185,531
Hennes & Mauritz AB -- B... 192,230 6,439,298
Icon Medialab International
AB**..................... 42,495 1,478,434
NetCom AB -- B**........... 108,930 7,656,340
Skandia Forsakrings AB..... 131,910 3,984,587
------------
19,744,190
------------
</TABLE>
<TABLE>
- ----------------------------------------------------------
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
TURKEY -- 3.2%
Akbank TAS................. 90,943,000 $ 2,682,684
Dogan Yayin Holding AS**... 155,230,000 2,289,528
Haci Omer Sabanci Holding
AS -- ADR................ 9,720 141,123
Yapi ve Kredi Bankasi AS... 317,338,818 9,799,825
------------
14,913,160
------------
FINLAND -- 2.1%
Nokia Oyj.................. 55,230 10,012,489
------------
ITALY -- 1.1%
Arnoldo Mondadori Editore
SpA...................... 154,761 4,909,831
------------
SPAIN -- 0.4%
Acciona SA................. 26,190 1,477,128
Telefonica SA**............ 1,938 48,406
Terra Networks SA**........ 7,325 400,223
------------
1,925,757
------------
RUSSIA -- 0.0%
Novosibirsk Telephone**.... 4,000 32,000
------------
Total Europe............... 218,489,626
------------
FAR EAST -- 35.0%
JAPAN -- 11.3%
Daiwa Securities Group,
Inc...................... 132,600 2,075,241
Fast Retailing Co., Ltd.... 16,500 6,718,215
Internet Initiative Japan,
Inc. -- ADR**............ 40,954 3,980,217
Konami Co., Ltd............ 31,100 5,555,202
Matsushita Communication
Industrial Co., Ltd...... 2,000 528,531
Mobilephone
Telecommunications
International, Ltd....... 75 7,487,521
Murata Manufacturing Co.,
Ltd...................... 22,000 5,167,857
Nichii Gakkan Co........... 34,050 6,662,029
NTT Mobile Communications
Network, Inc............. 116 4,461,975
Taiyo Yuden Co., Ltd....... 81,000 4,804,346
The Goodwill Group, Inc.... 57 2,789,469
The Nikko Securities Co.,
Ltd...................... 173,000 2,189,380
Trend Micro, Inc.**........ 200 50,504
------------
52,470,487
------------
HONG KONG -- 8.5%
CCT Telecom Holdings,
Ltd.**................... 7,444,000 5,586,692
China.com Corp. -- A**..... 109,334 8,596,386
China Telecom, Ltd.**...... 1,838,000 11,659,027
Hutchinson Whampoa, Ltd.... 306,000 4,513,157
Pacific Century CyberWorks,
Ltd.**................... 3,959,000 9,352,864
------------
39,708,126
------------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
4
<PAGE> 9
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
SOUTH KOREA -- 5.5%
Cheil Communications,
Inc...................... 71,855 $ 5,435,794
Dacom Corp.**.............. 13,290 6,846,896
Insung Information**....... 68,535 2,341,839
Korea Data Systems......... 25,926 296,819
Korea Thrunet Co.,
Ltd.**................... 37,409 2,539,136
SK Telecom Co., Ltd. --
ADR...................... 160,568 6,161,799
Trigem Computer, Inc....... 17,077 1,894,938
------------
25,517,221
------------
INDIA -- 5.2%
Infosys Technologies,
Ltd...................... 8,280 2,763,093
Satyam Computer Services,
Ltd...................... 100,000 5,055,172
Satyam Infoway, Ltd. --
ADR**.................... 30,674 4,754,470
Silverline Technologies,
Ltd...................... 240,000 4,469,241
Zee Telefilms, Ltd......... 295,000 7,410,943
------------
24,452,919
------------
SINGAPORE -- 2.3%
Chartered Semiconductor
Manufacturing, Ltd. --
ADR**.................... 35,007 2,555,511
Datacraft Asia, Ltd........ 732,000 6,075,600
NatSteel Electronics,
Ltd...................... 395,000 2,087,061
------------
10,718,172
------------
THAILAND -- 1.4%
Advanced Info Service
Public Co., Ltd.
(Foreign)**.............. 309,100 5,186,545
TelecomAsia Corp. Public
Co., Ltd. (Foreign)**.... 1,196,000 1,555,927
------------
6,742,472
------------
INDONESIA -- 0.4%
PT Astra International
Tbk**.................... 3,086,000 1,656,172
------------
TAIWAN -- 0.3%
Acer, Inc. -- GDR**........ 103,500 1,474,875
------------
PHILIPPINES -- 0.1%
Ayala Land, Inc............ 2,086,400 543,603
------------
Total Far East............. 163,284,047
------------
NORTH AMERICA -- 6.4%
MEXICO -- 3.3%
Grupo Financiero Bancomer
SA de CV -- O............ 10,272,090 4,293,137
Grupo Televisa SA --
GDR**.................... 72,589 4,954,199
Telefonos de Mexico SA --
ADR -- L................. 54,588 6,141,151
------------
15,388,487
------------
</TABLE>
<TABLE>
- ----------------------------------------------------------
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
UNITED STATES -- 3.1%
FirstCom Corp.**........... 159,218 $ 5,851,261
Global TeleSystems Group,
Inc.**................... 62,572 2,166,555
MIH, Ltd.**................ 34,832 2,055,088
NTL, Inc.**................ 37,695 4,702,451
------------
14,775,355
------------
Total North America........ 30,163,842
------------
MIDDLE EAST -- 5.6%
ISRAEL -- 5.6%
AudioCodes, Ltd.**......... 86,140 7,924,880
Check Point Software
Technologies, Ltd.**..... 46,301 9,202,324
NICE Systems, Ltd. --
ADR**.................... 89,829 4,418,464
Orbotech, Ltd.**........... 27,300 2,115,750
Partner Communications Co.,
Ltd. -- ADR**............ 95,191 2,463,067
------------
26,124,485
------------
Total Middle East.......... 26,124,485
------------
SOUTH AMERICA -- 0.6%
BRAZIL -- 0.6%
Petroleo Brasileiro SA
(Pref.).................. 8,834,650 2,249,620
Petroleo Brasileiro SA
(Pref.) -- ADR........... 15,800 405,238
------------
2,654,858
------------
Total South America........ 2,654,858
------------
AFRICA -- 0.1%
SOUTH AFRICA -- 0.1%
Liberty International
PLC...................... 37,106 278,822
------------
Total Africa............... 278,822
------------
- ----------------------------------------------------------
TOTAL INVESTMENTS (COST
$255,139,085).............. 94.5% $440,995,680
Other Assets in Excess of
Liabilities................ 5.5% 25,575,740
----------- ------------
Net Assets..................... 100.0% $466,571,420
==========================================================
The federal income tax basis and unrealized appreciation
(depreciation) for all investments is as follows:
</TABLE>
<TABLE>
<S> <C>
Basis.................................... $255,139,085
============
Gross Appreciation....................... $188,728,764
Gross Depreciation....................... (2,872,169)
------------
Net Appreciation....................... $185,856,595
============
**Non-income producing security.
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
5
<PAGE> 10
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Automobiles............................ 0.4%
Auto Parts Manufacturing............... 1.4%
Banking................................ 2.7%
Broadcast & Publishing Services........ 9.2%
Business & Publishing Services......... 2.8%
Chemicals.............................. 0.5%
Communications......................... 0.6%
Computer Manufacturers................. 0.8%
Construction........................... 0.3%
Consumer Services/Multi-Industry....... 1.0%
Data Processing........................ 2.5%
Electronic Components.................. 4.0%
Electronic Systems/Devices............. 2.4%
Financial Services..................... 1.8%
Health Care............................ 0.5%
Industrial Services.................... 1.5%
Insurance.............................. 0.8%
Investments............................ 1.2%
Machinery & Engineering................ 0.9%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Mail-Order/Retail/Apparel.............. 1.0%
Merchandising.......................... 1.4%
Office/Communications Equipment........ 1.0%
Oil.................................... 0.1%
Other Computers........................ 0.4%
Photo-Optical Equipment................ 2.3%
Real Estate............................ 0.2%
Retailing -- Foods..................... 1.1%
Retailing -- Goods..................... 0.4%
Semiconductors/Components.............. 3.2%
Services to Medical Profession......... 0.9%
Software & EDP Services................ 7.9%
Technology/Multi-Industry.............. 8.6%
Telecommunications..................... 27.1%
Telephone Utilities.................... 2.2%
Textiles & Apparel..................... 1.4%
Other Assets In Excess Of
Liabilities.......................... 5.5%
------
TOTAL.................................. 100.0%
======
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
6
<PAGE> 11
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (Cost $255,139,085)........ $440,995,680
Foreign currency (Cost $3,716).......................... 3,577
Cash.................................................... 24,631,149
Receivables:
Dividends.......................................... 147,955
Interest........................................... 51,947
Investment securities sold......................... 790,594
Fund shares sold................................... 564,463
Prepaid expenses........................................ 27,608
Deferred organizational costs........................... 44,403
------------
- ----------------------------------------------------------------------------
TOTAL ASSETS................................... 467,257,376
------------
- ----------------------------------------------------------------------------
LIABILITIES:
Payables:
Due to affiliates.................................. 539,537
Accrued expenses........................................ 146,419
------------
- ----------------------------------------------------------------------------
TOTAL LIABILITIES.............................. 685,956
------------
- ----------------------------------------------------------------------------
NET ASSETS.................................................. $466,571,420
============
SHARES OUTSTANDING.......................................... 22,082,106
============
NET ASSET VALUE PER SHARE................................... $ 21.13
============
============================================================================
NET ASSETS CONSISTED OF THE FOLLOWING AT DECEMBER 31, 1999:
Paid-in capital......................................... $240,268,784
Undistributed net realized gain......................... 40,451,133
Unrealized foreign exchange loss........................ (5,092)
Unrealized appreciation on investments.................. 185,856,595
------------
NET ASSETS..................................... $466,571,420
============
============================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement
7
<PAGE> 12
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT LOSS:
Income:
Dividends (Net of non-reclaimable foreign taxes of
$186,893)......................................... $ 1,831,362
Interest........................................... 323,936
------------
- -------------------------------------------------------------------------------
Total income..................................... 2,155,298
------------
- -------------------------------------------------------------------------------
Expenses:
Investment advisory fee............................ 4,080,429
Administration fee................................. 314,358
Professional fees.................................. 118,152
Federal and state registration fees................ 23,770
Custodian fee...................................... 244,884
Transfer agent fees................................ 42,730
Trustees' fees..................................... 18,561
Amortization of organization costs................. 25,371
Miscellaneous...................................... 89,085
------------
- -------------------------------------------------------------------------------
Total expenses................................... 4,957,340
------------
- -------------------------------------------------------------------------------
Net investment loss............................ (2,802,042)
------------
- -------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions............ 88,188,307
Net realized foreign exchange loss...................... (3,724,043)
Net change in unrealized foreign exchange gain.......... 15,858
Change in unrealized appreciation of investments........ 150,066,154
------------
- -------------------------------------------------------------------------------
Net gain on investments........................ 234,546,276
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $231,744,234
============
===============================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement
8
<PAGE> 13
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the four month period
For the year September 1, 1998 For the year
ended through ended
December 31, 1999 December 31, 1998 August 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss........................ $ (2,802,042) $ (1,002,935) $ (1,202,312)
Net realized and unrealized gain (loss) on
investments.............................. 234,546,276 (5,124,573) 30,640,370
------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............ 231,744,234 (6,127,508) 29,438,058
------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income...................... -- -- --
Capital gains.............................. (32,567,117) (9,922,354) (18,667,191)
------------- ------------ ------------
Total distributions to shareholders.... (32,567,117) (9,922,354) (18,667,191)
------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Proceeds from shares sold.................. 242,087,350 58,317,866 86,666,536
Reinvestment of distributions.............. 32,422,270 9,838,003 18,666,482
Cost of shares redeemed.................... (230,946,531) (57,363,037) (67,560,735)
------------- ------------ ------------
Net increase in net assets derived from
capital share transactions........... 43,563,089 10,792,832 37,772,283
------------- ------------ ------------
Total increase (decrease) in net
assets............................... 242,740,206 (5,257,030) 48,543,150
------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------------------
Beginning of period............................ $ 223,831,214 $229,088,244 $180,545,094
------------- ------------ ------------
End of period.................................. $ 466,571,420 $223,831,214 $229,088,244
============= ============ ============
===========================================================================================================================
Capital share transactions are as follows:
Shares issued.............................. 17,125,507 5,245,917 6,694,016
Shares reinvested.......................... 1,765,919 909,243 1,840,876
Shares redeemed............................ (16,194,532) (5,254,104) (5,222,930)
------------- ------------ ------------
Net increase from capital share
transactions......................... 2,696,894 901,056 3,311,962
============= ============ ============
===========================================================================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement
9
<PAGE> 14
- --------------------------------------------------------------------------------
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
from the
For the four commencement
month period of operations
For the year September 1, 1998 For the year October 28, 1996
ended through ended through
December 31, 1999 December 31, 1998 August 31, 1998 August 31, 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset value, beginning of
period.......................... $ 11.55 $ 12.39 $ 11.90 $ 10.00
-------- -------- -------- --------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment loss............. (.13) (0.04) (0.07) (0.05)
Net gains (losses) on
investments (both realized and
unrealized)................... 11.31 (0.25) 1.77 1.95
-------- -------- -------- --------
Total income (loss) from
investment
operations............. 11.18 (0.29) 1.70 1.90
-------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment
income........................ -- -- -- --
Distributions from capital
gains......................... (1.60) (0.55) (1.21) --
-------- -------- -------- --------
Total distributions...... (1.60) (0.55) (1.21) --
-------- -------- -------- --------
Net asset value, end of period.... $ 21.13 $ 11.55 $ 12.39 $ 11.90
======== ======== ======== ========
Total Return............. 98.94% (2.04)%** 16.50% 19.00%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)........................ $466,571 $223,831 $229,088 $180,545
Ratio of expenses to average net
assets........................ 1.82% 2.00%* 1.88% 2.11%*+
Ratio of net investment loss to
average net assets............ (1.03)% (1.46)%* (0.54)% (0.67)%*+
Portfolio turnover.............. 273.64% 116.28%** 219.78% 380.02%**
Annualized portfolio turnover... 273.64% 347.89% 219.78% 450.35%
</TABLE>
- --------------------------------------------------------------------------------
* Annualized
** Not Annualized
+ Such ratios are after transfer agent waivers. PFPC Inc., the transfer agent,
waived a portion of its fee for the first ten months of the Funds operations.
