<PAGE>
Acorn Family of Funds
First Quarter Report
March 31, 1999
Managed by Wanger Asset Management, L.P.
[PHOTO OF ACORNS APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
Acorn Family of Funds First Quarter Report 1999
Table of Contents
<S> <C>
Squirrel Chatter: An Unusual Occurrence 2
Acorn Twenty
In a Nutshell 4
Performance at a Glance 5
Major Portfolio Changes 14
Statement of Investments 15
Acorn Foreign Forty
In a Nutshell 6
Performance at a Glance 7
Major Portfolio Changes 16
Statement of Investments 17
Portfolio Diversification 18
Acorn USA
In a Nutshell 8
Performance at a Glance 9
Major Portfolio Changes 19
Statement of Investments 20
Acorn International
In a Nutshell 10
Performance at a Glance 11
Major Portfolio Changes 22
Statement of Investments 24
Portfolio Diversification 28
Acorn Fund
In a Nutshell 12
Performance at a Glance 13
Major Portfolio Changes 29
Statement of Investments 31
Foreign Portfolio Diversification 38
Shareholder News 39
Trustees, Officers and Contact Information 40
</TABLE>
1
<PAGE>
- --Squirrel Chatter: An Unusual Occurrence
[PHOTO APPEARS HERE]
I was working at my computer a few days ago trying to get some historical price
data from the Internet. Accidentally, I hit two keys simultaneously; the monitor
flickered, went black and then produced several screens of text--and not the
information I had been searching for. I hit the print button to get a hard copy
and called our Information Technology department to see if we had a systems
problem.
"Funny you should ask," said Sandra. "We were running some Y2K tests on our
accounting programs with the system clock set ahead by four years when
everything froze up. Wait a minute, you weren't on the network--were you?"
"Well . . ."
"We sent out an e-mail to everyone two hours ago to let you know we were
shutting down for this test!"
"Sorry about that," I replied sheepishly. "I didn't read the e-mail. I'm 112
e-mails behind at last count. But I think you should see what appeared on my
screen. I printed out a copy."
"Bring it down," she said.
I went to get the item from the printer. It sure looked like a normal Barron's
story, but the dateline was the same as it had been on the screen--January 2003.
I ran down to Sandra's office with the article in my hand.
"Wow!" she exclaimed. "How could that happen?"
"Never mind about that," I said, "how can I get more?"
"I don't think you can," she said, sadly. "I had to completely reboot the
network after you screwed it up."
So, while I could not get back to the future, I did still have this fragment,
this glimpse into tomorrow. I can't vouch for its authenticity, but here it is:
Another Bang-Up Showing by Secondary Stocks
January 2003
...for the third year in a row, small-cap stocks outstripped their large-cap
counterparts.
To put it another way, ever since the big bull move began in late 1999, the
small-capitalization equities have been in the vanguard.
Despite this persistent front-running performance, investors during this span
have blown hot and cold on the small caps. Periodically, small caps are
"discovered," their virtues become the stuff of interviews in the financial
press and they're the subject of a rush of brokerage recommendations. The
Street's attention span, of course, is less than legendary: interest wanes.
Then, inexplicably, only a few weeks or months later, it revives and the process
starts all over again.
But small caps have managed to weather the swells and ebbs of investment
fashion quite nicely. Indeed, in the year just ended, they lengthened their
steady lead over the large-capitalization equities.
Specifically, in the past three years-plus, small caps, as measured by the
Russell 2000, have appreciated just over 100%, which works out to an average
annual advance of 25.4%. That compares with a rise over the same stretch of
45.4%, or 12.9% average yearly, for the big caps, as measured by the S&P 500.
And in 2002, small caps climbed by a solid 17.0%, more than twice the 7.1%
rise of the S&P 500.
A happy combination of things is likely responsible for this superior showing.
Not the least of these is the awesome expansion in the number of mutual funds.
That unbridled growth has encompassed the launching of numerous funds dedicated
to investing in small caps.
At the same time, as the bull market has roared on, carrying values to
unprecedented heights, institutional investors have widened their focus and
sought more diversity in their portfolios by exploring the small-cap universe.
2
<PAGE>
Moreover, small caps had been laggards for some years until the latest bull
move got under way in November 1999. As a result, many were selling at extremely
tempting prices.
In light of their strong gains the past three years, the question logically
arises: Are they now at the point where they've been transformed into expensive
from cheap?
History, at least, says no. For the popularity of small caps tends to run in
cycles, and by past standards, the current one has quite a ways to go.
Well, this glimpse into the future is dynamite stuff! All of our hardworking
squirrels at Acorn waved their bushy tails in ecstasy. One question remained,
could we tell our shareholders without getting in trouble with the SEC?
Mystery Explained
I had been back on the Internet for an hour doing a search or two ("Tropical
islands for sale" and "Owning your own NBA franchise") when Sandra reappeared.
"I figured it out," she said. "The laws of physics still hold. You didn't get
in touch with the future at all. Your PC actually picked up a Barron's story by
Rhonda Brammer dated January 3, 1994. All the date information had been moved
ahead four years."
Obviously we were disappointed to hear that we would still have to work for a
living after our Miracle of Prophecy had been debunked.
But maybe the story is right!
I decided to go ahead and print that four and a half year old article just to
demonstrate that market cycles keep on cycling. The Barron's piece was one of
many being writ ten at that time justifying the outperformance of small-cap
stocks and predicting the continuation of small-cap dominance. Was the
prediction correct? No. The article was dead wrong; the cycle was turning as the
article was being written, and large cap stocks began to do better than small-
cap in 1994 and have continued to do so up until the present.
Today, you can find many articles in the press explaining why the S&P 500 will
continue its successful run. But if history holds true, these articles may soon
be no more accurate than the one we cited. In time, small cap stocks and foreign
stocks will displace the S&P as king of the hill. Markets are--and always have
been--rotational. The undervaluation of small cap stocks relative to the S&P 500
is so extreme that the turn could be sharp and soon.
I think there is a good chance that Barron's will carry
a story in its January, 2003 issue reporting "Another Bang-up Showing for
Secondary Stocks."
/s/ Ralph Wanger
Ralph Wanger
Chief Investment Officer, Wanger Asset Management,
Lead Portfolio Manager, Acorn Fund
Past performance does not guarantee future results.
3
<PAGE>
Acorn Twenty
--In a Nutshell
[PHOTO APPEARS HERE]
Acorn Twenty had an outstanding first quarter, gaining 7.2%. Our benchmark, the
S&P 400 Midcap, was actually down -6.4%. We even beat the "unbeatable" S&P 500's
5.0% return. The mega-cap, growth companies phenomenon continued during the
first quarter of 1999, outpacing mid- and small-cap stocks. Nevertheless, your
Fund's concentrated strategy illustrated that excellent opportunities exist in
these markets--as long as you know where to find them.
The big winner during the quarter was RCN Corp., up 90.1%. Investors dialed
into this telephone, video and data company as it secured additional financing
from investment firm Hick, Muse, Tate & Furst. With this capital RCN is even
better positioned to take market share from regional bell operating companies,
throwing the baby bells out with the bath water.
Other winners: Expeditors International, flying quickly to a 28.9% gain; Jones
Apparel, which after being dressed down for announcing the acquisition of Nine
West finished the quarter up 27.3% once Wall Street saw that the shoe fit; and
Telephone & Data Systems ringing up a 25.1% return.
Healthcare stocks have been in intensive care lately. Our biggest losers
during the quarter were Lincare Holdings, down a breathtaking 30.6%, and
McKesson HBOC distributing a 17.7% loss.
We are pleased with Acorn Twenty's auspicious start and thank Acorn's research
team for their contributions. Your Fund represents our analysts' best mid-cap
ideas and the success of Acorn Twenty is ultimately a function of our collective
investment skills. However, each quarter we'd like to recognize one team member
for a particulary outstanding contribution to Acorn Twenty's success. This
quarter's "Twenty Plenty" award goes to Chuck McQuaid, director of research and
co-manager of Acorn Fund, who recommended Expeditors, Telephone & Data Systems,
and Liberty Media (up 14.3%). In addition, our entire team is indebted to Acorn
traders Deb Wolfe and Shelley Maish for their outstanding efforts during the
Fund's inauguration.
Again, we want to welcome all of our fellow shareholders and hope they are as
happy with the Fund's strong start as we are.
/s/ John H. Park /s/ Mark H. Yost
John H. Park Mark H. Yost
Co-Portfolio Manager Co-Portfolio Manager
Acorn Twenty had an outstanding First Quarter, gaining 7.2%. Our benchmark, the
S&P 400 Midcap, was actually down -6.4%.
A New Bundle of Joy
Rivals Baby Bells
RCN, Inc. (RCNC) vaulted to our #1 position in Acorn Twenty during the first
quarter. RCN is a new-age telecommunication company offering bundled voice
(local and long distance), video and high speed Internet services to city
dwellers from Boston to Washington, DC. RCN brings competitive choice to
residential customers who desire better, cheaper and faster communications
services than the incumbent RBOCs (regional bell operating companies) can
provide. By offering up to four services per home in densely populated areas,
RCN has a unique opportunity to generate substantial returns on a single fixed
capital investment. At the same time, RCN offers residential customers savings
of 10 to 30% off their existing telephone and cable rates. Recently, RCN
announced plans to begin offering service in the San Francisco market by early
2000. Check if RCN services are available in your neighborhood by visiting:
www.rcn.com. You'll be glad you did!
4
<PAGE>
- --Performance at a Glance
Acorn Twenty
Information
Ticker Symbol: ACTWX
Minimum
Initial Investment: $1,000
$1,000 for an IRA
Minimum
Subsequent Investment: $100
Exchange Fee: None
Management Fee*: 0.90%
12b-1 Fee: None
Administrative Fee: 0.05%
Total Expense Ratio*: 1.35%
*Fees and expenses are calculated for the period since the Fund's inception on
November 23, 1998 through December 31, 1998. Wanger Asset Management has
undertaken to reimburse the Fund for any ordinary operating expenses exceeding
1.35% of its average annual net assets.
<TABLE>
<CAPTION>
Fund Net Assets as of 3/31/99: $46.1 million
- ----------------------------------------------------------------
--Acorn Twenty Top 10 Holdings
<S> <C>
RCN Corporation 7.4%
Metro Market: Voice, Video & Internet Services
Americredit 7.3%
Auto Lending
Expeditors Int'l of Washington 6.4%
International Freight Forwarder
Telephone & Data Systems 6.2%
Cellular & Telephone Franchises
PRIMEDIA 6.1%
Specialty Magazines & Other Publications
Liberty Media Group, AT&T 5.4%
CATV & Satellite Dish Programming
McKesson HBOC 5.2%
Hospital Computer Services (formerly HBO)
H&R Block 5.1%
Tax Preparation
Lincare Holdings 4.9%
Home Health Care Services
MidAmerican Energy 4.7%
Growth Utility (formerly CalEnergy)
</TABLE>
The Fund's top 10 holdings and portfolio diversification vary with changes
in portfolio investments. See the Statement of Investments for a complete list
of the Fund's holdings.
Acorn Twenty Portfolio Diversification
- --------------------------------------------------------------------------------
--as a % of net assets, as of 3/31/99
[PIE CHART APPEARS HERE]
Other* 4.3%
Energy/Minerals 8.6%
Consumer
Goods/Services 41.3%
Information 9.8%
Finance 11.0%
Industrial
Goods/Services 11.1
Health Care 13.9%
* includes "Cash and other assets less liabilities" of 4.3%
<TABLE>
<CAPTION>
Relative Performance
- --------------------------------------------------------------------------------
1st quarter Life of Fund
1999
<S> <C> <C>
Acorn Twenty 7.2% 14.8%
S&P MidCap 400 -6.4% 4.0%
S&P 500 5.0% 11.1%
</TABLE>
*Life of Fund Performance is from Acorn Twenty's inception (11/23/98) through
3/31/99.
Net Asset Value Per Share 3/31/99: $11.48
- --------------------------------------------------------------------------------
The Value of a $10,000 Investment in Acorn Twenty
- --------------------------------------------------------------------------------
--November 23, 1998 through March 31, 1999
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Acorn Twenty $ 11,480
S & P Midcap 400 $ 10,400
DATE ACORN 20 ($) S & P MIDCAP 400
- ---- ------------ ----------------
<S> <C> <C>
11/23/98 10,000 10,000
12/31/98 10,710 11,109
1/31/99 11,000 10,676
2/28/99 10,710 10,117
03/31/99 11,480 10,400
</TABLE>
Total Return
Life of Fund
14.8%
This graph compares the results of $10,000 invested in Acorn Twenty on November
23, 1998 (the date Fund shares were first offered to the public), with all
dividends and capital gains reinvested to the S&P MidCap 400.
The S&P MidCap 400 is a market value-weighted index of 400 stocks that are in
the next tier down from the S&P 500. The S&P 500 is a broad market-weighted
average of U.S. blue-chip companies. All indexes are unmanaged and returns
include reinvested dividends.
Past performance does not guarantee future results. The investment return and
principal value of an investment in the Fund will fluctuate so that Fund shares,
when redeemed, may be worth more or less than their original cost.
5
<PAGE>
Acorn Foreign Forty
--In a Nutshell
[PHOTO APPEARS HERE]
Acorn Foreign Forty gained 8.9% in the first quarter, an outstanding result in
absolute terms. We also trounced the various benchmarks we use, as these were up
a little over 1% each (see inset).
We were helped by a rally in Japanese stocks and by good returns from our
investment in the computer, publishing, and telecommunication sectors. The prize
for biggest percentage gain goes to Softbank whose share price rose 86% in the
quarter. Softbank benefitted from two factors: investors suddenly recognizing
the strong performance of its internet-related businesses, and being Japan-
based. Unlike many U.S. internet stocks, which look dangerously overpriced to
us, Softbank has businesses which are profitable today with an "un-internet
like" share price. Michael King, covering Japanese stocks, deserves the credit
for uncovering this exciting stock.
The prize for biggest dollar gain goes to NTL, which reported continued rapid
growth in the number of subscribers to their UK cable television and telephone
services and their plans to rollout internet access services in that country.
Our director of research and co-manager of the Acorn Fund, Chuck McQuaid, did
the legwork to uncover this stock.
On the downside, we would have been better off in the quarter had we not owned
any of our utilities or insurance companies. An increase in interest rates
caused prices in these sectors to decline. This affected even the companies we
own, in spite of the fact that we project strong earnings for our holdings. For
example, our Spanish life insurer, Mapfre Vida, continues to experience double
digit growth in sales and earnings driven by strong inflows into the life
insurance and mutual fund products they offer. We liked these companies when we
bought them, and at the new lower prices we now like them even more.
We talked about the favorable outlook for international stocks in our 1998
annual report, and Leah Zell does so again in the Acorn International section of
this report. Acorn Foreign Forty and Acorn International give you two very
different ways to own exciting foreign stocks. Both funds invest with Acorn's
proven methodology. Both funds benefit from Acorn's renowned research team and
experienced fund management. Acorn International invests in smaller cap stocks
outside the U.S. The fund is also broadly diversified across the globe--
including emerging markets. Acorn Foreign Forty, on the other hand, focuses on
mid-to-larger company non-US stocks. In addition, Acorn Foreign Forty
concentrates its investments on fewer positions and primarily in developed
countries. It does not invest in emerging markets.
As opportunities continue to unfold abroad, we believe Acorn International and
Acorn Foreign Forty will continue to uncover great stocks in their respective
arenas. We think that owning both funds offers the best coverage of this world
of opportunties.
Acorn Foreign Forty and Acorn International give you two very different ways to
own exciting foreign stocks.
