<PAGE>
2
Acorn Family of Funds
Semiannual Report
June 30, 1999
Managed by Wanger Asset Management, L.P.
[PHOTO OF ACORNS APPEARS HERE]
<PAGE>
We are glad you are a shareholder in some of the Acorn Funds. Our investment
staff are shareholders just like you. As fellow shareholders, we take pride in
the good performance of all five funds so far this year. If you would like to
make automatic regular investments to your fund or try one of our other funds,
please call us at 800-922-6769.
<PAGE>
Reserve This Date!
September 28, 1999
Meet your Acorn portfolio managers, analysts
and fellow shareholders.
Find out what's new with Acorn USA, Acorn Fund,
Acorn International, and our two newest funds -
Acorn Twenty and Acorn Foreign Forty.
Bring your ideas and questions,
we'd love to listen and to answer.
TURN OVER TO LEARN MORE
<PAGE>
Please join us at the
1999
Annual Meeting for Shareholders
Hosted by
Ralph Wanger
President of Acorn Investment Trust
September 28, 1999
9-10 am
1 Bank One Plaza (formerly First Chicago Center)
38 South Dearborn Street
Chicago, Illinois 60670
REFER TO THE SECOND HALF OF THIS INSERT
FOR DIRECTIONS AND PARKING INFORMATION
PS: If you are not able to attend the meeting, e-mail us your questions.
We'll e-mail a response back.
Send your questions to [email protected].
<PAGE>
Acorn Family of Funds Semiannual Report 1999
Table of Contents
Squirrel Chatter: J.P. Morgan 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 19
Acorn USA
In a Nutshell 8
Performance at a Glance 9
Major Portfolio Changes 20
Statement of Investments 21
Acorn International
In a Nutshell 10
Performance at a Glance 11
Major Portfolio Changes 24
Statement of Investments 26
Portfolio Diversification 30
Acorn Fund
In a Nutshell 12
Performance at a Glance 13
Major Portfolio Changes 31
Statement of Investments 33
Foreign Portfolio Diversification 39
Acorn Family of Funds
Statements of Assets and Liabilities 41
Statements of Operations 42
Statements of Changes in Net Assets 44
Financial Highlights 46
Notes to Financial Statements 49
Trustees, Officers and Contact Information 52
.Mid-Year Distributions
The following table details the funds' midyear distributions. The record date
was June 21, 1999, the ex-dividend date was June 22, 1999, and the payable date
was June 25, 1999.
<TABLE>
<CAPTION>
Acorn Fund Acorn International Acorn USA Acorn Twenty Acorn Foreign Forty
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Long-term Capital Gains $0.19 $0.00 $0.02 None $0.00
- -----------------------------------------------------------------------------------------------------------------------------
Short-term Capital Gains $0.00 $0.00 $0.02 None $0.03
- -----------------------------------------------------------------------------------------------------------------------------
Ordinary Income $0.03 $0.03 $0.15 $0.00 None $0.00
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
.Squirrel Chatter: J.P. Morgan
[PHOTO APPEARS HERE]
In the history of American finance, there have been many interesting and
important figures from Alexander Hamilton to George Soros. None approaches the
mythic status of John Pierpont Morgan. He dominated the banking scene from the
end of the Civil War to the eve of World War I. Since his death in 1913, no
other person has achieved his level of power and reputation. Morgan was loved by
a few, respected by many, and hated by most. He was not hated for his deeds so
much as what he stood for--massive wealth and power. In the Gilded Age, he
personified the wealth of a Bill Gates and the influence of an Alan Greenspan.
Morgan: American Financier1, a new biography by Jean Strouse, is a splendid
study of the man and his period.
What a period it was! Some of the people who did business with Morgan
were Mellon, Rockefeller, Harriman, Frick, Carnegie, Baker, Widener and Edison,
a group of tycoons now turned into universities, museums, banks or libraries.
One could ponder on the transformation of a businessman into a building.
Morgan, as a person, was agreeably complex and contradictory. He was
deeply religious and a womanizer. He was a handsome youth, but an ugly adult
(his nose became deformed by rhinophyma). He was a leader, but not a good
speaker or writer. Despite achieving every worldly success, he suffered from
fits of depression, and often sat alone in his study, smoking a cigar and
playing solitaire. (Strouse does not say what game of solitaire he favored, but
in that primitive age he had to use real cards, not the Microsoft version.)
Mr. Morgan played solitaire in very nice surroundings. He had a
Manhattan mansion (a series of five, of increasing splendor), an art-filled
house in London, a great country house on the Hudson, and three vacation houses.
He had a fabulous yacht, the Corsair, built in three different versions. His art
collection included Gutenberg bibles and other rare books and manuscripts, old
master paintings, armor, Egyptian antiquities, all in great quantity, many now
in the Met or the Morgan Library. It was the best art collection ever assembled
by one private individual. His artistic taste was informed and refined, but
conventional. For instance, he missed the French Impressionist movement
altogether, although he could have bought a boxcar load of VanGoughs and Monets
for what he paid for one Gainsborough.
As mutual fund investors, you and I should be most interested in Morgan
as the supreme financial tycoon. His firm put together U.S. Steel, creating the
biggest industrial company in the country. Another deal created International
Harvester. Railroads were the leading industry of his time, and he put together
the Northern Pacific and the Southern Railway. His least successful trust was an
ocean shipping company, IMM, that not only lost money in the freight business,
but through the White Star Line, owned the ill-fated (but photogenic) Titanic.
These mergers were attacked by Progressive "trust-busters," but big companies
were needed as the United States became an industrial giant. Regardless of your
opinion on these mergers, Morgan did many things that clearly benefited the
country.
Bringing in Capital
The construction of the U.S. railway network was dependent on European
capital. By today's standards, 19th Century America would have been classified
as an Emerging Market. If you think of the United States in Morgan's era as the
equivalent to Argentina now, it's not surprising that many European investors
lost their money on American railroads that went bust. Morgan's firm (Drexel,
Morgan & Co. until 1895, now J.P. Morgan & Co.) was in the center of
international banking, with his father's bank in London funneling money to New
York.2 The amount of European capital invested in the United States grew from
$222 million in 1853 to $3 billion in 1890. Morgan himself spent about half of
each year in Europe, mixing business, art collecting, and spa treatments.3
The key to keeping European investors happy was a sound dollar, backed
by gold. Therefore, Morgan and the other bankers fought to base the U.S.
currency on a gold standard. Whether your were pro or anti, the gold standard
was one of the key political divides of the 1890s. Farmers always hate bankers,
and opposed the gold standard. So did silver miners, who wanted silver to be
counted in monetary reserves together with gold. The Populist party, which
represented the anti-gold standard factions, wanted faster growth in the money
supply and inflation to enable debtors to pay off their obligations in cheaper
dollars. Morgan, the defender of sound money, was hated as the leader of the
gold-standard Eastern banking interests.
The One-Man Fed
In 1894, foreign investors became nervous that the Populists would
prevail and inflate the money supply, which would cause their dollar-denominated
bonds to lose value. European investors started selling bonds for gold and
physically shipping the gold to London. At the end of 1894, the U.S. gold
reserve plunged from $100 million to $45 million. In early 1895, gold losses
reached $2 million per day, and the U.S. government faced a crisis not unlike
the one that
2
<PAGE>
forced several Asian countries to devalue their currencies two years ago.
Morgan and several other bankers met with President Cleveland in February 1895,
the day gold reserves dropped to only $9 million, with claims of $12 million
against that gold. A U.S. government default was only a day away. Morgan's group
figured out a way to sell $62 million in new gold-backed bonds without
Congressional approval (the silverites in Congress would not have approved the
bond issue), and saved the government. After the bond sale, Morgan ran a
delicate foreign-exchange support program that succeeded, and U.S. gold reserves
rebounded back over $100 million by June. Despite this triumph, Morgan and
Rothschild, the two syndicate managers, were vilified in the press and in
Congress, where Bryan made a nasty anti-gold, anti-Semitic speech.
In 1896, the Democrats nominated the Populist William Jennings Bryan for
president. His convention speech was perhaps the best political oration in
American history, ending with the famous phrase: "You shall not crucify mankind
upon a cross of gold." I always had thought that this was a great
anti-materialistic religious thunderbolt, but its context was merely part of
Bryan's violent hatred of the gold standard. Bryan lost the election anyway.
The Panic of 1907
In 1907, there was a terrible panic, one of the worst financial crises
ever to hit America. Many banks, trust companies, insurance companies, and
stockbrokers had too much debt. After a couple of banks failed, a panic started
that threatened to wipe out a large part of the American financial system and
create the kind of depression that showed up 22 years later in 1929. There was
no Federal Reserve System to regulate banks or act as lender of last resort.
Morgan and a small group of allies acted as a private Fed, deciding
which financial institutions were hopeless and should be allowed to go under,
and which were sound but illiquid and could be saved by extending new credit.
Morgan then browbeat his friends into extending the savable banks new credit
despite the fear and panic that enveloped Wall Street at that moment. It worked.
The Panic of 1907 was short-lived, and no depression followed.
A lot of the time Morgan and other nineteenth century bankers were don't-
rock-the-boat conservatives. Sometimes Morgan acted as a risk-taking venture
capitalist. His most successful undertaking was Edison and his new electric
light. In 1878, Edison was well-known, but had little money. Drexel, Morgan
supplied capital for the new Edison Electric Light Co., and continued to support
Edison during the start-up phase. Development was not smooth: the 1878 lamp used
a platinum filament that proved a dead end (Carbon filament worked better, and
finally the tungsten filament bulb, that we still use today, replaced carbon in
turn). The electric light was the "killer app" for the electrical industry. In
1892, Edison's company was combined with its major competition to form General
Electric, with Morgan as the investment banker.
If Morgan did so many good things in his life, why did he receive such
bad press in his lifetime and to this day? One answer is that his critics on the
left--variously Anarchists, Communists, Fabian Socialists, Utopian Socialists,
other sects of Socialists, union organizers, Populists and
Progressives--detested his immense wealth and unparalleled power. They didn't
believe any one man should be allowed to obtain that kind of wealth and
influence. The standard anti-capitalist caricature is still J.P. Morgan in
formal dress, whether in political cartoon, movie, or the little banker guy in
your Monopoly game. No one since Morgan has equaled his immense power. Morgan's
power died with him. Our world today has grown too large for any one financier
to dominate it.
/S/Ralph Wanger
Ralph Wanger
Chief Investment Officer, Wanger Asset Management,
Lead Portfolio Manager, Acorn Fund
________________________________________________________________________________
1 Strouse, Jean. Morgan: American Financier. Random House, NYC, 1999.
2 Papa's bank became Morgan, Grenfell & Co. in 1910. Other Morgan companies
that are in operation today include J.P. Morgan & Co., and Morgan Stanley Dean
Witter Discover.
3 Morgan and his wife Fanny both spent six months every year in Europe; just
not the same six months. When she was heading back to New York with her
companions, he would sail for London with his entourage, usually including one
of his lady friends.
3
<PAGE>
Acorn Twenty
.In a Nutshell
[PHOTO APPEARS HERE]
This quarter paid off for small- and mid-cap investors. Acorn Twenty gained
13.6% for the quarter ended June 30, 6.5% ahead of the S&P 500, but just
slightly behind the 14.2% return of the S&P MidCap 400 Index.
Investors rediscovered value during the second quarter. They finally
noticed the wide valuation gap between small- and mid-cap stocks versus their
large-cap brethren.
The small-cap Russell 2000 and the S&P MidCap 400 indexes outperformed the S&P
500 by 8.5% and 7.1%, respectively, during the quarter.
This supports our belief that relative value exists among small to midsized
companies. Many of Acorn Twenty's stocks trade at lower price-earnings multiples
than S&P 500 companies, yet have higher expected growth rates.
Twelve stocks posted double-digit gains in your Fund. Some standouts
include AES, an energy company, up 56% during the quarter. Liberty Media was up
40% following its investment in News Corp. Several other stocks were up 20% or
more, including three stocks highlighted in our March 30 report--Telephone &
Data Systems, RCN, and Jones Apparel.
We had one disappointment this quarter, McKesson HBOC, a hospital computer
services company. The stock declined 42% during the quarter when an accounting
scandal was uncovered in April. While we are disappointed, it is important to
remember that our concentrated strategy is to have our winners outweigh the
losers, resulting in superior, long-term return potential.
We continue to be excited about the Fund's future prospects and we
appreciate your investment in Acorn Twenty.
/s/ John H. Park /s/ Mark H. Yost
John H. Park Mark H. Yost
Co-Portfolio Manager Co-Portfolio Manager
Keeping Up
with Jones
Jones Apparel Group (JNY) has been in Acorn Twenty since the Fund's
inception. Jones manufactures apparel, primarily for women, and owns well-
regarded brand names. In addition to the Jones New York and Evan Picone labels,
Jones makes the Lauren by Ralph Lauren line of clothes as well as Polo Jeans,
both under license from Ralph Lauren. The Jones management team is impressive.
The company has posted 20% or greater sales and earnings growth every year since
its 1991 IPO, even though the industry is notorious for its fickle fashion fads.
This year, Jones announced it was acquiring shoe manufacturer/retailer Nine
West. Wall Street was initially thumbs (or toes) down on the deal since Nine
West had been a troubled, mismanaged company. But where investors turned up
their noses, Jones saw opportunity. Poor performing Nine West stores will be
closed. As a result, we estimate as much as $100 million in working capital
could be redeployed by tighter inventory management. Wall Street had put its
foot in its mouth. After seeing the acquisition's potential opportunities and
return, Jones' stock price climbed, up 56% for the year at June 30, 1999. The
acquisition closed on June 15, 1999, and we expect Jones' new "sole-mate" to add
significantly to earnings and cash flow.
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
Other Expenses: 0.93%
Less Expense
Reimbursement: 0.48%
Total Expense Ratio*: 1.35%
*Fees and expenses are calculated for the period from 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. This expense limitation is voluntary and
is terminable by either the Fund or Wanger Asset Management on 30 days' notice
to the other.
<TABLE>
<CAPTION>
Fund Net Assets as of 6/30/99: $62.7 million
- --------------------------------------------------------------
.Acorn Twenty Top 10 Holdings
<S> <C>
Americredit 6.5%
Auto Lending
PRIMEDIA 6.4%
Specialty Magazines & Other Publications
Telephone & Data Systems 6.0%
Cellular & Telephone Franchises
RCN 5.5%
Metro Market: Voice Video & Internet Services
UICI 5.3%
Insurance/Specialty Finance
AES Corporation 5.2%
Power Plants
ServiceMaster 5.1%
Facilities Management
H & R Block 5.0%
Tax Preparation
National Data 4.9%
Credit Card & Health Claims Processor
Liberty Media Group, AT&T 4.8%
Cable Programming
</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 6/30/99
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Catagory Percentage
<S> <C>
Other 9.2
Industrial Goods/Services 5.1
Energy/Minerals 9.9
Consumer Goods/Services 9.9
Finance 19.5
Information 44.0
Health Care 2.4
</TABLE>
*Includes "Cash and other assets less liabilities" of 4.5%.
<TABLE>
<CAPTION>
Relative Performance
- ---------------------------------------------------------------------
2nd quarter Year to date Life of Fund*
1999
<S> <C> <C> <C>
Acorn Twenty 13.6% 21.8% 30.4%
S&P MidCap 400 14.2% 6.9% 18.7%
Russell 2000 15.6% 9.3% 17.1%
S&P 500 7.1% 12.4% 18.9%
</TABLE>
*Life of Fund performance is from Acorn Twenty's inception 11/23/98 through
6/30/99.
Net Asset Value Per Share 6/30/99: $13.04
- -----------------------------------------
The Value of a $10,000 Investment in Acorn Twenty
- -------------------------------------------------
November 23, 1998 through June 30, 1999
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Acorn Twenty $13,040
S & P Midcap 400 $11,872
DATE ACCORN 20 ($) 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
3/31/99 11,480 10,400
4/30/99 12,710 11,220
5/31/99 12,730 11,270
6/30/99 13,040 11,872
</TABLE>
Total Return Life of Fund 30.4%
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. 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.
All indexes are unmanaged and returns include reinvested dividends.
Past performance does not guarantee future results. The investment return
and principle 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]
Since inception, the Fund has returned 31%, more than triple the returns of
its benchmark indexes.
Acorn Foreign Forty returned a satisfying 9.4% in the second quarter, well
ahead of the 4.8% return of the creatively named Salomon Smith Barney Cap Range
$2-10 Billion Index. Since inception, the Fund has returned 31%, more than
triple the returns of its benchmark indexes.
Three of your Fund's stocks gained more than 50% during the quarter. We
highlighted Softbank last quarter when it was our 10th largest holding. It is
now our largest position. We once again thank Michael King, our Japanese
analyst, for unearthing Softbank at a time when it was very underfollowed.
Michael also scored with Nintendo (up 64%--see inset), a name that is on the tip
of every child's tongue, but not yet in every parent's portfolio. Our
international research director, Roger Edgley, contributed contract manufacturer
Natsteel Electronics in Singapore, up 56%.
Not all of our stocks went up. We experienced modest declines in two of our
European life insurance companies, Mapfre Vida in Spain, and ASR in the
Netherlands. We visited these companies recently and have confirmed that their
core life insurance businesses are still doing extremely well. Danish cleaning
contractor ISS and Olivetti, an Italian typewriter-maker-turned-telecom-
operator, also had poor stock returns this quarter although nothing bad happened
to their businesses.
We continue to see many excellent opportunities in the international mid-
to large-cap stock universe. We believe Acorn Foreign Forty provides both a good
way to diversify your portfolio and to own what we predict will be tomorrow's
blue chips.
Move Over
Mickey
Most six to twelve year olds today enjoy Coca-Cola, McDonald's, Disney, and
Nintendo. Ranked by hours used, the winner is Nintendo. Unique products plus a
strong, global brand equals high barriers to entry, high margins, and a mountain
of cash to fund future growth. This is a classic case where the company is well-
known, but the stock is not. We think this will change as Nintendo, a leader in
the expanding industry of interactive entertainment, advances to the next level
in the great stock market game (and becomes a blue chip on everyone's buy list).
/s/ Marcel P. Houtzager
Marcel P. Houtzager
Portfolio Manager
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
Other Expenses: 1.75%
Less Expense
Reimbursement: 1.25%
Total Expense Ratio*: 1.45%
*Fees and expenses are calculated for the period from 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. This expense limitation is voluntary and
is terminable by either the Fund or Wanger Asset Management on 30 days' notice
to the other.