Notes to Financial Statements are an integral part of this Schedule.
10
<PAGE> 15
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL DISCOVERY FUND -- PORTFOLIO MANAGERS' LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
For the year ending December 31, 1999 (the fund's first year), the Driehaus
International Discovery Fund returned 213.65%. This compares with a return of
26.96% for the Morgan Stanley Capital International Europe, Australia, Far East
Index and 62.92% for the Lipper International Small-Cap Fund Index for 1999. For
the year, the Driehaus International Discovery Fund ranked second among the 70
funds in its Lipper International Small-Cap Fund peer group.*
During the first half of the year, fund performance benefited from a strong
overweighting in Asia and the emerging markets, which peaked at nearly 70% of
the total portfolio. Japan rallied on renewed optimism about an economic
recovery fueled by banking reform and corporate restructuring similar to that
seen in the U.S. during the 1980s. During the year, the fund had heavy
weightings in consumer sector stocks that benefited from the recovery, including
specialized retailers like Fast Retailing Co., Ltd., Ryohin Keikaku Co., Ltd.,
and Don Quijote Co., Ltd. Drake Beam Morin-Japan, Inc., an employment
outplacement service company, was an example of a firm benefiting from the wave
of corporate restructurings.
The fund also held heavy weightings in the Australian market with a bias
toward information technology and telecommunication companies. The Australian
market offered an array of software and Internet-related companies with
promising growth prospects at valuations that were truly "down under," as that
market segment seemed reluctant to fully value information technology
businesses. As a result, companies like Solution 6 Holdings, Ltd., and MYOB,
Ltd., which focus on small and mid-sized enterprise system solutions, saw rapid
price increases early in 1999 when the Australian market corrected to
international valuations for these types of companies.
Toward the end of the third quarter, the fund cut back substantially on its
Japanese holdings and invested in Western Europe. We had been early investors in
the spectacular Japanese over-the-counter (OTC) market rally, and we decided
that Japanese stock prices had run far ahead of their fundamentals. Despite this
cutback, we remain highly positive on Japan and the progress the country is
making toward restructuring its corporate sector.
Later in 1999, the fund also profited from several investment themes we
identified across Europe. Increasing advertising budgets created a need to
target and segment audiences. Social survey and audience research companies
(similar to A.C. Nielsen in the U.S.) improved their earnings prospects as
customers placed larger orders, and new players entered the market looking for
demographic information. The fund's investments in companies such as Ipsos and
Europstat in France capitalized on this trend. In addition to experiencing
better demand for their demographic research, these companies also had new
markets, like the Internet, to survey.
Technology continued to be a rich area of investment opportunity. Growth in
the use of mobile telephones across Europe drove the demand for handsets.
Increasing penetration of the Internet and new methods of data and video
delivery greatly expanded the market for personal computers and decoder boxes
for televisions. The sheer volume of growth, coupled with the increasing
sophistication of these electronic devices, spurred demand for semiconductor
chips. The fund took advantage of this growing demand by investing in Dialog
Semiconductor PLC, a British design and supply house for integrated circuits.
Dialog Semiconductor PLC supplies integrated circuits to handset manufacturers
and provides power management modules that extend the talk time of cell phones
by reducing the power used by the handset. Micronas Semiconductor Holding AG, a
Swiss semiconductor chip producer, sells components to the telecommunication and
automobile sectors. The company had a strong backlog of orders and urged
analysts to raise its earnings forecasts.
The future looks bright. European business leaders are increasingly savvy
about exploiting new technologies and new business opportunities. Venture
capital investment in Europe is booming, and new companies are regularly being
brought to market. We expect technology will continue to develop rewarding
investments. The global drive to maximize the use of the Internet is creating
abundant opportunities to invest in companies that create software, build
infrastructure, and provide consulting services to enable e-commerce. Strong
economic development throughout the world also affords more conventional
opportunities to invest as companies develop new products for consumers and
businesses see stronger demand for capital equipment.
11
<PAGE> 16
Returns for 1999 were unusual, and we would caution that it would be normal
to experience volatility or some amount of correction after the recent run-up in
the valuations of growth companies. Thank you for supporting the fund during its
first year. We are looking forward to the upcoming year and are optimistic about
the investment opportunities we see in small cap stocks outside the U.S.
Sincerely,
<TABLE>
<S> <C>
Emery R. Brewer LOGO
Emery R. Brewer Lynette Schroeder
Portfolio Manager Portfolio Manager
February 18, 2000 February 18, 2000
</TABLE>
- ---------------
* The Fund's total return for the year ending 12/31/99 was ranked number two out
of 70 funds by Lipper Analytical Services, Inc. in the Lipper International
Small Cap Fund category. During the period, the adviser reimbursed a portion of
the Fund's expenses; otherwise the Fund's returns and ranking may have been
lower.
12
<PAGE> 17
DRIEHAUS INTERNATIONAL DISCOVERY FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DRIEHAUS INTERNATIONAL LIPPER INTERNATIONAL
DISCOVERY MSCI EAFE SMALL CAP
FUND (DRIDX) INDEX FUND INDEX
---------------------- --------- --------------------
<S> <C> <C> <C>
One Year (Since Inception 12/31/98) 213.65% 26.96% 62.92%
</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
DRIDX MSCI EAFE INDEX SMALL CAP FUND INDEX
----- --------------- --------------------
<S> <C> <C> <C>
Dec 1998 10000 10000 10000
Mar 1999 10880 10139 10375
Jun 1999 14200 10397 11780
Sept 1999 16570 10853 12703
Dec 1999 31365 12696 16292
</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 $10,000 investment in the Fund, since
December 31, 1998, (the date of the Fund's commencement of operations), with all
dividends and capital gains reinvested, with the Morgan Stanley Capital
International (MSCI) EAFE Index with dividends reinvested and the Lipper
International Small Cap Fund Index with reinvested dividends for the same
period.
The EAFE Index (MSCI 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. Source: Morgan
Stanley Capital International.
The Lipper International Small Cap Fund Index is an equally weighted managed
index of the 10 largest qualifying funds that invest at least 65% of assets in
equity securities of non-United States companies with a market capitalization of
less than $1 billion at time of purchase. Data is in U.S. dollars. Source:
Lipper Analytical Services.
13
<PAGE> 18
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL DISCOVERY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 89.1%
- ----------------------------------------------------------
EUROPE -- 50.6%
FRANCE -- 14.7%
Beneteau.................... 1,180 $ 356,531
Consodata SA**.............. 6,855 310,681
Europstat**................. 1,020 383,181
FI System**................. 2,200 669,151
GFI Informatique............ 2,260 291,121
Integra-Net SA**............ 4,000 581,730
Ipsos**..................... 4,700 388,629
Jet Multimedia.............. 1,000 451,204
Unilog SA................... 3,930 428,663
-----------
3,860,891
-----------
UNITED KINGDOM -- 13.8%
Autonomy Corp. PLC**........ 7,500 363,750
Dialog Semiconductor
PLC**..................... 9,000 652,634
Easynet PLC**............... 12,000 337,759
Eidos PLC**................. 2,800 246,495
Fibernet Group PLC**........ 12,145 345,274
Future Network PLC**........ 20,700 285,048
GEO Interactive Media Group
PLC**..................... 5,943 166,555
Psion PLC................... 8,725 364,740
Scoot.com PLC**............. 150,880 366,793
QXL.com PLC -- ADR**........ 4,193 496,871
-----------
3,625,919
-----------
SWEDEN -- 12.2%
Adera AB -- B**............. 3,463 258,463
Connecta AB**............... 10,000 340,856
ConNova Group AB**.......... 23,125 390,037
Effnet Group AB**........... 8,300 297,543
Enea Data AB................ 6,580 506,570
Framfab AB**................ 5,000 905,029
Teligent AB**............... 29,635 505,063
-----------
3,203,561
-----------
GERMANY -- 8.3%
ADVA AG Optical
Networking**.............. 1,705 322,832
Fantastic Corp.**........... 2,110 382,516
JUMPtec Industrielle
Computertechnik AG**...... 4,220 368,915
Kamps AG.................... 3,900 271,024
Kamps AG -- New**........... 2,730 189,717
Secunet Security AG**....... 6,088 276,532
Steag Hamatech AG**......... 10,100 367,217
-----------
2,178,753
-----------
SWITZERLAND -- 1.6%
Micronas Semiconductor
Holding AG**.............. 1,528 412,636
-----------
BELGIUM -- 0.0%
Real Software -- VVPR
Strips**.................. 125 3
-----------
Total Europe................ 13,281,763
-----------
</TABLE>
<TABLE>
- ----------------------------------------------------------
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
FAR EAST -- 25.3%
AUSTRALIA -- 8.2%
Aristocrat Leisure, Ltd..... 10,000 $ 143,883
BMCMedia.com, Ltd.**........ 193,000 367,723
Computershare, Ltd.......... 37,000 182,318
ERG, Ltd.................... 30,000 168,521
MYOB, Ltd**................. 20,074 170,133
Powerlan, Ltd.**............ 263,600 256,314
Powertel, Ltd.**............ 125,000 220,095
Solution 6 Holdings,
Ltd.**.................... 30,000 327,186
Technology One, Ltd.**...... 170,000 327,252
-----------
2,163,425
-----------
JAPAN -- 7.4%
Bellsystem 24, Inc. ........ 300 328,864
Cecile Co., Ltd............. 6,000 248,410
Daiwabo Information System
Co., Ltd. ................ 4,000 89,850
Drake Beam Morin-Japan,
Inc. ..................... 600 195,556
Fast Retailing Co., Ltd..... 1,000 407,165
Net One System Co., Ltd..... 8 211,412
Pasona Softbank, Inc. ...... 1,000 79,475
Round One Corp.............. 17 229,617
Ryohin Keikaku Co., Ltd..... 700 140,521
-----------
1,930,870
-----------
HONG KONG -- 3.1%
CCT Telecom Holdings,
Ltd.**.................... 300,000 225,149
Computer & Technologies
Holdings, Ltd.**.......... 110,000 137,830
Giordano International,
Ltd....................... 150,000 156,625
Quality Healthcare Asia,
Ltd.**.................... 730,000 285,841
-----------
805,445
-----------
SINGAPORE -- 2.7%
Datacraft Asia, Ltd......... 43,000 356,900
Star Cruises PLC............ 35,000 357,000
-----------
713,900
-----------
SOUTH KOREA -- 2.1%
Daou Technology, Inc.**..... 402 13,984
Garnet Systems Co.,
Ltd.**.................... 9,300 202,299
Trigem Computer, Inc........ 3,016 334,668
-----------
550,951
-----------
TAIWAN -- 1.4%
Systex Corp.**.............. 30,000 204,556
Via Technologies, Inc.**.... 15,701 172,593
-----------
377,149
-----------
INDONESIA -- 0.4%
PT Astra International
Tbk**..................... 200,000 107,335
-----------
Total Far East.............. 6,649,075
-----------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
14
<PAGE> 19
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL DISCOVERY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
NORTH AMERICA -- 6.1%
UNITED STATES -- 3.1%
FirstCom Corp............... 16,540 $ 607,845
MyWeb, Inc.com**............ 7,170 193,590
-----------
801,435
-----------
MEXICO -- 3.0%
Corporacion Interamericana
de Entretenimiento SA -
B**....................... 71,000 283,625
Datacapital SA -- B**....... 371,000 156,623
TV Azteca SA de CV -- ADR... 39,333 353,997
-----------
794,245
-----------
Total North America......... 1,595,680
-----------
MIDDLE EAST -- 4.1%
ISRAEL -- 2.3%
AudioCodes, Ltd.**.......... 3,394 312,248
BackWeb Technologies,
Ltd.**.................... 6,709 282,617
-----------
594,865
-----------
TURKEY -- 1.8%
Finansbank AS -- GDR**...... 70,000 292,250
Global Menkul Degerler
AS**...................... 37,000,000 170,538
-----------
462,788
-----------
Total Middle East........... 1,057,653
-----------
SOUTH AMERICA -- 2.4%
BRAZIL -- 2.0%
Empresa Brasileira de
Aeronautic SA (Pref.)..... 38,000 171,436
Globo Cabo SA -- ADR........ 20,000 360,000
-----------
531,436
-----------
ARGENTINA -- 0.4%
El Sitio, Inc.**............ 2,500 91,875
-----------
Total South America......... 623,311
-----------
</TABLE>
<TABLE>
- ----------------------------------------------------------
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
AFRICA -- 0.6%
SOUTH AFRICA -- 0.6%
Softline, Ltd.**............ 100,000 $ 160,033
-----------
Total Africa................ 160,033
-----------
Total Equity Securities
(Cost $12,801,138)........ 23,367,515
-----------
RIGHTS/WARRANTS -- 0.0%
- ----------------------------------------------------------
KOREA -- 0.0%
Garnet Systems Co., Ltd. --
Rights**.................. 1,004 9,576
-----------
THAILAND -- 0.0%
Seamico Securities Public
Co., Ltd. (Foreign) --
Warrants**................ 9,375 3,982
-----------
Total Rights/Warrants (Cost
$0)....................... 13,558
-----------
- ----------------------------------------------------------
TOTAL INVESTMENTS (COST
$12,801,138)................ 89.1% $23,381,073
Other Assets in Excess of
Liabilities................. 10.9% 2,860,581
---------- -----------
Net Assets...................... 100.0% $26,241,654
==========================================================
The federal income tax basis and unrealized appreciation
(depreciation) for all investments is as follows:
</TABLE>
<TABLE>
<S> <C>
Basis.................................... $ 12,801,138
============
Gross Appreciation....................... $ 10,708,631
Gross Depreciation....................... (128,696)