/s/ Marcel P. Houtzager
Marcel P. Houtzager
Lead Portfolio Manager
As discussed in the 1998 annual report, there is no widely recognized benchmark
for international midcap stocks, so, as a compromise, we use three indexes to
help you judge our performance. The EAFE and Lipper International Funds indexes
are well known, but they track larger cap international stocks than the ones we
invest in (EAFE's average market cap is $22 billion, dwarfing Acorn Foreign
Forty's average market cap of $3.5 billion). The Lipper International Funds
Average tracks all mutual funds investing in non-U.S. stocks except small-cap
international stocks. The Salomon Smith Barney Cap Range $2-$10 Billion index
does track mid cap international stocks, but with a catchy name like "Salomon
Smith Barney Cap Range $2-$10 Billion" it may take some time before this index
becomes well known.
6
<PAGE>
- --Performance at a Glance
Acorn Foreign Forty
Information
Ticker Symbol: ACFFX
Minimum
Initial Investment: $1,000
$1,000 for an IRA
Minimum
Subsequent Investment: $100
Exchange Fee: None
Management Fee*: 0.95%
12b-1 Fee: None
Administrative Fee: 0.05%
Total Expense Ratio*: 1.45%
*Fees and expenses are calculated for the period since the
Fund's inception on November 23, 1998 through December 31, 1998. Wanger Asset
Management has undertaken to reimburse
the Fund for any ordinary operating expenses exceeding 1.45%
of its average annual net assets.
<TABLE>
<CAPTION>
Fund Net Assets as of 3/31/99: $22.8 million
--Acorn Foreign Forty Top 10 Holdings
<S> <C> <C>
NTL United Kingdom 5.4%
Voice, Video & Data Services
NuSkin Enterprises Japan 4.5%
Personal Care / Herbal Products
Newsquest United Kingdom 4.1%
Regional Newspapers
Canadian Natural Resources Canada 3.8%
Oil & Gas Producer
Bodycote United Kingdom 3.5%
Materials Tech. & Metal Processing
Airtours United Kingdom 3.2%
Packaged Tour Vacations
Helsinki Telephone Finland 3.2%
Telecommunications Operator
Kon. Pakhoed Netherlands 3.2%
Logistics
Serco Group United Kingdom 3.1%
Facilities Management
Softbank Japan 3.0%
Internet Leader in Japan
</TABLE>
The Fund's top 10 holdings and portfolio diversification vary with changes
in portfolio investments. See the Statement of Investments for a complete list
of the Fund's holdings.
Acorn Foreign Forty Portfolio Diversification
--as a % of net assets, as of 3/31/99
[PIE CHART APPEARS HERE]
Other* 15.7%
Health Care 5.2%
Information 39.4%
Finance 7.7%
Industrial
Goods/Services 16.5%
Consumer
Goods/Services 15.5%
* includes "Cash and other assets less liabilities" of 6.0%
<TABLE>
<CAPTION>
Relative Performance
- ---------------------------------------------------------------
1st quarter Life of Fund
1999
<S> <C> <C>
Acorn Foreign Forty 8.9% 19.8%
EAFE 1.4% 5.6%
SSB Cap Range $2-10B 1.1% 4.5%
Lipper Int'l Funds Average 1.5% NA%
</TABLE>
*Life of Fund performance for Acorn Foreign Forty is from inception (11/23/98)
through 3/31/99.
Net Asset Value Per Share 3/31/99: $11.98
The Value of a $10,000 Investment in Acorn Foreign 40
--November 23, 1998 through March 31, 1999
[PERFORMANCE GRAPH APPEARS HERE]
Acorn Foreign Forty $11,980
EAFE $ 10,556
<TABLE>
Date Acorn Foreign Forty ($) EAFE ($)
---- ------------------------ --------
<S> <C> <C>
11/23/98 10,000 10,000
12/31/98 11,000 10,411
1/31/99 11,790 10,381
2/28/99 11,590 10,133
3/31/99 11,980 10,556
</TABLE>
Total Return
Life of Fund
19.8%
This graph compares the results of $10,000 invested in Acorn Foreign Forty on
November 23, 1998 (the date Fund shares were first offered to the public), with
all dividends and capital gains reinvested, with EAFE.
EAFE is Morgan Stanley's Europe, Australasia and Far East Index, an unmanaged
widely recognized international benchmark that comprises 20 major markets in
Europe, Australia, and the Far East. The SSB Cap Range $2-10B is Salomon Smith
Barney's two to ten billion U.S. dollar security market capitalization subset of
its Broad Market Index. It represents a mid-cap developed market index,
excluding the U.S. The Lipper Int'l Funds Average measures the performance of
all non-U.S. funds tracked by Lipper, excluding the International Small Cap
Funds group. For the first quarter of 1999, this consisted of 618 funds. All
indexes are unmanaged and returns include reinvested dividends.
Past performance does not guarantee future results. The investment return and
principal value of an investment in the Fund will fluctuate so that Fund shares,
when redeemed, may be worth more or less than their original cost.
7
<PAGE>
Acorn USA
- --In a Nutshell
[PHOTO APPEARS HERE]
Your Fund ran the wrong way last quarter. Acorn USA slid-7.9%, a little worse
than the small-cap Russell 2000 index (-5.4%), and well below the S&P 500's
+5.0%. Over the past year, Acorn USA's performance still ranks in the top third
(#211) of all 663 small-cap funds followed by Lipper Inc. We're number 136 of
493 small-cap funds for the two years ended March 31, 1999.
The two hottest fashions on Wall Street last quarter were Size and Youth.
Plus-sized stocks were all the rage on the stock market's catwalk. Over the past
year, the S&P 500 whales rose +18.5%, while small-caps remained caught in their
own private bear market (Russell 2000 down -16.3%). Within the small stock group
itself, the infants and toddlers ran amok. Newly minted Internet companies fared
best, especially those brewed-up just last semester in some college dorm room
(dorms having replaced garages as the entrepreneurial start-up sites of choice).
The main reason your Fund lagged last quarter was because it owned too many
reasonably-priced stocks. That sounds strange, doesn't it? How can it be wrong
to own reasonably-priced stocks? Does that mean owning unreasonably-priced
stocks is good? Over the past three months, yes. The silliest priced stocks kept
getting sillier last quarter. Investors (strike that, Speculators) paid up and
up and up for Internet companies growing their business values (i.e. losses) at
mind-boggling, unstable rates. Meanwhile, stocks of companies growing business
value at a consistent, healthy pace suffered from neglect.
Our most infirm industry last quarter was healthcare. Weak stocks included
Lincare (hit with a Medicare subpoena) and Magellan (psychiatric managed care).
Many of our other losers were in good businesses seemingly too ordinary for
today's wild times. MidAmerican Energy is a utility, Host Marriott serves food
in airports, and Acceptance Insurance writes crop insurance.
Our best stocks were, not surprisingly, companies benefiting from the
Internet. RCN is an Internet service provider building an advanced fiber optic
telecommunications network in the Northeast. Intelliquest has built a direct
marketing database full of Internet users' vital statistics. TV Guide offers an
interactive TV guide that one day may be your TV's portal to the World Wide Web.
Stocks have momentarily become what economists call a luxury good... the higher
the price the greater the demand, because the price itself validates the
underlying value of the product.
Stocks have momentarily become what economists call a luxury good. Normally
when the price of a product goes up, people buy less of it. Think meat or
gasoline. But for luxury goods, the higher the price the greater the demand,
because the price itself validates the underlying value of the product. Think
very expensive restaurants, where the higher the price of the entrees, the
better the food must be. At Acorn, we don't confuse a higher stock price with a
better value.
Unreal `Net companies and their unreal valuations are holding the market
spellbound. Our portfolio of real companies with real franchise values trading
at good prices is well cast to benefit when the spell breaks.
/s/ Robert A. Mohn
Robert A. Mohn
Lead Portfolio Manager
Service
--With a Dial
When your PC crashes (and you don't have Sandra to fix it) you can call a toll-
free number to a "help desk." Lots of times, the help desk is run by an outside
contractor rather than the PC company itself. (After all, if the PC company
wanted to have friendly chats with its customers it wouldn't have designed the
PC that way to begin with!)
One of the outsourcing companies that runs these help desks is Sykes
Enterprises. Sykes is one of our favorite Internet plays. As this "super
highway" of complex technology takes over the world, its eager users
increasingly need the road-side assistance Sykes provides. Their additional
markets include handling customer care for cellular phone companies, Internet
service providers and Web sites. Sykes is a great stock that gives us the growth
promise of the Internet at the right price.
8
<PAGE>
- --Performance at a Glance
Acorn USA
Information
Ticker Symbol: AUSAX
Minimum
Initial Investment: $1,000
$1,000 for an IRA
Minimum
Subsequent Investment: $100
Exchange Fee: None
Management Fee*: 0.94%
12b-1 Fee: None
Administrative Fee: 0.05%
Total Expense Ratio*: 1.20%
*Fees and expenses are for the fiscal year ended
December 31, 1998.
Fund Net Assets as of 3/31/99: $252.0 million
- ------------------------------------------------------
--Acorn USA Top 10 Holdings
MidAmerican Energy 7.6%
Growth Utility (formerly CalEnergy)
Micros Systems 6.8%
Information Systems for Restaurants & Hotels
RCN 5.8%
Metro Market: Voice, Video & Internet Services
Sykes Enterprises 4.5%
Call Center Services
Lincare Holdings 4.3%
Home Health Care Services
National Data 4.0%
Credit Card & Health Claims Processor
TV Guide 3.8%
TV Program Guides & Programming
Hub Group 3.3%
Truck & Rail Freight Forwarder
UICI 3.2%
Health Insurance
Wackenhut 2.7%
Prison Management
The Fund's top 10 holdings and portfolio diversification vary with changes
in portfolio investments. See the Statement of Investments for a complete list
of the Fund's holdings.
Acorn USA Portfolio Diversification
- -----------------------------------------
--as a % of net assets, as of 3/31/99
[PIE CHART APPEARS HERE]
Other* 10.3%
Health Care 7.7%
Information 40.1%
Industrial
Goods/Services 12.3%
Finance 14.7%
Energy/Minerals 14.9%
* includes: "Cash and other assets less liabilities" of 6.8%
<TABLE>
<CAPTION>
Relative Performance
- -------------------------------------------------------------------
1st quarter Last 12 mos.
1999
<S> <C> <C>
Acorn USA -7.9% -13.7%
Russell 2000 -5.4% -16.3%
Lipper Small-Cap Funds Avg. -6.0% -15.5%
S&P MidCap 400 -6.4% 0.5%
S&P 500 5.0% 18.5%
</TABLE>
Net Asset Value Per Share 3/31/99: $13.63
- -----------------------------------------
The Value of a $10,000 Investment in Acorn USA
- -----------------------------------------------------
--September 4, 1996 through March 31, 1999
[PERFORMANCE GRAPH APPEARS HERE]
Acorn USA $ 15,016
Russell 2000 $ 12,292
<TABLE>
<CAPTION>
<S> <C> <C>
Date Acorn USA ($) Russell 2000 ($)
- ---- ------------- ----------------
09/04/96 10,000 10,000
09/30/96 10,720 10,360
12/31/96 11,650 10,899
03/31/97 11,480 10,335
06/30/97 13,320 12,011
09/30/97 15,340 13,798
12/31/97 15,413 13,335
03/31/98 17,401 14,678
06/30/98 17,525 13,993
09/30/98 14,151 11,174
12/31/98 16,305 12,997
03/31/99 15,016 12,292
</TABLE>
Average Annual Total Return
1 Year Life of Fund
-13.7% 17.1%
This graph compares the results of $10,000 invested in Acorn USA on September 4,
1996, (the date Fund shares were first offered to the public), with all
dividends and capital gains reinvested, to the Russell 2000 Index with dividends
reinvested.
The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then
eliminating the largest 1,000, leaving a market capitalization-weighted index of
2,000 small companies. The Lipper Small-Cap Funds Avg. is an average of all U.S.
small-cap funds tracked by Lipper, which consisted of 747 and 663 funds for the
1st qtr. and 12-mos. periods above. The S&P MidCap 400 is a market value-
weighted index of 400 stocks that are in the next tier down from the S&P 500.
The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. All
indexes are unmanaged and returns include reinvested dividends.
Past performance does not guarantee future results. The investment return and
principal value of an investment in the Fund will fluctuate so that Fund shares,
when redeemed, may be worth more or less than their original cost.
9
<PAGE>
Acorn International
--In a Nutshell
[PHOTO APPEARS HERE]
We pronounce last year's financial crisis dead.
What evidence can we present?
. Brazil devalued its currency in January and none of the dire predictions of
doom materialized--the Hong Kong peg held; and the dollar strengthened instead
of weakened.
. Emerging markets equities soared (see the IFCI Composite Index opposite).
. Sony announced on March 9th that it would cut its labor force by 12,000 and
close 15 out of 60 production plants in order to raise returns on capital.
Foreign critics have long felt that Japanese companies have to restructure to
give a kick in the pants to Japan's ailing economy. When a bellwether company
like Sony agrees to a western-style restructuring, it has an enormous, positive
psychological impact. Foreign investors piled into the market, setting a monthly
record for foreign cash inflows, and the strongest quarterly record since the
summer of 1994.
. Oskar-The Grouch-LaFontaine got canned. The Minister of Finance to the newly-
elected German Chancellor Gerhard Schroeder abruptly resigned when it became
clear that his socialist plans for Europe's largest economy were unpopular.
Apparently, nobody wanted to turn back the clock. The next day, the German
market rallied a robust 5.3% in celebration.
The outlook for foreign investing is brighter. Japanese stocks have done a lot
better recently. We now think we have seen the end of one of the longest bear
markets in history. The other Asian economies are also on the mend. One example
of this is Moodys' upgrade of Korean sovereign government bonds.
Brazil has been in permanent financial crisis. Yet even they returned this
month to international capital markets with a two billion dollar debt offering
that was well received. The new European Central Bank has just cut interest
rates .5% to 2.5% to stimulate demand. Even legendary investor Warren Buffet is
reported to be looking for neat stocks outside the U.S.
Acorn International rose 1.2% from January to March, in line with its EMI
benchmark and the Lipper International Funds Index (see pg.7), but behind the
Lipper International Small Cap Index. Our cautious stance towards Japan (where
smaller companies led the upturn) held us back, as did consolidation in the
European information technology service stocks. April went very well and our
long-term investment style hasn't changed. Over the quarter, we initiated 23 new
positions and added to 35 existing positions, particularly in the
telecommunications, healthcare and media sectors. At the same time, we've
reduced the overall number of names so the portfolio is brimming with high-
quality smaller companies that have great potential. Our job is to add to the
ones that flourish, dump those that disappoint, and hold on to the best of them
for a very long time.
/s/ Leah Joy Zell
Leah Joy Zell
Lead Portfolio Manager
Latin
Impressario
Mexico led the performance tables this quarter
(surprise!), up 30%. A favorite holding there is Corporacion Interamericana de
Entretenimiento, or CIE. Imagine a Latin American version of Ticketmaster,
Madison Square Garden and Disney combined. Whether it's the Rolling Stones
concert in Mexico City or Beauty and the Beast in Buenos Aires, CIE makes it
happen. Sales have been growing 75-100% a year, We don't think it will stay
small for long.