<TABLE>
<CAPTION>
Fund Net Assets as of 6/30/99: $45.2 million
- -----------------------------------------------------------------------
.Acorn Foreign Forty Top 10 Holdings
<S> <C> <C>
Softbank Japan 3.1%
Internet Services/Investment Holding
Bodycote United Kingdom 3.1%
Materials Technology & Metal Processing
Nintendo Japan 3.1%
Video Games
Atos France 2.9%
Computer Services/Transaction Processing
NTL United Kingdom 2.9%
Voice, Video & Data Services
Canadian Natural Resources Canada 2.8%
Oil & Gas Producer
Getronics Netherlands 2.6%
Computer Services
SmarTone Telecom Hong Kong 2.6%
Mobile Telecommunications
Mapfre Vida Spain 2.5%
Life Insurance & Mutual Funds
SITA France 2.5%
Waste Hauling & Landfills
</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 6/30/99
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Catagory Percentage
<S> <C>
Energy/Minerals 4.1
Health Care 7.8
Industrial Goods/Services 11.3
Information 38.0
Consumer Goods/Services 11.5
Other* 15.6
Finance 11.7
</TABLE>
*Includes "Cash and other assets less liabilities" of 8.2%.
<TABLE>
<CAPTION>
Relative Performance
- --------------------------------------------------------------------------
<S> <C> <C> <C>
2nd quarter Year to date Life of Fund*
1999
Acorn Foreign Forty 9.4% 19.2% 31.1%
EAFE 2.5% 4.0% 8.3%
SSB Cap Range $2-10B 4.8% 6.0% 9.5%
Lipper Int'l Funds Average 5.6% 7.4% N/A
</TABLE>
*Life of Fund performance for Acorn Foreign Forty is from inception 11/23/98
through 6/30/99.
Net Asset Value Per Share 6/30/99: $13.08 F40
- -----------------------------------------
The Value of a $10,000 Investment in Acorn Foreign Forty
- ---------------------------------------------------------------------------
.November 23, 1998 through June 30, 1999
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Date Acorn Foreign Forty ($) 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
4/30/99 12,240 10,980
5/31/99 12,170 10,418
6/30/99 13,110 10,825
</TABLE>
Total Return
Life of Fund
31.1%
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 10 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, which
includes Acorn Foreign Forty, measures the performance of all non-U.S. funds
tracked by Lipper, excluding the International Small Cap Funds group. This group
consisted of 630 funds for the second quarter. 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
Small stocks rallied during the second quarter. The small-cap Russell 2000
Index rose 15.6%, more than double the 7.1% return of the S&P 500. Acorn USA
outpaced both indexes, gaining 17.5%.
At the start of the first quarter, the market was persecuting whole groups
of stocks. Value stocks were thought to be the ugly stepsisters of the growth-
stock beauties. Cyclical stocks were given up for dead after the Asian economies
crumbled. Small-cap stocks were on the wrong side of the market's large-cap
bias. The only bull-market participants were the darling fat-caps and Internet
companies.
Everything changed in April after interest rates increased. That's usually
bad for all stocks, but it is particularly troublesome for stocks trading on
hyped future earnings. As rates rose, price became more important than future
promises. Undervalued stocks soared (even the historically rate-sensitive
utility stocks rallied), while high-priced glamour stocks declined. Many
investors were surprised to discover that Internet stocks could be derailed
(temporarily) by something as old-fashioned as an interest rate hike.
Acorn USA's best stocks of the quarter were not so long ago its worst. All
are thriving small companies whose stock prices had plunged, then rebounded 50%
or more by June. Some examples include Magellan (managed care), Aspect Telecom
(call center software) and Equitable Resources (gas utility).
Small stocks finally were the market's big winners. How long will this
small-cap rally continue? Well, small stocks underperformed large stocks for
five years. We can hope that the market will shift to favor small caps over the
next five years. Acorn USA shareholders should do well if this normal market
rotation occurs.
Just What the
Patient Ordered
National Data knows two truths:
1) People prefer plastic to paper. Money, that is. Ten years ago, only 15% of
all consumer payments were made via credit cards. Today it's 25% and growing.
Processors like National Data make their money routing credit card and other
electronic payments between merchants and banks.
2) For all the miracles of modern medicine, the health care payment system is
strictly Stone Age. You can get your kidney stones removed in one hour, but your
insurance claim likely won't get paid for five months. National Data is helping
solve the problem by automating the whole health-claims process.
Small stocks rallied during the second quarter. The small-cap Russell 2000 Index
rose 15.6%, more than double the 7.1% return of the S&P 500.
/s/ Robert A. Mohn
Robert A. Mohn
Portfolio Manager
8
<PAGE>
.Performance at a Glance
<TABLE>
<CAPTION>
Acorn USA
Information
<S> <C>
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
Other Expenses: 0.26%
Total Expense Ratio*: 1.20%
</TABLE>
*Fees and expenses are for the fiscal year ended
December 31, 1998.
<TABLE>
<CAPTION>
Fund Net Assets as of 6/30/99: $312.7 million
- ---------------------------------------------------------
.Acorn USA Top 10 Holdings
<S> <C>
MidAmerican Energy 9.5%
Growth Utility
Micros Systems 5.3%
Information Systems for Restaurants & Hotels
UICI 5.1%
Insurance/Specialty Finance
National Data 3.8%
Credit Card & Health Claims Processor
Sykes Enterprises 3.2%
Call Center Services
Wackenhut 3.1%
Prison Management
Lincare Holdings 3.0%
Home Health Care Services
Telephone & Data Systems 2.8%
Cellular & Telephone Franchises
Americredit 2.8%
Auto Lending
RCN 2.7%
Metro Market: Voice, Video & Internet Services
</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 USA Portfolio Diversification
- --------------------------------------------
.as a % of net assets, as of 6/30/99
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Catagory Percentages
<S> <C>
Consumer Goods/Services 6.4
Other* 6.7
Information 34.3
Health Care 8.2
Industrial Goods/Services 11.8
Finance 16.0
Energy/Minerals 16.6
</TABLE>
*Includes "Cash and other assets less liabilities" of 5.8%.
<TABLE>
<CAPTION>
Relative Performance
- -------------------------------------------------------------------
2nd quarter Year to date Last 12 mos.
1999
<S> <C> <C> <C>
Acorn USA 17.5% 8.3% 0.7%
Russell 2000 15.6% 9.3% 1.5%
Lipper Small-Cap
Funds Avg. 15.6% 8.6% 1.9%
S&P MidCap 400 14.2% 6.9% 17.2%
S&P 500 7.1% 12.4% 22.8%
</TABLE>
Net Asset Value Per Share 6/30/99: $15.98
- -----------------------------------------
The Value of a $10,000 Investment in Acorn USA
- --------------------------------------------------------
.September 4, 1996 through June 30, 1999
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Date Accorn USA ($) Russel 2000 ($)
- ---- -------------- ---------------
<S> <C> <C>
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
06/30/99 17,650 14,203
</TABLE>
Average Annual Total Return
1 Year Life of Fund
0.7% 22.3%
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.
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 Average, which
includes Acorn USA, is an average of all U.S. small-cap funds tracked by Lipper,
which consisted of 789, 777 and 698 funds for the second quarter, 6- and 12-
month 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]
These results are no flash-in-the-pan. Whether you look at the last twelve
months or the trailing five years, your Fund's performance numbers rank in the
top-quintile of all international equity funds followed by Lipper.
Your Fund is flying. Acorn International was up 15.5% in the second quarter.
This is 9.3% better than the EMI Index and 9.9% above the Lipper International
Funds Index, and nearly 2% ahead of the Lipper International Small Cap Funds
Index for the three months. It even beats the S&P 500 by 8.4% (diversification
finally pays!). These results are no flash-in-the-pan. Whether you look at the
last twelve months or the trailing five years, your Fund's performance numbers
rank in the top-quintile of all international equity funds followed by Lipper.
For the one- and five-year periods ended June 30, 1999, the Fund ranked 84 out
of 638 funds and 35 out of 200 funds, respectively./1/
Contractors for
Hire
Electronics companies love to design and market products. Making them is more of
a challenge in today's world. Many of the best brand names outsource the
manufacturing function to specialist contractors known as EMS (electronic
manufacturing services) companies. Two of our Singapore EMS holdings, Venture
Manufacturing and Natsteel Electronics, work for Hewlett Packard, Apple, Sony,
Cisco and others, making items such as computers, servers and disk drives. Both
sides win. The customer lowers production costs and frees up capital, while the
EMS provider earns a high return by running its facilities efficiently. No
wonder these stocks are growing earnings yearly in excess of 25%.
How did we do it? The short answer, this quarter, is Singapore. The local
Straits Times Index had a fabulous run, up 46% in U.S. dollars since the end of
March. Our five stock picks in that market did even better, rising a stellar 93%
over the same period. Best of all, they were BIG holdings, generating a combined
$93 million in profits for shareholders in three months. Credit goes to Roger
Edgley, our director of International Research and Asian equity specialist, who
identified Singapore as the place to hide during the regional meltdown.
Secondary credit goes to that old-fashioned virtue, patience. We first bought
Star Cruises in the summer of 1993 and Venture Manufacturing in the spring of
1995. We added to both positions at the depths of the crisis, between June and
September of last year, at prices in excess of 75% below where the stocks sell
today. Datacraft Asia and Natsteel Electronics are newer positions, initially
appearing in the portfolio around 18 months ago. What all these stocks have in
common is: (1) Roger identified them all as quality companies with top-flight
management; and (2) we put fresh money into them when they were deeply out of
favor. That defines long-term investing to us.
We wrote in the last quarterly report that the outlook for foreign
investing was improving. Small-cap stocks are leading the charge, after two
years of lagging their large-cap peers by double digits. According to the
Salomon Smith Barney indexes, equities outside the United States with market
capitalizations below $1 billion are up 14.7% year-to-date versus a gain of 4.7%
for those with market capitalizations above $5 billion. Patience wins again.
/s/ Leah Joy Zell
Leah Joy Zell
Lead Portfolio Manager
/s/ Margaret M. Forster
Margaret M. Forster
Co-Portfolio Manager
/1/ This ranking represents a combination of the Lipper International Small Cap
Funds category and the Lipper International Funds category for the 1- and 5-year
periods ended June 30. The two categories were combined to show how Acorn
International performed among the broadest universe of international funds. The
ranking was calculated by Wanger Asset Management, L.P., Acorn International's
investment adviser, assigning a rank to the average annual total return of each
fund in the International Small Cap Funds and International Funds categories, on
a combined basis (the best-performing fund received a rank of 1 and the worst
received a rank of 638, or 200, respectively, for the 1- and 5-year periods).
The percentile rank was calculated by dividing Acorn International's 1- and
5-year rank (84 and 35, respectively) by the total number of funds for the 1-
and 5-year periods (638 and 200, respectively). This produced a rank of 13.2%
and 17.5%, respectively, for Acorn International, placing it in the combined
categories top quintile.
10
<PAGE>
.Performance at a Glance
Acorn International
Information
Ticker Symbol: ACINX
Minimum
Initial Investment: $1,000
$1,000 for an IRA
Minimum
Subsequent Investment: $ 100
Exchange Fee: None
Management Fee*: 0.82%
12b-1 Fee: None
Other Expenses: 0.30%
Total Expense Ratio*: 1.12%
*Fees and expenses are for the fiscal year ended
December 31, 1998.
Fund Net Assets as of 6/30/99: $1,883.1 million
- -----------------------------------------------
.Acorn International Top 10 Holdings
WM Data Sweden 3.3%
Computer Services/Consulting
Tieto Corporation Finland 3.3%
Computer Services/Consulting
Venture Manufacturing Singapore 2.7%
Electronic Manufacturing Services
Serco Group United Kingdom 2.5%
Facilities Management
NTL United Kingdom 2.3%
Voice, Video & Data Services
Star Cruises Singapore 2.2%
Cruise Line
Atos France 2.2%
Computer Services/Transaction Processing
Datacraft Asia Singapore 2.1%
Network Systems Integration
Li and Fung Hong Kong 1.9%
Sourcing of Consumer Goods
Rhoen Klinikum Germany 1.9%
Hospital 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 International Portfolio Diversification
- ------------------------------------------------
.as a % of net assets, as of 6/30/99
Health Care 5.0%
Energy/Minerals 2.7%
Other* 10.0%
Finance 7.0%
Information 42.2%
Industrial
Goods/Services 12.4%
Consumer
Goods/Services 20.7%
*Includes "Cash and other assets less liabilities" of 5.6%
Relative Performance
- -----------------------------------------------------------------------------
2nd quarter Year to date Last 12 mos.
1999
Acorn International 15.5% 16.8% 11.9%
EMI (World ex-U.S.) 6.2% 7.7% 3.4%
IFCI Composite 23.8% 37.3% 27.0%
Lipper Int'l Small-Cap
Funds Index 13.6% 17.8% 7.8%
Lipper Int'l Funds Index 5.6% 6.9% 4.0%
Net Asset Value Per Share 6/30/99: $24.17
- -----------------------------------------
The Value of a $10,000 Investment in Acorn International
- --------------------------------------------------------
.September 23, 1992 through June 30, 1999
[PERFORMANCE GRAPH APPEARS HERE]
Acorn Int'l $ 27,574
EMI (World ex-U.S.) $ 16,839
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
6/30/99 27,222
Average Annual Total Return
1 year 5 years Life of Fund
11.9% 11.9% 15.9%
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.).
EMI is Salomon Brothers' 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
International Small-Cap Funds Index measures the performance of the 10 largest
International small-cap funds tracked by Lipper, which includes Acorn
International. The Lipper International Funds Index measures the performance of
the 30 largest non-U.S. small-cap funds tracked by Lipper. 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
[PICTURE APPEARS HERE]
It finally happened--small stocks outperformed blue-chip stocks in the second
quarter. Acorn Fund was up 15.8% for the quarter, double the return of the S&P
500, and slightly ahead of the small-cap Russell 2000 Index.
We had been complaining about small caps underperforming large caps.
While we were whining, we were actively swapping some of our winners that had
become mid-caps, into small caps, which were better values. We bought about $300
million of small stocks in the second quarter.
Most of our largest-percentage winners in the quarter were stocks with
cap sizes under $1 billion. Magellan Health, a managed-care company, jumped a
robust 137%, while Gadzooks, a retail speciality store for young adults,
surprised us by more than doubling. Electronics distributors Kent Electronics
and Pioneer Standard rose 99% and 84%, respectively. AirNet Systems soared 93%.
Employee timeclock company Kronos clocked an 86% move.
Fears about Asia subsided in the quarter. Singapore-based Star Cruises
sailed to a 145% gain and Natsteel Electronics zapped a 61% return. Independent
power producer AES, which had dropped due to fears about Asian contracts,
provided an electrifying 56% rise.
Our Internet-related stocks were hot. Softbank, a Japanese-based company
featured in our 1998 annual report, netted an 80% return, while information
provider InfoUSA doubled.
We are continuing to find and buy great small-cap companies and we
believe these companies have the potential to deliver long-term rewards.
A Towering
Landlord
We like companies that benefit from the declining costs of electronics. For
example, Acorn Fund was an early owner of cellular telephone companies at a time
when cell phone prices plunged as much as 90%. A play on this theme is the
recently purchased Pinnacle Holdings that controls valuable real estate in the
form of broadcasting towers. Competition to provide wireless phone service in
urban areas is robust. Since all cellular phone companies need towers to
broadcast their signals to provide service, and since zoning restricts new tower
construction, Pinnacle Holdings stands to benefit as more competitors build
wireless systems. Its stock rose 62% last quarter.
Acorn Fund was up 15.8% for the quarter, double the return of the S&P 500, and
slightly ahead of the small-cap Russell 2000 Index.
/s/ Ralph Wanger /s/ Charles P. McQuaid
Ralph Wanger Charles P. McQuaid
Lead Portfolio Manager Co-Portfolio Manager
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
Other Expenses: 0.15%
Total Expense Ratio*: 0.84%
*Fees and expenses are for the fiscal year ended December 31, 1998.
Fund Net Assets as of 6/30/99: $3,406.1 million
- --------------------------------------------------------------------
.Acorn Fund Top 10 Holdings
<TABLE>
<S> <C>
Liberty Media Group, AT&T 2.8%
Cable Programming
National Data 2.3%
Credit Card & Health Claims Processor
AES Corporation 2.2%
Power Plants
Carnival 2.1%
Largest Cruise Line
Harley Davidson 2.0%
Motorcycles & Related Materials
Lincare Holdings 1.9%
Home Health Care Services
RCN 1.8%
Metro Market: Voice, Video & Internet Services
Solectron 1.7%
Electronic Manufacturing Services
NTL 1.6%
Voice, Video & Data Services
Americredit 1.5%
Auto Lending
</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 Fund Portfolio Diversification
- -----------------------------------------------
.as a % of net assets, as of 6/30/99
<TABLE>
<S> <C>
Other* 8.8%
Health Care 6.0%
Energy/Minerals 9.0%
Information 30.3%
Industrial Goods/Services 9.6%
Consumer Goods/Services 14.6%
Finance 10.0%
Foreign 11.7%
</TABLE>
*Includes "Cash and other assets less liabilities" of 4.0%.
<TABLE>
<CAPTION>
Relative Performance
- -----------------------------------------------------------------
2nd quarter Year to date Last 12 mos.