------------
Net Appreciation....................... $ 10,579,935
============
**Non-income producing security.
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
15
<PAGE> 20
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL DISCOVERY FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Aerospace.............................. 0.7%
Automobiles............................ 0.4%
Banking................................ 1.8%
Broadcast & Publishing Services........ 7.9%
Business & Publishing Services......... 8.0%
Clothing............................... 0.6%
Computer Manufacturers................. 1.9%
Data Processing........................ 0.6%
Electronic Components.................. 1.6%
Electronic Systems/Devices............. 2.8%
Health Care............................ 1.1%
Industrial Components.................. 0.6%
Leisure................................ 2.2%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Leisure Products....................... 1.4%
Leisure & Tourism...................... 1.6%
Machinery & Engineering................ 4.2%
Merchandising.......................... 4.4%
Retailing -- Foods..................... 1.8%
Retailing -- Goods..................... 0.5%
Semiconductors/Components.............. 3.9%
Software & EDP Services................ 13.4%
Technology/Multi-Industry.............. 20.2%
Telecommunications..................... 7.5%
Other Assets In Excess Of
Liabilities.......................... 10.9%
------
TOTAL.................................. 100.0%
======
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
16
<PAGE> 21
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL DISCOVERY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (Cost $12,801,138)......... $23,381,073
Cash.................................................... 3,669,000
Receivables:
Dividends.......................................... 3,020
Interest........................................... 6,098
Fund shares sold................................... 53,750
Net unrealized appreciation on unsettled foreign
currency forward contracts from transaction
hedges............................................. 743
Prepaid expenses........................................ 9,687
-----------
- ---------------------------------------------------------------------------
TOTAL ASSETS................................... 27,123,371
-----------
- ---------------------------------------------------------------------------
LIABILITIES:
Foreign currency........................................ 365,831
Payables:
Investment securities purchased.................... 451,963
Due to affiliates.................................. 28,752
Accrued expenses........................................ 35,171
-----------
- ---------------------------------------------------------------------------
TOTAL LIABILITIES.............................. 881,717
-----------
- ---------------------------------------------------------------------------
NET ASSETS.................................................. $26,241,654
===========
SHARES OUTSTANDING.......................................... 928,791
===========
NET ASSET VALUE PER SHARE................................... $ 28.25
===========
===========================================================================
NET ASSETS CONSISTED OF THE FOLLOWING AT DECEMBER 31, 1999:
Paid-in capital......................................... $13,798,933
Undistributed net realized gain......................... 1,861,174
Unrealized foreign exchange gain........................ 1,612
Unrealized appreciation on investments.................. 10,579,935
-----------
NET ASSETS..................................... $26,241,654
===========
===========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
17
<PAGE> 22
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL DISCOVERY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT LOSS:
Income:
Dividends (Net of non-reclaimable foreign taxes of
$3,968)............................................ $ 58,788
Interest........................................... 22,182
-----------
- ---------------------------------------------------------------------------
Total income..................................... 80,970
-----------
- ---------------------------------------------------------------------------
Expenses:
Investment advisory fee............................ 146,812
Administration fee................................. 114,000
Professional fees.................................. 39,752
Federal and state registration fees................ 15,648
Custodian fee...................................... 43,775
Transfer agent fees................................ 36,292
Trustees' fees..................................... 4,757
Miscellaneous...................................... 26,293
-----------
Total expenses before fees waived and
reimbursements..................................... 427,329
-----------
- ---------------------------------------------------------------------------
Administration fee waived.......................... (100,298)
Transfer agent fees waived......................... (31,200)
Expense reimbursement from advisor................. (58,167)
-----------
Total expenses net of fees waived and
reimbursements................................... 237,664
-----------
- ---------------------------------------------------------------------------
Net investment loss............................ (156,694)
-----------
- ---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions............ 3,871,635
Net realized foreign exchange loss...................... (86,751)
Net change in unrealized foreign exchange gain.......... 1,612
Change in unrealized appreciation of investments........ 10,579,935
-----------
- ---------------------------------------------------------------------------
Net gain on investments........................ 14,366,431
- ---------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $14,209,737
===========
===========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
18
<PAGE> 23
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL DISCOVERY FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss..................................... $ (156,694)
Net realized and unrealized gain on investments......... 14,366,431
-----------
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations........................................ 14,209,737
-----------
- -------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income................................... --
Capital gains........................................... (1,767,016)
-----------
Total distributions to shareholders................ (1,767,016)
-----------
- -------------------------------------------------------------------------------
Capital share transactions:
Proceeds from shares sold............................... 12,072,889
Reinvestment of distributions........................... 1,767,016
Cost of shares redeemed................................. (40,982)
-----------
Net increase in net assets derived from capital
share transactions................................ 13,798,923
-----------
Total increase in net assets....................... 26,241,644
-----------
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period....................................... $ 10
-----------
End of period............................................. $26,241,654
===========
===============================================================================
Capital share transactions are as follows:
Shares issued............................................. 858,953
Shares reinvested......................................... 71,568
Shares redeemed........................................... (1,731)
-----------
Net increase from capital share transactions....... 928,790
===========
===============================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
19
<PAGE> 24
- --------------------------------------------------------------------------------
DRIEHAUS INTERNATIONAL DISCOVERY FUND
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
The Table below sets forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<S> <C>
Net Asset value, beginning of period........................ $ 10.00
-------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss....................................... (.17)
Net gains (losses) on investments (both realized and
unrealized)............................................. 21.14
-------
Total income (loss) from investment operations..... 20.97
-------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... --
Distributions from capital gains.......................... (2.72)
-------
Total distributions................................ (2.72)
-------
Net asset value, end of period.............................. $ 28.25
=======
Total Return....................................... 213.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)...................... $26,242
Ratio of expenses to average net assets................... 2.43%+
Ratio of net investment loss to average net assets........ (1.60)%+
Portfolio turnover........................................ 267.86%
</TABLE>
- --------------------------------------------------------------------------------
+ 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 the fund's operating expense cap for the first
seventeen months of its operations. For the period from December 31, 1998 (the
commencement of operations) through May 31, 1999 the Fund's operating expense
cap was 2.50% of average net assets. For the period June 1, 1999 through May
31, 2000 the operating expense cap has been reduced to 2.40% of average net
assets.
Notes to Financial Statements are an integral part of this schedule.
20
<PAGE> 25
- --------------------------------------------------------------------------------
DRIEHAUS EUROPEAN OPPORTUNITY FUND -- PORTFOLIO MANAGER'S LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
For the year ending December 31, 1999 (the fund's first year), the Driehaus
European Opportunity Fund returned 169.90%. This compares with a return of
15.89% for the Morgan Stanley Capital International Europe Index and 27.49% for
the Lipper European Region Fund Index in 1999. For the year, the Driehaus
European Opportunity Fund ranked first among 138 funds listed in the Lipper
European Region Fund group.*
Growth investors were richly rewarded during the second half of 1999 as the
European economies began to show positive signs of accelerating economic growth,
which was driven primarily by the recovery in Asia and the emerging markets.
This growth, combined with low inflation and low interest rates, created an
attractive environment for aggressive growth investors. Persistent macroeconomic
differences among Europe's largest economies continued to create unique
investment opportunities, and the fund adapted its country allocation strategy
to meet those opportunities. For example, unprecedented levels of strong
domestic consumption in France drove continual upward revisions in the country's
gross domestic product (GDP) growth forecasts. German industrial orders grew
more than three times faster than expected in July, and 1999 was a year of
recovery within the UK. The fund capitalized upon French growth by maintaining
its consistently high weighting of 25% in French stocks. When upwards earnings
revisions became visible, the fund's weighting in UK stocks grew to 22%, and by
year end, exposure to German stocks had also increased to 17%.
Although the Driehaus European Opportunity Fund is not a macro-oriented
fund, we were able to capitalize upon several investment themes that emerged
from the macroeconomic recovery in Europe by selectively applying our
stock-oriented investment philosophy. First, the explosive growth in the use of
personal communication devices--specifically, the prominent trend toward strong
demand for mobile telephone handsets--created a wealth of investment
opportunities. While the Nordic countries have led the world in mobile telephone
penetration, in 1999, mobile telephone use increased in Germany, France, and
England. The fund took a novel view of this trend and invested in companies like
ARM Holdings PLC and Epcos AG that supplied the mobile handset industry. ARM
Holdings PLC is a British company that designs microprocessors for semiconductor
chip manufacturers and sells its expertise into the mobile handset manufacturing
industry. As a result, the company experienced a strong increase in demand for
its products and services. Another indirect beneficiary of handset demand was
Epcos AG, a German manufacturer that sells electronic components to handset
manufacturers. Strong demand for semiconductor chips, driven by the consumer
demand for electronic devices, meant that semiconductor equipment manufacturers
experienced strong increases in their order books. The fund invested in
semiconductor equipment manufacturers like ASM Lithography Holding NV, a Dutch
company that makes devices that burn patterns onto silicon chips.
The second investment theme stemmed from the robust growth in advertising
expenditures, driven by the economic recovery, the development of new financial
services, the introduction of new automobiles, and the explosion in mobile
telephone services. The fund took advantage of this growth by investing in NRJ
SA, a French radio company that compounded its profit and sales growth by
restructuring rates and improving the way in which it targeted customers'
advertisements.
Finally, now that surfing means logging on instead of going to the beach,
who can ignore the Internet and the trend toward e-commerce? The fund took a
lower risk route to Internet investing and selected the stocks of high-growth
Internet consulting companies. Web agencies and consultants, like Sweden's
Framfab AB, work with new dot com companies and with established businesses to
create web sites and to develop e-commerce platforms. Framfab AB earns revenue
by providing consulting and integration expertise to corporations developing
e-business operations. Corresponding investments in software companies such as
Germany's Intershop Communications AG provided good exposure to the blossoming
e-commerce world. Intershop Communications AG makes packaged software that
enables businesses to set up shop on the Internet.
Looking into the new millennium, we are optimistic. European business
leaders are increasingly savvy about exploiting new technologies and new
business opportunities. Venture capital investment in Europe is booming, and new
companies are regularly being brought to market. Advances in technology continue
to develop many delightful and valuable products that should sustain the growth
trends witnessed in 1999, and European economic data continue to surprise on the
upside.
21
<PAGE> 26
Returns for 1999 were unusual, and we would caution that it would be normal
to experience volatility or some amount of correction after the recent run-up in
the valuations of growth companies. Thank you for supporting the fund during its
first year. We are pleased that we have been able to reward your support by
producing a fund that ranked first in the 1999 Lipper European Region Fund
Index. We look forward to the upcoming year and are enthusiastic about the
investment opportunities we see in Europe.
Sincerely,
/s/ Lynette Schroeder
Lynette Schroeder
Portfolio Manager
February 18, 2000
- ---------------
* The Fund's total return for the year ending 12/31/99 was ranked number one out
of 138 funds by Lipper Analytical Services, Inc. in the Lipper European Region
Fund category. During the period, the adviser reimbursed a portion of the Fund's
expenses; otherwise the Fund's returns would have been lower.
22
<PAGE> 27
DRIEHAUS EUROPEAN OPPORTUNITY FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
- -----------------------------------------------------------------------------------------------------------
DRIEHAUS EUROPEAN
OPPORTUNITY LIPPER EUROPEAN
FUND (DREOX) MSCI EUROPE INDEX REGION FUND INDEX
----------------- ----------------- -----------------
<S> <C> <C> <C>
One Year (Since Inception 12/31/98) 169.90% 15.89% 27.49%
- -----------------------------------------------------------------------------------------------------------
</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 EUROPEAN REGION
DREOX MSCI EUROPE INDEX FUND INDEX
----- ----------------- ----------------------
<S> <C> <C> <C>
Dec 1998 10000 10000 10000
Mar 1999 10420 9789 9908
Jun 1999 10830 9759 10071
Sep 1999 12940 9873 10211
Dec 1999 26990 11589 12749
</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 $10,000 investment in the Fund, since
December 31, 1998, (the date of the Fund's commencement of operations), with all
dividends and capital gains reinvested, with the Morgan Stanley Capital
International (MSCI) Europe Index with dividends reinvested and the Lipper
European Region Fund Index with dividends reinvested for the same period.
The MSCI Europe Index is a recognized benchmark of European stock markets.
It is an unmanaged index of a sample of companies representative of the market
structure of 15 European countries. Data is in U.S. dollars. Source: Morgan
Stanley Capital International.
The Lipper European Region Fund Index is an equally weighted managed index
of the 30 largest qualifying funds that invest in equity securities with primary
trading markets or operations concentrated in the European region or a single
country within this region. Data is in U.S. dollars. Source: Lipper Analytical
Services.