10
<PAGE>
- --Performance at a Glance
Acorn International
Information
<TABLE>
<CAPTION>
Fund Net Assets as of 3/31/99: $1,652.3 million
- --------------------------------------------------------------------------------
--Acorn International Top 10 Holdings
<S> <C> <C>
WM Data Nordic Sweden 4.3%
Computer Services/Consulting
Tieto Corporation Finland 3.7%
Computer Services/Consulting
Serco Group United Kingdom 2.9%
Facilities Management
NTL United Kingdom 2.3%
Voice, Video & Data Services
Rhoen Klinikum Germany 2.2%
Hospital Management
Venture Manufacturing Singapore 2.0%
Electronic Manufacturing Services
Cie Fin Richemont Switzerland 2.0%
Luxury Goods, Tobacco & Pay TV
Atos France 2.0%
Computer Services/Transaction Processing
Li and Fung Hong Kong 1.9%
Sourcing of Consumer Goods
Autogrill Italy 1.7%
Tollway Restaurants
</TABLE>
The Fund's top 10 holdings and portfolio diversification vary with changes
in portfolio investments. See the Statement of Investments for a complete list
of the Fund's holdings.
Acorn International Portfolio Diversification
- ---------------------------------------------
--as a % of net assets, as of 3/31/99
[PIE CHART APPEARS HERE]
Other* 13.9%
Information 37.0%
Health Care 5.5%
Finance 8.9%
Consumer Goods/Services 20.6%
Industrial Goods/Services 14.1%
* includes "Cash and other assets less liabilities" of 6.7%
<TABLE>
<CAPTION>
Relative Performance
- ---------------------------------------------------------
1st quarter Last 12 mos.
1999
<S> <C> <C>
Acorn International 1.2%
EMI (World ex-U.S.) 1.4% -3.0%
IFCI Composite 10.8% -19.3%
Lipper Int'l Small-Cap
Funds Index 3.7% -3.1%
</TABLE>
Net Asset Value Per Share 3/31/99: $21.06
- -----------------------------------------
The Value of a $10,000 Investment in Acorn Int'l
- ------------------------------------------------
--September 23, 1992 through March 31, 1999
[PERFORMANCE GRAPH APPEARS HERE]
Acorn Int'l $ 23,574
EMI (World ex-U.S.) $ 15,864
Date Acorn Int'l ($)
- ---- ---------------
1992 10,690
1993 15,940
1994 15,334
1995 16,703
1996 20,133
1997 20,170
1998 23,305
3/31/99 23,574
Average Annual Total Return
1year 5years Life of Fund
- -1.2% 8.3% 14.1%
This graph compares the results of $10,000 invested in Acorn International on
September 23, 1992 (the date Fund shares were first offered to the public), with
all dividends and capital gains reinvested, with the EMI (World ex-U.S.). In
preceding years, the performance of Acorn International was compared to Morgan
Stanley's Europe, Australasia Far East Index (EAFE), an international benchmark
that comprises 20 major markets in Europe, Australia and the Far East. The EMI
(world-ex U.S.) more closely approximates the composition of Acorn
International's portfolio. For the 12 months ended 3/31/99, the EMI showed a
total return of -3.0% and EAFE showed a return of 6.1%, compared to Acorn
International's total return of -1.2%.
EMI World ex-U.S. is Salomon Smith Barney's index of the bottom 20% of
institutionally investable capital of countries, as selected by Salomon,
excluding the U.S. The IFCI Composite is the International Finance Corporation's
index of 31 emerging markets, which weights securities according to their market
capitalization after adjusting for shares held by other constituents in the
index. The Lipper Int'l Small-Cap Funds Index measures the performance of the 10
largest int'l small-cap funds tracked by Lipper, including Acorn International.
All indexes are unmanaged and returns include reinvested dividends.
Past performance does not guarantee future results. The investment return and
principal value of an investment in the Fund will fluctuate so that Fund shares,
when redeemed, may be worth more or less than their original cost.
11
<PAGE>
Acorn Fund
--In a Nutshell
[PHOTO APPEARS HERE]
First Quarter Results
Acorn Fund fell 3.6% in the quarter. Down is not as good as up, but we did beat
the small cap indexes and the Lipper Small Cap Funds Index, which dropped 4.7%.
Blue chips again outperformed small caps; the S&P 500 jumped 5.0%.
Media and communications stocks remained hot in the quarter. Foreign cable
TV/Telephone/Internet providers United International Holdings and NTL sizzled,
providing 125% and 44% gains respectively. Domestic counterparts RCN and
Cablevision also surged, wiring home 90% and 45% returns. Softbank, a Japanese
holding company with Internet investments, banked an 86% gain. TV Guide and CMP
Media were also big winners.
Many niche companies were also hot. Atwood Oceanics pumped forth a 75% profit
as its depressed stock rebounded on an oil price recovery. Labor Ready worked up
a 32% return as its earnings exceeded expectations. Expeditors International
expedited a 29% gain as it grew through the economic slowdown in Asia.
Technology was tough. Aspect Telecom, a maker of call center telephone
equipment, reported a disappointing quarter and plunged 62%. RCM Technologies
and Aztech Technology, computer services firms, dropped 59% and 54%,
respectively.
HA.Lo Industries fell 55% on lower than expected quarterly earnings; we
purchased more as its price got real Lo. Borders Group fell 44% on disappointing
same store sales growth, while International Game Technology rolled a 40% loss.
The Trend is Near
At close to 30, Acorn Fund is one of the oldest funds on the block. It has
experienced a lot of market cycles. As Squirrel Chatter highlights this quarter,
in some cycles, small cap stocks are the hot performers, and in others, they lag
the hot performance of large caps. These shifting trends are inevitable and we
do our best to exploit them.
Over the past four years, small caps as a group have underperformed larger
stocks. Therefore, we've sought out exceptional opportunities in the more solid
mid-cap market. We actively exploited this trend and did it well. We think it's
time for this trend to go in the other direction. Here's why:
Valuations are the relationship of a stock's price to earnings. Currently,
valuations of large cap stocks are significantly higher than small cap stocks.
Consequently, investors are paying a lot of money for a little upside potential
in large caps--and small caps are offering incredible opportunities.
Consider the valuation trends of the Russell 1,000* (larger companies) and the
Russell 2,000** (smaller companies). Twenty years ago, both larger and smaller
companies had valuations of roughly 8x earnings. Over the next several years,
the two moved in similar patterns until 1996--when the two were tied at 22x
earnings.
Now, the Russell 1,000 is at 28x earnings and the Russell 2,000 is at 18x
earnings--the most significant split in recent history. More often than not, the
Russell 2000 has sold at a premium to the Russell 1,000--not a discount. But
like the end of a Meg Ryan and Tom Hanks movie, these two characters will
inevitably end up together.
Therefore, we went through a "smallification" program away from big companies
with high valuations to small companies with good value. This past quarter, we
shifted approximately $300 million from stocks that have grown into high p/e
mid-cap or large-cap stocks, to smaller stocks that offer new opportunities.
We may be early, but when a big move occurs, it may be fast. We want to be on
board with our seat belts fastened before it takes off.
So, for anyone who wondered, Acorn continues to be a small company fund.
/s/ Ralph Wanger /s/ Charles P. McQuaid
Ralph Wanger Charles P. McQuaid
Lead Portfolio Manager Co-Portfolio Manager
*Russell 1000(R) Index measures the performance of the 1,000 largest companies
in the Russell 3000 Index, which represents approximately 89% of the total
market capitalization of the Russell 3000 Index. As of the latest
reconstitution, the average market capitalization was approximately $9.9
billion; the median market capitalization was approximately $3.7 billion. The
smallest company in the index had an approximate market capitalization of
$1,404.7 million.
**Russell 2000(R) Index measures the performance of the 2,000 smallest companies
in the Russell 3000 Index, which represents approximately 11% of the total
market capitalization of the Russell 3000 Index. As of the latest
reconstitution, the average market capitalization was approximately $592.0
million; the median market capitalization was approximately $500.0 million. The
largest company in the index had an approximate market capitalization of
$1,402.7 million.
Russell 3000(R) Index measures the performance of the 3,000 largest US companies
based on total market capitalization, which represents approximately 98% of the
investable US equity market.
12
<PAGE>
- --Performance at a Glance
Acorn Fund
Information
Ticker Symbol: ACRNX
Minimum
Initial Investment: $1,000
$1,000 for an IRA
Minimum
Subsequent Investment: $100
Exchange Fee: None
Management Fee*: 0.69%
12b-1 Fee: None
Administrative Fee: 0.05%
Total Expense Ratio*: 0.84%
*Fees and expenses are for the fiscal year ended
December 31, 1998.
Fund Net Assets as of 3/31/99: $3,154.5 million
- --------------------------------------------------------------------------------
--Acorn Fund Top 10 Holdings
Liberty Media Group, AT&T 4.6%
CATV & Satellite Dish Programming
Harley-Davidson 3.1%
Motorcycles & Related Merchandise
Carnival 2.6%
Largest Cruise Line
National Data 2.4%
Credit Card & Health Claims Processor
Lincare Holdings 2.4%
Home Health Care Services
Solectron 2.2%
Electronic Manufacturing Services
Expeditors International of Washington 1.9%
International Freight Forwarder
AES Corporation 1.7%
Power Plants
McKesson HBOC 1.7%
Hospital Computer Services (formerly HBO & Co.)
RCN 1.7%
Metro Market: Voice, Video & Internet Services
The Fund's top 10 holdings and portfolio diversification vary with changes
in portfolio investments. See the Statement of Investments for a complete list
of the Fund's holdings.
Acorn Fund Portfolio Diversification
- --------------------------------------------------------------------------------
--as a % of net assets, as of 3/31/99
[PIE CHART APPEARS HERE]
Other* 23.8%
Industrial
Goods/Services 8.7%
Consumer Goods/Services 10.3%
Foreign Securities 11.3%
Information 32.0%
Finance 13.9%
* includes "Cash and other assets less liabilities" of 4.0%
<TABLE>
Relative Performance
- ---------------------------------------------------------------
1st quarter Last 12 mos.
1999
<S> <C> <C>
Acorn Fund -3.6% -8.7%
S&P 500 5.0% 18.5%
Russell 2000 -5.4% -16.3%
Lipper Small Cap Funds Index -4.7% -14.7%
S&P MidCap 400 -6.4% 0.5%
</TABLE>
Net Asset Value Per Share 3/31/99: $16.25
- -----------------------------------------
The Value of a $10,000 Investment in Acorn Fund
- ------------------------------------------------
--June 10, 1970 through December 31, 1998
[PERFORMANCE GRAPH APPEARS HERE]
Acorn Fund S & P 500
$778,925 ---------
$ 502,576
Date Acorn Funds ($) S & P ($)
- ------- --------------- ---------
1970 $ 13,587 $ 12,676
1974 10,691 10,816
1978 31,777 18,200
1982 68,208 33,054
1986 136,843 67,295
1990 183,674 105,386
1994 411,750 165,032
1998 807,685 478,724
3/31/99 778,925 502,576
Average Annual Total Return
1 year 5 years 10 years Life of Fund
- -8.7% 13.1% 15.0% 16.3%
This graph compares the results of $10,000 invested in Acorn Fund on June 10,
1970 (the date Fund shares were first offered to the public), with all dividends
and capital gains reinvested, to the S&P 500 Index with dividends reinvested
The S&P 500 is a broad market-weighted average of U.S. blue-chip companies.
The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then
eliminating the largest 1,000, leaving a market capitalization-weighted index of
2,000 small companies. The Lipper Small Cap Funds Index measures the performance
of the 30 largest U.S. small-cap funds tracked by Lipper, including Acorn Fund.
The S&P MidCap 400 is a market value-weighted index of 400 stocks that are in
the next tier down from the S&P 500. All indexes are unmanaged and returns
include reinvested dividends.
Past performance does not guarantee future results. The investment return and
principal value of an investment in the Fund will fluctuate so that Fund shares,
when redeemed, may be worth more or less than their original cost.