1999
<S> <C> <C> <C>
Acorn Fund 15.8% 11.6% 6.0%
S&P 500 7.1% 12.4% 22.8%
Russell 2000 15.6% 9.3% 1.5%
Lipper Small Cap
Funds Index 14.9% 9.4% 1.9%
S&P MidCap 400 14.2% 6.9% 17.2%
</TABLE>
Net Asset Value Per Share 6/30/99: $18.59
- -----------------------------------------
The Value of a $10,000 Investment in Acorn Fund
- -------------------------------------------------
.June 10, 1970 through June 30, 1999
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Acorn Fund S & P 500
---------
$901,804 $537,999
Date Acorn Funds ($) S & P ($)
- ---- --------------- ---------
<S> <C> <C> <C>
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
6/30/99 901,844 537,999
</TABLE>
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 the S&P 500
Stock 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, which includes
Acorn Fund, measures the performance of the 30 largest U.S. small-cap funds
tracked by Lipper. 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 Fund
.Major Portfolio Changes in the Second Quarter
<TABLE>
<CAPTION>
Number of Shares Held
-------------------------
3/31/99 6/30/99
Additions
- --------------------------------------------------------
Information
<S> <C> <C>
Acxiom 78,000 105,000
H & R Block 50,000 63,000
Keane 0 100,000
National Data 0 72,000
PRIMEDIA 200,000 235,800
Sterling Commerce 40,000 65,000
- --------------------------------------------------------
Consumer Goods/Services
Herman Miller 0 63,800
Jones Apparel 39,000 65,000
- --------------------------------------------------------
Finance
SEI Investments 0 31,500
UICI 0 120,000
- --------------------------------------------------------
Industrial Goods/Services
ServiceMaster 105,000 170,000
- --------------------------------------------------------
Real Estate
The Rouse Company 0 116,000
Sales
- --------------------------------------------------------
Information
Concord EFS 66,500 0
RCN 101,000 82,000
- --------------------------------------------------------
Health Care
First Health 110,000 0
Lincare Holdings 80,000 59,700
McKesson HBOC 36,000 0
- --------------------------------------------------------
Consumer Goods/Services
Harley-Davidson 24,000 0
- --------------------------------------------------------
Industrial Goods/Services
Expeditors Int'l of Washington 55,000 0
(includes effect of 2 for 1
stock split)
</TABLE>
14
<PAGE>
Acorn Twenty
.Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------------
Common Stocks: 95.5%
- ----------------------------------------------------------
Information: 44.0%
<S> <C> <C>
.Television Programming: 4.8%
82,000 Liberty Media Group, AT&T (b) $ 3,014
Cable Programming
.Telephone Services: 5.4%
82,000 RCN (b) 3,413
Metro Market: Voice, Video &
Internet Services
.Mobile Communications: 5.9%
51,000 Telephone & Data Systems 3,726
Cellular & Telephone Franchises
.Transaction Processors: 4.9%
72,000 National Data 3,078
Credit Card & Health Claims
Processor
.Computer Services: 3.6%
100,000 Keane (b) 2,262
Application Development
& Maintenance Services
.Business Software: 3.8%
65,000 Sterling Commerce (b) 2,373
Electronic Commerce Software
& Services
.Business Information/
Marketing Services/
Publishing: 15.6%
235,800 PRIMEDIA (b) 3,994
Specialty Magazines &
Other Publications
63,000 H & R Block 3,150
Tax Preparation
105,000 Acxiom (b) 2,618
Database Marketing Services
- ----------------------------------------------------------
9,762
--------
Information: Total 27,628
- ----------------------------------------------------------
Health Care: 2.4%
.Services: 2.4%
59,700 Lincare Holdings (b) 1,493
Home Health Care Services
--------
Health Care: Total 1,493
- ----------------------------------------------------------
Consumer Goods/Services: 9.9%
.Cruise Lines: 4.2%
60,400 Royal Caribbean Cruises 2,643
Cruises to Caribbean & Alaska
.Furniture & Manufacturers: 5.7%
65,000 Jones Apparel (b) 2,230
Women's Apparel
63,800 Herman Miller 1,340
Office Furniture
- ----------------------------------------------------------
3,570
--------
Consumer Goods/Services: Total 6,213
Principal Amount or
Number of Shares Value (000)
- ----------------------------------------------------------
- ----------------------------------------------------------
Finance: 19.5%
.Finance Companies: 6.5%
255,000 Americredit (b) $ 4,080
Auto Lending
.Money Management: 4.4%
31,500 SEI Investments 2,780
Mutual Fund Administration
.Insurance: 8.6%
120,000 UICI (b) 3,315
Insurance/Specialty Finance
14,100 Progressive 2,044
Auto Insurance
- ----------------------------------------------------------
5,359
--------
Finance: Total 12,219
- ----------------------------------------------------------
Industrial Goods/Services: 5.1%
.Other Industrial Services: 5.1%
170,000 ServiceMaster 3,188
Facilities Management
--------
Industrial Goods/Services: Total 3,188
- ----------------------------------------------------------
Energy/Minerals: 9.9%
.Independent Power: 9.9%
56,000 AES Corporation (b) 3,255
Power Plants
85,000 MidAmerican Energy 2,943
Growth Utility
Energy/Minerals: Total 6,198
- ----------------------------------------------------------
Real Estate: 4.7%
116,000 The Rouse Company 2,943
Regional Shopping Malls
--------
Total Common Stocks: 95.5% 59,882
(Cost: $49,893)
Short-Term Obligations: 7.5%
Yield 4.85% - 5.10% Due 7/1 - 7/2/99
$2,783 Pru Funding 2,783
$1,884 Commercial Credit 1,884
- ----------------------------------------------------------
(Amortized Cost: $4,667) 4,667
Total Investments: 103.00% 64,549
(Cost: $54,560)
Cash and Other Assets less Liabilities: (3.0%) (1,865)
--------
Total Net Assets: 100% $62,684
- ----------------------------------------------------------
</TABLE>
.Notes to Statement of Investments
(a) At June 30, 1999, for federal income tax purposes cost of investments was
$54,676,000 and net unrealized appreciation was $9,873,000, consisting of gross
unrealized appreciation of $10,638,000 and gross unrealized depreciation of
$765,000.
(b) Non-income producing security.
15
<PAGE>
Acorn Foreign Forty
>Major Portfolio Changes in the Second Quarter
<TABLE>
<CAPTION>
Number of Shares
-------------------------
3/31/99 6/30/99
Additions
- ----------------------------------------------------------
Europe
<S> <C> <C>
.Germany
Rhoen Klinikum 3,000 10,000
Stinnes 0 49,500
.Sweden
Netcom 0 30,000
.Finland
Tieto Corporation 14,000 20,000
.France
Atos 5,000 13,000
SITA 2,000 5,000
.United Kingdom
Energis 10,000 35,000
NFC 0 250,000
SSL International 0 90,000
WPP Group 0 10,000
.Italy
Banca Fideuram 0 150,000
Mediolanum 0 70,000
Olivetti 0 170,000
Saipem 0 150,000
SEAT Pagine Gialle 200,000 600,000
.Spain
Mapfre Vida 12,000 40,000
.Netherlands
Getronics 10,000 30,064
- ----------------------------------------------------------
Asia
.Hong Kong
SmarTone Telecom 149,900 324,900
.Japan
Nintendo 2,500 10,000
Other Countries
.Canada
Power Financial 7,000 40,000
.United States
Azurix 0 30,000
MIH 0 35,000
Sales
- ----------------------------------------------------------
Europe
.Finland
Helsinki Telephone 15,000 0
.United Kingdom
Newsquest 150,000 0
.Netherlands
Kon Pakhoed 30,000 0
</TABLE>
16
<PAGE>
Acorn Foreign Forty
.Statement of Investments (unaudited) June 30, 1999
Number of Shares Value (000)
- -------------------------------------------------------------
Common Stocks: 91.8%
- -------------------------------------------------------------
Europe: 63.0%
.Germany: 6.3%
12,000 MobilCom $1,074
Telecommunication Services
10,000 Rhoen Klinikum 995
Hospital Management
49,500 Stinnes (b) 771
Freight Forwarder
- -------------------------------------------------------------
2,840
.Denmark: 1.2%
10,000 ISS International System (b) 535
Cleaning Services
.Sweden: 2.2%
30,000 Netcom (b) 1,009
Telecommunication Services
.Finland: 1.8%
20,000 Tieto Corporation 833
Computer Services/Consulting
.France: 5.4%
13,000 Atos (b) 1,327
Computer Services/Transaction Processing
5,000 SITA 1,131
Waste Hauling & Landfills
- -------------------------------------------------------------
2,458
.United Kingdom: 20.8%
225,000 Bodycote 1,406
Materials Technology & Metal Processing
15,000 NTL (b) 1,293
Voice, Video & Data Services
90,000 SSL International 1,038
Medical & Footcare Products
80,000 Hays 843
Outsourcing Services
35,000 Energis (b) 835
Telecommunication Services
250,000 NFC 830
Logistics & Moving Services
100,000 Airtours 798
Packaged Tour Vacations
30,000 Serco Group 676
Facilities Management
60,000 Logica 629
Computer Services/Consulting
200,000 Smith & Nephew 608
Medical Equipment & Supplies
35,000 Sema Group 338
Computer Software & Services
10,000 WPP Group 85
Advertising
- -------------------------------------------------------------
9,379
.Switzerland: 3.7%
600 Pargesa $ 911
Industrial & Media Conglomerate
390 Cie Fin Richemont 750
Luxury Goods, Tobacco & Pay TV
- -------------------------------------------------------------
1,661
- -------------------------------------------------------------
.Italy: 9.4%
150,000 Banca Fideuram 874
Life Insurance & Mutual Funds
600,000 SEAT Pagine Gialle 820
Yellow Pages Publishers
42,000 Editoriale L'Espresso 680
Newspapers & Magazines
150,000 Saipem 599
Offshore Construction
70,000 Mediolanum 538
Life Insurance & Mutual Funds
170,000 Olivetti 408
Telecommunication Services
30,000 Autogrill Finanziari 309
Tollway Restaurants
- -------------------------------------------------------------
4,228
.Spain: 6.4%
40,000 Mapfre Vida 1,143
Life Insurance & Mutual Funds
90,000 Indra Sistemas 970
Computer Services
15,000 Aguas de Barcelona 781
Water Utility
- -------------------------------------------------------------
2,894
.Netherlands: 5.8%
30,064 Getronics 1,156
Computer Services
30,487 Hunter Douglas 1,047
Decorative Window Coverings
6,501 ASR Verzekeringsgroep 429
Insurance
- -------------------------------------------------------------
2,632
------
Europe: Total 28,469
- -------------------------------------------------------------
Asia: 16.1%
.Hong Kong: 2.6%
324,900 SmarTone Telecom 1,156
Mobile Telecommunications
.Japan: 11.6%
7,000 Softbank 1,417
Internet Services/Investment Holding
10,000 Nintendo 1,405
Video Games
45,000 NuSkin Enterprises (b) 897
Personal Care/Herbal Products
60,000 Olympus Optical 887
Photographic & Medical Equipment
6,000 Takefuji 620
Unsecured Consumer Loans
- -------------------------------------------------------------
5,226
17
<PAGE>
Acorn Foreign Forty
.Statement of Investments, continued
Number of Shares Value (000)
- -------------------------------------------------------------------------
.Singapore: 1.9%
200,000 Natsteel Electronics $ 875
Electronic Manufacturing Services
--------
Asia: Total 7,257
- -------------------------------------------------------------------------
Other Countries: 12.7%
.Canada: 6.4%
65,000 Canadian Natural Resources (b) 1,274
Oil & Gas Producer
20,000 Celestica (b) 861
Electronic Manufacturing Services
40,000 Power Financial 757
Financial Services Holding Company
- -------------------------------------------------------------------------
2,892
.Israel: 1.5%
30,000 Amdocs (b) 683
Telecommunications Billing & Customer Care Software
- -------------------------------------------------------------------------
.United States: 4.8%
35,000 MIH (b) $ 928
Pay-TV
8,000 Global TeleSystems (b) 648
Telecommunication Services
--------
30,000 Azurix (b) 600
Owner & Operator of Water Utilities
2,176
--------
Other: Total 5,751
--------
Total Common Stocks: 91.8% $ 41,477
(Cost: $36,773)
Short-Term Obligations: 6.5%
$2,935,000 American General Corp 2,935
5.00% Due 7/1/99
(Amortized Cost: $2,935)
--------
Total Investments: 98.3% 44,412
(Cost: $39,708)
--------
Cash and Other Assets Less Liabilities: 1.7% 785
--------
Total Net Assets: 100% $ 45,197
F40
- -----------------------------------------------------------------------------
.Notes to Statement of Investments
(a) At June 30, 1999, for federal income tax purposes cost of investments was
$39,708,000 and net unrealized appreciation was $4,704,000 consisting of gross
unrealized appreciation of $5,864,000 and gross unrealized depreciation of
$1,160,000.
(b) Non-income producing security.
18
<PAGE>
Acorn Foreign Forty
.Portfolio Diversification
At June 30, 1999, the Fund's portfolio of investments as a percent of net assets
was diversified as follows:
Value (000) Percent
- ---------------------------------------------------------------
.Information
Telephone Services $ 5,542 12.3%
Computer Services 4,283 9.6
CATV 2,221 4.9
Publishing 2,097 4.6
Business Information 970 2.1
Contract Manufacturing 875 1.9
Business Software 683 1.5
Mobile Communications 408 0.9
Advertising 85 0.2
- ---------------------------------------------------------------
17,164 38.0
.Health Care
Health Services 1,038 2.3
Hospital Management 995 2.2
Medical Equipment 887 2.0
Hospital/Laboratory Supplies 608 1.3
- ---------------------------------------------------------------
3,528 7.8
.Consumer Goods/Services
Consumer Software 1,405 3.1
Durable Goods 1,047 2.3
Nondurables 897 2.0
Travel 798 1.8
Entertainment 750 1.7
Restaurants 309 0.6
- ---------------------------------------------------------------
5,206 11.5
.Finance
Finance Companies 2,169 4.8
Insurance 1,572 3.5
Closed-End Funds 911 2.0
Savings & Loans 620 1.4
- ---------------------------------------------------------------
5,272 11.7
.Industrial Goods/Services
Outsourcing Services $ 2,054 4.5%
Industrial Materials 1,406 3.1
Electrical Components 861 1.9
Industrial Services 771 1.8
- ---------------------------------------------------------------
5,092 11.3
.Energy/Minerals
Oil/Gas Producers 1,274 2.8
Oil Services 599 1.3
- ---------------------------------------------------------------
1,873 4.1
.Other Industries
Regulated Utilities 1,381 3.1
Waste Management 1,131 2.5
Transportation 830 1.8
- ---------------------------------------------------------------
3,342 7.4
------------------------
Total Common Stocks: 47,477 91.8
------------------------
Short-Term Obligations: 2,935 6.5
------------------------
Total Investments: 44,412 98.3
Cash and Other Assets less
------------------------
Liabilities: 785 1.7
------------------------
Net Assets: $ 45,197 100.0%
- ---------------------------------------------------------------
19
<PAGE>
Acorn USA
.Major Portfolio Changes in the Second Quarter
Number of Shares
----------------
3/31/98 6/30/99
Additions
- --------------------------------------------------------------------
Information
Computer Task Group 0 119,000
IMR Global 0 50,000
National Data 239,300 278,300
PRIMEDIA 0 169,000
Telephone & Data Systems 0 120,000
Young Broadcasting 0 22,500
- --------------------------------------------------------------------
Health Care
Magellan Health Services 540,000 811,100
- --------------------------------------------------------------------
Consumer Goods/Services
Gadzooks 0 355,000
NuSkin Enterprises 0 158,000
Whole Foods Market 30,000 74,000
- --------------------------------------------------------------------
Finance
UICI 354,700 580,700
Americredit 407,000 543,500
Chittenden 0 91,600
Protective Life 0 57,000
TCF Financial 0 33,000
Texas Regional Bancshares 0 34,000
- --------------------------------------------------------------------
Industrial Goods/Services
Labor Ready 95,000 131,000
- --------------------------------------------------------------------
Energy/Minerals
MidAmerican Energy 684,400 855,400
- --------------------------------------------------------------------
Real Estate
The Rouse Company 0 47,000
Sales
- --------------------------------------------------------------------
Information
Commonwealth Telephone 55,500 0
Information Management 21,600 0
InfoUSA 154,400 26,800
Kronos 166,650 148,500
Liberty Media, AT&T 71,000 0
Micros Systems 518,500 491,000
Playboy Enterprises 31,800 0
RCN 434,700 205,700
Sykes Enterprises 353,500 296,500
Systems & Computer Technology 210,400 170,400
TV Guide 258,000 187,000
- --------------------------------------------------------------------
Health Care
CuraGen 27,000 0
- --------------------------------------------------------------------
Finance
AmerUs Life Holdings 184,500 93,500
Washington Mutual 66,400 0
- --------------------------------------------------------------------
Industrial Goods/Services
Schnitzer Steel 77,300 27,300
- --------------------------------------------------------------------
Energy/Minerals
J Ray McDermott 35,000 0
20
<PAGE>
Acorn USA
.Statement of Investments (unaudited) June 30, 1999
Number of Shares Value (000)
- -------------------------------------------------------------------------
Common Stocks: 94.2%
- -------------------------------------------------------------------------
Information: 34.3%
.Broadcasting: 2.2%
209,100 Data Transmission Network (b) $ 5,881
Data Services for Farmers
22,500 Young Broadcasting (b) 958
Television Stations
- -------------------------------------------------------------------------
6,839
.Television Programming: 2.2%
187,000 TV Guide (b) 6,849
TV Program Guides & Programming
.Telephone Services: 2.7%
205,700 RCN (b) 8,562
Metro Market: Voice, Video & Internet Services
.Mobile Communications: 4.0%
120,000 Telephone & Data Systems 8,768
Cellular & Telephone Franchises
121,800 COMARCO (b) 2,413
Wireless Network Testing
50,000 Pinnacle Holdings (b) 1,225
Towers for Cellular, PCS, & Paging
- -------------------------------------------------------------------------
12,406
.Telecommunications Equipment: 1.2%
377,100 Aspect Telecommunications (b) 3,677
Call Center Equipment
.Gaming Equipment: 0.9%
146,000 International Game Technology 2,701
Slot Machines & Progressive Jackpots
.Computer Services: 4.4%
296,500 Sykes Enterprises (b) 9,896
Call Center Services
119,000 Computer Task Group 2,023
Application Development & Staffing Services
534,700 Aztec Technology Partners (b) 1,003
Technology Staffing Services
50,000 IMR Global (b) 963
Application Development & Maintenance Services
- -------------------------------------------------------------------------
13,885
.Consumer Software: 0.4%
75,500 Activision (b) 1,099
Entertainment Software
.Business Software: 1.4%
170,400 Systems & Computer Technology (b) 2,481
Enterprise Software & Services
214,000 JDA Software (b) 1,993
Applications/Software & Services for Retailers
- -------------------------------------------------------------------------
4,474
.Transaction Processors: 3.8%
278,300 National Data 11,897
Credit Card & Health Claims Processor
.Business Information/
Marketing Services: 3.6%
206,000 CACI International (b) 4,635
Technology Services for Government
483,100 IntelliQuest Information (b) $ 3,623
Technology/Market Research
169,000 PRIMEDIA 2,862
Specialty Magazines & Other Publications
26,800 InfoUSA (b) 228
Business Data for Sales Leads
- -------------------------------------------------------------------------
11,348
.Computer Hardware/
Related Systems: 7.5%
491,500 Micros Systems (b) 16,711
Information Systems for Restaurants & Hotels
148,500 Kronos (b) 6,757
Labor Management Solutions
- -------------------------------------------------------------------------
23,468
-------
Information: Total 107,205
- -------------------------------------------------------------------------
Health Care: 8.2%
.Biotechnology/Drug Delivery: 0.1%
78,000 Synaptic Pharmaceuticals (b) 371
Receptor Targeted Drug Design
.Services: 8.1%
382,200 Lincare Holdings (b) 9,555
Home Health Care Services
811,100 Magellan Health Services (b) 8,111
Mental Health Services
352,000 First Health (b) 7,590
PPO Network
- -------------------------------------------------------------------------
25,256
-------
Health Care: Total 25,627
- -------------------------------------------------------------------------
Consumer Goods/Services: 6.4%
.Retail: 5.4%
930,600 Host Marriott Services (b) 7,561
Fast Food Kiosks in Airports
355,000 Gadzooks (b) 5,680
Teen Apparel Retailer
74,000 Whole Foods Market (b) 3,557
Natural Food Supermarkets
- -------------------------------------------------------------------------
16,798
.Non Durables: 1.0%
158,000 NuSkin Enterprises (b) 3,150
Personal Care/Herbal Products
-------
Consumer Goods/Services: Total 19,948
- -------------------------------------------------------------------------
Finance: 16.0%
.Savings & Loans
156,500 Coast Contingency Rights (b) 166
Litigation Claim Against US Government
.Finance Companies: 3.7%
543,500 Americredit (b) 8,696
Auto Lending
590,000 World Acceptance (b) 2,968
Personal Loans
- -------------------------------------------------------------------------
11,664
21
<PAGE>
Number of Shares Value (000)
- -------------------------------------------------------------------------
.Money Management: 0.7%
163,000 Phoenix Investment Partners $ 1,406
Mutual Fund & Pension Manager
52,800 Pioneer Group (b) 911
Equity Mutual Funds
- -------------------------------------------------------------------------
2,317
.Banks: 1.5%
91,600 Chittenden 2,862
Vermont & West Massachusetts Bank
34,000 Texas Regional Bancshares 924
TexMex Bank
33,000 TCF Financial 920
Great Lakes Bank
- -------------------------------------------------------------------------
4,706
.Insurance: 10.0%
580,700 UICI (b) 16,042
Insurance/Specialty Finance
392,100 Acceptance Insurance (b) 5,906
Crop Insurance
13,800 Markel (b) 2,581
Specialty Insurance
93,500 AmerUs Life Holdings 2,524
Annuities/Life Insurance
93,000 Leucadia National 2,360
Insurance Holding Company
57,000 Protective Life 1,881
Life/Dental Insurance
- -------------------------------------------------------------------------
31,294
--------
Finance: Total 50,147
- -------------------------------------------------------------------------
Industrial Goods/Services: 11.8%
.Steel: 0.6%
119,000 Atchison Casting (b) 1,238
Steel Foundries
27,300 Schnitzer Steel 613
Scrap Steel Processor
- -------------------------------------------------------------------------
1,851
.Industrial Distribution: 0.4%
70,000 Vallen (b) 1,120
Safety Products Distribution
.Machinery
86,700 Farr (b) 954
Filters
.Specialty Chemicals: 1.3%
225,600 Lilly Industries, Cl. A 4,188
Industrial Coatings
.Other Industrial Services: 9.2%
402,500 Wackenhut, Cl. B 9,660
Prison Management
346,000 Hub Group (b) 7,763
Truck & Rail Freight Forwarder
Principal Amount of
Number of Shares Value (000)
- --------------------------------------------------------------------------
347,400 Insurance Auto Auctions (b) $ 5,602
Auto Salvage Services
131,000 Labor Ready (b) 4,258
Temporary Manual Labor
186,900 Compass International Services (b) 1,308
Collection Agencies
- -------------------------------------------------------------------------
28,591
--------
Industrial Goods/Services: Total 36,704
- -------------------------------------------------------------------------
Energy/Minerals: 16.6%
.Independent Power: 9.5%
855,400 MidAmerican Energy 29,618
Growth Utility
.Oil/Gas Producers: 2.4%
473,800 Tesoro Petroleum (b) 7,551
Oil Refinery/Gas Reserves
.Distribution/Marketing/Refining: 4.7%
283,000 Atmos Energy 7,075
Natural Gas Utility
208,400 Dynegy 4,246
Natural Gas & Electric Processing & Marketing
92,300 Equitable Resources 3,484
Natural Gas Utility & Producer
- -------------------------------------------------------------------------
14,805
--------
Energy/Minerals: Total 51,974
- -------------------------------------------------------------------------
Real Estate: 0.9%
47,000 The Rouse Company 1,193
Regional Shopping Malls
28,100 Gaylord Entertainment 843
Opryland Hotel & Other Assets
28,400 Forest City Enterprises Cl. A 795
Shopping Malls
- -------------------------------------------------------------------------
2,831
--------
Real Estate: Total 2,831
--------
Total Common Stocks: 94.2% 294,436
(Cost: $276,703)
Short-Term Obligations: 5.9%
Yield 5.20% - 5.21% Due 7/1 - 7/2/99
$9,328 Ford Motor Credit 9,328
$9,236 Walmart 9,234
- -------------------------------------------------------------------------
(Amortized Cost $18,562) 18,562
--------
Total Investments: 100.1% 312,998
(Cost $295,265)
--------
Cash and Other Assets Less Liabilities: (0.1%) (331)
--------
Total Net Assets: 100% $312,667
- -------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
.Notes to Statement of Investments
(a) At June 30, 1999, for federal income tax purposes cost of investments was
$295,458,000 and net unrealized appreciation was $17,540,000, consisting of
gross unrealized appreciation of $50,099,000 and gross unrealized depreciation
of $32,559,000.