23
<PAGE> 28
- --------------------------------------------------------------------------------
DRIEHAUS EUROPEAN OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 89.2%
- ----------------------------------------------------------
EUROPE -- 89.2%
FRANCE -- 24.5%
ALTEN**..................... 1,750 $ 301,742
Altran Technologies SA...... 470 284,017
Coheris Atix**.............. 860 158,419
Consodata SA**.............. 5,145 233,181
Europstat**................. 885 332,465
FI System**................. 2,340 711,733
GFI Informatique............ 1,914 246,551
Infogrames Entertainment
SA**...................... 1,400 231,242
Integra-Net SA**............ 2,855 415,210
Ipsos**..................... 3,040 251,369
Jet Multimedia.............. 710 320,355
M6 Metropole Television..... 515 255,192
NRJ SA...................... 515 354,520
Prosodie SA................. 1,050 293,776
Publicis SA................. 730 275,708
STMicroelectronics NV....... 2,670 410,893
Unilog SA................... 2,800 305,408
------------
5,381,781
------------
UNITED KINGDOM -- 22.1%
ARM Holdings PLC**.......... 4,025 271,571
Autonomy Corp. PLC**........ 10,400 504,400
Baltimore Technologies
PLC**..................... 3,550 293,884
Dialog Semiconductor
PLC**..................... 6,000 435,089
Easynet Group PLC**......... 9,670 272,178
Eidos PLC**................. 3,750 330,127
Fibernet Group PLC**........ 8,005 227,576
Jazztel PLC -- ADR**........ 7,500 488,438
NDS Group PLC -- ADR**...... 10,000 305,000
Pace Micro Technology
PLC....................... 34,850 296,947
Psion PLC................... 5,275 220,516
The Future Network PLC**.... 18,650 256,819
The Sage Group PLC.......... 40,750 497,296
QXL.com PLC -- ADR**........ 3,872 458,832
------------
4,858,673
------------
</TABLE>
<TABLE>
- ----------------------------------------------------------
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
GERMANY -- 17.4%
ADVA AG Optical
Networking**.............. 2,125 $ 402,357
Aixtron AG.................. 1,715 241,471
EM TV & Merchandising
AG........................ 3,125 206,151
Epcos AG**.................. 4,975 370,783
Fantastic Corp.**........... 2,105 381,609
GFT Technologies AG**....... 2,820 289,697
Intershop Communications
AG**...................... 1,990 569,201
Kamps AG.................... 4,320 300,211
Kamps AG -- New**........... 2,100 145,937
Pixelpark AG**.............. 3,085 363,526
Secunet Security AG**....... 4,645 210,988
Steag Hamatech AG**......... 9,680 351,947
------------
3,833,878
------------
SWEDEN -- 14.8%
Adera AB -- B**............. 2,565 191,440
Connecta AB**............... 7,575 258,198
ConNova Group AB**.......... 13,875 234,022
Effnet Group AB**........... 6,300 225,846
Enea Data AB................ 3,430 264,063
Framfab AB**................ 3,975 719,499
Information Highway AB**.... 4,415 731,682
NetCom AB -- B**............ 4,600 323,319
Societe Europeenne de
Communication SA --
B**....................... 42,100 314,216
------------
3,262,285
------------
NETHERLANDS -- 3.5%
ASM Lithography Holding
NV -- ADR**............... 3,344 380,380
KPNQwest NV**............... 5,763 383,658
------------
764,038
------------
SWITZERLAND -- 2.5%
ESEC Holding AG**........... 125 233,153
Micronas Semiconductor
Holding AG**.............. 1,178 318,118
------------
551,271
------------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
24
<PAGE> 29
- --------------------------------------------------------------------------------
DRIEHAUS EUROPEAN OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
PORTUGAL -- 1.2%
Servicos de Telecomunicacoes
e Multimedia SGPS SA**.... 4,700 $ 267,307
------------
SPAIN -- 1.1%
Terra Networks SA**......... 4,516 246,745
------------
ITALY -- 1.1%
Gruppo Editoriale
L'Espresso................ 20,800 240,701
------------
BELGIUM -- 1.0%
Real Software -- VVPR
Strips**.................. 90 2
Ubizen, Inc.**.............. 3,655 215,346
------------
215,348
------------
Total Europe................ 19,622,027
------------
- ----------------------------------------------------------
TOTAL INVESTMENTS (COST
$9,768,607)................. 89.2% $ 19,622,027
Other Assets in Excess of
Liabilities................. 10.8% 2,375,263
---------- ------------
Net Assets...................... 100.0% $ 21,997,290
==========================================================
The federal income tax basis and unrealized appreciation
(depreciation) for all investments is as follows:
</TABLE>
<TABLE>
<S> <C>
Basis.................................... $ 9,768,607
============
Gross Appreciation....................... $ 9,898,376
Gross Depreciation....................... (44,956)
------------
Net Appreciation....................... $ 9,853,420
============
**Non-income producing security.
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
25
<PAGE> 30
- --------------------------------------------------------------------------------
DRIEHAUS EUROPEAN OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Broadcast & Publishing Services........ 12.3%
Business & Publishing Services......... 8.4%
Communications......................... 1.2%
Electronic Systems/Devices............. 2.4%
Machinery & Engineering................ 7.2%
Photo-Optical Equipment................ 1.7%
Retailing -- Foods..................... 2.0%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Semiconductors/Components.............. 6.6%
Software & EDP Services................ 17.8%
Technology/Multi-Industry.............. 21.7%
Telecommunications..................... 6.5%
Telephone Utilities.................... 1.4%
Other Assets In Excess Of
Liabilities.......................... 10.8%
------
TOTAL.................................. 100.0%
======
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
26
<PAGE> 31
- --------------------------------------------------------------------------------
DRIEHAUS EUROPEAN OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (Cost $9,768,607).......... $19,622,027
Cash.................................................... 2,348,388
Receivables:
Dividends.......................................... 5,602
Interest........................................... 347
Investment securities sold......................... 74,176
Fund shares sold................................... 58,325
Prepaid expenses........................................ 9,684
-----------
- ---------------------------------------------------------------------------
TOTAL ASSETS................................... 22,118,549
-----------
- ---------------------------------------------------------------------------
LIABILITIES:
Foreign currency........................................ 229
Payables:
Investment securities purchased.................... 77,188
Due to affiliates.................................. 14,889
Net unrealized depreciation on unsettled foreign
currency forward contracts
from transaction hedges.......................... 123
Accrued expenses........................................ 28,830
-----------
- ---------------------------------------------------------------------------
TOTAL LIABILITIES.............................. 121,259
-----------
- ---------------------------------------------------------------------------
NET ASSETS.................................................. $21,997,290
===========
SHARES OUTSTANDING.......................................... 815,124
===========
NET ASSET VALUE PER SHARE................................... $ 26.99
===========
===========================================================================
NET ASSETS CONSISTED OF THE FOLLOWING AT DECEMBER 31, 1999:
Paid-in capital......................................... $11,335,149
Undistributed net realized gain......................... 809,110
Unrealized foreign exchange loss........................ (389)
Unrealized appreciation on investments.................. 9,853,420
-----------
NET ASSETS..................................... $21,997,290
===========
===========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
27
<PAGE> 32
- --------------------------------------------------------------------------------
DRIEHAUS EUROPEAN OPPORTUNITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT LOSS:
Income:
Dividends (Net of non-reclaimable foreign taxes of
$2,650)............................................ $ 47,785
Interest........................................... 11,745
-----------
- ---------------------------------------------------------------------------
Total Income..................................... 59,530
-----------
- ---------------------------------------------------------------------------
Expenses:
Investment advisory fee............................ 106,633
Administration fee................................. 114,000
Professional fees.................................. 36,249
Federal and state registration fees................ 14,798
Custodian fees..................................... 22,759
Transfer agent fees................................ 36,325
Trustees' fees..................................... 4,644
Miscellaneous...................................... 24,069
-----------
Total expenses before fees waived and
reimbursements..................................... 359,477
-----------
- ---------------------------------------------------------------------------
Administration fee waived.......................... (104,048)
Transfer agent fees waived......................... (31,200)
Expense reimbursement from advisor................. (74,942)
-----------
Total expenses net of fees waived and
reimbursements................................... 149,287
-----------
- ---------------------------------------------------------------------------
Net investment loss............................ (89,757)
-----------
- ---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions............ 927,809
Net realized foreign exchange loss...................... (28,942)
Net change in unrealized foreign exchange loss.......... (389)
Change in unrealized appreciation of investments........ 9,853,420
-----------
- ---------------------------------------------------------------------------
Net gain on investments........................ 10,751,898
-----------
- ---------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $10,662,141
===========
===========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
28
<PAGE> 33
- --------------------------------------------------------------------------------
DRIEHAUS EUROPEAN OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss................................ $ (89,757)
Net realized and unrealized gain on investments.... 10,751,898
-----------
- --------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations.................................... 10,662,141
-----------
- --------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income.............................. --
Capital gains...................................... --
-----------
Total distributions to shareholders............ --
-----------
- --------------------------------------------------------------------------------------
Capital share transactions:
Proceeds from shares sold.......................... 11,536,927
Reinvestment of distributions...................... --
Cost of shares redeemed............................ (201,788)
-----------
Net increase in net assets derived from capital
share transactions............................ 11,335,139
-----------
Total increase in net assets................... 21,997,280
-----------
- --------------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------------
Beginning of period..................................... $ 10
-----------
End of period........................................... $21,997,290
===========
======================================================================================
Capital share transactions are as follows:
Shares issued...................................... 822,951
Shares reinvested.................................. --
Shares redeemed.................................... (7,828)
-----------
Net increase from capital share transactions... 815,123
===========
======================================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
29
<PAGE> 34
- --------------------------------------------------------------------------------
DRIEHAUS EUROPEAN OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
The Table below sets forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<S> <C>
Net Asset value, beginning of period........................ $ 10.00
-------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss....................................... (.11)
Net gains (losses) on investments (both realized and
unrealized)............................................. 17.10
-------
Total income from investment operations............ 16.99
-------
LESS DISTRIBUTIONS:
Dividends from net investment income...................... --
Distributions from capital gains.......................... --
-------
Total distributions................................ --
-------
Net asset value, end of period.............................. $ 26.99
=======
Total Return....................................... 169.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)...................... $21,997
Ratio of expenses to average net assets................... 2.10%+
Ratio of net investment loss to average net assets........ (1.26)%+
Portfolio turnover........................................ 214.90%
</TABLE>
- --------------------------------------------------------------------------------
+ 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 the fund's operating expense cap for the first
seventeen months of its operations. For the period from December 31, 1998 (the
commencement of operations) through May 31, 2000 the Fund's operating expense
cap will be 2.10% of average net assets.
Notes to Financial Statements are an integral part of this Schedule.
30
<PAGE> 35
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND -- PORTFOLIO MANAGER'S LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
For the period from January 1, 1999, through December 31, 1999, the Driehaus
Asia Pacific Growth Fund returned 264.49%. This compares with a return of 59.66%
for the Morgan Stanley Capital International Asia/Pacific Index and 78.34% for
the Lipper Pacific Region Fund Index for 1999. For the year, the Driehaus Asia
Pacific Growth Fund ranked first among the 56 funds in its Lipper Pacific Region
Fund peer group.*
The fund performed well due to its large investments in the technology and
telecommunications sectors, which, at year end, accounted for 51% and 20% of the
fund, respectively. Our overweighted position in these sectors stemmed from our
analysis that Asia will need to invest a substantial amount in new technology to
improve its efficiency and return on equity and catch up with the standards of
the U.S. For example, in 1999, Japanese return on equity remained around 3%
versus 18% in the U.S., and this was true for much of Southeast Asia as well.
Investments in networking, enterprise resource planning, and efforts to make
old-fashioned business models e-commerce compatible should continue to create
new opportunities for us to invest in these sectors. We recognized early on the
abundance of opportunities in the service/technology sector in Japan. While most
international investors seemed to be focusing on traditional exporters like Sony
and Honda, smaller Japanese companies were showing the greatest share price
growth. The smaller Japanese index-the Jasdaq- outperformed the Nikkei, with the
Jasdaq rising 244.5% in 1999 while the large cap Nikkei 225 gained 36.79%.
Moreover, while the number of Internet subscribers in the U.S. started to
plateau at around 90 million in 1999, Internet penetration in Asia was just
starting to take off. Penetration is still approximately 10% in Asia (versus 40%
in the U.S.) and growing at about 50% per annum. The shape of Asia's
technological awakening is different from that in the U.S. in one key way:
access to the Internet in Asia will not just be over PCs, but also cellular
phones, web TV, and even game consoles such as Sega's new Dreamcast. Because PC
penetration in Asia is much lower than in the U.S. and PC prices are generally
higher, consumers have found it easier to access the web via these other
devices.
After NTT Mobile Communications Network, Inc., a Japanese cellular provider,
launched its I-mode service in February 1999 (offering phones that can navigate
the Internet) the number of users hit 3.1 million by December. This equaled 17%
of total Japanese Internet subscribers. South Korea and Hong Kong are expected
to see a similar burst of growth as their cellular companies have just
introduced web-enabled phones.
Several other stocks which successfully fit into our emphasis on technology
and telecommunications in 1999 included:
- - Mobilephone Telecommunications International, Ltd., a Japanese cell phone
reseller, was one of the first companies to develop Internet content for cell
phones. Its new web sites offer chat rooms, stock prices, and other
information aimed at young people. Net profits are expected to grow 300% in
1999-2000.