13
<PAGE>
Acorn Twenty
--Major Portfolio Changes in the First Quarter
<TABLE>
<CAPTION>
Number of Shares
--------------------
12/31/98 3/31/99
Additions
- -----------------------------------------------------
Information
<S> <C> <C>
Acxiom 50,000 78,000
Concord EFS 0 66,500
H & R Block 28,000 50,000
PRIMEDIA 70,000 200,000
Sterling Commerce 0 40,000
- -----------------------------------------------------
Health Care
Lincare Holdings 40,000 80,000
McKesson HBOC
(Acquirer of HBO & Co.) 41,000 36,000
- -----------------------------------------------------
Finance
Americredit 135,000 255,000
- -----------------------------------------------------
Industrial Goods/Services
Servicemaster 0 105,000
- -----------------------------------------------------
Energy/Minerals
AES Corporation 28,000 49,000
MidAmerican Energy
(formerly known as CalEnergy) 35,000 77,000
<CAPTION>
Number of Shares
--------------------
12/31/98 3/31/99
Sales
- -----------------------------------------------------
Information
<S> <C> <C>
AC Nielsen 25,000 0
Telephone & Data Systems 83,000 51,000
RCN 170,000 101,000
- -----------------------------------------------------
Consumer Goods/Services
Jones Apparel 54,000 39,000
- -----------------------------------------------------
Finance
Republic NY 28,000 0
Peoples Heritage Financial 51,000 0
</TABLE>
14
<PAGE>
Acorn Twenty
--Statement of Investments March 31, 1999
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------------------------------------
Common Stocks: 95.7%
- ----------------------------------------------------------------------------------
<S> <C> <C>
Information: 41.3%
--Television Programming: 5.4%
47,000 Liberty Media Group, AT&T $2,473
CATV & Satellite Dish Programming
--Telephone Services: 7.3%
101,000 RCN 3,390
Metro Market: Voice, Video & Internet Services
--Mobile Communications: 6.2%
51,000 Telephone and Data Systems 2,875
Cellular & Telephone Franchises
--Transaction Processors: 4.0%
66,500 Concord EFS 1,833
Credit Card Services
--Business Software: 2.7%
40,000 Sterling Commerce 1,230
Electronic Commerce Software & Services
--Business Information/
Marketing Services: 15.7%
200,000 PRIMEDIA 2,800
Specialty Magazines & Other Publications
50,000 H & R Block 2,369
Tax Preparation
78,000 Acxiom 2,067
Database Marketing Services
- ----------------------------------------------------------------------------------
7,236
--------
Information: Total 19,037
- ----------------------------------------------------------------------------------
Health Care: 13.9%
--Services: 13.9%
36,000 McKesson HBOC
(Acquirer of HBO & Co.) 2,376
Hospital Computer Services
80,000 Lincare Holdings 2,250
Home Health Care Services
110,000 First Health Group 1,767
PPO Network
--------
Health Care: Total 6,393
- ----------------------------------------------------------------------------------
Consumer Goods/Services: 9.8%
--Cruise Lines: 4.5%
53,000 Royal Caribbean Cruises 2,067
Cruises to Caribbean & Alaska
--Leisure Vehicles: 3.0%
24,000 Harley-Davidson 1,380
Motorcycles & Related Merchandise
<CAPTION>
Number of Shares Value (000)
- -----------------------------------------------------------------------------------
<S> <C> <C>
--Manufacturers: 2.3%
39,000 Jones Apparel $ 1,089
Women's Apparel
--------
Consumer Goods/Services: Total 4,536
- -----------------------------------------------------------------------------------
Finance: 11.0%
--Finance Companies: 7.3%
255,000 Americredit 3,347
Auto Lending
--Insurance: 3.7%
12,000 Progressive 1,722
Auto Insurance
--------
Finance: Total 5,069
- -----------------------------------------------------------------------------------
Industrial Goods/Services: 11.1%
--Logistics: 6.5%
55,000 Expeditors Int'l of Washington 2,970
International Freight Forwarder
--Other Industrial Services: 4.6%
105,000 Servicemaster 2,133
Facilities Management
---------
Industrial Goods/Services: Total 5,103
- -----------------------------------------------------------------------------------
Energy/Minerals: 8.6%
--Independent Power: 8.6%
77,000 MidAmerican Energy
(formerly known as CalEnergy) 2,156
Growth Utility
49,000 AES Corporation 1,825
Power Plants
---------
Energy/Minerals: Total 3,981
---------
Total Common Stocks: 95.7% 44,119
---------
Short-Term Obligations: 5.7% 2,609
---------
Total Investments: 101.4% 46,728
---------
Cash and Other Assets less Liabilities: (1.4%) (632)
---------
Total Net Assets: 100% $46,096
- -----------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Acorn Foreign Forty
--Major Portfolio Changes in the First Quarter
<TABLE>
<CAPTION>
Number of Shares
------------------------------
12/31/98 3/31/99
Additions
- --------------------------------------------------------------
<S> <C> <C>
Europe
- --Germany
MobilCom 0 2,000
- --Finland
Helsinki Telephone 7,500 15,000
Tieto Corporation 0 14,000
- --United Kingdom
Airtours 60,000 100,000
Bodycote 30,000 60,000
Newsquest 0 150,000
NTL 9,000 15,000
Scottish Power 0 50,000
- --Italy
SEAT Pagine Gialle 0 200,000
- --Spain
Indra Sistemas 0 40,000
- --Netherlands
Getronics 0 10,000
Hunter Douglas 13,000 20,000
Kon. Pakhoed 20,000 30,000
- -------------------------------------------------------------
Asia
- --Hong Kong
SmarTone Telecom 0 149,900
- --Japan
NuSkin Enterprises 4,500 45,000
Olympus Optical 0 30,000
Softbank 2,000 6,000
- -------------------------------------------------------------
Other Countries
- --Canada
Canadian Natural Resources 20,000 50,000
- --Israel
Amdocs 5,000 20,000
<CAPTION>
Sales
- -------------------------------------------------------------
Europe
- --Sweden
Autoliv 4,000 0
- --United Kingdom
Hays 60,000 40,000
Logica 45,000 20,000
- --Italy
Olivetti 160,000 0
- --Netherlands
Unique International 23,000 0
- -------------------------------------------------------------
Asia
- --Hong Kong
Li and Fung 7,000 0
- --Japan
NTT Data 100 0
Terumo 10,000 0
- --Singapore
Natsteel Electronics 200,000 100,000
- -------------------------------------------------------------
Other Countries
- --South Africa
Comparex Holdings 16,000 0
</TABLE>
16
<PAGE>
Acorn Foreign Forty
--Statement of Investments March 31, 1999
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------------------------------------
Common Stocks: 94.0%
- ----------------------------------------------------------------------------------
<S> <C> <C>
Europe: 68.8%
--Germany: 3.8%
2,000 MobilCom $ 525
Telecommunication Services
3,000 Rhoen Klinikum 330
Hospital Management
- ----------------------------------------------------------------------------------
855
--Denmark: 2.0%
7,000 ISS International System 455
Cleaning Services
--Finland: 5.8%
15,000 Helsinki Telephone 734
Telecommunications Operator
14,000 Tieto Corporation 577
Computer Services/Consulting
- ----------------------------------------------------------------------------------
1,311
--France: 4.0%
5,000 Atos 459
Computer Services/Transaction Processing
2,000 SITA 451
Waste Hauling & Landfills
- ----------------------------------------------------------------------------------
910
--United Kingdom: 29.0%
15,000 NTL 1,221
Voice, Video & Data Services
150,000 Newsquest 938
Regional Newspapers
60,000 Bodycote 787
Materials Technology & Metal Processing
100,000 Airtours 735
Packaged Tour Vacations
30,000 Serco Group 712
Facilities Management
200,000 Smith & Nephew 487
Medical Equipment
50,000 Scottish Power 436
Electric Utility
40,000 Hays 412
Outsourcing Services
35,000 Sema Group 395
Computer Software & Services
10,000 Energis 284
Telecommunications Services
20,000 Logica 206
Computer Software & Services
- ----------------------------------------------------------------------------------
6,613
--Switzerland: 4.9%
400 Cie Fin Richemont 665
Luxury Goods, Tobacco & Pay TV
300 Pargesa Holdings 443
Industrial & Media Conglomerate
- ----------------------------------------------------------------------------------
1,108
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------------------------------------
<S> <C> <C>
--Italy: 4.4%
42,000 Editoriale L'Espresso $ 472
Newspapers & Magazines
30,000 Autogrill Finanziari 296
Tollway Restaurants
200,000 SEAT Pagine Gialle 234
Yellow Pages
- ----------------------------------------------------------------------------------
1,002
--Spain: 5.5%
7,500 Aguas de Barcelona 451
Utility
40,000 Indra Sistemas 413
Business Information Services
12,000 Mapfre Vida 395
Life Insurance & Mutual Funds
- ----------------------------------------------------------------------------------
1,259
--Netherlands: 9.4%
30,000 Kon. Pakhoed 727
Logistics
20,000 Hunter Douglas 583
Decorative Window Coverings
6,400 ASR Verzekeringsgroep 473
Insurance
10,000 Getronics 369
Computer Services
- ----------------------------------------------------------------------------------
2,152
---------
Europe: Total 15,665
- ----------------------------------------------------------------------------------
Asia: 14.6%
--Hong Kong: 1.9%
149,900 SmarTone Telecom 434
Mobile Telecommunications
--Japan: 11.5%
45,000 NuSkin Enterprises 1,029
Personal Care/Herbal Products
6,000 Softbank 673
Internet Leader in Japan
30,000 Olympus Optical 395
Medical Equipment
4,000 Takefuji 307
Unsecured Consumer Loans
2,500 Nintendo 216
Video Games
- ----------------------------------------------------------------------------------
2,620
--Singapore: 1.2%
100,000 Natsteel Electronics 273
Electronic Manufacturing Services
Asia: Total 3,327
---------
</TABLE>
17
<PAGE>
Acorn Foreign Forty
--Statement of Investments, continued
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
<S> <C> <C>
Other Countries: 10.6%
--Canada: 7.2%
50,000 Canadian Natural Resources $ 859
Oil & Gas Producer
20,000 Celestica 654
Electronic Manufacturing Services
7,000 Power Financial 134
Financial Services Holding Company
1,647
- ----------------------------------------------------------------------------------
--Israel: 1.9%
20,000 Amdocs 433
Telecommunications Billing & Customer Care Software
--United States: 1.5%
6,000 Global TeleSystems 336
Telecommunication Services
---------
Other: Total 2,416
---------
Total Common Stocks: 94.0% $21,408
---------
Short-Term Obligations: 12.6% 2,873
---------
Total Investments: 106.6% 24,281
---------
Cash and Other Assets Less Liabilities: (6.6%) (1,512)
---------
Total Net Assets: 100% $22,769
- ----------------------------------------------------------------------------------
</TABLE>
--Portfolio Diversification
At March 31, 1999, Acorn Foreign Forty's portfolio of investments as a percent
of net assets was diversified as follows:
<TABLE>
<CAPTION>
Value (000) Percent
- -----------------------------------------------------------------
<S> <C> <C>
- --Information
Telephone Services $ 2,547 11.2%
Publishing 2,083 9.1
Computer Services 2,006 8.8
CATV 1,221 5.4
Business Software 433 1.9
Business Information 413 1.8
Contract Manufacturing 273 1.2
- -----------------------------------------------------------------
8,976 39.4
- --Health Care
Hospital/Laboratory Supplies 487 2.1
Medical Equipment 395 1.7
Hospital Management 330 1.4
- -----------------------------------------------------------------
1,212 5.2
- --Consumer Goods/Services
Nondurables 1,029 4.5
Travel 735 3.2
Entertainment 665 2.9
Durable Goods 583 2.6
Restaurants 296 1.3
Consumer Software 216 1.0
- -----------------------------------------------------------------
3,524 15.5
- --Finance
Insurance 1,002 4.5
Closed End Funds 443 1.9
Savings & Loans 307 1.3
- -----------------------------------------------------------------
1,752 7.7
<CAPTION>
Value (000) Percent
- -----------------------------------------------------------------
<S> <C> <C>
- --Industrial Goods/Services
Outsourcing Services $ 1,579 6.9%
Industrial Materials 787 3.5
Industrial Services 727 3.2
Electrical Components 654 2.9
- -----------------------------------------------------------------
3,747 16.5
- --Energy/Minerals
Oil/Gas Producers 859 3.8
- -----------------------------------------------------------------
859 3.8
- --Other Industries
Regulated Utilities 887 3.9
Waste Management 451 2.0
- -----------------------------------------------------------------
1,338 5.9
------------------------------
Total Common Stocks: 21,408 94.0
------------------------------
Short-Term Obligations: 2,873 12.6
------------------------------
Total Investments: 24,281 106.6
Cash and Other Assets less
------------------------------
Liabilities: (1,512) (6.6)
------------------------------
Net Assets: $22,769 100.0%
- -----------------------------------------------------------------
</TABLE>
18
<PAGE>
Acorn USA
--Major Portfolio Changes in the First Quarter
<TABLE>
<CAPTION>
Number of Shares
--------------------------------
12/31/98 3/31/99
Additions
- -----------------------------------------------------------------------------
<S> <C> <C>
Information
CACI International 0 206,000
IntelliQuest Information 408,100 483,100
National Data 214,300 239,300
Pinnacle Holdings 0 50,000
Playboy Enterprises 0 31,800
Sykes Enterprises 258,500 353,500
- -----------------------------------------------------------------------------
Health Care
Lincare Holdings 352,200 382,200
- -----------------------------------------------------------------------------
Consumer Goods/Services
Whole Foods Market 0 30,000
- -----------------------------------------------------------------------------
Finance
Americredit 135,000 407,000
Phoenix Investment Partners 0 130,000
- -----------------------------------------------------------------------------
Industrial Goods/Services
Labor Ready 0 95,000
- -----------------------------------------------------------------------------
Energy/Minerals
MidAmerican Energy 674,400 684,400
(formerly known as CalEnergy)
<CAPTION>
Number of Shares
------------------------------
12/31/98 3/31/99
Sales
- ----------------------------------------------------------------------------
<S> <C> <C>
Information
Centennial Cellular 254,000 0
Info USA, Cl. A 107,000 0
Kronos 147,100 166,650
(includes effect of 3 for 2 stock split)
Liberty Media Group, AT&T 106,000 71,000
(formerly known as Liberty Media
Group, Tele-Communications)
Mettler Toledo 56,000 0
TV Guide 288,000 258,000
(formerly known as United
Video Satellite Group)
- ----------------------------------------------------------------------------
Consumer Goods/Services
First Years 2,500 0
Fresh Foods 84,700 0
- ----------------------------------------------------------------------------
Finance
Washington Mutual 94,400 66,400
- ----------------------------------------------------------------------------
Industrial Goods/Services
Farr Company 221,200 92,700
- ----------------------------------------------------------------------------
Energy/Minerals
GeoScience 179,000 0
- ----------------------------------------------------------------------------
Other Industries
Forest City Enterprises, Cl. A 85,400 28,400
</TABLE>
19
<PAGE>
Acorn USA
--Statement of Investments March 31, 1999
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------------------------------------
Common Stocks: 93.2%
- ----------------------------------------------------------------------------------
<S> <C> <C>
Information: 40.1%
--Broadcasting: 2.0%
209,100 Data Transmission Network $ 4,992
Data Services for Farmers
--Television Programming: 5.5%
258,000 TV Guide 9,514
(formerly known as United Video Satellite Group)
TV Program Guides & Programming
71,000 Liberty Media Group, AT&T 3,736
CATV Programming
31,800 Playboy Enterprises 716
CATV Programming
- -----------------------------------------------------------------------------------
13,966
--Telephone Services: 6.6%
434,700 RCN 14,590
Metro Market: Voice, Video & Internet Services
55,500 Commonwealth Telephone 2,043
Rural Market: Local, Long Distance & Internet Access
- -----------------------------------------------------------------------------------
16,633
--Mobile Communications: 1.4%
121,800 COMARCO 2,740
Wireless Network Testing
50,000 Pinnacle Holdings 756
Towers for Cellular, PCs, & Paging
- -----------------------------------------------------------------------------------
3,496
--Telecommunications Equipment: 1.0%
377,100 Aspect Telecommunications 2,498
Call Center Equipment
--Gaming Equipment: 0.8%
146,000 International Game Technology 2,126
Slot Machines & Progressive Jackpots
--Computer Services: 4.9%
353,500 Sykes Enterprises 11,422
Call Center Services
534,700 Aztec Technology Partners 886
Technology Staffing Services
- -----------------------------------------------------------------------------------
12,308
--Consumer Software: 0.4%
75,500 Activision 934
Entertainment Software
--Business Software: 1.5%
210,400 Systems & Computer Technology 2,104
Enterprise Software & Services
214,000 JDA Software 1,592
Applications Software & Services for Retailers
21,600 Information Management 46
Call Center Software
- -----------------------------------------------------------------------------------
3,742
--Transaction Processors: 4.0%
239,300 National Data 10,051
Credit Card & Health Claims Processor
<CAPTION>
Number of Shares Value (000)
- -----------------------------------------------------------------------------------