(b) Non-income producing security.
(c) On June 30, 1999, the Fund held 6.15% of the outstanding voting shares of
IntelliQuest Information. The aggregate cost and value of investments in this
company at June 30, 1999, was $5,147,000 and $3,623,000, respectively. The
market value of this security represents 1.16% of the total net assets of the
Fund at June 30, 1999. During the six months ended June 30, 1999, cost of
purchases was $909,000. There were no proceeds from sales or dividends received
from this company during the six months ended June 30, 1999.
23
<PAGE>
Acorn International
.Major Portfolio Changes in the Second Quarter
Number of Shares
------------------------
3/31/99 6/30/99
Additions
- ---------------------------------------------------------------------
Europe
.Germany
Kamps 0 $47,400
Merck 150,000 175,000
MobilCom 0 30,000
(includes effect of a 3 for 1 stock split)
Sixt 50,000 70,000
Stinnes 0 400,000
.Finland
Talentum 1,300,000 1,400,000
.Sweden
Modern Times 0 350,000
.France
Atos 360,000 400,000
Imetal 0 10,000
Penauille Polyservice 15,000 18,500
.United Kingdom
Baltimore Technologies 0 300,000
Bodycote 650,000 1,750,000
(includes effect of a 5 for 2 stock split)
Esat Telecom (Ireland) 75,000 205,000
Flextech 0 205,000
ITNET 250,000 1,240,000
Logica 500,000 600,000
NFC 0 2,000,000
NTL 467,000 500,000
Ocean Group 0 300,000
Photobition Group 665,000 1,860,000
Serco Group 2,000,000 2,100,000
SSL International 1,000,000 1,250,000
(formerly known as Seton Scholl
Healthcare)
.Italy
Class Editori 0 1,000,000
Saipem 0 1,250,000
SEAT Pagine Gialle 2,000,000 4,000,000
.Spain
Aguas de Barcelona 100,000 125,000
Cortefiel 350,000 400,000
.Netherlands
Kempen 400,000 420,000
.Hungary
Gedeon Richter 80,000 100,000
Matav ADR 0 55,000
- ---------------------------------------------------------------------
Asia
.Hong Kong
SmarTone Telecom 2,500,000 3,000,000
.Japan
Aiful 13,000 120,000
Benesse 0 50,000
JAFCO 0 125,000
Kadokawa Shoten 33,000 60,000
Nemic Lambda 0 48,000
Nintendo 130,000 144,000
NuSkin Enterprises 310,000 400,000
OBIC 27,600 35,000
Orix 100,000 175,000
Otsuka Kagu 21,000 25,000
Taiyo Ink 0 65,000
Trans Cosmos 31,000 95,000
.Taiwan
Chroma Ate 1,249,616 2,599,500
(includes effect of a 30% stock dividend)
.Malaysia
Unisem 0 504,000
.Thailand
United Broadcasting 0 885,900
.South Korea
S1 Corporation 31,000 50,000
- ---------------------------------------------------------------------
Latin America
.Brazil
Embratel 250,000 620,000
Tele Sudeste Celular 0 100,000
- ---------------------------------------------------------------------
Other Countries
.Australia
Computeshare 0 650,000
Ecorp 0 2,500,000
ERG 0 6,500,000
Keycorp 0 2,000,000
.Canada
Canadian Natural Resources 500,000 700,000
Power Financial 500,000 600,000
Penn West Petroleum 350,000 500,000
.Israel
Amdocs 200,000 420,000
ECI Telecom 225,000 300,000
Gilat Satellite Network 0 25,000
.South Africa
Dimension Data 2,500,000 5,000,000
.United States
Azurix 0 200,000
Global TeleSystems 75,000 165,000
MIH 0 375,000
24
<PAGE>
Number of Shares
------------------------
3/31/99 6/30/99
Sales
- ---------------------------------------------------------------------
Europe
.Germany
Berzelius Umwelt 200,000 0
Boewe Systec 60,000 0
Cewe Color Holding 8,000 0
United Global 250,000 140,000
.Denmark
Carli Gry 150,000 0
.Finland
Elcoteq Network 770,000 0
Helsinki Telephone 150,000 0
.Sweden
Autoliv 295,000 250,000
Esselte, Series A 400,000 0
WM Data Nordic 1,830,000 1,650,000
.United Kingdom
AEA Technology 385,000 0
Airtours 700,000 0
N. Brown Group 1,500,000 0
Newsquest 760,000 0
Premier Oil 15,000,000 0
Parity 500,000 0
Shanks & McEwan 2,000,000 0
.Switzerland
Cie Fin Richemont 20,000 12,500
Hero 13,000 0
.Italy
Banca Pop Commercia e Industria 700,000 500,000
Banca Pop Di Bergamo 250,000 0
Editoriale L' Espresso 2,000,000 1,800,000
Gewiss 110,000 0
Industrie Natuzzi ADR 300,000 0
.Netherlands
ASR Verzekeringsgroep 145,000 0
Getronics 560,000 500,000
Hunter Douglas 300,000 0
Kon. Pakhoed 250,000 0
Wegener Arcade NV 370,000 0
Asia
- ---------------------------------------------------------------------
.Hong Kong
Varitronix 10,000,000 5,000,000
.Japan
Arrk 207,000 0
Fuji Software ABC 210,000 150,000
Meitec 65,000 0
Nichii Gakkan 90,000 60,000
Nidec 125,000 75,000
Noritsu Koki 255,000 0
Ryohin Keikaku 115,000 100,000
Secom 54,000 0
Shinki 218,000 0
.Malaysia
Malaysian Oxygen 1,595,000 576,000
.Philippines
Int'l Container Terminal $8,750,000 0
Services Cv. 1.75% 3/13/04
.Singapore
Datacraft Asia 10,000,000 9,000,000
Genting International 16,900,000 0
Venture Manufacturing 7,500,000 6,500,000
- ---------------------------------------------------------------------
Latin America
.Brazil
Elevadores Atlas 470,000 380,000
- ---------------------------------------------------------------------
Other Countries
.South Africa
Comparex Holdings 1,050,000 0
25
<PAGE>
Acorn International
.Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -------------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 94.4%
- -------------------------------------------------------------------------------
<S> <C>
Europe: 53.5%
.Germany/Austria: 4.8%
200,000 Rhoen Klinikum Pfd. $ 19,595
160,000 Rhoen Klinikum 15,923
Hospital Management
7,100 EM.TV & Merchandising 9,995
Children's Television Programming
140,000 UnitedGlobalCom (b) 9,467
Cable Television for Europe, Israel & Australia
40,000 Fresenius, Pfd. 7,075
Dialysis Equipment & Solutions
165,000 Flughafen Wien (Austria) 6,924
Vienna Airport Authority
400,000 Stinnes (b) 6,229
Freight Forwarder
175,000 Merck KGA 5,692
Pharmaceuticals
70,000 Sixt 4,894
Automobile Rental/Leasing
30,000 MobilCom 2,685
Telecommunication Services
47,400 Kamps 1,931
Bakery Chain
- -------------------------------------------------------------------------------
90,410
.Denmark: 0.5%
75,000 ISS International System (b) (c) 4,015
Cleaning Services
44,000 Kompan International 3,120
Playground Equipment
50,000 Vest Wood 3,031
Furniture
- -------------------------------------------------------------------------------
10,166
.Finland: 5.1%
1,500,000 Tieto Corporation 62,497
Computer Services/Consulting
1,400,000 Talentum (c) 21,369
Trade Journals & Internet Services
500,000 Fiskars, Series A 8,714
Scissors & Gardening Tools
100,000 Spar Finland (c) 2,991
Grocery/Convenience Stores
- -------------------------------------------------------------------------------
95,571
.Norway: 0.1%
654,750 Atex Media Solutions (b) 1,372
Print Media Software
.Sweden: 5.0%
1,650,000 WM Data Nordic 62,879
Computer Services/Consulting
350,000 Modern Times (b) 7,595
TV, Newspapers & Internet
250,000 Autoliv 7,562
Seatbelts & Airbags
1,000,000 Mandator $ 6,645
Computer Services/Consulting
950,000 Bure Investment 5,028
Health Care Services & Investments
135,000 IBS (b) 3,041
Enterprise Software
250,000 Sigma 1,941
Technical Consulting
- -------------------------------------------------------------------------------
94,691
.France: 4.7%
400,000 Atos (b) 40,839
Computer Services/Transaction Processing
62,000 NRJ 13,958
Radio Network
60,000 Fininfo 10,272
Data Feeds for French Banks & Brokers
45,000 SITA 10,182
Waste Hauling & Landfills
95,000 Spir Communications 6,976
Regional Newspapers
18,500 Penauille Polyservice 5,209
Industrial Cleaning/Airport Services
10,000 Imetal 1,485
Industrial Materials
- -------------------------------------------------------------------------------
88,921
.United Kingdom/Ireland: 15.2%
2,100,000 Serco Group 47,336
Facilities Management
500,000 NTL (b) 43,094
Voice, Video & Data Services
1,870,000 Capita Group 19,352
Outsourcing Services
13,000,000 Electronics Boutique 18,904
Video/Computer Games Retailer
1,250,000 SSL International 14,423
Medical & Footcare Products
510,000 Euro Money Publications 13,867
Financial Publications
1,700,000 Rotork 11,818
Valve Actuators for Oil & Water Pipelines
1,350,000 Atkins 10,959
Outsourcing Services
1,750,000 Bodycote 10,938
Materials Technology & Metal Processing
205,000 Esat Telecom (Ireland) (b) 8,994
Telecommunication Services
3,500,000 Taylor Nelson 8,717
Market Research Services
1,240,000 ITNET 8,356
Outsourcing Services
2,500,000 Smith & Nephew 7,606
Medical Equipment & Supplies
2,000,000 Oriflame International 7,566
Cosmetics Sold Door-to-Door
2,000,000 NFC 6,636
Logistics & Moving Services
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -------------------------------------------------------------------------------
<S> <C>
1,860,000 Photobition Group (b) $ 6,348
Production of Graphics for Exhibits
600,000 Logica 6,289
Computer Services/Consulting
400,000 Saville Systems ADR (Ireland) (b) 5,800
Telecommunications Billing & Customer Care
Software
3,400,000 HALMA 5,681
Fire, Burglary & Flooding Detection Devices
1,500,000 Hogg Robinson 5,355
Corporate Travel Management
715,000 Fairey Group 4,948
Electronic Products
300,000 Ocean Group (b) 4,942
Freight Forwarder
300,000 Baltimore Technologies 3,405
Security Software & Systems Integration
205,000 Flextech 3,301
Cable Channels
74,000 Icon (Ireland) (b) 1,452
Contract Research Organization
- -------------------------------------------------------------------------------
286,087
.Switzerland: 5.2%
65,000 Selecta Group 25,923
Vending Machine Owner/Operator
12,500 Cie Fin Richemont 24,042
Luxury Goods, Tobacco & Pay TV
33,000 Phoenix Mecano 15,538
Electrical Components Manufacturer
6,500 Sarasin & Cie Bank 11,164
Private Banking
18,000 Societe Generale d'Affichage 8,510
Billboard Advertising
15,000 Bon Appetit 8,443
Cash & Carry Stores/Specialty Restaurants
3,200 Pargesa Holdings 4,858
Industrial & Media Conglomerate
- -------------------------------------------------------------------------------
98,478
.Italy/Greece: 7.4%
2,900,000 Autogrill 29,878
Tollway Restaurants
1,800,000 Editoriale L'Espresso 29,145
Newspapers & Magazines
3,000,000 Banca Fideuram 17,481
Life Insurance & Mutual Funds
1,200,000 Attica Enterprises (Greece) 13,718
Ferry Line
500,000 Banco Pop Commercia e Industria 11,705
500,000 Banco Pop Commercia e Industria
Rights (b) 310
Regional Bank
1,400,000 Mediolanum 10,756
Life Insurance & Mutual Funds
1,400,000 Aeroporti di Roma 8,648
Airport Management
1,000,000 Class Editori 7,993
Newspapers & On-Line Financial Data
4,000,000 SEAT Pagine Gialle $ 5,466
Yellow Pages Publisher
1,250,000 Saipem 4,989
Offshore Construction
- -------------------------------------------------------------------------------
140,089
.Spain/Portugal: 2.2%
400,000 Mapfre Vida 11,427
Life Insurance & Mutual Funds
400,000 Cortefiel 10,519
Apparel Retailer
650,000 Prosegur 7,307
Security Guards
125,000 Aguas de Barcelona 6,510
250 Aguas de Barcelona New Shares 13
Water Utility
419,000 Filmes Lusomundo (Portugal) 5,825
Newspapers, Radio, Video, Film Distribution
- -------------------------------------------------------------------------------
41,601
.Netherlands: 2.6%
420,000 Kempen 21,008
Stock Brokerage/Investment Management
500,000 Getronics 19,234
Computer Services/Consulting
950,000 Scala Business Solutions (b) (c) 8,083
95,775 Scala Business Solutions Warrants
3/31/01 (b) 89
Enterprise Software for Small- to Medium-
Sized Companies
- -------------------------------------------------------------------------------
48,414
.Hungary: 0.7%
1,200,000 Matav 6,489
55,000 Matav ADR 1,512
Telecommunication Services
100,000 Gedeon Richter 4,351
Pharmaceuticals
- -------------------------------------------------------------------------------
12,352
----------
Europe: Total 1,008,152
- -------------------------------------------------------------------------------
Asia: 23.8%
.Hong Kong: 3.6%
14,999,000 Li and Fung 35,956
Sourcing of Consumer Goods
3,000,000 SmarTone Telecom 10,672
Mobile Telecommunications
5,000,000 Varitronix International 10,407
LCD Manufacturer
2,000,000 TVB 9,383
Television Broadcasting
- -------------------------------------------------------------------------------
66,418
</TABLE>
27
<PAGE>
Acorn International
.Statement of Investments, continued
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -------------------------------------------------------------------------------
<S> <C>
.India: 0.0%
2,000,000 Centurion Quantum Growth (b) $ 461
Closed-End Fund
.Japan: 10.1%
100,000 Ryohin Keikaku 25,157
Designer & Retailer of Muji Brand Specialty
Consumer Goods
144,000 Nintendo 20,237
Video Games
175,000 Orix 15,615
Finance Leasing
120,000 Aiful 14,693
Consumer Lending
60,000 Kadokawa Shoten 12,244
Magazine/Book Publisher
75,000 Nidec 11,283
Spindle Motor Manufacturer
35,000 OBIC 9,571
Computer Integrator
150,000 Fuji Software ABC 8,923
Computer Services/Consulting
80,000 Takefuji 8,268
Consumer Lending
125,000 JAFCO 8,262
Venture Capital Fund
20,000 Bellysystem 24 8,171
Telemarketing
400,000 NuSkin Enterprises (b) 7,975
Personal Care/Herbal Products
500,000 Olympus Optical 7,390
Photographic & Medical Equipment
95,000 Trans Cosmos 6,907
Information Technology Services & Investments
60,000 Nichii Gakkan 6,543
Health Care Services
65,000 Taiyo Ink (b) 6,068
Speciality Chemicals
50,000 Benesse (b) 5,432
Correspondence Courses
25,000 Otsuka Kagu 4,523
Furniture Retailer
48,000 Nemic Lambda (b) 3,529
Power Supplies
- -------------------------------------------------------------------------------
190,791
.Taiwan: 0.4%
2,599,499 Chroma Ate (b) 7,605
Test & Measurement Instruments
.Malaysia: 0.1%
504,000 Unisem 1,254
Semiconductor Assembly
576,000 Malaysian Oxygen 1,228
Industrial Gases
- -------------------------------------------------------------------------------
2,482
.Philippines: 0.6%
79,260,000 Int'l Container Terminal Services (b) $ 10,311
Container Handling Terminals & Port Management
.Thailand: 0.0%
885,900 United Broadcasting (b) 697
Direct-to-Home Satellite Broadcasting
.South Korea: 0.5%
50,000 S1 Corporation 9,633
3,402 S1 Corporation Rights (b) 155
Central Stations Alarm Business
- -------------------------------------------------------------------------------
9,788
.Singapore: 8.5%
6,500,000 Venture Manufacturing 50,015
Electronic Manufacturing Services
9,500,000 Star Cruises 42,370
Cruise Line
9,000,000 Datacraft Asia 39,240
Network Systems Integration
6,500,000 Natsteel Electronics 28,443
Electronic Manufacturing Services
- -------------------------------------------------------------------------------
160,068
--------
Asia: Total 448,621
- -------------------------------------------------------------------------------
Latin America: 4.8%
.Mexico: 3.0%
7,000,000 Grupo Industrial Bimbo 15,559
Bread, Baked Goods & Snacks
3,500,000 Kimberly Clark de Mexico 14,355
Paper Products
3,600,000 Corp Interamericana de
Entretenimiento (b) 11,679
Special Events & Live Entertainment
4,600,000 Grupo Continental 7,196
Beverages
8,940,000 Nadro, Series L 7,097
Pharmaceutical Distributor
- -------------------------------------------------------------------------------
55,886
.Brazil: 0.9%
620,000 Embratel 8,602
Long Distance Telephone Services
380,000 Elevadores Atlas 5,412
Elevator Installation & Maintenance
100,000 TeleSudeste Celular 2,900
Cellular Operator
- -------------------------------------------------------------------------------
16,914
.Argentina: 0.7%
400,000 IRSA GDS 12,350
Real Estate Management & Development
.Peru: 0.2%
7,100,000 Enrique Ferreyros 4,662
Heavy Machinery Dealer
-------
Latin America: Total 89,812
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000) Number of Shares Value (000)
- ---------------------------------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------- .South Africa: 1.2%
Other Countries: 12.3% 5,000,000 Dimension Data (b) $ 22,123
.Australia: 2.4% Networks & Computer Services
5,000,000 AAPT (b) $ 15,555
Telecommunications Services .Russia: 0.0%
6,500,000 ERG (b) 12,047 $1,500,000 Khanty Mansiysk 10% Notes (b) 750
Smart Card Systems for Public Transport 3,834 Khanty Mansiysk (b) 113
650,000 Computershare (b) 7,671 Oil Production in Russia
Financial Software/Services ----------------------------------------------------------
2,000,000 KeyCorp (b) (c) 4,938 863
Smart Card Technology
2,500,000 Ecorp (b) 4,385 .United States: 2.5%
On-line Publishing/Services 325,000 AES Corporation (b) 18,891
- -------------------------------------------------------------------- Power Plants
44,596 165,000 Global TeleSystems (b) 13,365
.Canada: 4.5% Telecommunication Services
650,000 Celestica (b) 27,974 375,000 MIH (b) 9,937
Electronic Manufacturing Services Pay-TV
700,000 Canadian Natural Resources (b) 13,715 200,000 Azurix (b) 4,000
Oil & Gas Producer Owner & Operator of Water Utilities
600,000 Power Financial 11,351 ----------------------------------------------------------
Financial Services Holding Company 46,193
500,000 Penn West Petroleum (b) 9,121 ---------
Oil & Gas Producer Other: Total 230,764
600,000 LGS Group (b) 5,310
Computer Systems Integrator ---------
1,200,000 Bracknell (b) 5,108 Total Common Stocks and Other
Electrical Contractor & Facilities Management Equity-Like Securities: 94.4% 1,777,349
300,000 Leitch Technology (b) 4,895 (Cost: $1,059,651)
Television Production Equipment Short-Term Obligations: 4.4%
4,000,000 Dundee Realty (b) 3,783 Yield 4.95% - 5.20% Due 7/1 - 7/2/99
Real Estate $33,904 Edna Services 33,899
100,000 Northstar Energy (b) 3,581 $25,339 Ford Motor Credit 25,339