- - BMCMedia.com, Ltd., an Australian Internet advertising company, is expected to
see its sales increase from $4.8 million in 1999 to $36 million in 2000 as the
result of the increased acceptance of Internet advertising among Australian
companies.
- - Pacific Century CyberWorks, Ltd., a Hong Kong Internet venture capital
company, is following the success of Japan's Softbank Corp. in making
strategic investments in Asia's emerging Internet companies.
In the latter part of 1999, the rapid rise in the valuations of Japanese
stocks seemed to get ahead of itself, and, therefore, we cut the fund's
weighting in Japan to 40%. We were also disappointed by the Japanese
government's delay of two key reforms: the introduction of new bank insurance
and consolidated tax accounting. Both of these measures would have encouraged
further corporate restructuring.
At the same time, we boosted our weightings in the rest of Asia to 58% due
to more upside surprises in earnings. Several countries that had experienced
political instability-including Taiwan, Malaysia, and India- recovered, and we
increased our investments there as they caught up to the best performers such as
Hong Kong, South Korea, and Singapore. In addition, Southeast Asian countries
continued to open up their economies to increased foreign ownership. For
example, China plans to liberalize its telecommunications sector as part of
joining the World Trade Organization.
31
<PAGE> 36
Returns for 1999 were unusual, and we would caution that it would be normal
to experience volatility or some amount of correction after the recent run-up in
the valuations of growth companies. We remain optimistic that the Asian markets
can do well over the long term. However, in the short term, they may have to
contend with higher U.S. interest rates during the first half of 2000. One
positive note is that the fund is not wedded to any particular country-such as
Japan-so we can be flexible in shifting assets to the best countries and the
best stocks.
Sincerely,
Eric J. Ritter
Eric J. Ritter, CFA
Portfolio Manager
February 18, 2000
- ---------------
* The Fund's total return for the year ending 12/31/99 was ranked number one out
of 56 funds by Lipper Analytical Services, Inc. in the Lipper Pacific Region
Fund category. During the period, the adviser reimbursed a portion of the
Fund's expenses; otherwise the Fund's returns would have been lower.
32
<PAGE> 37
DRIEHAUS ASIA PACIFIC GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DRIEHAUS ASIA
PACIFIC GROWTH LIPPER PACIFIC
FUND MSCI ASIA REGION FUND
(DRAPX) PACIFIC INDEX INDEX
-------------- ------------- --------------
<S> <C> <C> <C>
One Year 264.49% 59.66% 78.34%
Since Inception (12/31/97 -- 12/31/99) 89.96% 27.63% 31.56%
</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
DRAPX MSCI ASIA PACIFIC INDEX FUND INDEX
----- ----------------------- ---------------------
<S> <C> <C> <C>
Dec 1997 10000 10000 10000
Mar 1998 9950 10462 10282
Jun 1998 8500 9261 8880
Sept 1998 8300 8058 8081
Dec 1998 9900 10203 9705
Mar 1999 12160 11336 10443
Jun 1999 16940 12932 12887
Sept 1999 21940 13984 13647
Dec 1999 36084 16290 17308
</TABLE>
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 $10,000 investment in the Fund, since
December 31, 1997, (the date of the Fund's commencement of operations), with all
dividends and capital gains reinvested, with the Morgan Stanley Capital
International (MSCI) Asia Pacific Index with dividends reinvested and the Lipper
Pacific Region Fund Index with dividends reinvested for the same period.
The MSCI 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. Source: Morgan Stanley Capital International.
The Lipper Pacific Region Fund 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. Source: Lipper Analytical Services.
33
<PAGE> 38
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 91.4%
- ----------------------------------------------------------
FAR EAST -- 90.6%
JAPAN -- 37.4%
Asatsu-DK, Inc. ............. 5,800 $ 391,700
Avex, Inc. .................. 350 87,354
Bellsystem 24, Inc. ......... 200 219,242
Cecile Co., Ltd. ............ 3,000 124,205
Cresco, Ltd. ................ 2,300 265,636
CSK Corp. ................... 2,000 324,949
Drake Beam Morin-Japan,
Inc. ...................... 800 260,742
Fast Retailing Co., Ltd. .... 1,100 447,881
Focus System Corp. .......... 7,000 171,283
Fujitsu Support & Service,
Inc. ...................... 1,000 490,359
Hikari Tsushin, Inc. ........ 300 601,938
Hitachi Software Engineering
Co., Ltd. ................. 1,700 247,920
Japan Asia Investment Co.,
Ltd. ...................... 25,000 411,080
Japan Business Computer Co.,
Ltd. ...................... 6,000 270,138
Japan Telecom Co., Ltd. ..... 4 160,517
Justsystem Corp.**........... 5,100 309,484
Konami Co., Ltd. ............ 4,100 732,358
Kyocera Corp. -- ADR......... 1,300 340,600
Matsushita Communication
Industrial Co., Ltd. ...... 2,000 528,531
Mobilephone
Telecommunications
International, Ltd. ....... 15 1,497,504
Murata Manufacturing Co.,
Ltd. ...................... 2,000 469,805
Nichii Gakkan Co. ........... 1,500 293,481
NTT Mobile Communications
Network, Inc. ............. 12 461,584
OBIC Co., Ltd. .............. 60 42,517
Park24 Co., Ltd. ............ 2,500 223,892
Ryohin Keikaku Co., Ltd. .... 800 160,595
Softbank Corp. .............. 400 382,891
Taiyo Yuden Co., Ltd. ....... 9,000 533,816
The Goodwill Group, Inc. .... 5 244,690
The Sailor Pen Co., Ltd. .... 14,000 287,756
Tokyo Seimitsu Co., Ltd. .... 1,500 242,243
-----------
11,226,691
-----------
</TABLE>
<TABLE>
- ----------------------------------------------------------
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
HONG KONG -- 11.9%
ASM Pacific Technology,
Ltd. ...................... 208,000 $ 374,648
CCT Telecom Holdings,
Ltd.**..................... 408,000 306,202
China Telecom, Ltd. --
ADR**...................... 1,600 205,700
Computer & Technologies
Holdings, Ltd.**........... 380,000 476,141
e-New Media Co., Ltd.**...... 600,000 297,588
Founder Hong Kong, Ltd.**.... 220,000 272,789
Giordano International,
Ltd. ...................... 200,000 208,834
Globe Tech Holdings, Ltd. ... 380,000 446,382
Johnson Electric Holdings,
Ltd. ...................... 23,000 149,799
Li & Fung, Ltd. ............. 70,000 178,161
Pacific Century CyberWorks,
Ltd.**..................... 281,000 663,843
-----------
3,580,087
-----------
AUSTRALIA -- 11.7%
Aristocrat Leisure, Ltd. .... 27,155 390,714
BMCMedia.com, Ltd.**......... 260,000 495,378
Computershare, Ltd. ......... 98,600 485,852
CSL, Ltd..................... 13,900 199,997
ecorp, Ltd.**................ 115,000 287,865
Melbourne IT, Ltd.**......... 70,000 392,249
Powerlan, Ltd.**............. 396,000 385,055
Securenet, Ltd.**............ 51,500 233,465
Solution 6 Holdings,
Ltd.**..................... 37,000 403,529
Technology One, Ltd.**....... 130,000 250,251
-----------
3,524,355
-----------
SOUTH KOREA -- 7.8%
Cheil Communications,
Inc. ...................... 6,300 476,592
Comtec System Co., Ltd. ..... 15,000 203,435
Cybertek Holdings, Inc.**.... 100 1,541
Daou Technology, Inc.**...... 679 23,626
Garnet Systems Co., Ltd.**... 23,000 500,308
Hyundai Electronics
Industries Co.**........... 3,043 64,585
Insung Information**......... 8,400 287,028
Korea Data Systems........... 9,365 107,227
Korea Telecom Freetel**...... 600 150,330
Samsung Electronics.......... 551 129,076
Sewon Telecom, Ltd.**........ 12,000 209,247
Trigem Computer, Inc. ....... 1,767 196,084
-----------
2,349,079
-----------
TAIWAN -- 5.7%
Acer Peripherals, Inc. ...... 122,127 505,863
Ambit Microsystems Corp. .... 35,000 259,838
Hitron Technology, Inc.**.... 43,900 262,966
Mercuries Data Systems,
Ltd.**..................... 78,000 188,880
Systex Corp.**............... 38,000 259,105
WYSE Technology Taiwan,
Ltd. ...................... 123,000 239,063
-----------
1,715,715
-----------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
34
<PAGE> 39
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
THAILAND -- 4.4%
Advanced Info Service Public
Co., Ltd. (Foreign)**...... 24,300 $ 407,742
Grammy Entertainment Public
Co., Ltd. (Foreign)........ 76,400 259,636
National Finance Public Co.,
Ltd. (Foreign)**........... 360,000 160,096
Shin Corp. Public Co., Ltd.
(Foreign)**................ 4,500 42,533
Siam Commercial Bank Public
Co., Ltd. (Pref.)
(Foreign)**................ 130,000 158,768
TelecomAsia Corp. Public Co.,
Ltd. (Foreign)**........... 220,000 286,207
-----------
1,314,982
-----------
SINGAPORE -- 4.3%
MediaRing.com, Ltd.**........ 250,000 270,189
NatSteel Electronics,
Ltd. ...................... 50,000 264,185
Singapore Press Holdings,
Ltd. ...................... 5,000 108,376
Star Cruises PLC............. 62,000 632,400
-----------
1,275,150
-----------
MALAYSIA -- 3.7%
Digi Swisscom Berhad**....... 163,000 175,868
Mesiniaga Berhad**........... 240,000 508,421
Star Publications............ 79,000 222,447
Unisem (M) Berhad............ 31,000 199,053
-----------
1,105,789
-----------
INDIA -- 1.7%
Infosys Technologies, Ltd. --
ADR........................ 1,500 495,000
-----------
PHILIPPINES -- 1.1%
ABS-CBN Broadcasting
Corp.**.................... 203,400 252,357
International Container
Terminal Services,
Inc.**..................... 516,000 46,735
La Tondena Distillers,
Inc. ...................... 50,000 39,702
-----------
338,794
-----------
INDONESIA -- 0.9%
PT Astra International
Tbk**...................... 132,000 70,841
PT Matahari Putra Prima
Tbk**...................... 1,210,000 203,470
-----------
274,311
-----------
Total Far East............... 27,199,953
-----------
</TABLE>
<TABLE>
- ----------------------------------------------------------
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
NORTH AMERICA -- 0.8%
UNITED STATES -- 0.8%
MyWeb, Inc.com**............. 8,606 $ 232,363
-----------
Total North America.......... 232,363
-----------
Total Equity Securities
(Cost $16,986,273)......... 27,432,316
-----------
RIGHTS/WARRANTS -- 0.5%
- ----------------------------------------------------------
THAILAND -- 0.2%
Siam Commercial Bank Public
Co., Ltd. (Pref.) (Foreign)
-- Warrants**.............. 150,000 69,693
-----------
MALAYSIA -- 0.2%
Digi Swisscom Berhad --
Rights**................... 81,500 61,125
-----------
SOUTH KOREA -- 0.1%
Garnet Systems Co., Ltd. --
Rights**................... 2,484 23,692
-----------
Total Rights/Warrants
(Cost $92,377)............. 154,510
-----------
- ----------------------------------------------------------
TOTAL INVESTMENTS (COST
$17,078,650)................. 91.9% $27,586,826
Other Assets in Excess of
Liabilities.................. 8.1% 2,445,237
--------- -----------
Net Assets....................... 100.0% $30,032,063
==========================================================
The federal income tax basis and unrealized appreciation
(depreciation) for all investments is as follows:
</TABLE>
<TABLE>
<S> <C>
Basis.................................... $ 17,078,650
============
Gross Appreciation....................... $ 10,783,418
Gross Depreciation....................... (275,242)