<S> <C> <C>
--Business Information/
Marketing Services: 3.6%
483,100 IntelliQuest Information $ 4,891
Technology Market Research
206,000 CACI International 3,489
Technology Services for Government
154,400 Info USA, Cl. B 695
Business Data for Sales Leads
- -----------------------------------------------------------------------------------
9,075
--Computer Hardware/
Related Systems: 8.4%
518,500 Micros Systems 17,111
Information Systems for Restaurants & Hotels
166,650 Kronos 4,083
Time Accounting Software & Clocks
- -----------------------------------------------------------------------------------
21,194
---------
Information: Total 101,015
- -----------------------------------------------------------------------------------
Health Care: 7.7%
--Biotechnology/Drug Delivery: 0.3%
78,000 Synaptic Pharmaceuticals 536
Receptor Targeted Drug Design
27,000 CuraGen 179
Genomics
- -----------------------------------------------------------------------------------
715
--Services: 7.4%
382,200 Lincare Holdings 10,749
Home Health Care Services
352,000 First Health 5,654
PPO Network
540,000 Magellan Health Services 2,261
Mental Health Services
- -----------------------------------------------------------------------------------
18,664
---------
Health Care: Total 19,379
- -----------------------------------------------------------------------------------
Consumer Goods/Services: 2.9%
--Retail: 2.9%
930,600 Host Marriott Services 6,282
Fast Food Kiosks in Airports
30,000 Whole Foods Market 1,031
---------
Natural Food Supermarkets
Consumer Goods/Services: Total 7,313
- -----------------------------------------------------------------------------------
Finance: 14.7%
--Savings & Loans: 1.4%
66,400 Washington Mutual 2,714
West Coast Savings & Loan
156,500 Coast Contingency Rights 929
Litigation Claim Against US Government
- -----------------------------------------------------------------------------------
3,643
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------------------------------------
<S> <C> <C>
--Finance Companies: 3.4%
407,000 Americredit $ 5,342
Auto Lending
590,000 World Acceptance 3,171
Personal Loans
- ----------------------------------------------------------------------------------
8,513
--Money Management: 0.8%
130,000 Phoenix Investment Partners 1,121
Mutual Fund & Pension Manager
52,800 Pioneer Group 782
Equity Mutual Funds
- ----------------------------------------------------------------------------------
1,903
--Insurance: 9.1%
354,700 UICI 7,981
Health Insurance
392,100 Acceptance Insurance 5,293
Crop Insurance
184,500 AmerUs Life Holdings 4,428
Annuities/Life Insurance
93,000 Leucadia National 2,813
Insurance Holding Company
13,800 Markel 2,487
Specialty Insurance
- ----------------------------------------------------------------------------------
23,002
------
Finance: Total 37,061
- ----------------------------------------------------------------------------------
Industrial Goods/Services: 12.3%
--Steel: 0.7%
119,000 Atchison Casting 959
Steel Foundries
77,300 Schnitzer Steel 918
Scrap Steel Processor
- ----------------------------------------------------------------------------------
1,877
--Industrial Distribution: 0.5%
70,000 Vallen 1,190
Safety Products Distribution
--Machinery: 0.3%
92,700 Farr Company 788
Filters
--Specialty Chemicals: 1.4%
225,600 Lilly Industries, Cl. A 3,483
Industrial Coatings
--Other Industrial Services: 9.4%
346,000 Hub Group 8,217
Truck & Rail Freight Forwarder
402,500 Wackenhut, Cl. B 6,843
Prison Management
347,400 Insurance Auto Auctions 4,212
Auto Salvage Services
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------------------------------------
<S> <C> <C>
95,000 Labor Ready $ 2,476
Temporary Manual Labor
244,500 Compass International Services 1,834
Collection Agencies
- ----------------------------------------------------------------------------------
23,582
----------
Industrial Goods/Services: Total 30,920
- ----------------------------------------------------------------------------------
Energy/Minerals: 14.9%
--Independent Power: 7.6%
684,400 MidAmerican Energy 19,163
(formerly known as CalEnergy)
Growth Utility
--Oil/Gas Producers: 2.1%
473,800 Tesoro Petroleum 5,212
Oil Refinery/Gas Reserves
--Distribution/Marketing/Refining: 4.8%
283,000 Atmos Energy 6,810
Natural Gas Utility
208,400 Dynegy 2,931
Natural Gas & Electric Processing & Marketing
92,300 Equitable Resources 2,406
Natural Gas Utility & Producer
- ----------------------------------------------------------------------------------
12,147
--Oil Services: 0.4%
35,000 J Ray McDermott 1,046
Offshore Construction
---------
Energy/Minerals: Total 37,568
- ----------------------------------------------------------------------------------
Real Estate: 0.6%
37,300 Gaylord Entertainment 905
Opryland Hotel & Other Assets
28,400 Forest City Enterprises Cl. A 687
Shopping Centers
----------
Real Estate: Total 1,592
----------
Total Common Stocks: 93.2% 234,848
----------
Short-Term Obligations: 7.1% 17,988
----------
Total Investments: 100.3% 252,836
----------
Cash and Other Assets Less Liabilities: (0.3%) (808)
----------
Total Net Assets: 100% $252,028
- ----------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Acorn International
--Major Portfolio Changes in the First Quarter
<TABLE>
<CAPTION>
Number of Shares
---------------------
12/31/98 3/31/99
Additions
- --------------------------------------------------------------------------------
<S> <C> <C>
Europe
- --Germany
EM.TV & Merchandising 0 7,000
Fresenius, Pfd. 0 40,000
Sixt 0 50,000
- --Denmark
Carli Gry 100,000 150,000
ISS International System 45,000 75,000
- --Finland
Helsinki Telephone 85,000 150,000
Talentum 1,200,000 1,300,000
- --Sweden
Mandator 50,000 1,000,000
Sigma 0 250,000
WM Data Nordic 1,800,000 1,830,000
- --United Kingdom/Ireland
Bodycote 450,000 650,000
Esat Telecom (Ireland) 0 75,000
Hogg Robinson 1,100,000 1,500,000
Icon (Ireland) 0 100,000
Newsquest 0 760,000
Photobition Group 0 665,000
Premier Oil 10,000,000 15,000,000
Saville Systems ADR (Ireland) 325,000 400,000
Smith & Nephew 500,000 2,500,000
- --Switzerland
Sarasin & Cie Bank 4,500 6,500
Selecta Group 60,000 65,000
- --Italy
SEAT Pagine Gialle 0 2,000,000
- --Spain/Portugal
Aguas de Barcelona 79,500 100,000
Cortefiel 250,000 350,000
Filmes Lusomundo (Portugal) 118,200 417,000
Mapfre Vida 370,000 400,000
- --Netherlands
Kempen 300,000 400,000
Kon. Pakhoed 150,000 250,000
- --Hungary
Gedeon Richter 30,000 80,000
Matav 750,000 1,200,000
<CAPTION>
Number of Shares
---------------------
12/31/98 3/31/99
Additions
- -------------------------------------------------------------------------------
Asia
<S> <C> <C>
- --Hong Kong
Li and Fung 14,327,000 14,999,000
SmarTone Telecom 0 2,500,000
TVB 1,500,000 2,000,000
Varitronix International 9,250,000 10,000,000
- --Japan
Aiful 0 13,000
Bellsystem 24 10,000 20,000
Kadokawa Shoten 0 33,000
Meitec 0 65,000
Nichii Gakkan 0 90,000
(includes effect of 15% stock dividend)
NuSkin Enterprises 132,000 310,000
OBIC 0 27,600
(includes effect of 20% stock dividend)
Olympus Optical 0 500,000
Otsuka Kagu 0 21,000
Ryohin Keikaku 76,500 115,000
Takefuji 0 80,000
Trans Cosmos 0 31,000
- --Korea
S1 Corporation 0 31,000
- -------------------------------------------------------------------------------
Latin America
- --Brazil
Embratel 0 250,000
- -------------------------------------------------------------------------------
Other Countries
- --Australia
AAPT 4,000,000 5,000,000
- --Canada
Bracknell 800,000 1,110,000
Celestica 600,000 650,000
Canadian Natural Resources 400,000 500,000
Leitch Technology 0 300,000
Power Financial 400,000 500,000
- --Israel
ECI Telecom 0 225,000
Galileo Technology 90,000 250,000
- --South Africa
Dimension Data 2,000,000 2,500,000
- --United States
Global TeleSystems 40,000 75,000
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
-----------------
12/31/98 3/31/99
Sales
- --------------------------------------------------------------
Europe
<S> <C> <C>
- --Germany/Austria
Cewe Color Holding 18,500 8,000
Merck KGA 200,000 150,000
United International
Holdings (Austria) 473,000 250,000
- --Finland
KCI Konecranes International 135,000 0
- --Sweden
Atle 315,000 0
Getinge Industrier 760,000 0
Semcon 35,400 0
- --France
Virbac 6,600 0
- --United Kingdom
AEA Technology 650,000 385,000
City Centre Restaurants 4,400,000 0
Dialog Corporation 350,000 0
Edinburgh Fund Managers 766,000 0
Energis 50,000 0
Hays 350,000 0
Ocean Group 225,000 0
Ocean Group, Cl. B 250,000 0
Sema Group 401,908 0
Serco Group 2,045,000 2,000,000
Vosper Thornycroft Holdings 270,500 0
- --Italy/Greece
Gewiss 600,000 110,000
Industrie Natuzzi ADR 400,000 300,000
Hellenic Bottling (Greece) 250,000 0
- --Spain
Sol Melia 150,000 0
- --Portugal
Jeronimo Martins 13,800 0
- --Netherlands
DOCdata 175,000 0
- --Hungary
Pick Szeged 100,000 0
<CAPTION>
Number of Shares
-----------------
12/31/98 3/31/99
Sales
- ------------------------------------------------------------------
Asia
<S> <C> <C>
- --India
Housing Development Finance 80,000 0
- --Japan
Fuji Software ABC 200,000 210,000
(includes effect of 30% stock dividend)
Hokuto 108,000 0
NTT Data 1,000 0
Terumo 120,000 0
- ------------------------------------------------------------------
Latin America
- --Brazil
Cemig, Pfd. 160,000,000 0
Itau Banco 8,000,000 0
- --Panama
Banco Latinoamericano de 150,000 0
Exportaciones
- ------------------------------------------------------------------
Other Countries
- --Australia
Anaconda Nickel 2,500,000 0
Mayne Nickless 1,250,000 0
Tyndall Australia 6,500,000 0
- --Canada
Shaw Industries 1,000,000 0
- --Israel
Blue Square Israel 350,000 0
- --United States
Carnival 350,000 0
</TABLE>
23
<PAGE>
Acorn International
--Statement of Investments March 31, 1999
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -----------------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 93.3%
- -----------------------------------------------------------------------------------
Europe: 61.4%
<S> <C> <C>
--Germany/Austria: 5.0%
200,000 Rhoen Klinikum Pfd. $19,433
160,000 Rhoen Klinikum 17,619
Hospital Management
250,000 United International Holdings (Austria) 10,875
Cable Television for Austria & Other Countries
40,000 Fresenius, Pfd. 7,881
Dialysis Equipment & Solutions
165,000 Flughafen Wien (Austria) 6,979
Vienna Airport Authority
7,000 EM.TV & Merchandising 6,008
Children's Television Programming
150,000 Merck KGA 5,182
Pharmaceuticals
50,000 Sixt 3,077
Automobile Rental/Leasing
200,000 Berzelius Umwelt 1,943
Industrial Waste Recycling
60,000 Boewe Systec 1,619
Envelope Stuffing Machines
8,000 Cewe Color Holding 1,503
Photographic Developing & Printing
- ----------------------------------------------------------------------------------
82,119
--Denmark: 0.8%
75,000 ISS International System 4,874
Cleaning Services
50,000 Vest Wood 3,123
Furniture Company
150,000 Carli Gry 2,615
Casual Clothing
44,000 Kompan International 2,364
Playground Equipment
- ----------------------------------------------------------------------------------
12,976
--Finland: 6.4%
1,500,000 Tieto Corporation 61,780
Computer Services/Consulting
1,300,000 Talentum 18,526
Trade Journals & Multimedia
500,000 Fiskars, Series A 7,827
Scissors & Gardening Tools
150,000 Helsinki Telephone 7,336
Telecommunications Operator
770,000 Elcoteq Network 6,251
Electronic Manufacturing Services
100,000 Spar Finland 3,995
Grocery/Convenience Stores
- ----------------------------------------------------------------------------------
105,715
--Norway: 0.1%
654,750 Atex Media Solutions 1,440
Print Media Software
<CAPTION>
Number of Shares Value (000)
- -----------------------------------------------------------------------------------
<S> <C> <C>
--Sweden: 6.2%
1,830,000 WM Data Nordic $71,437
Computer Services/Consulting
295,000 Autoliv 11,081
Seatbelts & Airbags
400,000 Esselte, Series A 6,421
Office Supplies & Related Equipment
475,000 Bure Investment 5,892
Health Care Services & Investments
1,000,000 Mandator 5,631
Computer Services/Consulting
250,000 Sigma 1,931
Technical Consulting
- ----------------------------------------------------------------------------------
102,393
--France: 4.5%
360,000 Atos 33,036
Computer Services/Transaction Processing
62,000 NRJ 12,450
Radio Network
45,000 SITA 10,154
Waste Hauling & Landfills
60,000 Fininfo 9,969
Data Feeds for French Banks & Brokers
95,000 Spir Communications 5,559
Regional Newspapers
15,000 Penauille Polyservice 4,065
Industrial Cleaning
6,200 Assystem 120
Nuclear Energy Consulting
- ----------------------------------------------------------------------------------
75,353
--United Kingdom/Ireland: 16.2%
2,000,000 Serco Group 47,460
Facilities Management
467,000 NTL 38,002
Voice, Video & Data Services
1,870,000 Capita Group 21,554
Outsourcing Services
13,000,000 Electronics Boutique 17,576
Videogame/Computer Software Stores
1,000,000 Seton Scholl Healthcare 12,914
Pharmaceuticals
510,000 Euro Money Publications 11,835
Financial Publications
1,700,000 Rotork 10,730
Valve Actuators for Oil & Water Pipelines
1,350,000 Atkins 8,881
Outsourcing Services
650,000 Bodycote 8,526
Materials Technology & Metal Processing
1,500,000 N. Brown Group 8,354
Mail Order Clothing in Large Sizes
2,000,000 Shanks & McEwan 8,184
Landfills & Waste Incinerators
3,500,000 Taylor Nelson 7,811
Market Research Services
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
2,500,000 Smith & Nephew $ 6,084
Medical Equipment & Supplies
2,000,000 Oriflame International 5,811
Cosmetics Sold Door-to-Door
500,000 Parity 5,638
Computer Software, IT Staffing & Services
3,425,000 HALMA 5,170
Fire, Burglary & Flooding Detection Devices
500,000 Logica 5,162
Computer Software & Services
1,500,000 Hogg Robinson 5,146
Corporate Travel Management
700,000 Airtours 5,142
Packaged Tour Vacations
400,000 Saville Systems ADR (Ireland) 4,900
Telecommunications Billing & Customer Care
Software
760,000 Newsquest 4,754
Regional Newspapers
715,000 Fairey Group 3,780
Electronic Products
15,000,000 Premier Oil 3,390
Oil & Gas Producer
75,000 Esat Telecom (Ireland) 3,141
Telecommunication Services
665,000 Photobition Group 2,582
Production of Graphics for Exhibits
385,000 AEA Technology 2,135
Lithium Batteries/Nuclear Energy Consulting
250,000 ITNET 1,550
IT Outsourcing Services
100,000 Icon (Ireland) 1,450
Contract Research Organization for
Drug Development
- ---------------------------------------------------------------------------------
267,662
--Switzerland: 6.5%
20,000 Cie Fin Richemont 33,241
Luxury Goods, Tobacco & Pay TV
65,000 Selecta Group 20,640
Vending Machine Owner/Operator
33,000 Phoenix Mecano 15,652
Electrical Components Manufacturer
6,500 Sarasin & Cie Bank 10,935
Private Banking
15,000 Bon Appetit 7,854
Cash & Carry Stores/Speciality Restaurants
18,000 Societe Generale d'Affichage 7,297
Billboard Advertising
13,000 Hero 6,605
Packaged Foods
3,200 Pargesa Holdings 4,724
Industrial & Media Conglomerate
- ---------------------------------------------------------------------------------
106,948
<CAPTION>
Number of Shares Value (000)
- ---------------------------------------------------------------------------------
<S> <C> <C>
--Italy/Greece: 8.0%
2,900,000 Autogrill $28,647
Tollway Restaurants
2,000,000 Editoriale L'Espresso 22,456
Newspapers & Magazines
700,000 Banco Pop Commercia e Industria 17,193
Regional Bank
3,000,000 Banca Fideuram 17,166
Life Insurance & Mutual Funds
1,400,000 Aeroporti di Roma 11,034
Airport Management
1,200,000 Attica Enterprises (Greece) 10,216
Ferry Line
1,400,000 Mediolanum 9,280
Life Insurance & Mutual Funds
250,000 Banca Popolare Di Bergamo 6,343
Regional Bank
300,000 Industrie Natuzzi ADR 4,950
Leather Couches
2,000,000 SEAT Pagine Gialle 2,343
Yellow Pages Publisher
110,000 Gewiss 2,179
Electrical Plugs & Switches
- ---------------------------------------------------------------------------------
131,807
--Spain/Portugal: 2.4%
400,000 Mapfre Vida 13,150
Life Insurance & Mutual Funds
350,000 Cortefiel 8,124
Apparel Retailer
650,000 Prosegur 7,052
Security Guards
100,000 Aguas de Barcelona 6,013
250 Aguas de Barcelona New Shares 15
Utility
417,000 Filmes Lusomundo (Portugal) 5,290
Newspapers, Radio, Video, Film Distribution
- ---------------------------------------------------------------------------------
39,644
--Netherlands: 4.8%
400,000 Kempen 22,153
Stock Brokerage/Investment Management
560,000 Getronics 20,676
Computer Services/Consulting
145,000 ASR Verzekeringsgroep 10,723
Insurance
300,000 Hunter Douglas 8,745
Decorative Window Coverings
950,000 Scala Business Solutions 6,102
95,775 Scala Business Solutions Warrants 3/31/01 5
Enterprise Software for Small-to-Medium
Sized Companies
250,000 Kon. Pakhoed 6,059
Logistics
370,000 Wegener Arcade NV 5,612
Newspapers/Direct Marketing
- ---------------------------------------------------------------------------------
80,075
</TABLE>
25
<PAGE>
Acorn International
--Statement of Investments, continued
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ---------------------------------------------------------------------------------