Oil & Gas Producer $24,618 IBM Credit 24,615
- -------------------------------------------------------------------- ---------
84,838 (Amortized Cost: $83,853) 83,853
.Israel: 1.7% ---------
250,000 Galileo Technology (b) 11,328 Total Investments: 98.8% 1,861,202
Communications Semiconductors (Cost: $1,143,504)
300,000 ECI Telecom 9,956 ---------
Telecommunication Equipment Cash and Other Assets less Liabilities: 1.2% 21,904
420,000 Amdocs (b) 9,555 ---------
Telecommunications Billing & Customer Total Net Assets: 100% $ 1,883,106
Care Software ----------------------------------------------------------
25,000 Gilat Satellite Network (b) 1,312
Satellite Communication Equipment
- --------------------------------------------------------------------
32,151
</TABLE>
- --------------------------------------------------------------------------------
.Notes to Statement of Investments
(a) At June 30, 1999, for federal income tax purposes cost of investments was
$1,143,950,000 and net unrealized appreciation was $717,252,000 consisting
of gross unrealized appreciation of $771,615,000 and gross unrealized
depreciation of $54,363,000.
(b) Non-income producing security.
(c) On June 30, 1999, the Fund held the following percentages of the
outstanding voting shares of the affiliated companies (ownership of at
least 5%) listed below:
<TABLE>
<S> <C>
Kompan International (Denmark)........................... 9.36% Key Corp (Australia)......................................... 6.40%
Spar Finland (Finland)................................... 8.80% Scala Business Solutions (Netherlands)....................... 5.16%
Talentum (Finland)....................................... 8.58%
</TABLE>
The aggregate cost and value of investments in these companies at June 30, 1999,
was $36,380,000 and $40,500,000 respectively. The market value of these
securities represents 2.15% of the total net assets at June 30, 1999. During the
period ended June 30, 1999, the cost of purchases and proceeds from sales in
affiliated companies was $8,184,000 and $6,644,000 respectively. Net dividends
received from these companies amounted to $466,000 and net realized loss in
sales of investments in such companies amounted to $3,447,000.
29
<PAGE>
Acorn International
.Portfolio Diversification
At June 30, 1999, the Fund's portfolio of investments as a percent of net assets
was diversified as follows:
<TABLE>
<CAPTION>
Value (000) Percent Value (000) Percent
- --------------------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
.Information .Finance
Computer Services $256,059 13.6% Finance Companies $ 32,145 1.7%
Publishing 102,885 5.5 Money Management 28,237 1.5
Telephone Services 92,908 5.0 Banks 23,179 1.2
Contract Manufacturing 78,458 4.2 Insurance 22,778 1.2
CATV 65,799 3.5 Brokerage 21,008 1.1
Business Software 31,345 1.7 Closed-End Funds 5,319 0.3
Instrumentation 28,753 1.5 -------------------------------------------------------------
Transaction Processors 24,656 1.3 132,666 7.0
Programming 18,287 1.0 .Industrial Goods/Services
Business Information 16,620 0.9 Outsourcing Services 117,618 6.2
Broadcasting 14,278 0.7 Electrical Components 57,448 3.1
Radio 13,958 0.7 Industrial Services 21,691 1.1
Semiconductors 12,582 0.7 Machinery Processing 16,480 0.9
Computer Hardware 11,283 0.6 Industrial Materials 12,423 0.7
Marketing 8,717 0.4 Specialty Chemicals 7,296 0.4
Advertising 8,510 0.4 -------------------------------------------------------------
Internet 4,385 0.2 232,956 12.4
Mobile Communications 2,900 0.2 .Energy/Minerals
Telephone Equipment 1,312 0.1 Oil/Gas Producers 27,280 1.4
- --------------------------------------------------- Independent Power 18,891 1.0
793,695 42.2 Oil Services 4,989 0.3
.Health Care -------------------------------------------------------------
Hospital Management 35,518 1.9 51,160 2.7
Services 25,994 1.4 .Other Industries
Medical Equipment 14,465 0.8 Transportation 46,237 2.5
Pharmaceuticals 10,043 0.5 Real Estate 16,133 0.9
Hospital/Laboratory Supplies 7,606 0.4 Regulated Utilities 10,523 0.5
- --------------------------------------------------- Waste Management 10,182 0.5
93,626 5.0 -------------------------------------------------------------
.Consumer Goods/Services 83,075 4.4
Consumer Services 84,925 4.5
Entertainment 63,282 3.3 ----------------------
Retail 50,515 2.7 Total Common Stocks and
Travel 47,725 2.5 Other Equity-Like Securities: 1,777,349 94.4
Nondurables 38,610 2.0 Short-Term Obligations: 83,853 4.4
Restaurants 29,878 1.6 ----------------------
Food 24,002 1.3 Total Investments: 1,861,202 98.8
Consumer Software 20,237 1.1 Cash and Other Assets less
Consumer Goods Distribution 10,088 0.5 Liabilities: 21,904 1.2
Durable Goods 7,562 0.4 ----------------------
Beverages 7,196 0.4 Net Assets: $ 1,883,106 100.0%
Leisure Products 3,120 0.2 -------------------------------------------------------------
Furniture & Textiles 3,031 0.2
- ---------------------------------------------------
390,171 20.7
</TABLE>
30
<PAGE>
Acorn Fund
.Major Portfolio Changes in the Second Quarter
Number of Shares
----------------------
3/31/99 6/30/99
Additions
- ---------------------------------------------------------------------
Information
AppNet Systems 0 135,000
Computer Task Group 652,000 790,000
Entra Data (Sweden) 0 20,000
IMR Global 159,000 350,000
Keane 123,000 275,000
Online Resources 0 310,000
PRIMEDIA 1,000,000 1,100,000
REMEC 0 262,000
Softbank (Japan) 165,000 235,000
Structural Dynamics 33,000 310,000
Tele Celular Sul (Brazil) 0 36,000
THQ 97,000 200,000
World Color Press 1,050,000 1,240,000
Young Broadcasting 500,000 700,000
- ---------------------------------------------------------------------
Health Care
Incyte Pharmaceuticals 0 160,000
NPS Pharmaceuticals 156,000 529,000
Orthofix International 0 232,000
Thermedics 0 7,000
Wesley Jessen Vision 13,000 299,000
- ---------------------------------------------------------------------
Consumer Goods/Services
Anchor Gaming 270,000 450,000
Aristocrat Leisure (Australia) 500,000 849,000
Bally Total Fitness 400,000 480,000
Gadzooks 63,000 425,000
Gildan Activewear 0 166,000
Herman Miller 0 336,000
ITT Educational Services 0 187,000
Just For Feet 68,000 600,000
Mobile Mini 0 294,000
Nautica Enterprises 270,000 580,000
Sirena Apparel 0 504,000
West TeleServices 0 267,000
Whole Foods Market 345,000 390,000
- ---------------------------------------------------------------------
Finance
Ace Cash Express 58,000 204,000
Affiliated Managers Group 180,000 300,000
Americredit 2,938,000 3,267,000
Chittenden 64,000 409,000
Commonwealth Bancorp 575,000 677,000
Creditrust 465,000 525,000
Eldorado Bancshares 0 400,000
FPIC Insurance 151,000 220,000
Peoples Heritage Financial 70,000 178,000
Phoenix Investment Partners 2,524,000 2,637,000
StanCorp Financial 0 210,000
TCF Financial 695,000 787,000
Texas Regional Bancshares 542,000 602,000
UICI 815,000 1,155,000
- ---------------------------------------------------------------------
Industrial Goods/Services
Advanced Lighting Technologies 218,000 550,000
Applied Industrial Technologies 350,000 500,000
Cambrex 523,000 600,000
Forward Air 0 120,000
GP Strategies 512,000 600,000
HAoLO Industries 801,000 1,001,000
Intermet 76,000 400,000
Labor Ready 1,310,000 1,440,000
Lilly Industries, Cl. A 1,000,000 1,100,000
Spartech 0 100,000
- ---------------------------------------------------------------------
Energy/Minerals
Atmos Energy 847,000 1,000,000
Basin Exploration 0 150,000
Canadian Natural Resources
(Canada) 400,000 500,000
Cross Timbers Oil 0 481,000
Dynegy 890,000 1,000,000
Hanover Compressor 0 150,000
Saipem (Italy) 0 1,250,000
- ---------------------------------------------------------------------
Other Industries
Azurix 0 283,000
First Industrial Realty Trust 200,000 500,000
First Washington Realty Trust 190,000 385,000
Stericycle 0 152,000
The Rouse Company 829,000 968,000
Unisource Energy 500,000 700,000
31
<PAGE>
Acorn Fund
. Major Portfolio Changes in the Second Quarter, continued
Number of Shares
----------------------
3/31/99 6/30/99
Sales
- ---------------------------------------------------------------------
Information
ACNielsen 638,000 403,000
Acres Gaming 380,000 0
Altera 24,000 0
American Power Conversion 225,000 350,000
(includes effect of 2 for 1 stock split)
Analysts International 535,000 280,000
Cablevision Systems 125,000 0
Cablevision Systems, Pfd 100,000 0
Choicepoint 355,000 210,000
CMP Media 500,000 0
Commonwealth Telephone 454,000 354,000
Getty Images 860,000 770,000
Hutchinson Technology 69,000 0
Information Management 66,000 0
Jabil Circuit 675,000 475,000
Liberty Media Group, AT&T 2,750,000 2,600,000
(includes effect of 2 for 1 stock split)
Macrovision 200,000 150,000
Mettler Toledo 675,000 591,000
Micros Systems 750,000 700,000
National Instruments 135,000 0
RCN 1,584,000 1,484,000
SkyTel Communications 400,000 0
Solectron 1,440,000 890,000
Sykes Enterprises 750,000 670,000
Thermo Instrument Systems 367,000 0
TV Guide 750,000 366,000
United International Holdings
(Austria) 100,000 0
Univision Communications 85,000 0
- ---------------------------------------------------------------------
Health Care
Affymetrix 153,000 0
Hillenbrand Industries 239,000 91,000
Lincare Holdings 2,690,000 2,572,000
McKesson HBOC 806,000 0
Ocular Sciences 13,000 0
Respironics 729,000 555,000
- ---------------------------------------------------------------------
Consumer Goods/Services
Autoliv 165,000 0
Carnival 1,700,000 1,500,000
Cie Fin Richemont (Switzerland) 11,000 0
Fred Meyer Holdings 25,000 0
Harley-Davidson 1,700,000 1,250,000
Nintendo (Japan) 87,000 0
Protection One 742,000 0
- ---------------------------------------------------------------------
Finance
Baldwin & Lyons, Cl. B 723,000 498,000
Foremost 687,000 430,000
SEI Investments 551,000 539,000
Washington Mutual 475,000 62,000
- ---------------------------------------------------------------------
Industrial Goods/Services
Expeditors Int'l of Washington 1,100,000 1,890,000
(includes effect of 2 for 1 stock split)
Thermo Electron 325,000 0
Worthington Industries 1,295,000 700,000
- ---------------------------------------------------------------------
Energy/Minerals
AES Corporation 1,464,000 1,264,000
Atwood Oceanics 377,000 225,000
Enron Oil & Gas 470,000 0
J Ray McDermott 570,000 0
KN Energy 260,000 0
- ---------------------------------------------------------------------
Other Industries
Archstone 350,000 0
Homestead Village 945,000 0
32
<PAGE>
Acorn Fund
.Statement of Investments (unaudited) June 30, 1999
Number of Shares Value (000)
- ---------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 96.0%
- ---------------------------------------------------------------------
Information: 30.3%
Media
.Broadcasting: 1.8%
700,000 Young Broadcasting (b) $ 29,794
Television Stations
819,000 Data Transmission Network (b) (c) 23,034
Data Services for Farmers
575,000 Granite Broadcasting (b) 4,492
Television Stations
150,000 Cumulus Media (b) 3,281
Radio Stations
- ---------------------------------------------------------------------
60,601
.Television Programming: 3.7%
2,600,000 Liberty Media Group, AT&T (b) 95,550
Cable Programming
366,000 TV Guide (b) 13,405
TV Program Guides & Programming
150,000 Macrovision (b) 11,231
Copyright Protection for Video Tapes & Data
150,000 Playboy Enterprises (b) 3,984
Publishing & CATV Programming
- ---------------------------------------------------------------------
124,170
Telecommunications
.Telephone Services: 2.3%
1,484,000 RCN (b) 61,772
Metro Market: Voice, Video & Internet Services
354,000 Commonwealth Telephone (b) 14,315
Rural Market: Local, Long Distance &
Internet Access
140,000 Startec Global Communications (b) 1,698
International Telecommunications
- ---------------------------------------------------------------------
77,785
.Mobile Communications: 1.8%
580,000 Telephone & Data Systems 42,376
Cellular & Telephone Franchises
500,000 Pinnacle Holdings (b) 12,250
Towers for Cellular, PCS & Paging
355,000 COMARCO (b) (c) 7,033
Wireless Network Testing
- ---------------------------------------------------------------------
61,659
.Telecommunications Equipment: 0.5%
864,000 Aspect Telecommunications (b) 8,424
Call Center Equipment
262,000 REMEC (b) 4,225
Telecommunication Equipment for Defense &
Commercial
36,000 Comverse Technology (b) 2,718
Voicemail & Other Enhanced Services Equipment
- ---------------------------------------------------------------------
15,367
Computer Related Hardware
.Computer Hardware/
Related Systems: 2.1%
913,000 Kronos (b) (c) 41,542
Labor Management Solutions
700,000 Micros Systems (b) 23,800
Information System for Restaurants & Hotels
Principal Amount or
Number of Shares Value (000)
- ---------------------------------------------------------------------
350,000 American Power Conversion (b) $ 7,044
Uninterruptable Power Systems
72,386
.Semiconductors/
Related Equipment: 0.4%
350,000 Oak Industries (b) 15,291
Communications Components
.Gaming Equipment: 1.9%
2,342,000 International Game Technology 43,327
Slot Machines & Progressive Jackpots
450,000 Anchor Gaming (b) 21,628
Slot Machines & Casino
- ---------------------------------------------------------------------
64,955
.Contract Manufacturing: 2.8%
890,000 Solectron (b) 59,352
Electronic Manufacturing Services
475,000 Jabil Circuit (b) 21,434
Electronic Manufacturing Services
200,000 Sanmina (b) 15,175
Backplanes & Electronic Manufacturing Services
- ---------------------------------------------------------------------
95,961
.Instrumentation: 1.0%
591,000 Mettler Toledo (b) 14,664
Laboratory Products
613,000 Thermoquest (b) 8,161
$1,500,000 Thermoquest, 5% Note Due 8/15/00 1,478
Mass Spectrometry & Chromatography
$5,000,000 Thermo Optek, 5% Note Due 10/15/00 4,925
265,000 Thermo Optek (b) 2,749
Elemental & Molecular Spectroscopy
232,000 Metrika Systems (b) 2,030
Gamma Ray Instrumentation
266,122 Onix Systems (b) 1,597
Field Measurement & Sensor Equipment
- ---------------------------------------------------------------------
35,604
.Business Software: 1.1%
1,075,000 Systems & Computer Technology (b) 15,655
Enterprise Software & Services
280,000 Sterling Commerce (b) 10,220
Electronic Commerce Software & Services
650,000 JDA Software Group (b) 6,053
Applications/Software & Services for Retailers
310,000 Structural Dynamics (b) 5,754
Design Software
- ---------------------------------------------------------------------
37,682
.Consumer Software: 1.1%
350,000 Electronic Arts (b) 18,987
Entertainment Software
$6,500,000 Activision, 6.75% Note Due 1/1/05 6,207
410,000 Activision (b) 5,971
Entertainment Software
200,000 THQ (b) 5,750
Entertainment Software
36,915
.Computer Services: 2.2%
670,000 Sykes Enterprises (b) 22,361
Call Center Services
790,000 Computer Task Group 13,430
Application Development & Staffing Services
33
<PAGE>
Acorn Fund
.Statement of Investments, continued
Number of Shares Value (000)
- --------------------------------------------------------------------------------
195,000 BISYS (b) $ 11,407
Processing for Banks
642,000 RCM Technologies (b) (c) 8,507
Technology Staffing Services
350,000 IMR Global (b) 6,737
Application Development & Maintenance Services
275,000 Keane (b) 6,222
Application Development & Maintenance Services
280,000 Analysts International 4,025
Technology Staffing Services
1,037,000 Aztec Technology Partners (b) 1,944
Application Development & Maintenance Services
39,000 Dunn Computer (b) 78
Custom Computer Systems for Government
- --------------------------------------------------------------------------------
74,711
Software/Services
.Business Information/Marketing
Services/Publishing: 3.9%
1,240,000 World Color Press (b) 34,100
Web-Offset Printing
1,100,000 PRIMEDIA 18,631
Specialty Magazines & Other Publications
770,000 Getty Images (b) 14,534
Photographs for Publications & Electronic Media
210,000 Choicepoint (b) 14,096
Fraud Protection Information
1,400,000 InfoUSA, Cl. A (b) 12,425
1,000,000 InfoUSA, Cl. B (b) 8,500
Business Data for Sales Leads
403,000 ACNielsen (b) 12,191
Market Research, Information & Analysis
450,000 Information Holdings (b) 8,831
Scientific & Medical Publications,
Patent Information
350,000 Acxiom (b) 8,728
Database Marketing Services
- --------------------------------------------------------------------------------
132,036
.Internet: 0.5%
200,000 Security Dynamics (b) 4,250
Authentication & Encryption Software
310,000 Online Resources (b) 4,204
Internet Banking Technology
2,683 Bigfoot International (b) (c) 4,024
Internet Direct Marketing
250,000 NeoPlanet, Series A (b) 2,000
Cool Web Browser
135,000 AppNet Systems (b) 1,814
Internet Application Development
342,855 GIGA (b) 1,714
29,714 GIGA Warrants (b) 8
Data on Information Technology
- --------------------------------------------------------------------------------
18,014
.Electronics Distribution: 0.5%
790,000 Pioneer-Standard Electronics 9,480
Component & Computer Distribution
400,000 Kent Electronics (b) 7,925
Component Distribution & Contract Assembly
- --------------------------------------------------------------------------------
17,405
.Transaction Processors: 2.7%
1,855,000 National Data (c) $ 79,301
Credit Card & Health Claims Processor
300,000 Concord EFS (b) 12,694
Credit Card Processor
