Small Cap Recovery Growth Commentary

December 31, 2007

The Driehaus Small Cap Recovery Growth Composite outperformed the Russell 2000 Growth Index by 428 basis points for the fourth quarter. Stock selection in the Industrials, Energy, Health Care, and Consumer Discretionary sectors were key contributors to return during the quarter. Specifically, holdings in the alternative energy and aerospace segments within the Industrials sector aided quarterly returns. In addition, select holdings in the pharmaceutical segment of the Health Care sector contributed to quarterly performance.

Performance of the Small Cap Recovery Growth Strategy (the “Strategy”) was constrained by holdings in the Information Technology and Consumer Staples sectors. Within the Information Technology sector, holdings in the semiconductor and software segments detracted from quarterly performance. Other holdings that detracted from quarterly performance included positions in uranium related securities in the Materials sector.

Changes in sector weightings were driven by both company-specific and industry-wide factors. The Strategy increased its exposure to the Health Care and Materials sectors largely due to the purchase of attractive growth stocks in the pharmaceutical and precious metals segments of the two sectors.

Exposure to the Information Technology and Telecommunication Services sectors was lower at the end of the fourth quarter relative to the previous quarter. The reduction in exposure to these sectors resulted from a combination of industry-specific weaknesses and company-specific fundamental earnings disappointments.

NOTES

Sources: Driehaus Capital Management LLC, FactSet, Morgan Stanley Capital International and Standard & Poor’s Global Industry Classification Standard, Russell Indices, and the Wall Street Journal.

The performance numbers represent a composite of small cap recovery growth accounts managed by Driehaus Capital Management LLC.  These numbers are estimated for the period as all underlying accounts have not yet been reconciled. All rates of return include reinvested dividends and other earnings and are net of fees and brokerage commissions. The performance data shown above represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted.

The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The performance data includes reinvested dividends. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index.