International Discovery Commentary

December 31, 2007

The Driehaus International Discovery Composite outperformed its benchmark, the MSCI All Country World Index ex-USA Growth (the “Index”), by approximately 230 basis points this quarter.

The Strategy benefited from strong stock selection in the Materials, Information Technology, and Telecommunication Services sectors. Accelerating sales and increased earnings growth rates caused the Strategy’s two largest overweightings in the Industrials and Information Technology sectors. Due to poor forecasts for sales and earnings growth, the Strategy’s two largest underweights were in the Financials and Consumer Staples sectors. The Strategy’s underweighting to the Financials sector also benefited the Strategy’s performance compared to the Index.  

From a country perspective, the Strategy’s two largest overweightings were Canada and Singapore, and the two largest underweightings were the United Kingdom and Japan. The Strategy’s returns, compared to the Index, benefited from underweighting Japan; however, the underweight allocation to the United Kingdom detracted from performance. In addition, stock selection in both the United Kingdom and Japan detracted from return. Due to signs of moderate slowing within these two countries, the Strategy remains underweight in the United Kingdom and Japan.  The overweight allocation to Canada positively impacted relative performance.  The Strategy remains overweight in Canada and Singapore due to their strong earnings growth outlook.

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 international discovery 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 Morgan Stanley Capital International All Country World Ex-USA Growth Index (MSCI All Country World Ex-USA Growth Index) is a subset of the Morgan Stanley Capital International All Country World Ex-USA Index (MSCI All Country World Ex-USA Index) and is composed only of the MSCI All Country World Ex-USA Index stocks which are categorized as growth stocks. The MSCI All Country World Ex-USA Index is a market capitalization-weighted index designed to measure equity market performance in 47 global developed and emerging markets, excluding the U.S.

Copyright MSCI 2007. All Rights Reserved. Without prior written permission of MSCI, this information and any other MSCI intellectual property may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. This information is provided on an “as is” basis, and the user of this information assumes the entire risk of any use made of this information. Neither MSCI, each of its affiliates nor any third party involved in or related to the computing, compiling or creating of any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages relating to any use of this information.

For additional disclosure on the Composite, please click here.