- --------------------------------------------------------------------------------
91,995
---------
Information: Total 1,032,537
- --------------------------------------------------------------------------------
Health Care: 6.0%
.Biotechnology/Drug Delivery: 1.5%
450,000 Inhale Therapeutic Systems (b) 10,716
Pulmonary Drug Delivery
329,000 Protein Design Labs (b) 7,300
Computer Designed Monoclonal Antibodies
525,000 Myriad Genetics (b) 4,725
Gene Discovery & Diagnostic Products
1,508,000 Corvas International (b) (c) 4,524
Rational Drug Design
351,000 Guilford Pharmaceuticals (b) 4,475
Drug Delivery & Neurology Drugs
915,000 Microcide Pharmaceuticals (b) (c) 4,318
Antibiotics
160,000 Incyte Pharmaceutical (b) 4,230
Gene Sequencing
768,000 Synaptic Pharmaceuticals (b) (c) 3,648
Receptor Targeted Drug Design
529,000 NPS Pharmaceuticals (b) 3,505
Small Molecule Drugs
664,000 Genome Therapeutics (b) 1,992
Gene Discovery Services
230,000 CuraGen (b) 1,840
Genomics
- --------------------------------------------------------------------------------
51,273
.Medical Equipment: 0.9%
299,000 Wesley Jessen Vision (b) 9,680
Contact Lenses
555,000 Respironics (b) 8,394
Respiratory Devices
443,000 Acuson (b) 7,614
Ultrasound Devices
232,000 Orthofix International (b) 3,451
Bone Fixation & Stimulation Devices
7,000 Thermedics (b) 65
Respiratory, Neurodiagnostics & Cardiovascular
- --------------------------------------------------------------------------------
29,204
.Hospital/Laboratory Supplies: 0.1%
91,000 Hillenbrand Industries 3,936
Hospital Beds & Coffins
.Services 3.5%
2,572,000 Lincare Holdings (b) 64,300
Home Health Care Services
1,952,000 First Health Group (b) 42,090
PPO Network
1,280,000 Magellan Health Services (b) 12,800
Mental Health Services
34
<PAGE>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
43,000 Spectrum Health Solutions (b) $ 11
Workmen's Compensation
- --------------------------------------------------------------------------------
119,201
-------
Health Care: Total 203,614
- --------------------------------------------------------------------------------
Consumer Goods/Services: 10.0%
Goods
.Leisure Vehicles: 2.4%
1,250,000 Harley-Davidson 67,969
Motorcycles & Related Merchandise
474,000 Thor Industries 13,450
Busses & RV's
- --------------------------------------------------------------------------------
81,419
.Furniture: 0.2%
336,000 Herman Miller 7,056
Office Furniture
.Nondurables: 0.2%
401,000 First Years 6,015
Infant & Toddler Products
.Apparel Manufacturers: 1.5%
630,000 Jones Apparel (b) 21,617
Women's Apparel
600,000 Unifi (b) 12,750
Polyester & Nylon Fabrics
429,000 St. John Knits 12,548
Upscale Knitware
166,000 Gildan Activewear (b) 2,801
Cotton T-Shirts
504,000 Sirena Apparel (b) (c) 1,008
Designer Women's Apparel
- --------------------------------------------------------------------------------
50,724
Services
.Retail: 2.2%
1,600,000 Borders Group (b) 25,300
Bookstores
390,000 Whole Foods Market (b) 18,744
Natural Food Supermarkets
580,000 Nautica Enterprises (b) 9,788
Men's Casual Apparel
911,000 Host Marriott Services (b) 7,402
Fast Food Kiosks in Airports
425,000 Gadzooks (b) 6,800
Teen Apparel Retailer
600,000 Just for Feet (b) 3,862
Athletic Shoe Retailer
400,000 Panera Bread (b) 2,550
Bakery & Deli Restaurants
- --------------------------------------------------------------------------------
74,446
.Consumer Services: 0.7%
480,000 Bally Total Fitness (b) 13,620
Fitness Centers
187,000 ITT Educational Services (b) 4,874
Technology Oriented Postsecondary
Degree Programs
267,000 West TeleServices (b) 2,503
Customer Care & Sales Support
55,000 Steiner Leisure (b) 1,667
Spas & Hair/Skin Products on Cruise Ships
- --------------------------------------------------------------------------------
22,664
Principal Amount of
Number of Shares Value (000)
- --------------------------------------------------------------------------------
.Casinos: 0.5%
500,000 Hollywood Park (b) $ 8,500
Race Track & Casino
250,000 Station Casinos (b) 5,094
Casinos & Riverboats
535,000 Monarch Casino & Resort (b) (c) 3,411
Casino/Hotel in Reno
63,000 Lakes Gaming (b) 689
Hotel & Casino in Biloxi & Gulfport
$ 6,250,000 Grand Palais Casino 14%
Note Due 2/25/98 (b) 312
New Orleans Casino
- --------------------------------------------------------------------------------
18,006
.Cruise Lines: 2.3%
1,500,000 Carnival 72,750
Largest Cruise Line
140,000 Royal Caribbean Cruises 6,125
Cruises to Caribbean & Alaska
410,000 Royal Olympic Cruise (b) 1,179
Cruises in Mediterranean
- --------------------------------------------------------------------------------
80,054
-------
Consumer Goods/Services: Total 340,384
- --------------------------------------------------------------------------------
Finance: 14.6%
.Banks: 2.0%
787,000 TCF Financial 21,938
Great Lakes Bank
602,000 Texas Regional Bancshares 16,367
TexMex Bank
409,000 Chittenden 12,781
Vermont & West Massachusetts Bank
170,000 CNB Bancshares 9,690
Indiana Bank
400,000 Eldorado Bancshares (b) 4,400
California Bank
178,000 Peoples Heritage Financial 3,349
New England Bank
- --------------------------------------------------------------------------------
68,525
.Savings & Loans: 2.4%
1,578,000 Peoples Bank Bridgeport 48,030
Connecticut Savings & Loan
801,000 Washington Federal 17,972
Washington State Savings & Loan
677,000 Commonwealth Bancorp 12,144
Philadelphia Savings & Loan
62,000 Washington Mutual 2,193
West Coast Savings & Loan
554,000 Coast Contingency Rights (b) 589
Litigation Claims Against US Government
- --------------------------------------------------------------------------------
80,928
.Insurance: 4.0%
1,155,000 UICI (b) 31,907
Insurance/Specialty Finance
78,000 Markel (b) 14,586
Specialty Insurance
400,000 Protective Life 13,200
Life/Dental Insurance
511,000 Leucadia National 12,967
Insurance Holding Company
35
<PAGE>
Acorn Fund
.Statement of Investments, continued
Number of Shares Value (000)
- --------------------------------------------------------------------------------
498,000 Baldwin & Lyons, Cl. B $ 11,796
Trucking Insurance
220,000 FPIC Insurance (b) 10,670
Medical & Dental Malpractice Insurance
430,000 Foremost 9,460
Mobile Home & RV Insurance
612,000 Acceptance Insurance (b) 9,218
Crop Insurance
320,000 United Fire & Casualty 8,320
Property & Casualty
320,000 HCC Insurance Holdings 7,260
Aviation Insurance
210,000 StanCorp Financial (b) 6,300
Group Life, Disability & 401K
- --------------------------------------------------------------------------------
135,684
.Money Management: 3.4%
539,000 SEI Investments 47,567
Mutual Fund Administration
2,637,000 Phoenix Investment Partners (b) (c) 22,744
Mutual Fund & Pension Manager
1,063,000 Baker Fentress 20,197
Closed-End Investment Company
1,034,000 Pioneer Group (b) 17,837
Equity Mutual Funds
300,000 Affiliated Managers Group (b) 9,056
Mutual Fund & Pension Manager
- --------------------------------------------------------------------------------
117,401
.Finance Companies: 2.8%
3,267,000 Americredit (b) (c) 52,272
Auto Lending
525,000 Creditrust (b) (c) 14,569
Buys Defaulted Credit Card Paper
600,000 DVI Health Services (b) 10,275
Leases for Big Medical Equipment
1,820,000 World Acceptance (b) (c) 9,157
Personal Loans
1,375,000 Capital Trust (b) 6,187
Mortgage Loans
204,000 Ace Cash Express (b) 2,881
Check Cashing Stores
- --------------------------------------------------------------------------------
95,341
-------
Finance: Total 497,879
- --------------------------------------------------------------------------------
Industrial Goods/Services: 9.6%
.Steel 1.4%
825,000 Gibraltar Steel (b) (c) 20,419
Steel Processing
700,000 Worthington Industries 11,506
Steel Processing
400,000 Intermet Holdings 6,050
Ductile Iron & Aluminum Foundries
345,000 A M Castle 5,865
Steel Distribution
420,000 Atchison Casting (b) (c) 4,371
Steel Foundries
- --------------------------------------------------------------------------------
48,211
.Industrial Goods: 1.0%
1,000,000 Clarcor 19,187
Filters
500,000 Applied Industrial Technologies 9,500
Industrial Components Distribution
550,000 Advanced Lighting Technologies (b) $ 4,950
Metal Halide Lighting
- --------------------------------------------------------------------------------
33,637
.Specialty Chemicals & Industrial
Materials: 1.2%
1,100,000 Lilly Industries, Cl. A 20,419
Industrial Coatings
600,000 Cambrex 15,750
Pharmaceutical & Other Specialty Chemicals
100,000 Spartech 3,163
Plastics
445,000 Symex (c) 2,003
Combinatorial Materials
100,000 Brunswick Technologies (b) 544
Fiberglass Fabric for Composites
- --------------------------------------------------------------------------------
41,879
.Outsourcing Services &
Training: 1.6%
1,440,000 Labor Ready (b) 46,800
Temporary Manual Labor
600,000 GP Strategies (b) (c) 5,250
Training Programs
500,000 International Total Services (b) (c) 1,594
Aviation Services
- --------------------------------------------------------------------------------
53,644
.Logistics: 2.8%
1,890,000 Expeditors International of Washington 51,502
International Freight Forwarder
759,000 Hub Group (b) 17,030
Truck & Rail Freight Forwarder
435,000 C H Robinson 15,986
Truck Freight Forwarder
650,000 Airnet Systems (b) (c) 8,775
Check & Other Small Package Shipment
120,000 Forward Air (b) 3,375
Transportation Between Airports
- --------------------------------------------------------------------------------
96,668
.Other Industrial Services: 1.6%
1,326,000 Wackenhut, Cl. B 31,824
31,000 Wackenhut, Cl. A 922
Prison Management
1,001,000 HAoLO Industries (b) 9,885
Distributor of Advertising & Promotional Products
294,000 Mobile Mini (b) 5,751
Leases Portable Storage Units
736,000 Compass International Services (b) (c) 5,152
Collection Agencies
- --------------------------------------------------------------------------------
53,534
------
Industrial Goods/Services: Total 327,573
- --------------------------------------------------------------------------------
Energy/Minerals: 9.0%
.Independent Power: 3.7%
1,264,000 AES Corporation (b) 73,470
1,852 AES Corporation Warrants (b) 168
Power Plants
1,500,000 MidAmerican Energy 51,938
Growth Utility
- --------------------------------------------------------------------------------
125,576
36
<PAGE>
<TABLE>
<CAPTION>
Number of shares Value (000)
- ------------------------------------------------------------------
<S> <C> <C>
.Oil/Gas Producers: 2.5%
2,100,000 Tesoro Petroleum (b) (c) $ 33,469
Oil Refinery/Gas Reserves
900,000 Devon Energy 32,175
Oil & Gas Producer
300,000 Evergreen Resources (b) 7,556
Oil & Gas Producer
481,000 Cross Timbers Oil 7,155
Oil & Gas Producer
150,000 Basin Exploration (b) 3,009
Oil & Gas Producer
987,000 Tipperary (b) (c) 1,234
Oil & Gas Producer
- ------------------------------------------------------------------
84,598
.Distribution/Marketing/Refining: 2.4%
1,000,000 Equitable Resources 37,750
Natural Gas Utility & Producer
1,000,000 Atmos Energy 25,000
Natural Gas Utility
1,000,000 Dynegy 20,375
Natural Gas & Electric Processing,
Production & Marketing
- ------------------------------------------------------------------
83,125
.Oil Services: 0.4%
225,000 Atwood Oceanics (b) 7,031
Offshore Drilling
150,000 Hanover Compressor (b) 4,819
Compressor Rental
- ------------------------------------------------------------------
11,850
---------
Energy/Minerals: Total 305,149
- ------------------------------------------------------------------
Other Industries: 4.8%
.Real Estate: 4.2%
968,000 The Rouse Company 24,563
Regional Shopping Malls
770,312 Security Capital European Realty (b) 15,406
Strategic Real Estate Investments
500,000 First Industrial Realty Trust 13,719
Industrial Properties
466,000 Forest City Enterprises, Cl. B 13,106
370,000 Forest City Enterprises, Cl. A 10,360
Shopping Malls
820,000 Cornerstone Properties 13,017
Downtown Office Buildings
260,000 Equity Residential Properties Trust 11,716
Nationwide Apartments
699,000 LaSalle Hotel Properties 10,703
Upscale/Full Service Hotels
400,000 Macerich Company 10,500
Regional Shopping Malls
385,000 First Washington Realty Trust (b) (c) 8,999
120,000 First Washington Realty Trust,
Cv. Pfd. (b) (c) 3,548
Community Shopping Centers
165,000 Weingarten Realty Investors 6,889
Community Shopping Centers
- ------------------------------------------------------------------
142,526
.Waste Management: 0.1%
152,000 Stericycle (b) $ 2,062
Medical Waste Disposal
.Regulated Utilities: 0.5%
700,000 Unisource Energy (b) 8,356
Electric Utility in Tuscon
283,000 Azurix (b) 5,660
Owner & Operator of Water Utilities
130,000 Central Hudson Gas & Electric 5,460
Electric Utility
- ------------------------------------------------------------------
19,476
---------
Other Industries: Total 164,064
- ------------------------------------------------------------------
Foreign Securities: 11.7%
.Canada: 0.3%
500,000 Canadian Natural Resources (b) 9,797
Oil & Gas Producer
475,000 Canadian 88 Energy (b) 1,322
Oil & Gas Producer
- ------------------------------------------------------------------
11,119
.Australia: 0.2%
849,000 Aristocrat Leisure 6,434
Slot Machines
.United Kingdom: 3.2%
644,000 NTL (b) 55,505
Voice, Video & Data Services
1,200,000 Serco Group 27,049
Facilities Management
1,650,000 Airtours 13,161
Packaged Tour Vacations
1,250,000 Edinburgh Fund Managers 8,246
Investment Management
1,100,000 N. Brown Group 5,939
Mail Order Clothing in Large Sizes
- ------------------------------------------------------------------
109,900
.Germany/Austria: 0.4%
180,000 Flughafen Wien (Austria) 7,553
Vienna Airport Authority
23,000 Binding-Brauerei 5,278
Brewery
- ------------------------------------------------------------------
12,831
.Sweden: 1.1%
1,000,000 WM Data Nordic 38,109
Computer Services/Consulting
20,000 Entra Data (b) 395
Business Software
- ------------------------------------------------------------------
38,504
.Netherlands: 0.8%
312,439 Hunter Douglas 10,730
Decorative Window Coverings
152,380 ASR Verzekeringsgroep 10,050
Insurance
171,084 Getronics 6,581
Computer Services/Consulting
- ------------------------------------------------------------------
27,361
</TABLE>
37
<PAGE>
Acorn Fund
.Statement of Investments, continued
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ------------------------------------------------------------------
<S> <C> <C>
.France: 0.7%
230,000 Atos (b) $ 23,483
Computer Services/Transaction Processing
.Italy: 0.8%
1,500,000 Banca Fideuram 8,740
Life Insurance & Mutual Funds
1,000,000 Aeroporti di Roma 6,177
Airport Management
1,970,000 Ducati Motor (b) 5,160
Motorcycles
1,250,000 Saipem 4,989
Offshore Construction
- ------------------------------------------------------------------
25,066
.Malaysia: 0.1%
750,000 Resorts World Berhad 1,591
Casino/Hotel Resort
590,000 Berjaya Sports Toto 1,230
Lottery/Gaming
- ------------------------------------------------------------------
2,821
.Hong Kong: 0.3%
4,500,000 Varitronix International 9,367
LCD Manufacturer
.China: 0.0%
200,000 The Investment Company of China (b) 1,092
Closed-End Fund
.Singapore: 1.3%
8,130,000 Star Cruises 36,260
Cruise Line
2,000,000 Natsteel Electronics 8,752
Electronic Manufacturing Services
- ------------------------------------------------------------------
45,012
.Japan: 1.5%
235,000 Softbank Corporation 47,586
Internet Services/Investment Holding
300,000 Olympus Optical 4,434
Photographic & Medical Equipment
- ------------------------------------------------------------------
52,020
</TABLE>
<TABLE>
<CAPTION>
Principle Amount of
Number of shares Value (000)
- ------------------------------------------------------------------
<S> <C> <C>
.Mexico: 0.6%
3,300,000 Kimberly Clark de Mexico $ 13,535
Paper Products
7,350,000 Nadro, Series L 5,835
Pharmaceutical Distributor
- ------------------------------------------------------------------
19,370
.Other Latin America: 0.4%
407,124 IRSA (Argentina) 12,570
Real Estate Management & Development
36,000 Tele Celular Sul (Brazil) 781
Cellular Operator
- ------------------------------------------------------------------
13,351
-----------
Foreign: Total 397,731
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Total Common Stocks and Other ----------
Equity-Like Securities: 96.0% $3,268,931
(Cost: $2,007,523)
Short-Term Obligations: 8.5%
Yield 4.27%-5.26% Due 7/1-7/15/99
$ 88,696 IBM Credit Corp $ 88,696
$ 53,112 Cigna 53,085
$ 42,882 John Deere Capital 42,882
$ 36,186 GE Company 36,154
$ 33,759 Baxter International 33,759
$ 24,348 Ford Motor Credit 24,344
$ 12,000 US Treasury Bill 11,980
----------
(Amortized Cost: $290,900) 290,900
----------
Total Investments: 104.5% 3,559,831
(Cost: $2,298,423)
----------
Cash and Other Assets Less Liabilities: (4.5%) (153,760)
----------
Total Net Assets: 100% $3,406,071
- ------------------------------------------------------------------
</TABLE>
.Notes to Statement of Investments:
(a) At June 30, 1999, for federal income tax purposes cost of investments was
$2,299,435,000 and net unrealized appreciation was $1,260,396,000, consisting of
gross unrealized appreciation of $1,417,113,000 and gross unrealized
depreciation of $156,717,000.
(b) Non-income producing security.
(c) On June 30, 1999, the Fund held the following percentages of the outstanding