------------
Net Appreciation....................... $ 10,508,176
============
**Non-income producing security.
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
35
<PAGE> 40
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Automobiles............................ 0.2%
Banking................................ 0.8%
Beverages & Tobacco.................... 0.1%
Broadcast & Publishing Services........ 3.5%
Business & Publishing Services......... 2.2%
Clothing............................... 0.7%
Communications......................... 0.8%
Computer Manufacturers................. 2.7%
Data Processing........................ 0.9%
Electrical & Electronics............... 0.5%
Electronic Components.................. 10.7%
Electronic Systems/Devices............. 2.0%
Financial Services..................... 1.9%
Health Care............................ 1.0%
Investments............................ 0.6%
Leisure................................ 2.1%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Leisure & Tourism...................... 2.2%
Merchandising.......................... 2.6%
Office/Communications Equipment........ 2.4%
Other Computers........................ 0.1%
Retailing -- Goods..................... 1.5%
Semiconductors/Components.............. 2.3%
Services to Medical Profession......... 0.7%
Software & EDP Services................ 19.7%
Technology/Multi-Industry.............. 9.1%
Telecommunications..................... 18.7%
Telephone Utilities.................... 1.0%
Tools & Hardware....................... 0.7%
Transportation/Multi-Industry.......... 0.2%
Other Assets In Excess Of
Liabilities.......................... 8.1%
------
TOTAL.................................. 100.0%
======
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
36
<PAGE> 41
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (Cost $17,078,650)......... $27,586,826
Cash.................................................... 2,170,782
Receivables:
Dividends.......................................... 2,276
Interest........................................... 10,128
Fund shares sold................................... 432,046
Prepaid expenses........................................ 11,085
Deferred organizational costs........................... 17,580
-----------
- ---------------------------------------------------------------------------
TOTAL ASSETS................................... 30,230,723
-----------
- ---------------------------------------------------------------------------
LIABILITIES:
Foreign currency........................................ 7,265
Payables:
Investment securities purchased.................... 112,654
Due to affiliates.................................. 36,261
Net unrealized depreciation on unsettled foreign
currency forward contracts from transaction
hedges............................................. 822
Accrued expenses........................................ 41,658
-----------
- ---------------------------------------------------------------------------
TOTAL LIABILITIES.............................. 198,660
-----------
- ---------------------------------------------------------------------------
NET ASSETS.................................................. $30,032,063
===========
SHARES OUTSTANDING.......................................... 962,741
===========
NET ASSET VALUE PER SHARE................................... $ 31.19
===========
===========================================================================
NET ASSETS CONSISTED OF THE FOLLOWING AT DECEMBER 31, 1999:
Paid-in capital......................................... $15,327,367
Undistributed net realized gain......................... 4,196,440
Unrealized foreign exchange gain........................ 80
Unrealized appreciation on investments.................. 10,508,176
-----------
NET ASSETS..................................... $30,032,063
===========
===========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
37
<PAGE> 42
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT LOSS:
Income:
Dividends (Net of non-reclaimable foreign taxes of
$6,366)........................................... $ 54,200
Interest........................................... 30,201
-----------
- -------------------------------------------------------------------------------
Total income..................................... 84,401
-----------
- -------------------------------------------------------------------------------
Expenses:
Investment advisory fee............................ 175,273
Administration fee................................. 114,000
Professional fees.................................. 37,259
Federal and state registration fees................ 13,798
Custodian fee...................................... 45,798
Transfer agent fees................................ 36,397
Trustees' fees..................................... 3,820
Amortization of organization costs................. 5,854
Miscellaneous...................................... 30,767
-----------
Total expenses before fees waived and
reimbursements.................................... 462,966
-----------
- -------------------------------------------------------------------------------
Administration fee waived.......................... (97,641)
Transfer agent fees waived......................... (31,200)
Expense reimbursement from advisor................. (30,289)
-----------
Total expenses net of fees waived and
reimbursements................................... 303,836
-----------
- -------------------------------------------------------------------------------
Net investment loss............................ (219,435)
-----------
- -------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions............ 8,353,996
Net realized foreign exchange loss...................... (170,692)
Net change in unrealized foreign exchange gain.......... 768
Change in unrealized appreciation of investments........ 9,638,887
-----------
- -------------------------------------------------------------------------------
Net gain on investments........................ 17,822,959
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $17,603,524
===========
===============================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
38
<PAGE> 43
- --------------------------------------------------------------------------------
DRIEHAUS ASIA PACIFIC GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
from the
commencement
For the three month period of operations
For the year October 1, 1998 December 31, 1997
ended through through
December 31, 1999 December 31, 1998 September 30, 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss..................... $ (219,435) $ (20,191) $ (8,979)
Net realized and unrealized gain (loss)
on investments........................ 17,822,959 792,901 (630,577)
----------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations........................ 17,603,524 772,710 (639,556)
----------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income................... -- -- --
Capital gains........................... (3,257,162) -- --
----------- ---------- ----------
Total distributions to
shareholders...................... (3,257,162) -- --
----------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Proceeds from shares sold............... 13,766,077 610,000 4,318,619
Reinvestment of distributions........... 3,257,162 -- --
Cost of shares redeemed................. (6,302,441) -- (96,870)
----------- ---------- ----------
Net increase in net assets derived
from capital share transactions... 10,720,798 610,000 4,221,749
----------- ---------- ----------
Total increase in net assets........ 25,067,160 1,382,710 3,582,193
----------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------------------------------------
Beginning of period......................... $ 4,964,903 $3,582,193 $ --
----------- ---------- ----------
End of period............................... $30,032,063 $4,964,903 $3,582,193
=========== ========== ==========
============================================================================================================================
Capital share transactions are as follows:
Shares issued........................... 674,329 69,795 442,994
Shares reinvested....................... 117,928 -- --
Shares redeemed......................... (330,928) -- (11,377)
----------- ---------- ----------
Net increase from capital share
transactions...................... 461,329 69,795 431,617
=========== ========== ==========
============================================================================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
39
<PAGE> 44
- --------------------------------------------------------------------------------
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
from the
For the three commencement
month period of operations
For the year October 1, 1998 December 31, 1997
ended through through
December 31, 1999 December 31, 1998 September 30, 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset value, beginning of period... $ 9.90 $ 8.30 $ 10.00
------- ------- -------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment loss.................. (.23) (0.04) (0.02)
Net gains (losses) on investments
(both realized and unrealized)..... 25.85 1.64 (1.68)
------- ------- -------
Total income (loss) from
investment operations....... 25.62 1.60 (1.70)
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment
income............................. -- -- --
Distributions from capital gains..... (4.33) -- --
------- ------- -------
Total distributions........... (4.33) -- --
------- ------- -------
Net asset value, end of period......... $ 31.19 $ 9.90 $ 8.30
======= ======= =======
Total Return.................. 264.49% 19.28%** (17.00)%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)............................. $30,032 $ 4,965 $ 3,582
Ratio of expenses to average net
assets............................. 2.60%+ 2.95%*+ 2.95%*+
Ratio of net investment loss to
average net assets................. (1.88)%+ (2.64)%*+ (0.45)%*+
Portfolio turnover................... 362.55% 92.40%** 283.59%**
Annualized portfolio turnover........ 362.55% 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 the fund's operating expense cap for the first
twenty-nine months of its operations. For the period from December 31, 1997
(the commencement of operations) through May 31, 1999 the Fund's operating
expense cap was 2.95% of average net assets. For the period June 1, 1999
through May 31, 2000 the operating expense cap has been reduced to 2.50% of
average net assets.
Notes to Financial Statements are an integral part of this schedule.
40
<PAGE> 45
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND -- PORTFOLIO MANAGER'S LETTER
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
For the period January 1, 1999, through December 31, 1999, the Driehaus
Emerging Markets Growth Fund returned 114.16%. This compares with a return of
68.82% for the Morgan Stanley Capital International (MSCI) Emerging Markets
Index and 68.97% for the Lipper Emerging Markets Fund Index for 1999. For the
year, the Driehaus Emerging Markets Growth Fund ranked fourth among the 180
funds in the Lipper Emerging Markets Fund peer group.*
Since the fund's inception on January 1, 1998, the Driehaus Emerging Markets
Growth Fund posted an annualized return of 36.74%, compared with the MSCI
Emerging Markets Index's 13.86% and the Lipper Emerging Markets Funds Index's
11.16% over the same period.
The fund's outperformance in 1999 was largely achieved during the fourth
quarter of the year, when our strong overweighting of the technology and
telecommunications sectors propelled the fund to a quarterly gain of more than
62%. Our technology and telecom investments covered a broad spectrum of stocks,
including Internet-related companies, in emerging markets across Asia, Latin
America, Central and Eastern Europe, and the Middle East. Some examples held by
the fund during this period included Satayam Infowave Ltd., the second largest
Internet service provider/portal in India that demonstrated rapid revenue
growth; Dogan Yayin Holding AS, a Turkish media company that entered the
Internet market and is now bidding for a cellular license; and FirstCom Corp., a
competitive exchange carrier with fiber optic networks offering long distance
and data services to corporate clients in Peru, Chile, and Colombia. FirstCom
Corp. may add the Brazilian market through a merger with AT&T Latin America to
extend its data network throughout Latin America. Examples on the mobile telecom
side include Egyptian Mobile Phone Services, which has the dominant market share
in that country, and M-Cell Ltd., a highly profitable South African company.
During the latter part of 1999, we saw a resurgence in economic growth in
almost every emerging market. Much of this resurgence can be attributed to lower
interest rates, as currencies stabilized and corporate earnings rebounded. This,
in turn, resulted in renewed investment in these economies on both the equity
and debt sides, further fueling their recovery. Asia continued to show progress
in its rebound from the global financial crisis of 1997-1998, as exports rose
dramatically, especially in the electronics sector. Countries such as Taiwan,
Singapore, and Malaysia continued to benefit from the strong trend toward
contract outsourcing in the manufacture of components for mobile phones and
personal computers. India also strengthened on the back of growing exports,
especially in computer software, which accounted for 10% of India's total
exports in 1999. The country's software exports are expected to grow at 50% over
the next few years, and this high-margin industry should continue to fuel growth
in India's technology sector as well as the economy as a whole.
During the fourth quarter, emerging markets in Hungary, the Czech Republic,
and Poland, which depend heavily on exports to Western Europe, were positively
affected by the burgeoning recovery of economies in the western part of the
continent. During 1999, the fund was heavily overweighted in Turkey, where the
equity market rose almost 400% for the year. The Turkish economy benefited from
the efforts of the pro-reform government that, with the help of the
International Monetary Fund, created a new currency policy aimed at reducing
inflation. In addition, Turkey was given the green light to apply for admission
into the European Union.
In South Africa, interest rates declined and the currency stabilized during
1999. Rising commodity prices in platinum, paper/pulp, and gold were also highly
positive for the South African economy. The increase in commodity prices also
benefited the Latin American region. Latin American economies continue to be
linked and highly leveraged to the performance of the U.S. economy. This was
especially true in Mexico, where 1999 saw an economic rebound, particularly in
the northern part of the country, due to strong export sales to the U.S.
Returns for 1999 were unusual, and we would caution that it would be normal
to experience volatility or some amount of correction after the recent run-up in
the valuations of growth companies. Given the improving scenario across the
board, we remain highly positive on the long-term prospects of the emerging
markets. Forecasted earnings growth is expected to be extremely strong, while as
a whole, these markets are still trading
41
<PAGE> 46
below the peak highs seen during 1993. As the economies in these countries
continue to emerge from a recessionary cycle, our outlook anticipates another
strong year.
Sincerely,
Emery R. Brewer
Emery R. Brewer
Portfolio Manager
February 18, 2000
- ---------------
* The Fund's total return for the year ending 12/31/99 was ranked number four
out of 180 funds by Lipper Analytical Services, Inc. in the Lipper Emerging
Markets Fund category. During the period, the adviser reimbursed a portion of
the Fund's expenses; otherwise the Fund's returns and ranking may have been
lower.
42
<PAGE> 47
DRIEHAUS EMERGING MARKETS GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DRIEHAUS EMERGING
MARKETS GROWTH MSCI EMERGING LIPPER EMERGING
FUND (DREGX) MARKETS INDEX MARKETS FUND INDEX
----------------- ------------- ------------------
<S> <C> <C> <C>
One Year 114.16% 68.82% 68.97%
Since Inception (12/31/97 -- 12/31/99) 36.74% 13.86% 11.16%
</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 MARKETS LIPPER EMERGING
DREGX INDEX MARKETS FUND INDEX
----- --------------------- ------------------
<S> <C> <C> <C>
Dec 1997 10000 10000 10000
Mar 1998 10550 10722 10512
Jun 1998 9520 8183 8300
Sept 1998 7560 6504 6331
Dec 1998 8730 7679 7313
Mar 1999 9380 8663 7894
Jun 1999 12230 10926 9880
Sept 1999 11480 10374 9190
Dec 1999 18696 12964 12357
</TABLE>
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 $10,000 investment in the Fund, since
December 31, 1997, (the date of the Fund's commencement of operations), with all
dividends and capital gains reinvested, with the Morgan Stanley Capital
International (MSCI) Emerging Markets Index with dividends reinvested and the
Lipper Emerging Markets Fund Index with dividends reinvested for the same
period.
The MSCI 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. Source: Morgan Stanley Capital International.
The Lipper Emerging Markets Fund 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. Source: Lipper
Analytical Services.