<S> <C> <C>
--Hungary: 0.5%
1,200,000 Matav $ 6,395
Telecommunications Services
80,000 Gedeon Richter 2,595
Pharmaceuticals
- ---------------------------------------------------------------------------------
8,990
---------
Europe: Total 1,015,122
- ---------------------------------------------------------------------------------
Asia: 19.0%
--Hong Kong: 3.7%
14,999,000 Li and Fung 31,741
Sourcing of Consumer Goods
10,000,000 Varitronix International 15,614
LCD Manufacturer
2,000,000 TVB 7,291
Television Broadcasting
2,500,000 SmarTone Telecom 7,242
Cellular Telephone Services
- ---------------------------------------------------------------------------------
61,888
--India: 0.0%
2,000,000 Centurion Quantum Growth 462
Closed-End Fund
--Japan: 8.1%
115,000 Ryohin Keikaku 18,256
Designer & Retailer of Muji Brand Specialty
Consumer Goods
125,000 Nidec 15,410
Spindle Motor Manufacturer
210,000 Fuji Software ABC 13,742
Computer Services/Consulting
130,000 Nintendo 11,218
Video Games
255,000 Noritsu Koki 7,644
Photo Processing Equipment Manufacturer
100,000 Orix 7,507
Finance Leasing
310,000 NuSkin Enterprises 7,091
Direct Distributor of Cosmetics & Sundries
20,000 Bellysystem 24 6,839
Telemarketing
500,000 Olympus Optical 6,586
Photographic & Medical Equipment
90,000 Nichii Gakkan 6,574
Healthcare Services
80,000 Takefuji 6,147
Consumer Lending
27,600 OBIC 5,139
Systems Integration for
Small to Medium Sized Companies
54,000 Secom 5,116
Central Station Alarm Business
33,000 Kadokawa Shoten 4,403
Magazine/Book Publisher
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- ---------------------------------------------------------------------------------
<S> <C> <C>
218,000 Shinki $ 3,663
Corporate & Consumer Lending
207,000 Arrk Corporation 2,325
Industrial Modeling
21,000 Otsuka Kagu 2,305
Furniture Retailer
65,000 Meitec 1,894
Engineering Outsourcing
31,000 Trans Cosmos 1,361
Information Technology Services & Investments
13,000 Aiful 886
Consumer Lending
- ---------------------------------------------------------------------------------
134,106
--Taiwan: 0.2%
1,249,616 Chroma Ate 2,715
Electronics Manufacturing Test
& Measurement Instruments
--Malaysia: 0.1%
1,595,000 Malaysian Oxygen 2,384
Industrial Gases
--Philippines: 0.8%
$8,750,000 Int'l Container Terminal
Services Cv. 1.75% 3/13/04 7,525
79,260,000 Int'l Container Terminal Services 5,318
Container Handling Terminals & Port Management
- ---------------------------------------------------------------------------------
12,843
--South Korea: 0.4%
31,000 S1 Corporation 5,861
Central Station Alarm Business
--Singapore: 5.7%
7,500,000 Venture Manufacturing 33,844
Electronic Manufacturing Services
10,000,000 Datacraft Asia 23,400
Network Systems Integration
6,500,000 Natsteel Electronics 17,749
Electronic Manufacturing Services
9,500,000 Star Cruises 17,385
Cruise Line
16,900,000 Genting International 1,690
Investment Holding
- ---------------------------------------------------------------------------------
94,068
-------
Asia: Total 314,327
- ---------------------------------------------------------------------------------
Latin America:4.7%
--Mexico: 3.2%
7,000,000 Grupo Industrial Bimbo 15,578
Bread, Baked Goods & Snacks
3,500,000 Kimberly Clark de Mexico 13,172
Paper Products
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
-------------------------------------------------------------------------------------
<S> <C> <C>
3,600,000 Corp Interamericana de
Entretenimiento $10,657
Special Events & Live Entertainment
2,300,000 Grupo Continental 6,519
Beverages
8,940,000 Nadro, Series L 6,513
Pharmaceutical Distributor
-------------------------------------------------------------------------------------
52,439
--Brazil: 0.6%
470,000 Elevadores Atlas 4,933
Elevator Installation & Maintenance
250,000 Embratel 4,172
Long Distance Telephone Services
-------------------------------------------------------------------------------------
9,105
--Argentina: 0.6%
400,000 IRSA GDS 10,550
Real Estate Management & Development
--Peru: 0.3%
6,500,000 Enrique Ferreyros 4,623
Heavy Machinery Dealer
-------
Latin America: Total 76,717
-------------------------------------------------------------------------------------
Other Countries: 8.2%
--Australia: 0.9%
5,000,000 AAPT 14,840
Telecommunications Services
--Canada: 3.9%
650,000 Celestica 21,269
Electronic Manufacturing Services
500,000 Power Financial 9,585
Financial Services Holding Company
500,000 Canadian Natural Resources 8,593
Oil & Gas Producer
300,000 Leitch Technology 5,553
Equipment for Television Production
1,110,000 Bracknell 4,806
Electrical Contractor & Facilities Management
600,000 LGS Group 4,700
Computer Systems Integration
350,000 Penn West Petroleum 4,500
Oil & Gas Producer
<CAPTION>
Principal Amount or
Number of Shares Value (000)
-------------------------------------------------------------------------------------
<S> <C> <C>
4,000,000 Dundee Realty $ 3,199
Real Estate
100,000 Northstar Energy 2,710
Oil & Gas Producer
-------------------------------------------------------------------------------------
64,915
--Israel: 1.2%
225,000 ECI Telecom 7,875
Digital Telecommunication Equipment
250,000 Galileo Technology 7,312
Communications Semiconductors
200,000 Amdocs 4,325
Telecommunications Billing & Customer Care
Software
-------------------------------------------------------------------------------------
19,512
--South Africa: 1.2%
2,500,000 Dimension Data 11,075
Networks & Computer Services
1,050,000 Comparex Holdings 8,166
Computer Networking & Systems Integration
-------------------------------------------------------------------------------------
19,241
--Russia: 0.0%
$1,500,000 Khanty Mansiysk 10% Notes 750
419 Khanty Mansiysk 94
Oil Production in Russia
-------------------------------------------------------------------------------------
844
--United States: 1.0%
325,000 AES Corporation 12,106
Power Plants
75,000 Global TeleSystems 4,195
Telephone Services
-------------------------------------------------------------------------------------
16,301
----------
Other: Total 135,653
Total Common Stocks and Other ----------
Equity-Like Securities: 93.3% 1,541,819
----------
Short-Term Obligations: 6.0% 98,449
----------
Total Investments: 99.3% 1,640,268
----------
Cash and Other Assets less Liabilities: 0.7% 12,076
----------
Total Net Assets: 100% $1,652,344
-------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
Acorn International
--Portfolio Diversification
At March 31, 1999, Acorn International's portfolio of investments as a percent
of net assets was diversified as follows:
<TABLE>
<CAPTION>
Value (000) Percent
- ------------------------------------------------------------
<S> <C> <C>
- --Information
Computer Services $242,425 14.7%
Publishing 80,778 4.9
Telephone Services 63,396 3.8
Contract Manufacturing 51,593 3.1
CATV 48,877 3.0
Business Software 22,410 1.4
Instrumentation 19,789 1.2
Computer Hardware 15,410 0.9
Broadcasting 12,844 0.8
Business Information 12,551 0.8
Radio 12,450 0.8
Marketing 7,811 0.5
Semiconductors 7,312 0.4
Advertising 7,297 0.4
Programming 6,008 0.3
- -------------------------------------------------------
610,951 37.0
- --Health Care
Hospital Management 37,052 2.2
Pharmaceuticals 20,691 1.3
Medical Equipment 14,467 0.9
Services 12,466 0.8
Hospital/Laboratory Supplies 6,084 0.3
- -------------------------------------------------------
90,760 5.5
- --Consumer Goods/Services
Entertainment 56,641 3.4
Consumer Services 53,741 3.3
Retail 49,106 3.0
Nondurables 33,901 2.1
Food 30,037 1.8
Travel 29,363 1.8
Restaurants 28,647 1.7
Durable Goods 19,826 1.2
Consumer Software 11,218 0.7
Consumer Goods Distribution 10,508 0.6
Furniture & Textiles 8,073 0.5
Beverages 6,519 0.4
Leisure Products 2,364 0.1
- -------------------------------------------------------
339,944 20.6
<CAPTION>
Value (000) Percent
- ----------------------------------------------------------
<S> <C> <C>
- --Finance
Banks $ 34,471 2.1%
Insurance 33,458 2.0
Money Management 26,446 1.6
Brokerage 22,153 1.3
Finance Companies 17,317 1.0
Closed End Funds 13,352 0.9
- -------------------------------------------------------
147,197 8.9
- --Industrial Goods/Services
Outsourcing Services 116,404 7.0
Electrical Components 60,965 3.7
Machinery Processing 24,616 1.5
Industrial Services 20,378 1.2
Industrial Materials 8,526 0.6
Speciality Chemicals 2,384 0.1
- -------------------------------------------------------
233,273 14.1
- --Energy/Minerals
Oil/Gas Producers 26,458 1.6
Independent Power 12,106 0.7
- -------------------------------------------------------
38,564 2.3
- --Other Industries
Transportation 41,072 2.5
Waste Management 20,281 1.2
Real Estate 13,749 0.8
Regulated Utilities 6,028 0.4
- -------------------------------------------------------
81,130 4.9
Total Common Stocks and ---------------------
Other Equity-Like Securities: 1,541,819 93.3
---------------------
Short-Term Obligations: 98,449 6.0
---------------------
Total Investments: 1,640,268 99.3
---------------------
Cash and Other Assets less
Liabilities: 12,076 0.7
---------------------
Net Assets: $1,652,344 100.0%
- -------------------------------------------------------
</TABLE>
28
<PAGE>
Acorn Fund
--Major Portfolio Changes in the First Quarter
<TABLE>
<CAPTION>
Number of Shares
---------------------
12/31/98 3/31/99
Additions
- --------------------------------------------------------------------
Information
<S> <C> <C>
Altera 0 24,000
American Power Conversion 200,000 225,000
Choicepoint 270,000 355,000
CMP Media 400,000 500,000
Computer Task Group 590,000 652,000
Comverse Technology 0 24,000
Hutchinson Technology 0 69,000
IMR Global 0 159,000
International Game Technology 2,262,000 2,342,000
JDA Software Group 400,000 650,000
Keane 0 123,000
Kronos 575,000 913,000
(includes effect of 3 for 2 stock split)
Macrovision 150,000 200,000
National Data 1,808,000 1,840,000
Natsteel Electronics (Singapore) 1,500,000 2,000,000
NeoPlanet 0 250,000
Pinnacle Holdings 0 500,000
Playboy Enterprises 30,000 150,000
PRIMEDIA 705,000 1,000,000
RCM Technologies 500,000 564,000
Security Dynamics 0 200,000
Softbank Corporation (Japan) 86,200 165,000
Sterling Commerce 228,800 279,000
Structural Dynamics 0 33,000
Systems & Computer Technology 950,000 1,065,000
THQ 0 97,000
World Color Press 910,000 1,050,000
- ---------------------------------------------------------------------
Health Care
Acuson 0 414,000
Genome Therapeutics 0 578,000
Guilford Pharmaceuticals 0 290,000
Lincare Holdings 2,470,000 2,690,000
Myriad Genetics 0 432,000
Ocular Sciences 0 13,000
Olympus Optical (Japan) 0 300,000
Protein Design Labs 0 329,000
Wesley Jessen Vision 0 13,000
- --------------------------------------------------------------------
Consumer Goods/Services
Anchor Gaming 86,000 270,000
Aristocrat Leisure (Australia) 0 500,000
Bally Total Fitness 236,000 400,000
Ducati Motor (Italy) 0 1,800,000
First Years 139,000 344,000
Gadzooks 0 63,000
Jones Apparel 500,000 630,000
Just For Feet 0 68,000
Nautica Enterprises 0 270,000
St. John Knits 340,000 420,000
Station Casinos 0 190,000
Steiner Leisure 0 45,000
Whole Foods Market 0 345,000
- --------------------------------------------------------------------
Finance
Ace Cash Express 0 58,000
Affiliated Managers Group 80,000 180,000
Americredit 2,070,000 2,938,000
Chittenden 0 64,000
Creditrust Corp 165,000 465,000
DVI Health Services 448,000 533,000
Edinburgh Fund Managers 484,000 1,250,000
(United Kingdom)
FPIC Insurance 0 151,000
HCC Insurance Holdings 0 320,000
Markel 0 75,000
Phoenix Investment Partners 2,112,000 2,524,000
- --------------------------------------------------------------------
Industrial Goods/Services
Applied Industrial Technologies 140,000 350,000
Clarcor 585,000 987,000
Expeditors International of 1,000,000 1,100,000
Washington
GP Strategies 438,000 512,000
HA.LO Industries 209,000 801,000
(includes effect of 3 for 2 stock split)
Intermet Holdings 0 76,000
Labor Ready 1,070,000 1,310,000
Wackenhut, Cl. B 1,236,000 1,303,000
- --------------------------------------------------------------------
Energy/Minerals
Atmos Energy 650,000 847,000
Canadian 88 Energy (Canada) 0 450,000
Devon Energy 650,000 900,000
Dynegy 800,000 890,000
Equitable Resources 900,000 1,000,000
J Ray McDermott 400,000 570,000
- --------------------------------------------------------------------
Other Industries
Central Hudson Gas & Electric 0 130,000
Unisource Energy 0 500,000
</TABLE>
29
<PAGE>
Acorn Fund
--Major Portfolio Changes in the First Quarter, continued
<TABLE>
<CAPTION>
Number of Shares
-----------------------
12/31/98 3/31/99
Sales
- ----------------------------------------------------------------------------
Information
<S> <C> <C>
AC Nielsen 1,278,000 638,000
BISYS 231,000 195,000
BRC Holdings 608,000 0
Cablevision Systems 600,000 125,000
Centennial Cellular 450,000 0
Comparex Holdings 200,000 0
Filmes Lusomundo (Portugal) 297,200 0
Harte Hanks Communications 100,000 0
Jabil Circuit 370,000 675,000
(includes effect of 2 for 1 stock split)
Liberty Media Group, AT&T 3,500,000 2,750,000
(formerly known as Liberty media
Group, Tele-Communications)
Micros Systems 886,000 750,000
National Instruments 266,000 135,000
Pioneer-Standard Electron 990,000 790,000
Richey Electronics 250,000 0
Sanmina 250,000 200,000
SkyTel Communications 700,000 400,000
SMART Modular Technology 52,000 0
Solectron 770,000 1,440,000
(includes effect of 2 for 1 stock split)
Thermo Bio Analysis 200,000 0
Thermo Instrument Systems 705,000 367,000
True North Communications 200,000 0
TV Guide 1,000,000 750,000
(formerly known as United Video
Satellite Group)
United International Holdings 552,000 100,000
(Austria)
- ----------------------------------------------------------------------------
Health Care
Affymetrix 307,000 153,000
Getinge Industrier (Sweden) 495,000 0
Sybron International 544,000 0
<CAPTION>
Number of Shares
--------------------------
12/31/98 3/31/99
- ----------------------------------------------------------------------------
Consumer Goods/Services
<S> <C> <C>
Autoliv (Sweden) 256,000 165,000
Barnes & Noble 10,000 0
Carnival 2,650,000 1,700,000
Fred Meyer Holdings 599,000 25,000
Grand Casinos 250,000 0
Harley-Davidson 2,200,000 1,700,000
Hellenic Bottling (Greece) 250,000 0
Industrie Natuzzi (Italy) 325,000 0
Nintendo (Japan) 180,000 87,000
Rio Hotel & Casino 155,000 0
Royal Caribbean Cruises 240,000 140,000
- ----------------------------------------------------------------------------
Finance
AmerUs Life Holdings 200,000 0
Banco Latinoamericano de 135,000 0
Exportaciones (Panama)
SEI Investments 604,000 551,000
Washington Mutual 664,000 475,000
- ----------------------------------------------------------------------------
Industrial Goods/Services
Baldor Electric 882,000 0
Cambrex 610,000 523,000
Noritsu Koki (Japan) 76,000 0
Schnitzer Steel 140,000 0
Thermo Electron 650,000 325,000
- ----------------------------------------------------------------------------
Energy/Minerals
Atwood Oceanics 525,000 377,000
Enron Oil & Gas 1,220,000 470,000
KN Energy 240,000 260,000
(includes effect of 3 for 2 stock split)
Shaw Industries, Cl. A (Canada) 440,000 0
Weatherford International 300,000 0
- ----------------------------------------------------------------------------
Other Industries
Cemig (Brazil) 112,000,000 0
</TABLE>
30
<PAGE>
Acorn Fund
--Statement of Investments March 31, 1999
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities; 96.0%
- -------------------------------------------------------------------------
<S> <C> <C>
Information: 32.0%
Media
--Broadcasting: 1.7%
500,000 Young Broadcasting $ 22,812
Television Stations
819,000 Data Transmission Network 19,554
Data Services for Farmers
85,000 Univision Communications 4,250
TV Network & Stations
575,000 Granite Broadcasting 3,809
Television Stations
150,000 Cumulus Media 1,763
Radio Stations
- -------------------------------------------------------------------------
52,188
--Cable Television: 0.7%
100,000 Cablevision Systems, Pfd. 11,150
125,000 Cablevision Systems 9,266
Cable TV
- -------------------------------------------------------------------------
20,416
--Television Programming: 5.8%
2,750,000 Liberty Media Group, AT&T 144,719
CATV & Satellite Dish Programming
750,000 TV Guide 27,656
(formerly known as United Video Satellite Group)
TV Program Guides & Programming
200,000 Macrovision 7,400
Copyright Protection for Video Tapes & DVDs
150,000 Playboy Enterprises 3,375
Publishing, CATV
- -------------------------------------------------------------------------
183,150
Telecommunications
--Telephone Services: 2.3%
1,584,000 RCN 53,163
Metro Market: Voice, Video & Data Services
454,000 Commonwealth Telephone 16,713
Rural Market: Local, Long Distance &
Internet Access
140,000 Startec Global Communications 1,085
International Telecommunications
- -------------------------------------------------------------------------
70,961
--Mobile Communications: 1.7%
577,000 Telephone & Data Systems 32,528
Cellular & Telephone Franchises
500,000 Pinnacle Holdings 7,562
Towers for Cellular, PCS, Paging, Etc.