voting shares of the companies listed below:
Corvas International.......... 9.99% Bigfoot International........... 6.39%
Sirena Apparel................ 9.92% RCM Technologies................ 6.12%
World Acceptance.............. 9.57% Phoenix Investment Partners..... 6.01%
Microcide Pharmaceuticals..... 8.29% First Washington Realty Trust... 5.89%
COMARCO....................... 8.00% Airnet Systems.................. 5.71%
International Total Services.. 7.51% Monarch Casino & Resort......... 5.67%
Kronos........................ 7.29% GP Strategies................... 5.66%
Synaptic Pharmaceuticals...... 7.16% Atchison Casting................ 5.51%
Data Transmission Network..... 7.07% National Data................... 5.49%
Gibraltar Steel............... 6.59% Compass International Services.. 5.11%
Tipperary..................... 6.52% Americredit..................... 5.11%
Tesoro Petroleum.............. 6.50% Creditrust...................... 5.05%
The aggregate cost and value of investments in these companies at June 30, 1999,
was $320,108,000 and $340,394,000, respectively. The market value of these
securities represents 9.99% of the total net assets at June 30, 1999. During the
six months ended June 30, 1999, cost of purchases and proceeds from sales in
affiliated companies was $43,865,000 and $25,640,000, respectively. Dividends
received from these companies amounted to $974,000 and net realized gain on
sales of investments in such companies amounted to $11,176,000.
38
<PAGE>
Acorn Fund
.Foreign Portfolio Diversification
At June 30, 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 $ 68,173 2.0%
Cable Television 55,505 1.6
Business Information/Publishing 47,586 1.4
Semiconductors & Related
Equipment 27,049 0.8
Contract Manufacturing 8,752 0.3
Mobile Communications 781 0.0
Business Software 395 0.0
- ----------------------------------------------------------
208,241 6.1
.Health Care
Medical Equipment 4,434 0.1
- ----------------------------------------------------------
4,434 0.1
.Consumer Goods/Services
Travel 49,421 1.5
Beverages 16,008 0.4
Nondurable Goods 13,535 0.4
Gaming 7,664 0.2
Retail 5,939 0.2
Consumer Goods Distribution 5,835 0.2
Leisure Vehicles 5,160 0.2
Entertainment 1,591 0.0
- ------------------------------------------------------
105,153 3.1
</TABLE>
<TABLE>
<CAPTION>
Value (000) Percent
- ------------------------------------------------------
<S> <C> <C>
.Finance
Money Management $ 16,986 0.5%
Insurance 10,050 0.3
Closed-End Funds 1,092 0.0
- ------------------------------------------------------
28,128 0.8
.Industrial Goods/Services
Electrical Components 9,367 0.3
- ------------------------------------------------------
9,367 0.3
.Energy/Minerals
Oil/Gas Producers 11,119 0.3
Oil Services 4,989 0.2
- ------------------------------------------------------
16,108 0.5
.Other Industries
Transportation 13,730 0.4
Real Estate 12,570 0.4
- ------------------------------------------------------
26,300 0.8
--------------------
Total Foreign Portfolio $ 397,731 11.7%
- ------------------------------------------------------
</TABLE>
39
<PAGE>
Acorn Family of Funds
.Statements of Assets and Liabilities
.Statements of Operations
.Statements of Changes in Net Assets
.Financial Highlights
.Notes to Financial Statements
40
<PAGE>
Acorn Family of Funds
. Statements of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
Acorn Acorn Acorn Acorn Acorn
(in thousands) Fund International USA Twenty Foreign Forty
- ------------------------------------------------------------------------------------------------------------------------------------
6/30/99
<S> <C> <C> <C> <C> <C>
Assets
Investments, at value (cost: Acorn Fund $2,298,423;
Acorn International $1,143,504; Acorn USA $295,265;
Acorn Twenty $54,560; Acorn Foreign Forty $39,708) $ 3,559,831 $ 1,861,202 $ 312,998 $ 64,549 $ 44,412
Cash -- 19,252 1 -- 1,146
Net unrealized appreciation on foreign forward
currency contracts -- 758 -- -- --
Organization costs -- -- 47 -- --
Receivable for:
Securities sold 15,454 11,885 783 -- 1,112
Fund shares sold 531 4,822 373 253 479
Dividends and interest 1,779 6,626 22 16 --
Other assets 258 105 13 -- 86
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 3,577,853 1,904,650 314,237 64,818 47,235
Liabilities and Net Assets
Cash overdraft 38 -- -- -- --
Net unrealized depreciation on foreign forward
currency contracts 3 -- -- -- --
Payable for:
Securities purchased 9,463 18,413 -- 1,994 1,955
Fund shares redeemed 161,354 2,065 1,408 3 --
Amount owed to advisor 2 -- 47 115 56
Other 922 1,066 115 22 27
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 171,782 21,544 1,570 2,134 2,038
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Fund shares outstanding $ 3,406,071 $ 1,883,106 $ 312,667 $ 62,684 $ 45,197
- ------------------------------------------------------------------------------------------------------------------------------------
Fund shares outstanding 183,218 77,922 19,570 4,808 3,455
- ------------------------------------------------------------------------------------------------------------------------------------
Pricing of Shares
Net asset value, offering price and redemption price
per share $ 18.59 $ 24.17 $ 15.98 $ 13.04 $ 13.08
- ------------------------------------------------------------------------------------------------------------------------------------
Analysis of Net Assets
Paid-in capital $ 1,592,872 $ 1,106,306 $ 271,821 $ 50,894 $ 39,274
Accumulated net realized gain on sales
of investments, futures and foreign
currency transactions 545,418 57,708 22,664 1,928 1,082
Net unrealized appreciation of investments and other
assets (net of unrealized PFIC gains of $274 for
Acorn International and $19 for Acorn Foreign Forty) 1,261,402 718,118 17,733 9,989 4,683
Undistributed net investment income (loss) 6,379 974 449 (127) 158
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to
Fund shares outstanding $ 3,406,071 $ 1,883,106 $ 312,667 $ 62,684 $ 45,197
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements 41
<PAGE>
Acorn Family of Funds
.Statements of Operations (unaudited)
<TABLE>
<CAPTION>
Acorn
Acorn Fund International
6 months Year 6 months Year
(in thousands) ended 6/30, ended 12/31, ended 6/30, ended 12/31,
- ----------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Investment Income:
Dividends $ 19,697 $ 28,483 $ 16,200 $ 26,225
Interest 4,339 13,414 2,467 10,223
- ----------------------------------------------------------------------------------------------------------------------------
24,036 41,897 18,667 36,448
Foreign taxes withheld (239) (513) (1,750) (2,521)
- ----------------------------------------------------------------------------------------------------------------------------
Total investment income 23,797 41,384 16,917 33,927
Expenses:
Investment advisory 11,484 24,905 7,052 14,124
Administration 832 1,812 429 858
Custodian 425 924 1,025 1,957
Transfer and dividend disbursing agent 781 1,414 743 1,384
Reports to shareholders 282 573 302 575
Legal and audit 111 223 63 97
Registration and blue sky 24 55 15 58
Trustees' and other 297 446 131 166
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses 14,236 30,352 9,760 19,219
Less custodian fees paid indirectly -- -- -- --
Less reimbursement of expenses by advisor -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net expenses 14,236 30,352 9,760 19,219
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 9,561 11,032 7,157 14,708
Net Realized and Unrealized Gain (Loss) on Investments,
Futures and Foreign Currency Transactions:
Net realized gain (loss) on sales of investments 550,750 252,065 69,986 2,408
Net realized gain (loss) on foreign currency
transactions (70) (132) 6,007 (6,031)
Net realized gain (loss) on futures (2,990) (17,930) (403) 7,811
Change in net unrealized appreciation of
investments and foreign currency transactions (184,417) (43,553) 189,172 215,847
- ----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
futures and foreign currency transactions 363,273 190,450 264,762 220,035
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 372,834 $201,482 $271,919 $234,743
============================================================================================================================
</TABLE>
See accompanying notes to financial statements 42
<PAGE>
<TABLE>
<CAPTION>
Acorn
Acorn USA Acorn Twenty Foreign Forty
6 months Year 6 months Inception 11/23 6 months Inception 11/23
ended 6/30, ended 12/31, ended 6/30, through 12/31, ended 6/30, through 12/31,
- -----------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C>
$ 1,596 $ 882 $ 136 $ 38 $ 322 $ 6
462 1,042 54 7 49 3
- -----------------------------------------------------------------------------------------------------
2,058 1,924 190 45 371 9
-- -- -- -- (29) (1)
- -----------------------------------------------------------------------------------------------------
2,058 1,924 190 45 342 8
1,275 2,336 216 26 121 11
68 124 12 1 6 1
21 39 6 2 32 3
131 246 55 18 30 13
61 126 27 1 24 1
16 32 19 1 19 1
12 33 8 4 6 2
28 43 1 -- 1 --
- -----------------------------------------------------------------------------------------------------
1,612 2,979 344 53 239 32
(3) (5) (6) (2) (12) (3)
-- -- (15) (12) (43) (11)
- -----------------------------------------------------------------------------------------------------
1,609 2,974 323 39 184 18
- -----------------------------------------------------------------------------------------------------
449 (1,050) (133) 6 158 (10)
22,972 23,791 2,174 (246) 1,098 74
-- -- -- -- -- --
-- -- -- -- -- --
992 (14,625) 7,457 2,532 3,539 1,163
- -----------------------------------------------------------------------------------------------------
23,964 9,166 9,631 2,286 4,637 1,237
- -----------------------------------------------------------------------------------------------------
$24,413 $ 8,116 $9,498 $2,292 $4,795 $1,227
=====================================================================================================
</TABLE>
43
<PAGE>
Acorn Family of Funds
>Statements of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
Acorn
Acorn Fund International
6 months Year 6 months Year
(in thousands) ended 6/30 ended 12/31 ended 6/30 ended 12/31
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
From Operations:
Net investment income (loss) $ 9,561 $ 11,032 $ 7,157 $ 14,708
Net realized gain (loss) on sales of investments,
futures and foreign currency transactions 547,690 234,003 75,590 4,188
Change in net unrealized appreciation of
investments and foreign currency transactions (184,417) (43,553) 189,172 215,847
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 372,834 201,482 271,919 234,743
Distributions to Shareholders From:
Net investment income (5,713) (6,284) (11,602) (12,611)
Net realized gain (36,184) (219,264) -- (22,701)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (41,897) (225,548) (11,602) (35,312)
From Fund Share Transactions:
Reinvestment of dividends and capital
gain distributions 37,931 204,856 10,789 33,102
Proceed from other shares sold 169,217 490,137 214,401 406,219
- -----------------------------------------------------------------------------------------------------------------------------------
207,148 694,993 225,190 439,321
Payments for shares redeemed (681,475) (802,923) (327,898) (536,194)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Fund share transactions (474,327) (107,930) (102,708) (96,873)
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (143,390) (131,996) 157,609 102,558
Net Assets:
Beginning of period 3,549,461 3,681,457 1,725,497 1,622,939
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $ 3,406,071 $3,549,461 $1,883,106 $ 1,725,497
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed Net Investment Income $ 6,379 $ 2,531 $ 974 $ 5,419
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
44
<PAGE>
<TABLE>
<CAPTION>
Acorn
Acorn USA Acorn Twenty Foreign Forty
6 months Year 6 months Inception 11/23 6 months Inception 11/31
ended 6/30, ended 12/31, ended 6/30, through 12/31, ended 6/30, through 12/31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
$ 449 $ (1,050) $ (133) $ 6 $ 158 $ (10)
22,972 23,791 2,174 (246) 1,098 74
992 (14,625) 7,457 2,532 3,539 1,163
- -----------------------------------------------------------------------------------------------------------------------------------
24,413 8,116 9,498 2,292 4,795 1,227
-- -- -- -- -- --
(784) (19,532) -- -- (99) --
- ------------------------------------------------------------------------------------------------------------------------------------
(784) (19,532) -- -- (99) --
718 17,705 -- -- 94 --
65,026 175,578 23,123 31,688 29,060 14,739
- ------------------------------------------------------------------------------------------------------------------------------------
65,744 193,283 23,123 31,688 29,154 14,739
(57,657) (85,540) (3,661) (256) (4,438) (181)
- ------------------------------------------------------------------------------------------------------------------------------------
8,087 107,743 19,462 31,432 24,716 14,558
- ------------------------------------------------------------------------------------------------------------------------------------
31,716 96,327 28,960 33,724 29,412 15,785
280,951 184,624 33,724 -- 15,785 --
- -----------------------------------------------------------------------------------------------------------------------------------
$ 312,667 $ 280,951 $ 62,684 $ 33,724 $ 45,197 $ 15,785
- -----------------------------------------------------------------------------------------------------------------------------------
$ 449 $ -- ($127) $ 6 $ 158 $ 9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
Acorn Family of Funds
.Financial Highlights (unaudited)
<TABLE>
<CAPTION>
6 months Years
Acorn Fund ended 6/30, ended 12/31,
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For a share outstanding throughout each period 1999 1998
Net Asset Value, beginning of period $16.85 $16.99
Income From Investment Operations
Net investment income .05 .04
Net realized and unrealized gain (loss) on investments, foreign currency and futures 1.91 .91
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.96 .95
Less Distributions
Dividends from net investment income (0.03) (0.03)
Distributions from net realized and unrealized gains reportable for federal income taxes (0.19) (1.06)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (0.22) (1.09)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $18.59 $16.85
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 11.7% 6.0%
Ratios/Supplemental Data
Ratio of expenses to average net assets .86%* .84%
Ratio of net investment income to average net assets .57%* .30%
Portfolio turnover rate 35%* 24%
Net assets at end of period (in millions) $3,406 $3,549
6 months Years
Acorn International ended 6/30, ended 12/31,
- -----------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period 1999 1998
Net Asset Value, beginning of period $20.82 $18.39
Income From Investment Operations
Net investment income (loss) .17 .17
Net realized and unrealized gain (loss) on investments, foreign currency and futures 3.33 2.68
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.50 2.85
Less Distributions
Dividends from net investment income (.15) (.15)
Distributions from net realized and unrealized gains reportable for federal income taxes -- (.27)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (.15) (.42)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $24.17 $20.82
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 16.8% 15.4%
Ratios/Supplemental Data
Ratio of expenses to average net assets 1.14%* 1.12%
Ratio of net investment income to average net assets .84%* .86%
Portfolio turnover rate 53%* 37%
Net assets at end of period (in millions) $1,883 $1,725
6 months Years
Acorn USA ended 6/30, ended 12/31,
- -----------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period 1999 1998
Net Asset Value, beginning of period $14.80 $15.12
Income From Investment Operations
Net investment loss (b) .02 (.07)
Net realized and unrealized gain on investments 1.20 .87
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.22 .80
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends from net investment income -- --
Distributions from net realized and unrealized gains reportable for federal income taxes (.04) (1.12)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (.04) (1.12)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $15.98 $14.80
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 8.3% 5.8%
Ratios/Supplemental Data
Ratio of expenses to average net assets (a) 1.18%* 1.20%
Ratio of net investment loss to average net assets .33%* (.42%)
Portfolio turnover rate 53%* 42%
Net assets at end of period (in millions) $313 $281
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) In accordance with a requirement by the Securities and Exchange Commission,
the Acorn USA ratio reflects total expenses prior to the reduction of custodian
fees for cash balances it maintains with the custodian ("custodian fees paid
indirectly"). This ratio net of custodian fees paid indirectly would have been
1.79% for the period ended December 31, 1996.