43
<PAGE> 48
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
EQUITY SECURITIES -- 93.9%
- ----------------------------------------------------------
FAR EAST -- 35.3%
SOUTH KOREA -- 11.4%
Cheil Communications,
Inc. ..................... 707 $ 53,484
Dacom Corp.**............... 220 113,342
Daou Technology, Inc.**..... 251 8,731
Haansoft, Inc.**............ 6,000 277,939
Hanaro Telecom, Inc.**...... 5,020 86,872
Hanjin Transportation
Co.**..................... 2,940 101,236
Insung Information**........ 2,005 68,511
Kookmin Bank................ 562 8,810
Korea Telecom Corp. --
ADR....................... 2,820 210,795
Samsung Electronics......... 550 128,842
Trigem Computer, Inc. ...... 1,261 139,927
------------
1,198,489
------------
TAIWAN -- 7.0%
Acer Peripherals, Inc. ..... 26,784 110,942
Asustek Computer, Inc. --
GDR....................... 10 139
Far Eastern Textile, Ltd.... 40,940 97,833
Hitron Technology, Inc.**... 18,500 110,817
President Chain Store
Corp...................... 3,780 16,681
Systex Corp.**.............. 23,000 156,827
Taiwan Semiconductor
Manufacturing Co., Ltd. --
ADR**..................... 2,340 105,300
WYSE Technology Taiwan,
Ltd. ..................... 70,000 136,052
------------
734,591
------------
HONG KONG -- 5.4%
China.com Corp. -- A**...... 500 39,313
Computer & Technologies
Holdings, Ltd.**.......... 130,000 162,890
Globe Tech Holdings, Ltd.... 192,000 225,540
Quality Healthcare Asia,
Ltd.**.................... 350,000 137,047
------------
564,790
------------
SINGAPORE -- 5.1%
Chartered Semiconductor
Manufacturing, Ltd. --
ADR**..................... 2,000 146,000
Datacraft Asia, Ltd. ....... 25,032 207,766
Star Cruises PLC............ 18,000 183,600
------------
537,366
------------
THAILAND -- 2.6%
Advanced Info Service Public
Co., Ltd. (Foreign)**..... 10,000 167,795
Grammy Entertainment Public
Co., Ltd. (Foreign)....... 31,000 105,350
------------
</TABLE>
<TABLE>
- ----------------------------------------------------------
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
$ 273,145
------------
INDIA -- 2.0%
Infosys Technologies,
Ltd. -- ADR............... 300 $ 99,000
Satyam Infoway, Ltd. --
ADR**..................... 750 116,250
------------
215,250
------------
MALAYSIA -- 0.9%
Digi Swisscom Berhad**...... 90,000 97,105
------------
INDONESIA -- 0.9%
PT Astra International
Tbk**..................... 180,000 96,601
------------
Total Far East.............. 3,717,337
------------
EUROPE -- 19.2%
TURKEY -- 8.0%
Aksigorta AS................ 2,000,000 121,681
Alcatel Teletas
Telekomunikasyon Endustri
ve Ticaret AS............. 600,000 132,743
Dogan Yayin Holding AS**.... 12,600,000 185,841
Global Menkul Degerler
AS**...................... 16,500,000 76,051
Haci Omer Sabanci Holding
AS -- ADR................. 8,270 120,071
Yapi ve Kredi Bankasi AS --
GDR....................... 6,922 204,214
------------
840,601
------------
RUSSIA -- 4.5%
AO Tatneft -- ADR........... 9,000 85,500
Golden Telecom, Inc.**...... 6,225 199,200
LUKoil Holdings -- ADR...... 3,700 192,400
------------
477,100
------------
POLAND -- 2.7%
Art Marketing Syndicate
SA**...................... 10,000 118,017
Optimus SA.................. 9,000 170,641
------------
288,658
------------
SPAIN -- 1.7%
Terra Networks SA**......... 3,360 183,583
------------
HUNGARY -- 1.7%
OTP Bank Rt. -- GDR......... 3,000 174,750
------------
GREECE -- 0.6%
Folli-Follie Abee........... 1,320 58,893
------------
Total Europe................ 2,023,585
------------
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
44
<PAGE> 49
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
NORTH AMERICA -- 13.4%
MEXICO -- 10.3%
Alfa SA**................... 20,000 $ 93,931
Consorcio Ara SA de CV**.... 105,000 173,984
Corporacion Interamericana
de Entretenimiento SA --
B**....................... 35,000 139,815
Grupo Financiero Banorte SA
de CV -- O**.............. 115,000 173,562
Grupo Televisa SA --
GDR**..................... 3,160 215,670
Nuevo Grupo Iusacell de CV
SA -- ADR -- V**.......... 9,164 136,887
Telefonos de Mexico SA --
ADR -- L.................. 1,320 148,500
------------
1,082,349
------------
UNITED STATES -- 3.1%
EuroWeb International
Corp.**................... 8,000 92,500
FirstCom Corp.**............ 5,050 185,588
StarMedia Network, Inc.**... 1,100 44,069
------------
322,157
------------
Total North America......... 1,404,506
------------
SOUTH AMERICA -- 11.2%
BRAZIL -- 10.6%
Empresa Brasileira de
Aeronautica SA (Pref.).... 25,000 112,787
Gerdau SA (Pref.)........... 3,600,000 95,655
Globo Cabo SA -- ADR........ 14,300 257,400
Petroleo Brasileiro SA
(Pref.) -- ADR............ 6,388 163,839
Tele Norte Leste
Participacoes SA -- ADR... 7,100 181,050
Telemig Celular
Participacoes SA -- ADR... 4,062 187,615
Usinas Siderurgicas de Minas
Gerais SA (Pref.) -- A.... 20,800 112,837
------------
1,111,183
------------
ARGENTINA -- 0.6%
El Sitio, Inc.**............ 1,800 66,150
------------
Total South America......... 1,177,333
------------
MIDDLE EAST -- 10.0%
EGYPT -- 3.6%
Commercial International
Bank -- GDR............... 8,000 114,560
Egyptian Company for Mobile
Services**................ 5,730 262,567
------------
377,127
------------
</TABLE>
<TABLE>
- ----------------------------------------------------------
<CAPTION>
Number Market
of Value
Shares (Note A)
<S> <C> <C>
ISRAEL -- 6.4%
AudioCodes, Ltd.**.......... 2,400 $ 220,800
Check Point Software
Technologies, Ltd.**...... 931 185,036
Formula Systems, Ltd. --
ADR**..................... 3,000 125,813
Orbotech, Ltd.**............ 1,905 147,638
------------
679,287
------------
Total Middle East........... 1,056,414
------------
AFRICA -- 4.8%
SOUTH AFRICA -- 4.8%
African Bank Investments,
Ltd.**.................... 55,000 113,485
Computer Configurations
Holdings, Ltd.**.......... 162 632
De Beers -- Centenary Linked
Units..................... 3,400 98,879
M-Cell, Ltd................. 29,000 112,137
Softline, Ltd.**............ 115,000 184,037
------------
509,170
------------
Total Africa................ 509,170
------------
Total Equity Securities
(Cost $5,941,337)......... 9,888,345
------------
RIGHTS/WARRANTS -- 0.3%
- ----------------------------------------------------------
GREECE -- 0.3%
Arcadia Metal Industrial C.
Rokas SA -- Rights**...... 1,680 30,140
------------
THAILAND -- 0.0%
Seamico Securities Public
Co., Ltd.
(Foreign) -- Warrants**... 6,000 2,549
------------
Total Rights/Warrants (Cost
$37,623).................. 32,689
------------
- ----------------------------------------------------------
TOTAL INVESTMENTS (COST
$5,978,960)................. 94.2% $ 9,921,034
Other Assets in Excess of
Liabilities................. 5.8% 615,980
---------- ------------
Net Assets...................... 100.0% $ 10,537,014
==========================================================
The federal income tax basis and unrealized appreciation
(depreciation) for all investments is as follows:
</TABLE>
<TABLE>
<S> <C>
Basis.................................... $ 5,978,960
============
Gross Appreciation....................... $ 4,029,961
Gross Depreciation....................... (87,887)
------------
Net Appreciation....................... $ 3,942,074
============
**Non-income producing security.
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
45
<PAGE> 50
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
SCHEDULE OF INVESTMENTS BY INDUSTRY
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Aerospace.............................. 1.1%
Automobiles............................ 0.9%
Banking................................ 5.4%
Broadcast & Publishing Services........ 7.1%
Business & Publishing Services......... 1.1%
Capital Goods/Multi-Industry........... 2.0%
Computer Manufacturers................. 3.6%
Data Processing........................ 1.7%
Electrical............................. 0.3%
Electronic Systems/Devices............. 4.3%
Finance/Multi-Industry................. 0.1%
Financial Services..................... 2.7%
Health Care............................ 1.3%
Home Building.......................... 1.7%
Insurance.............................. 1.2%
Investments............................ 1.8%
Leisure................................ 1.7%
Leisure & Tourism...................... 1.3%
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
<S> <C>
Merchandising.......................... 0.6%
Metals -- Steel........................ 2.0%
Miscellaneous Materials................ 0.9%
Office/Communications Equipment........ 1.1%
Oil.................................... 4.2%
Other Computers........................ 1.4%
Retailing -- Foods..................... 0.2%
Semiconductors/Components.............. 2.0%
Software & EDP Services................ 7.0%
Technology/Multi-Industry.............. 8.5%
Telecommunications..................... 21.1%
Telephone Utilities.................... 3.1%
Textiles & Apparel..................... 0.9%
Transportation -- Shipping............. 1.0%
Wireless Messaging Service............. 0.9%
Other Assets In Excess Of
Liabilities.......................... 5.8%
------
TOTAL.................................. 100.0%
======
</TABLE>
Notes to Financial Statements are an integral part of this Schedule.
46
<PAGE> 51
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (Cost $5,978,960).......... $ 9,921,034
Foreign currency (Cost $300,424)........................ 301,516
Cash.................................................... 99,576
Receivables:
Dividends.......................................... 18,565
Investment securities sold......................... 205,214
Fund shares sold................................... 2,000
Due from affiliates................................ 3,540
Prepaid expenses........................................ 12,045
Deferred organizational costs........................... 17,621
-----------
- ---------------------------------------------------------------------------
TOTAL ASSETS................................... 10,581,111
-----------
- ---------------------------------------------------------------------------
LIABILITIES:
Accrued expenses........................................ 44,097
-----------
- ---------------------------------------------------------------------------
TOTAL LIABILITIES.............................. 44,097
-----------
- ---------------------------------------------------------------------------
NET ASSETS.................................................. $10,537,014
===========
SHARES OUTSTANDING.......................................... 573,826
===========
NET ASSET VALUE PER SHARE................................... $ 18.36
===========
===========================================================================
NET ASSETS CONSISTED OF THE FOLLOWING AT DECEMBER 31, 1999:
Paid-in capital......................................... $ 5,684,924
Undistributed net realized gain......................... 908,995
Unrealized foreign exchange gain........................ 1,021
Unrealized appreciation on investments.................. 3,942,074
-----------
NET ASSETS..................................... $10,537,014
===========
===========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
47
<PAGE> 52
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT LOSS:
Income:
Dividends (net of non-reclaimable foreign taxes of
$3,770)............................................ $ 68,241
Interest........................................... 6,675
Other.............................................. 5,146
----------
- --------------------------------------------------------------------------
Total income..................................... 80,062
----------
- --------------------------------------------------------------------------
Expenses:
Investment advisory fee............................ 93,249
Administration fee................................. 114,000
Professional fees.................................. 35,580
Federal and state registration fees................ 10,871
Custodian fee...................................... 69,471
Transfer agent fees................................ 36,182
Trustees' fees..................................... 3,818
Amortization of organization costs................. 5,862
Miscellaneous...................................... 28,469
----------
Total expenses before fees waived and
reimbursements..................................... 397,502
----------
- --------------------------------------------------------------------------
Administration fee waived.......................... (105,297)
Transfer agent fees waived......................... (31,200)
Expense reimbursement from advisor................. (100,622)
----------
Total expenses net of fees waived and
reimbursements................................... 160,383
----------
- --------------------------------------------------------------------------
Net investment loss............................ (80,321)
----------
- --------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions............ 2,062,920
Net realized foreign exchange loss...................... (69,185)
Net change in unrealized foreign exchange gain.......... 5,768
Change in unrealized appreciation of investments........ 3,717,434
----------
- --------------------------------------------------------------------------
Net gain on investments........................ 5,716,937
- --------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $5,636,616
==========
==========================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
48
<PAGE> 53
- --------------------------------------------------------------------------------
DRIEHAUS EMERGING MARKETS GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
from the
commencement
For the three month period of operations
For the year October 1, 1998 December 31, 1997
ended through through
December 31, 1999 December 31, 1998 September 30, 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss................... $ (80,321) $ (11,895) $ (11,861)
Net realized and unrealized gain
(loss) on investments............... 5,716,937 553,317 (1,228,857)
----------- ---------- -----------
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 5,636,616 541,422 (1,240,718)
----------- ---------- -----------
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income................. -- -- --
Capital gains......................... (163,210) -- --
----------- ---------- -----------
Total distributions to
shareholders.................... (163,210) -- --
----------- ---------- -----------
- ---------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Proceeds from shares sold............. 2,064,333......... -- 4,737,772
Reinvestment of distributions......... 163,210 -- --
Cost of shares redeemed............... (1,192,411) -- (10,000)
----------- ---------- -----------
Net increase in net assets derived
from capital share
transactions.................... 1,035,132 -- 4,727,772
----------- ---------- -----------
Total increase in net assets...... 6,508,538 541,422 3,487,054
----------- ---------- -----------
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------------------
Beginning of period....................... $ 4,028,476 $3,487,054 $ --
----------- ---------- -----------
End of period............................. $10,537,014 $4,028,476 $ 3,487,054
=========== ========== ===========
===========================================================================================================================
Capital share transactions are as follows:
Shares issued......................... 196,288 -- 462,301
Shares reinvested..................... 10,709 -- --
Shares redeemed....................... (94,418) -- (1,054)
----------- ---------- -----------
Net increase from capital share
transactions.................... 112,579 -- 461,247
=========== ========== ===========
===========================================================================================================================
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
49
<PAGE> 54
- --------------------------------------------------------------------------------
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 commencement
month period of operations
For the year October 1, 1998 December 31, 1997
ended through through
December 31, 1999 December 31, 1998 September 30, 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset value, beginning of period......... $ 8.73 $ 7.56 $ 10.00
------- ------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss........................ (.14) (0.03) (0.03)
Net gains (losses) on investments (both
realized and unrealized)................. 10.05 1.20 (2.41)
------- ------- -------
Total income (loss) from investment
operations........................ 9.91 1.17 (2.44)
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income....... -- -- --
Distributions from capital gains........... (.28) -- --
------- ------- -------
Total distributions................. (.28) -- --
------- ------- -------
Net asset value, end of period............... $ 18.36 $ 8.73 $ 7.56
======= ======= =======
Total Return........................ 114.16% 15.48%** (24.40)%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)....... $10,537 $ 4,028 $ 3,487
Ratio of expenses to average net assets.... 2.58%+ 2.75%*+ 2.75%*+
Ratio of net investment loss to average net
assets................................... (1.29)%+ (1.23)%*+ (0.49)%*+
Portfolio turnover......................... 366.53% 82.60%** 261.21%**
Annualized portfolio turnover.............. 366.53% 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 the fund's operating expense cap for the first
twenty-nine months of its operations. For the period from December 31, 1997
(the commencement of operations) through May 31, 1999 the Fund's operating
expense cap was 2.75% of average net assets. For the period June 1, 1999
through May 31, 2000 the operating expense cap has been reduced to 2.50% of
average net assets.