355,000 COMARCO 7,988
Wireless Network Testing
400,000 SkyTel Communications 6,650
Nationwide Paging
- ----------------------------------------------------------------------------
54,728
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
--Telecommunications Equipment: 0.3%
864,000 Aspect Telecommunications $ 5,724
Call Center Equipment
24,000 Comverse Technology 2,040
Voicemail & Other Enhanced Services Equipment
- -------------------------------------------------------------------------
7,764
Computer Related Hardware
--Computer Hardware/
Related Systems: 1.7%
750,000 Micros Systems 24,750
Information System for Restaurants & Hotels
913,000 Kronos 22,369
Time Accounting Software & Clocks
225,000 American Power Conversion 6,075
Uninterruptable Power Systems
69,000 Hutchinson Technology 1,716
Hard Disk Drive Components
- ------------------------------------------------------------------------------
54,910
--Semiconductors/
Related Equipment: 0.4%
350,000 Oak Industries 11,112
Communications Components
24,000 Altera 1,428
Semiconductors/Programmable Logic Devices
- ------------------------------------------------------------------------------
12,540
--Gaming Equipment: 1.1%
2,342,000 International Game Technology 34,105
Slot Machines & Progressive Jackpots
380,000 Acres Gaming 1,045
Manufacturer of Casino Systems
- ------------------------------------------------------------------------------
35,150
--Contract Manufacturing: 3.5%
1,440,000 Solectron 69,930
Electronic Manufacturing Services
675,000 Jabil Circuit 27,338
Electronic Manufacturing Services
200,000 Sanmina 12,750
Backplanes & Electronic Manufacturing Services
- ------------------------------------------------------------------------------
110,018
--Instrumentation: 1.3%
675,000 Mettler Toledo 16,706
Laboratory Products
613,000 Thermoquest 7,433
$1,500,000 Thermoquest, 5% Note Due 8/15/00 1,432
Mass Spectrometry & Chromatography
367,000 Thermo Instrument Systems 5,299
Scientific & Industrial Instruments
</TABLE>
31
<PAGE>
Acorn Fund
--Statement of Investments, continued
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
$5,000,000 Thermo Optek, 5% Note Due 10/15/00 $ 4,850
265,000 Thermo Optek 2,650
Elemental & Molecular Spectroscopy
232,000 Metrika Systems 1,798
Gamma Ray Instrumentation
266,122 Onix Systems 1,430
Field Measurement & Sensor Equipment
- -------------------------------------------------------------------------------
41,598
--Business Software: 1.0%
1,065,000 Systems & Computer Technology 10,650
Enterprise Software & Services
650,000 JDA Software Group 4,834
Applications Software & Services for Retailers
135,000 National Instruments 3,848
Virtual Instruments
200,000 Security Dynamics 3,725
Authentication & Encryption Software
33,000 Structural Dynamics 629
Design Software
66,000 Information Management 140
Call Center Software
- -------------------------------------------------------------------------------
23,826
--Consumer Software: 0.9%
350,000 Electronic Arts 16,625
Entertainment Software
$6,500,000 Activision, 6.75% Note Due 1/1/05 5,980
410,000 Activision 5,074
Entertainment Software
97,000 THQ 1,976
Entertainment Software
- -------------------------------------------------------------------------------
29,655
--Computer Services: 2.2%
750,000 Sykes Enterprises 24,234
Call Center Services
652,000 Computer Task Group 13,937
Application Development & Maintenance Services
195,000 BISYS 10,969
Processing for Banks
564,000 RCM Technologies 6,204
Technology Staffing Services
535,000 Analysts International 6,153
Technology Staffing Services
159,000 IMR Global 2,822
Application Development & Maintenance Services
123,000 Keane 2,621
Application Development & Maintenance Services
1,037,000 Aztec Technology Partners 1,718
Application Development & Maintenance Services
360,000 Dunn Computer 765
Custom Computer Systems for Government
- -------------------------------------------------------------------------------
69,423
<CAPTION>
Number of Shares Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Software/Services
--Business Information/
Marketing Services/Publishing: 4.2%
1,050,000 World Color Press $ 22,312
Web-Offset Printing
355,000 Choicepoint 17,706
Fraud Protection Information
638,000 ACNielsen 17,306
Market Research, Information & Analysis
1,000,000 PRIMEDIA 14,000
Specialty Magazines & Other Publications
350,000 Acxiom 9,275
Database Marketing Services
1,400,000 InfoUSA, Cl. A 5,950
1,000,000 InfoUSA, Cl. B 4,500
Business Data for Sales Leads
- -------------------------------------------------------------------------------
91,049
--Internet: 0.2%
860,000 Getty Images 18,060
Photographs for Publications & Electronic Media
500,000 CMP Media 15,375
Technology Trade Press
279,000 Sterling Commerce 8,579
Electronic Commerce Software & Services
450,000 Information Holdings 8,044
Scientific & Medical Books/Journals
2,683 Bigfoot International 4,025
Internet Direct Marketing
250,000 NeoPlanet, Series A 2,000
Web Browser Application
342,855 GIGA 1,329
29,714 GIGA Warrants 3
Data on Information Technology
- -------------------------------------------------------------------------------
57,415
--Electronics Distribution: 0.3%
790,000 Pioneer-Standard Electronics 5,184
Component & Computer Distribution
400,000 Kent Electronics 3,975
Component Distribution & Contract Assembly
- -------------------------------------------------------------------------------
9,159
--Transaction Processors: 2.7%
1,840,000 National Data 77,280
Credit Card & Health Claims Processor
300,000 Concord EFS 8,269
Credit Card Processor
- -------------------------------------------------------------------------------
85,549
------------
Information: Total 1,009,499
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<S> <C> <C>
Health Care: 7.6%
--Biotechnology/Drug Delivery: 1.3%
450,000 Inhale Therapeutic Systems $ 12,206
Pulmonary Drug Delivery
768,000 Synaptic Pharmaceuticals 5,280
Receptor Targeted Drug Design
329,000 Protein Design Labs 4,956
Computer Designed Monoclonal Antibodies
432,000 Myriad Genetics 3,888
Gene Discovery & Diagnostic Products
915,000 Microcide Pharmaceuticals 3,774
Antibiotics
1,508,000 Corvas International 3,770
Rational Drug Design
290,000 Guilford Pharmaceuticals 3,299
Drug Delivery & Neurology Drugs
578,000 Genome Therapeutics 1,806
Gene Discovery Services
230,000 CuraGen 1,524
Genomics
156,000 NPS Pharmaceuticals 1,170
Small Molecule Drugs
- ------------------------------------------------------------------------------
41,673
--Medical Equipment: 0.7%
729,000 Respironics 9,614
Sleep Apnea Products
414,000 Acuson 6,184
Ultra Sound Devices
153,000 Affymetrix 5,326
Diagnostic Development
13,000 Ocular Sciences 373
Contact Lenses
13,000 Wesley Jessen Vision 358
Contact Lenses
- ------------------------------------------------------------------------------
21,855
--Hospital/Laboratory Supplies: 0.4%
239,000 Hillenbrand Industries 11,039
Hospital Beds & Coffins
--Services: 5.2%
2,690,000 Lincare Holdings 75,656
Home Health Care Services
806,000 McKesson HBOC 53,196
(Acquirer of HBO & Co.)
Hospital Computer Services
1,952,000 First Health Group 31,354
PPO Network
1,110,000 Magellan Health Services 4,648
Mental Health Services
43,000 Spectrum Health Solutions 11
Workman's Compensation
- ------------------------------------------------------------------------------
164,865
---------
Health Care: Total 239,432
</TABLE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<S> <C> <C>
Consumer Goods/Services: 10.3%
Goods
--Leisure Vehicles: 3.4%
1,700,000 Harley-Davidson $ 97,750
Motorcycles & Related Merchandise
480,000 Thor Industries 10,860
Mobile Homes & RV's
- ------------------------------------------------------------------------------
108,610
--Nondurables: 0.1%
344,000 First Years 4,795
Infant & Toddler Products
--Manufacturers: 1.2%
630,000 Jones Apparel 17,601
Women's Apparel
420,000 St. John Knits 11,077
Upscale Knitware
600,000 Unifi 7,650
Polyester & Nylon Fabrics
- ------------------------------------------------------------------------------
36,328
Services
--Retail: 1.5%
1,540,000 Borders Group 21,656
Bookstores
345,000 Whole Foods Market 11,859
Natural Food Supermarkets
911,000 Host Marriott Services 6,149
Fast Food Kiosks in Airports
270,000 Nautica Enterprises 3,054
Men's Apparel
400,000 Au Bon Pain 2,100
Bakery & Deli Restaurants
25,000 Fred Meyer Holdings 1,472
Supermarkets in the West
68,000 Just for Feet 850
Athletic Shoe Retailer
63,000 Gadzooks 469
Retail Specialty Stores for Young Adults
- ------------------------------------------------------------------------------
47,609
--Consumer Services: 0.5%
400,000 Bally Total Fitness 9,550
Fitness Centers
742,000 Protection One 4,637
Security Alarm Monitoring
45,000 Steiner Leisure 1,384
Spas & Hair/Skin Products on Cruise Ships
- ------------------------------------------------------------------------------
15,571
</TABLE>
33
<PAGE>
Acorn Fund
--Statement of Investments, continued
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
--Casinos: 0.8%
Colorado Casino
500,000 Hollywood Park 5,156
Race Track & Casino
535,000 Monarch Casino & Resort 3,712
Casino/Hotel in Reno
190,000 Station Casinos 2,422
Casinos & Riverboats
63,000 Lakes Gaming 516
Hotel & Casino in Biloxi & Gulfport
$6,250,000 Grand Palais Casino
14% Note Due 2/25/98 312
New Orleans Casino
- --------------------------------------------------------------------------------
23,931
--Cruise Lines: 2.8%
1,700,000 Carnival 82,556
Largest Cruise Line
140,000 Royal Caribbean Cruises 5,460
Cruises to Caribbean & Alaska
410,000 Royal Olympic Cruise 1,486
Cruises in Mediterranean
- --------------------------------------------------------------------------------
89,502
---------
Consumer Goods/Services: Total 326,346
- --------------------------------------------------------------------------------
Finance: 13.9%
--Banks: 1.4%
695,000 TCF Financial 18,070
Great Lakes Bank
542,000 Texas Regional Bancshares 14,634
Tex Mex Bank
170,000 CNB Bancshares 6,843
Indiana Bank
64,000 Chittenden 1,704
Vermont & West Massachusetts Bank
70,000 Peoples Heritage Financial 1,260
New England Bank
- --------------------------------------------------------------------------------
42,511
--Savings & Loans: 3.0%
1,554,000 Peoples Bank Bridgeport 46,231
Connecticut Savings & Loan
475,000 Washington Mutual 19,416
West Coast Savings & Loan
812,000 Washington Federal 17,052
Washington State Savings & Loan
575,000 Commonwealth Bancorp 8,733
Philadelphia Savings & Loan
554,000 Coast Contingency Rights 3,289
Litigation Claims Against US government
- --------------------------------------------------------------------------------
94,721
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
--Insurance: 3.8%
815,000 UICI $ 18,337
Health Insurance
511,000 Leucadia National 15,458
Insurance Holding Company
400,000 Protective Life 15,150
Life/Dental Insurance
723,000 Baldwin & Lyons, Cl. B 15,047
Trucking Insurance
687,000 Foremost 13,826
Mobile Home & RV Insurance
75,000 Markel 13,519
Specialty Insurance
351,000 United Fire & Casualty 9,038
Property & Casualty
612,000 Acceptance Insurance 8,262
Crop Insurance
151,000 FPIC Insurance 6,267
Medical & Dental Malpractice Insurance
320,000 HCC Insurance Holdings 6,160
Aviation Insurance
- --------------------------------------------------------------------------------
121,064
--Money Management: 3.4%
551,000 SEI Investments 50,967
Mutual Fund Administration
2,524,000 Phoenix Investment Partners 21,769
Mutual Fund & Pension Manager
1,063,000 Baker Fentress 16,078
Closed-End Investment Company
974,000 Pioneer Group 14,427
Equity Mutual Funds
180,000 Affiliated Managers Group 4,680
Mutual Fund & Pension Manager
- --------------------------------------------------------------------------------
107,921
--Finance Companies: 2.3%
2,938,000 Americredit 38,561
Auto Lending
1,820,000 World Acceptance 9,782
Personal Loans
465,000 Creditrust 9,184
Collection Agency
533,000 DVI Health Services 7,928
Leases for Big Medical Equipment
1,375,000 Capital Trust 6,703
Whole Mortgage Loans
58,000 Ace Cash Express 740
Check Cashing Stores
- --------------------------------------------------------------------------------
72,898
--------
Finance: Total 439,115
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Industrial Goods/Services: 8.7%
<S> <C> <C>
--Steel: 1.3%
825,000 Gibraltar Steel $16,448
Steel Processing
1,295,000 Worthington Industries 15,216
Steel Processing
345,000 A M Castle 4,162
Steel Distribution
420,000 Atchison Casting 3,386
Steel Foundries
76,000 Intermet Holdings 1,017
Ductile Iron & Aluminum Foundries
- --------------------------------------------------------------------------------
40,229
--Machinery: 0.7%
987,000 Clarcor 16,841
Filters
350,000 Applied Industrial Technologies 3,894
Industrial Components Distribution
- --------------------------------------------------------------------------------
20,735
--Conglomerates: 0.1%
325,000 Thermo Electron 4,408
Instrumentation, Biomedical & Industrial Products
--Specialty & Industrial Materials: 0.9%
1,000,000 Lilly Industries, Cl. A 15,438
Industrial Coatings
523,000 Cambrex 11,571
Pharmaceutical & Other Specialty Chemicals
445,000 Symex 2,002
Combinatorial Materials
100,000 Brunswick Technologies 575
Fiberglass Fabric for Composites
- --------------------------------------------------------------------------------
29,586
--Outsourcing Services & Training: 1.4%
1,310,000 Labor Ready 34,142
Temporary Manual Labor
512,000 GP Strategies 9,088
Training Programs
500,000 International Total Services 1,750
Aviation Services
- --------------------------------------------------------------------------------
44,980
--Logistics: 3.0%
1,100,000 Expeditors Int'l of Washington 59,400
International Freight Forwarder
759,000 Hub Group 18,026
Truck & Rail Freight Forwarder
435,000 C H Robinson 11,065
Truck Freight Forwarder
613,000 Airnet Systems 4,291
Check & Other Small Package Shipment
- --------------------------------------------------------------------------------
92,782
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
--Other Industrial Services: 1.3%
1,303,000 Wackenhut, Cl. B $22,151
31,000 Wackenhut, Cl. A 690
Prison Management
801,000 HA.LO Industries 9,862
Distributor of Specialty Products
806,000 Compass International Services 6,045
Collection Agencies
218,000 Advanced Lighting Technologies 1,690
Metal Halide Lighting
- --------------------------------------------------------------------------------
40,438
--------
Industrial Goods/Services: Total 273,158
- --------------------------------------------------------------------------------
Energy/Minerals: 8.0%
--Independent Power: 3.1%
1,464,000 AES Corporation 54,534
1,852 AES Corporation Warrants 83
Power Plants
1,500,000 MidAmerican Energy 42,000
(formerly known as CalEnergy)
Growth Utility
- --------------------------------------------------------------------------------
96,617
--Oil/Gas Producers: 2.0%
900,000 Devon Energy 24,806
Oil & Gas Producer
2,100,000 Tesoro Petroleum 23,100
Oil Refinery/Gas Reserves
470,000 Enron Oil & Gas 7,814
Oil & Gas Producer
300,000 Evergreen Resources 6,000
Oil & Gas Producer
1,031,000 Tipperary 838
Oil & Gas Producer
- --------------------------------------------------------------------------------
62,558
--Distribution/Marketing/Refining: 2.0%
1,000,000 Equitable Resources 26,063
Natural Gas Utility & Producer
847,000 Atmos Energy 20,381
Natural Gas Utility
890,000 Dynegy 12,516
Natural Gas & Electric Processing,
Production & Marketing
260,000 KN Energy 5,184
Natural Gas Pipelines
- --------------------------------------------------------------------------------
64,144
--Oil Services: 0.9%
570,000 JRay McDermott 17,029
Offshore Construction
377,000 Atwood Oceanics 11,310
Offshore Drilling
- --------------------------------------------------------------------------------
28,339
--------
Energy/Minerals: Total 251,658
</TABLE>
35
<PAGE>
Acorn Fund
--Statement of Investments, continued
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<S> <C> <C>
Other Industries: 4.2%
--Real Estate: 3.9%
829,000 The Rouse Company $ 18,393
Shopping Malls
770,312 Security Capital European Realty 15,406
Strategic Real Estate Investments
820,000 Cornerstone Properties 11,993
Downtown Office Buildings
466,000 Forest City Enterprises, Cl. B 11,126
370,000 Forest City Enterprises, Cl. A 8,949
Shopping Centers
260,000 Equity Residential Properties Trust 10,725
Nationwide Apartments
699,000 LaSalle Hotel Properties 9,262
Upscale/Full Service Hotels
400,000 Macerich Company 9,075
Regional Shopping Malls
350,000 Archstone 7,044
Equity Real Estate Investment Trust
165,000 Weingarten Realty Investors 6,538
Community Shopping Centers
200,000 First Industrial Realty Trust 4,788
Industrial Properties
190,000 First Washington Realty Trust 4,073
120,000 First Washington Realty Trust, Cv. Pfd. 3,255
Community Shopping Centers
945,000 Homestead Village 2,303
Extended Stay Hotels
- --------------------------------------------------------------------------------
122,930
--Regulated Utilities: 0.3%
500,000 Unisource Energy 5,531
Electric Utility in Tuscon
130,000 Central Hudson Gas & Electric 4,656
Electric Utility
- --------------------------------------------------------------------------------
10,187
--------
Other Industries: Total 133,117
- --------------------------------------------------------------------------------
Foreign Securities: 11.3%
--Canada: 0.3%
400,000 Canadian Natural Resources 6,875
Oil & Gas Producer
450,000 Canadian 88 Energy 1,606
Oil & Gas Producer
- --------------------------------------------------------------------------------
8,481
--Australia: 0.1%
500,000 Aristocrat Leisure 3,151
Slot Machines
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
--United Kingdom: 3.4%
644,000 NTL $ 52,405
Voice, Video & Data Services
1,200,000 Serco Group 28,476
Facilities Management
1,650,000 Airtours 12,119
Packaged Tour Vacations
1,250,000 Edinburgh Fund Managers 8,092
Investment Management
1,100,000 N. Brown Group 6,126
Mail Order Clothing in Large Sizes
- --------------------------------------------------------------------------------
107,218
--Germany/Austria: 0.6%
180,000 Flughafen Wien (Austria) 7,614
Vienna Airport Authority
23,000 Binding-Brauerei 5,587
Brewery
100,000 United International Holdings (Austria) 4,350
Cable Television for Austria & Other Countries
- --------------------------------------------------------------------------------
17,551
--Sweden: 1.4%
1,000,000 WM Data Nordic 39,037
Computer Services/Consulting
165,000 Autoliv 6,198
Seatbelts & Airbags
- --------------------------------------------------------------------------------
45,235
--Netherlands: 0.8%
150,000 ASR Verzekeringsgroep 11,093
Insurance
305,000 Hunter Douglas 8,891
Decorative Window Coverings
170,000 Getronics 6,277
Computer Services/Consulting
- --------------------------------------------------------------------------------
26,261
--Switzerland: 0.6%
11,000 Cie Fin Richemont 18,283
Luxury Goods, Tobacco & Pay TV
--France: 0.7%
230,000 Atos 21,106
Computer Services/Transaction Processing
--Italy: 0.7%
1,500,000 Banca Fideuram 8,583
Life Insurance & Mutual Funds
1,000,000 Aeroporti di Roma 7,881
Airport Management
1,800,000 Ducati Motor 5,266
Motorcycles
- --------------------------------------------------------------------------------
21,730
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
--Malaysia: 0.0%
750,000 Resorts World Berhad $ 739
Casino/Hotel Resort
590,000 Berjaya Sports Toto 591
Lottery/Gaming
- ------------------------------------------------------------------------------
1,330
--Hong Kong: 0.2%
4,500,000 Varitronix International 7,026
LCD Manufacturer
--China: 0.0%
200,000 The Investment Company of China 1,100
Closed-End Fund
--Singapore: 0.6%
8,130,000 Star Cruises 14,878
Cruise Line
2,000,000 Natsteel Electronics 5,461
Electronic Manufacturing Services
- ------------------------------------------------------------------------------
20,339
Japan: 1.0%
165,000 Softbank Corporation 18,502
Internet Leader in Japan
87,000 Nintendo 7,508
Video Games
300,000 Olympus Optical 3,952
Medical Equipment
- ------------------------------------------------------------------------------
29,962
--Mexico: 0.6%
3,300,000 Kimberly Clark de Mexico 12,419
Paper Products
7,350,000 Nadro, Series L 5,355
Pharmaceutical Distributor
- ------------------------------------------------------------------------------
17,774
<CAPTION>
Number of Shares Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
--Argentina: 0.3%
407,124 IRSA $ 10,738
Real Estate Management & Development
--------
Foreign: Total 357,285
Total Common Stocks and Other -----------
Equity-Like Securities: 96.0% $3,029,610
-----------
Short-Term Obligations: 4.0% 125,460
-----------
Total Investments: 100.00% 3,155,070
-----------
Cash and Other Assets Less Liabilities: (0.0%) (530)
-----------
Total Net Assets: 100% $3,154,540
- ------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
Acorn Fund
--Foreign Portfolio Diversification
At March 31, 1999 Acorn Fund's foreign portfolio of investments as a percent of
net assets was diversified as follows:
<TABLE>
<CAPTION>
Value (000) Percent
- -----------------------------------------------------------
<S> <C> <C>
- --Information
Computer Services $ 66,420 2.1%
Cable Television 56,755 1.8
Semiconductors & Related
Equipment 28,476 0.9
Business Information/Publishing 18,502 0.6
Contract Manufacturing 5,461 0.2
- -----------------------------------------------------------
175,614 5.6
- --Health Care
Medical Equipment 3,952 0.1
- -----------------------------------------------------------
3,952 0.1
- --Consumer Goods/Services
Travel 26,997 0.8
Entertainment 19,022 0.6
Beverages 14,478 0.5
Nondurable Goods 12,419 0.4
Consumer Software 7,508 0.2
Durable Goods 6,198 0.2
Retail 6,126 0.2
Consumer Goods Distribution 5,355 0.2
Leisure Vehicles 5,266 0.2
Gaming 3,742 0.1
- -----------------------------------------------------------
107,111 3.4
<CAPTION>
Value (000) Percent
- -----------------------------------------------------------
<S> <C> <C>
- --Finance
Money Management $ 16,675 0.5%
Insurance 11,093 0.4
Closed-End Funds 1,100 0.0
- -----------------------------------------------------------
28,868 0.9
- --Industrial Goods/Services
Electrical Components 7,026 0.2
- -----------------------------------------------------------
7,026 0.2
- --Energy/Minerals
Oil/Gas Producers 8,481 0.3
- -----------------------------------------------------------
8,481 0.3
- --Other Industries
Transportation 15,495 0.5
Real Estate 10,738 0.3
- -----------------------------------------------------------
26,233 0.8
--------------------
Total Foreign Portfolio $357,285 11.3%
- -----------------------------------------------------------
</TABLE>
38
<PAGE>
>Shareholder News
On May 1, 1999, Margaret Forster joined Leah Zell
as co-portfolio manager of Acorn International.
Margaret has been a key member of the international analytical team since 1994
and became a principal of Wanger Asset Management, L.P. (WAM) in January, 1999.
"The international market place is a land of opportunity--particularly if you
have access to solid information," says Forster. "Our international team has
lived--and regularly travels--all over the globe. That gives us an unbelievable
inside edge in understanding cultural, political and economic situations that
impact the long-term success of the companies we invest in." --Ms. Forster has
been featured in popular financial publications such as the Wall Street Journal
and in several international and academic journals. --Before joining WAM, Ms.
Forster was a professor of finance at Northwestern and Ohio State Universities,
and an economist with the International Monetary Fund. A Chartered Financial
Analyst (CFA), her degrees include a B.A. from Universidade de Sao Paulo, Escola
Politecnica, and an M.B.A., M.S. and Ph.D. from Cornell University. --A native
of Sao Paulo, Brazil, she is married and has a newborn daughter. --
Steve Radis takes the helm as Chief Marketing Officer.
Steve comes to WAM from the Zurich Insurance organization where most recently he
was Vice President, Corporate and Marketing Communications, Zurich Kemper Life.
A fifteen-year industry veteran, Steve began his career at Porter/Novelli Public
Relations. Before that, he headed Corporate Communications at one of Zurich's
mutual fund groups, Kemper Funds. --"The Acorn Family of Funds and Wanger Asset
Management have such a strong reputation in the marketplace," says Radis. "There
is so much to work with here, the opportunities for growth are limitless." --Mr.
Radis is a Member of the Direct Marketing Committee of the Investment Company
Institute and a former faculty member of the University of Wisconsin's Graduate
School of Banking. He received his BS from Bradley University. --A native of
Chicago, he lives in a suburb of Chicago with his wife Beverly and son Cameron.
- --
Howard Kastel, our former CEO, has left WAM. --
39
<PAGE>
The Acorn
- ------------------------
Family of Funds
Trustees
Irving B. Harris
Chairman
James H. Lorie
Vice Chairman
Leo A. Guthart
Jerome Kahn, Jr.
David C. Kleinman
Charles P. McQuaid
Roger S. Meier
Allan B. Muchin
Robert E. Nason
Katherine Schipper
Ralph Wanger
Officers
Ralph Wanger
President
Margaret M. Forster
Vice President
Marcel P. Houtzager
Vice President
Kenneth A. Kalina
Assistant Treasurer
Bruce H. Lauer
Vice President and Treasurer
Charles P. McQuaid
Senior Vice President
Robert A. Mohn
Vice President
John H. Park
Vice President
Mark H. Yost
Vice President
Leah J. Zell
Vice President
Investment Advisor
Wanger Asset Management, L.P.
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
1-800-9-ACORN-9
(1-800-922-6769)
e-mail: [email protected]
Web site: www.acornfunds.com
Distributor
WAM Brokerage Services, L.L.C.
P.O. Box 8502
Boston, Massachusetts 02266-8502
Transfer Agent, Dividend Disbursing Agent
and Custodian
State Street Bank and Trust Company
Attention: Acorn Family of Funds
P.O. Box 8502
Boston, Massachusetts 02266-8502
1-800-962-1585
Legal Counsel
Bell, Boyd & Lloyd
Chicago, Illinois
This report, including the unaudited schedules of investments, is submitted for
the general information of the shareholders of Acorn Investment Trust. This
report is not authorized for distribution unless preceded or accompanied by a
prospectus.
Watch for your favorite Acorn portfolio managers on
CNBC's Market Wrap
each Wednesday evening at 4:01 and 6:01 Eastern Time.
Our e-mail address is:
[email protected]
Find out what's new visit our web site at:
www.acornfunds.com
40
<PAGE>
[PHOTO OF ACORNS APPEARS HERE]
The Acorn
- ------------------------
Family of Funds
WAM Brokerage Services, L.L.C.
P.O. Box 8502
Boston, MA 02266-8502