Notes to Financial Statements are an integral part of this schedule.
50
<PAGE> 55
- --------------------------------------------------------------------------------
DRIEHAUS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The DRIEHAUS MUTUAL FUNDS (the "TRUST"), a registered management investment
company, organized as a Delaware business trust with five separate series
("FUNDS"). The Trust was 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 five series
included in the trust are as follows:
------------------------------------
<TABLE>
<CAPTION>
Fund Commencement of Operations
----------------------------------------------------------------------------------------
<S> <C>
*THE DRIEHAUS INTERNATIONAL GROWTH FUND 10/28/96
**THE DRIEHAUS INTERNATIONAL DISCOVERY FUND 12/31/98
**THE DRIEHAUS EUROPEAN OPPORTUNITY FUND 12/31/98
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.
** Prior to the commencement of investment operations on January 4, 1999, the
DRIEHAUS INTERNATIONAL DISCOVERY FUND and the DRIEHAUS EUROPEAN OPPORTUNITY
FUND had no operations other than those relating to organizational matters.
------------------------------------
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 equity securities of foreign companies.
The DRIEHAUS INTERNATIONAL DISCOVERY FUND seeks to achieve its objective by
investing primarily in equity securities of foreign companies with market
capitalizations of less than $1 billion.
The DRIEHAUS EUROPEAN OPPORTUNITY FUND seeks to achieve its objective by
investing primarily in equity securities of European companies.
The 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. The Fiscal year end for the DRIEHAUS
INTERNATIONAL DISCOVERY FUND and the DRIEHAUS EUROPEAN OPPORTUNITY FUND is
December 31.
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, 1999,
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.
51
<PAGE> 56
- --------------------------------------------------------------------------------
DRIEHAUS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
No provision is made for Federal income taxes since the FUNDS' have already
elected to be taxed as a "regulated investment company" under Subchapter M of
the Internal Revenue Code and have made and declared 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 amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with Federal income tax
regulations, which may differ from generally accepted accounting principles.
To the extent these book and tax differences are permanent in nature, such
amounts are classified among paid-in-capital in excess of par value,
undistributed net investment income and undistributed net realized gain (loss)
on investments.
For the period ending December 31, 1999, reclassifications were recorded to
decrease undistributed net investment loss by $2,802,042, $156,694, $89,757,
$219,435 and $80,321 and decrease undistributed net realized foreign exchange
loss by $6,385,728, $86,751, $28,942, $366,702 and $123,410, decrease
undistributed net realized gain by $6,526,085, $243,445, $118,699, $390,127 and
$149,506, and decrease paid-in-capital in excess of par by $2,661,685, $0, $0,
$196,010 and $54,225 for the DRIEHAUS INTERNATIONAL GROWTH FUND, the DRIEHAUS
INTERNATIONAL DISCOVERY FUND, the DRIEHAUS EUROPEAN OPPORTUNITY FUND, the
DRIEHAUS ASIA PACIFIC GROWTH FUND and the DRIEHAUS EMERGING MARKETS GROWTH FUND,
respectively.
The FUNDS hereby designate approximately $16,194,116, $615,623 and $121,006
as long-term capital gain dividend for the DRIEHAUS INTERNATIONAL GROWTH FUND,
the DRIEHAUS ASIA PACIFIC GROWTH FUND and the DRIEHAUS EMERGING MARKETS GROWTH
FUND, respectively for the purpose of the dividends paid deduction.
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 (other than investments in securities),
which are denominated in foreign currencies, 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 portfolio hedges during 1999.
The FUNDS do not isolate that portion of the results of operations which
results from fluctuations in foreign exchange rates on investments held. These
fluctuations are included with the net realized and unrealized gains or losses
which result from changes in the market prices of investments.
------------------------------------
DEFERRED ORGANIZATION COSTS
Organization costs incurred by the DRIEHAUS INTERNATIONAL GROWTH FUND, the
DRIEHAUS ASIA PACIFIC GROWTH FUND, and the DRIEHAUS EMERGING MARKETS GROWTH FUND
have been deferred and are amortized over a period of 60 months. The FUNDS'
remaining amortization periods for these costs are as follows:
<TABLE>
<CAPTION>
Fund Remaining Amortization Period
- ---------------------------------------------------------------------------------------------
<S> <C>
THE DRIEHAUS INTERNATIONAL GROWTH FUND 21 Months
THE DRIEHAUS ASIA PACIFIC GROWTH FUND 36 Months
THE DRIEHAUS EMERGING MARKETS GROWTH FUND 36 Months
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE> 57
- --------------------------------------------------------------------------------
DRIEHAUS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
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.
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.
Upon commencement of operations, 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
INTERNATIONAL DISCOVERY FUND, the DRIEHAUS EUROPEAN OPPORTUNITY FUND, the
DRIEHAUS ASIA PACIFIC GROWTH FUND, and the DRIEHAUS EMERGING MARKETS GROWTH FUND
will not exceed, 2.50%, 2.10%, 2.95%, and 2.75%, respectively, of the average
net assets of each FUND on an annual basis, for the period beginning with the
effective date of each FUND'S registration statement through May 31, 1999.
Effective June 1, 1999, the current expense caps for the DRIEHAUS INTERNATIONAL
DISCOVERY FUND, the DRIEHAUS EUROPEAN OPPORTUNITY FUND, the DRIEHAUS ASIA
PACIFIC GROWTH FUND, and the DRIEHAUS EMERGING MARKETS GROWTH FUND are 2.40%,
2.10%, 2.50%, and 2.50%, respectively, of the average net assets of each FUND on
an annual basis. The expense cap for each FUND will remain at this current rate
until May 31, 2000.
------------------------------------
The expense caps, amount accrued and payable to DCM, and amounts accrued and
receivable from DCM during the year ended December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Expense
Reimbursement
Advisory Fees Expense Cap Receivable
Payable January 1, 1999 June 1, 1999 (included in
(included in due to to due from
Fund Advisory Fees to affiliates) May 31, 1999 December 31, 1999 affiliates)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DRIEHAUS INTERNATIONAL
GROWTH FUND $4,080,429 $539,537 Not Applicable --
DRIEHAUS INTERNATIONAL
DISCOVERY FUND 146,812 28,752 2.50% 2.40% --
DRIEHAUS EUROPEAN
OPPORTUNITY FUND 106,633 14,889 2.10% 2.10% --
DRIEHAUS ASIA PACIFIC
GROWTH FUND 175,273 36,261 2.95% 2.50% --
DRIEHAUS EMERGING MARKETS
GROWTH FUND 93,249 -- 2.75% 2.50% $ 3,540
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Driehaus Securities Corporation ("DSC") is the FUNDS' distributor.
DSC also acts as a broker for the FUNDS for domestically traded securities.
For the year ended December 31, 1999, the FUNDS paid the following brokerage
commissions:
53
<PAGE> 58
- --------------------------------------------------------------------------------
DRIEHAUS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Commissions Shares Traded
Fund Commissions Paid to DSC through DSC
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DRIEHAUS INTERNATIONAL GROWTH FUND $3,892,385 $339,700 8,293,189
DRIEHAUS INTERNATIONAL DISCOVERY FUND 195,323 18,360 573,383
DRIEHAUS EUROPEAN OPPORTUNITY FUND 100,884 120 49,786
DRIEHAUS ASIA PACIFIC GROWTH FUND 327,617 5,063 137,270
DRIEHAUS EMERGING MARKETS GROWTH FUND 156,962 26,877 733,115
- -------------------------------------------------------------------------------------------------------------
</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., an indirect subsidiary of PNC Bank Corp., serves as the FUNDS'
administrative and accounting agent. In compensation for its services, PFPC
receives the larger of a monthly minimum fee and a monthly fee based upon
average net assets. PFPC has agreed to waive its minimum fees during the first
twenty-four months of operations for the DRIEHAUS INTERNATIONAL DISCOVERY FUND,
the DRIEHAUS EUROPEAN OPPORTUNITY FUND, the DRIEHAUS ASIA PACIFIC GROWTH FUND,
and the DRIEHAUS EMERGING MARKETS GROWTH FUND.
For the year ended December 31, 1999, $100,298, $104,048, $97,641, and
$105,297 of these fees have been waived by PFPC Inc. for the DRIEHAUS
INTERNATIONAL DISCOVERY FUND, the DRIEHAUS EUROPEAN OPPORTUNITY FUND, 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 agreed to waive a portion of its monthly fee for
transfer agent service, for the first two years of operations, for the DRIEHAUS
INTERNATIONAL DISCOVERY FUND, the DRIEHAUS EUROPEAN OPPORTUNITY FUND, the
DRIEHAUS ASIA PACIFIC GROWTH FUND, and the DRIEHAUS EMERGING MARKETS GROWTH
FUND. For the year ended December 31, 1999, $31,200 of these fees were waived by
PFPC Inc., for each of these FUNDS.
------------------------------------
C. FOREIGN CURRENCY FORWARD CONTRACTS
At December 31, 1999 the FUNDS had foreign currency forward contracts
outstanding under which they are obligated to exchange currencies at specified
future dates. At December 31, 1999 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, 1999:
DRIEHAUS INTERNATIONAL GROWTH FUND
Transaction Hedges:
None
DRIEHAUS INTERNATIONAL DISCOVERY FUND
Transaction Hedges:
Foreign Currency Purchases:
<TABLE>
<CAPTION>
Unrealized
Appreciation
US Dollars (Depreciation)
Sold Foreign Currency Purchased Settlement at December 31, 1999
- ---------------------------------------------------------------------------------
<C> <S> <C> <C>
$240,972 149,556 Pound Sterling January 2000 $ 743
-------
Net unrealized appreciation $ 743
=======
- ---------------------------------------------------------------------------------
</TABLE>
54
<PAGE> 59
- --------------------------------------------------------------------------------
DRIEHAUS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
DRIEHAUS EUROPEAN OPPORTUNITY FUND
Transaction Hedges:
Foreign Currency Purchases:
<TABLE>
<CAPTION>
Unrealized
Appreciation
US Dollars (Depreciation)
Sold Foreign Currency Purchased Settlement at December 31, 1999
- ---------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 77,330 47,785 Pound Sterling January 2000 $ (99)
-------
$ (99)
- ---------------------------------------------------------------------------------
</TABLE>
Foreign Currency Sales:
<TABLE>
<CAPTION>
Unrealized
Appreciation
US Dollars (Depreciation)
Purchased Foreign Currency Sold Settlement at December 31, 1999
- ---------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 74,193 45,920 Pound Sterling January 2000 $ (24)
-------
$ (24)
-------
Net unrealized depreciation $ (123)
=======
- ---------------------------------------------------------------------------------
</TABLE>
DRIEHAUS ASIA PACIFIC GROWTH FUND
Transaction Hedges:
Foreign Currency Purchases:
<TABLE>
<CAPTION>
Unrealized
Appreciation
US Dollars (Depreciation)
Sold Foreign Currency Purchased Settlement at December 31, 1999
- ---------------------------------------------------------------------------------
<C> <S> <C> <C>
$111,655 787,168,791 Indonesian Rupee January 2000 $ (822)
-------
Net unrealized depreciation $ (822)
=======
- ---------------------------------------------------------------------------------
</TABLE>
DRIEHAUS EMERGING MARKETS GROWTH FUND
Transaction Hedges:
None
D. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments securities, other than
short-term obligations, for the year ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
Fund Purchases Sales
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
DRIEHAUS INTERNATIONAL GROWTH FUND $730,555,714 $746,595,882
DRIEHAUS INTERNATIONAL DISCOVERY FUND 33,761,188 24,831,685
DRIEHAUS EUROPEAN OPPORTUNITY FUND 23,752,907 14,912,102
DRIEHAUS ASIA PACIFIC GROWTH FUND 45,380,436 40,222,443
DRIEHAUS EMERGING MARKETS GROWTH FUND 22,023,122 21,574,288
- -----------------------------------------------------------------------------------------------
</TABLE>
E. RESTRICTED SECURITIES
Restricted securities are securities that are not registered for sale under
the Securities Act of 1933 ("1933 Act") and that may be re-sold only in
transactions exempt from registration. Restricted securities include rule 144A
securities which may be sold normally to qualified institutional buyers. At
December 31, 1999, the FUNDS held no restricted securities.
55
<PAGE> 60
- --------------------------------------------------------------------------------
DRIEHAUS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
F. LINES OF CREDIT
The FUNDS have a ten million dollar committed line of credit. This line of
credit is available primarily to meet large, unexpected shareholder withdrawals.
For the year ended December 31, 1999, no borrowing has been made on this line of
credit.
G. 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.
------------------------------------
56
<PAGE> 61
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of Driehaus International Growth
Fund, Driehaus International Discovery Fund, Driehaus European Opportunity 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 INTERNATIONAL DISCOVERY FUND,
DRIEHAUS EUROPEAN OPPORTUNITY 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, 14-16, 24-26, 34-36 and
44-46, as of December 31, 1999, and the related statements of operations,
statements of changes in net assets, and financial highlights on pages 7-10,
17-20, 27-30, 37-40, 47-50, 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 our 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, 1999 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 International Discovery Fund,
Driehaus European Opportunity Fund, Driehaus Asia Pacific Growth Fund and
Driehaus Emerging Markets Growth Fund as of December 31, 1999, 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.
Auther Anderson LLP
Chicago, Illinois
February 23, 2000
57