(b) Net investment income (loss) per share was based upon the average shares
outstanding during each period.
* Annualized
See accompanying notes to financial statements 46
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
$15.04 $13.60 $12.24 $13.95 $11.06 $ 9.32 $ 6.51 $8.58
.15 .09 .11 .06 .04 .07 .11 .12
3.57 2.93 2.42 (1.10) 3.50 2.16 2.95 (1.62)
- ---------------------------------------------------------------------------------------------
3.72 3.02 2.53 (1.04) 3.54 2.23 3.06 (1.50)
(.16) (.11) (.09) (.11) (.06) (.08) (.10) (.13)
1.61 (1.47) (1.08) (.56) (.59) (.41) (.15) (.44)
- ---------------------------------------------------------------------------------------------
(1.77) (1.58) (1.17) (.67) (.65) (.49) (.25) (.57)
- ---------------------------------------------------------------------------------------------
$16.99 $15.04 $13.60 $12.24 $13.95 $11.06 $ 9.32 $6.51
- ---------------------------------------------------------------------------------------------
25.0% 22.6% 20.8% -7.4% 32.3% 24.2% 47.3% -17.5%
.56% .57% .57% .62% .65% .67% .72% .82%
.75% .53% .89% .55% .30% .72% 1.30% 1.60%
32% 33% 29% 18% 20% 25% 25% 36%
$3,681 $2,842 $2,399 $1,983 $2,035 $1,449 $1,150 $ 767
</TABLE>
<TABLE>
<CAPTION>
Inception 9/23
through 12/31,
- ------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
$19.61 $16.59 $15.24 $15.94 $10.69 $10.00
.40 .13 .16 .07 -- (.03)
(.34) 3.29 1.20 (.67) 5.25 .72
- ------------------------------------------------------------------------------
.06 3.42 1.36 (.60) 5.25 .69
(.38) (.12) -- -- -- --
(.90) (.28) (.01) (.10) -- --
- ------------------------------------------------------------------------------
(1.28) (.40) (.01) (.10) -- --
- ------------------------------------------------------------------------------
$18.39 $19.61 $16.59 $15.24 $15.94 $10.69
- ------------------------------------------------------------------------------
0.2% 20.7% 8.9% -3.8% 49.1% 6.9%
1.19% 1.17% 1.22% 1.24% 1.21% 2.35%*
.58% .51% .90% .48% .06% (1.37%)*
39% 34% 26% 20% 19% 20%*
$1,623 $1,773 $1,276 $1,363 $ 907 $ 30
</TABLE>
<TABLE>
<CAPTION>
Inception 9/4
through 12/31
- -----------------------------
1997 1996
<S> <C>
$11.65 $10.00
(.07) (.02)
3.83 1.67
- -----------------------------
3.76 1.65
- -----------------------------
-- --
(.29) --
- -----------------------------
(.29) --
- -----------------------------
$15.12 $11.65
- -----------------------------
32.3% 16.5%
1.35% 1.85%*
(.49%) (.99%)*
33% 20%*
$ 185 $ 53
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
6 months Inception 11/23
Acorn Twenty ended 6/30, through 12/31,
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
For a share outstanding throughout each period 1999 1998
Net Asset Value, beginning of period $10.71 $10.00
Income From Investment Operations
Net investment income (loss) (b) (.03) --
Net realized and unrealized gain on investments 2.36 .71
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 2.33 .71
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $13.04 $10.71
==========================================================================================================
Total Return 21.8% 7.1%
Ratios/Supplemental Data
Ratio of expenses to average net assets (a) (c) 1.38%* 1.41%*
Ratio of net investment income (loss) to average net assets (c) (.56%)* 0.22%*
Portfolio turnover rate 110%* 173%*
Net assets at end of period (in millions) $63 $34
==========================================================================================================
</TABLE>
(a) In accordance with a requirement by the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custodian fees for
cash balances it maintains with the custodian ("custodian fees paid
indirectly"). This ratio net of custodian fees paid indirectly would have been
1.35% for the period ended June 30, 1999 and December 31, 1998.
(b) Net investment income (loss) per share was based upon the average shares
outstanding during the period.
(c) Acorn Twenty was reimbursed by the Advisor for certain net expenses from
November 23, 1998 through June 30, 1999. Without the reimbursement, the ratio of
expenses (prior to custodian fees paid indirectly) to average net assets and the
ratio of net investment income (loss) to average net assets would have been
1.42% and (.63%), respectively, for the period ended June 30, 1999, and 1.83%
and (.21%), respectively, for the period ended December 31, 1998.
<TABLE>
<CAPTION>
6 months Inception 11/23
Acorn Foreign Forty ended 6/30, through 12/31,
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For a share outstanding throughout each period 1999 1998
Net Asset Value, beginning of period $11.00 $10.00
Income From Investment Operations
Net investment income/(loss) (c) .07 (.01)
Net realized and unrealized gain on investments 2.04 1.01
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.11 1.00
Less Distributions
Dividends from net investment income -- --
Distributions from net realized and unrealized gains reportable for federal income taxes (.03) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.03) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $13.08 $11.00
=================================================================================================================================
Total Return 19.2% 10.0%
Ratios/Supplemental Data
Ratio of expenses to average net assets (a) (c) 1.54%* 1.73%*
Ratio of net investment income (loss) to average net assets (c) 1.25%* (.78%)*
Portfolio turnover rate 77%* 90%*
Net assets at end of period (in millions) $45 $16
=================================================================================================================================
</TABLE>
(a) In accordance with a requirement by the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custodian fees for
cash balances it maintains with the custodian ("custodian fees paid
indirectly"). This ratio net of custodian fees paid indirectly would have been
1.45% for the period ended June 30, 1999 and December 31, 1998.
(b) Net investment income (loss) per share was based upon the average shares
outstanding during the period.
(c) Acorn Foreign Forty was reimbursed by the Advisor for certain net expenses
from November 23, 1998 through June 30,1999. Without the reimbursement, the
ratio of expenses to average net assets and the ratio of net investment
income/(loss) to average net assets would have been 1.80% and 90%, respectively,
for the period ended June 30, 1999, and 2.70% and (1.75%), respectively, for the
period ended December 31, 1998.
* Annualized
See accompanying notes to financial statements
48
<PAGE>
Acorn Family of Funds
.Notes to Financial Statements (unaudited)
1. Nature of Operations
Acorn Fund, Acorn International, Acorn USA, Acorn Twenty and Acorn Foreign Forty
(the "Funds") are series of Acorn Investment Trust (the "Trust"), an open-end
management investment company organized as a Massachusetts business trust. The
investment objective of each Fund is to seek long-term growth of capital.
2. Significant Accounting Policies
.Security valuation
Investments are stated at current value. Securities traded on securities
exchanges or in over-the-counter markets in which transaction prices are
reported are valued at the last sales price at the time of valuation. Securities
for which there are no reported sales on the valuation date are valued at the
mean of the latest bid and ask quotation or, if there is no ask quotation, at
the most recent bid quotation. Money market instruments having a maturity of 60
days or less from the valuation date are valued on an amortized cost basis.
Securities for which quotations are not available and any other assets are
valued at a fair value as determined in good faith by the Board of Trustees.
.Foreign currency translations
Values of investments denominated in foreign currencies are converted into U.S.
dollars using the spot market rate of exchange at the time of valuation.
Purchases and sales of investments and dividend and interest income are
translated into U.S. dollars using the spot market rate of exchange prevailing
on the respective dates of such transactions. The gain or loss resulting from
changes in foreign exchange rates is included with net realized and unrealized
gain or loss from investments, as appropriate.
.Security transactions and investment income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as soon as
the information is available to the Funds. Interest income is recorded on the
accrual basis and includes amortization of discounts on money market instruments
and long-term debt instruments when required for federal income tax purposes.
Realized gains and losses from security transactions are reported on an
identified cost basis.
.Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results may differ from those estimates.
.Financial instruments
Each Fund may purchase or sell exchange-traded financial futures contracts,
which are contracts that obligate that Fund to make or take delivery of a
financial instrument or the cash value of a securities index at a specified
future date at a specified price. The Funds enter into such contracts to hedge a
portion of their portfolio. Gains and losses are reflected as "Net Realized Gain
(Loss) on Futures" in the Statements of Operations. Additionally, each Fund may
engage in portfolio hedging with respect to changes in currency exchange rates
by entering into forward foreign currency contracts to purchase or sell foreign
currencies. The Statements of Operations reflect gains and losses as realized
for closed forward foreign currency contracts and unrealized for open contracts.
A Fund bears the market risk that arises from changes in the value of financial
instruments and securities indices (futures contracts) or from changes in
foreign currency rates (forward foreign currency contracts) and the credit risk
should a counterparty fail to perform under such contracts.
None of the funds had futures contracts open at June 30, 1999. Acorn Fund
and Acorn International entered into forward contracts to sell foreign currency,
as described below:
<TABLE>
<CAPTION>
Acorn Fund
Foreign Settlement U.S. Dollar Unrealized Gain
Amount (000) Currency Date Proceeds (000) (Loss) (000)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
78,085 Hong Kong Dollar 1/10/00 $10,007 $ (3)
============
Acorn International
Foreign Settlement U.S. Dollar Unrealized Gain
Amount (000) Currency Date Proceeds (000) (Loss) (000)
- -------------------------------------------------------------------------------------
23,000 British Pound 9/24/99 $36,612 $ 331
155,000 Hong Kong Dollar 1/10/00 19,501 (370)
1,789,200 Japanese Yen 9/16/99 15,168 210
4,735,000 Japanese Yen 9/24/99 40,219 587
------------
Total Unrealized Gain $ 758
============
</TABLE>
49
<PAGE>
.Fund share valuation
Fund shares are sold and redeemed on a continuing basis at net asset value. Net
asset value per share is determined daily as of the close of trading on the New
York Stock Exchange on each day the Exchange is open for trading by dividing the
total value of each Fund's investments and other assets, less liabilities, by
the respective number of Fund shares outstanding.
.Federal income taxes, dividends and distributions to shareholders
Each Fund has complied with the special provisions of the Internal Revenue Code
available to investment companies.
Acorn Fund, Acorn International and Acorn Foreign Forty have elected to
mark-to-market their investments in Passive Foreign Investment Companies
("PFICs") for Federal income tax purposes. A summary of transactions relating to
PFICs for Acorn International is as follows:
Acorn International (000)
- --------------------------------------------------------------------------------
Cumulative net unrealized appreciation
recognized in prior years at December 31, 1998 $ 311
Unrealized appreciation recognized through
June 30, 1999 0
Cumulative net unrealized appreciation recognized
in prior years on PFICS sold through June 30, 1999 (37)
-----
Cumulative net unrealized appreciation recognized
in prior years at June 30, 1999 274
-----
A summary of transactions relating to PFICS during
1998 follows:
Unrealized appreciation recognized 231
Distributions to shareholders from net investment
income relating to PFICs 0
At June 30, 1999, Acorn Fund had no cumulative net unrealized appreciation on
PFICs. In 1998, the Fund recognized unrealized appreciation of $232,000 and also
had losses on the sale of PFICs of $2,483,000.
At June 30, 1999, Acorn Foreign Forty had cumulative net unrealized
appreciation on PFICS of $19,000, all of which was recognized in 1998.
Distributions relating to PFICs are treated as ordinary income for Federal
income tax purposes.
Acorn International and Acorn Twenty intend to utilize provisions of the
federal tax law that allow them to carry a realized capital loss forward for
eight years following the year of the loss and offset such losses against future
realized gains. At December 31, 1998, Acorn International and Acorn Twenty had
capital loss carryforwards of $16,804,000 and $246,000, respectively, which will
expire December 31, 2006.
Dividends payable to shareholders are recorded by the Funds on the ex-
dividend date.
3. Transactions with Affiliates
The Funds' investment advisor, Wanger Asset Management, L.P. ("WAM") furnishes
continuing investment supervision to the Funds and is responsible for the
overall management of the Funds' business affairs.
Under the Funds' investment management agreement, fees are accrued daily
and paid monthly to WAM at the annual rates shown in the table below for each
fund.
Acorn Fund
- --------------------------------------------------------------------------
Net asset value:
For the first $700 million .75%
Next $1.3 billion .70%
Net assets in excess of $2 billion .65%
Acorn International
- --------------------------------------------------------------------------
Net asset value:
For the first $100 million 1.20%
Next $400 million .95%
Net assets in excess of $500 million .75%
Acorn USA
- --------------------------------------------------------------------------
Net asset value:
For the first $200 million .95%
Net assets in excess of $200 million .90%
Acorn Twenty
- --------------------------------------------------------------------------
On average daily net assets .90%
Acorn Foreign Forty
- --------------------------------------------------------------------------
On average daily net assets .95%
WAM has also contracted to provide administrative services to each Fund at
an annual rate of .05% of average daily net assets.
50
<PAGE>
Acorn Family of Funds
.Notes to Financial Statements (unaudited) continued
Certain officers and trustees of the Trust are also principals of WAM. The
Trust makes no direct payments to its officers and trustees who are affiliated
with WAM. Acorn Fund paid trustees' fees and expenses of the following:
<TABLE>
<CAPTION>
6 months
ended 6/30,
- --------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Acorn Fund $140 $211
Acorn International 69 94
Acorn USA 11 11
Acorn Twenty 1 --
Acorn Foreign Forty 1 --
-------------
$222 $316
-------------
</TABLE>
WAM advanced Acorn USA $107,000 in connection with the organization and initial
registration of the Fund. These costs are being amortized and reimbursed to WAM
over the period September 1996 through August 2001. WAM paid all of the
organization costs associated with the organization fo Acorn Twenty and Acorn
Foreign Forty. These costs amounted to $92,000. WAM will not be reimbursed for
these costs by the Funds.
WAM Brokerage Services, L.L.C., a wholly owned subsidiary of WAM, is the
distributor of the Funds' shares and receives no compensation for its services.
4. Borrowing Arrangements
The trust participates in a $250,000,000 credit facility which was entered into
to facilitate portfolio liquidity. No amounts have been borrowed under this
facility.
5. Fund Share Transactions
Proceeds and payments on Fund shares as shown in the Statements of Changes in
Net Assets are in respect of the following numbers of shares:
<TABLE>
<CAPTION>
6 months
Acorn Fund ended 6/30,
- ------------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Shares sold 10,094 28,471
Shares issued in reinvestment of
dividend and capital gain distributions 2,081 12,814
----------------
12,175 41,285
Less shares redeemed 39,663 47,224
----------------
Net decrease in shares outstanding (27,488) (5,939)
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn International ended 6/30,
- -----------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Shares sold 9,769 19,818
Shares issued in reinvestment of
dividend and capital gain distributions 445 1,540
----------------
10,214 21,358
Less shares redeemed 15,166 26,757
----------------
Net decrease in shares outstanding (4,952) (5,399)
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn USA ended 6/30,
- -----------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Shares sold 4,532 11,062
Shares issued in reinvestment of
dividend and capital gain distributions 46 1,270
----------------
4,578 12,332
Less shares redeemed 3,994 5,558
----------------
Net increase in shares outstanding 584 6,774
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn Twenty ended 6/30,
- ------------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Shares sold 1,979 3,176
Less shares redeemed 321 26
----------------
Net increase in shares outstanding 1,658 3,150
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn Foreign Forty ended 6/30,
- ------------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Shares sold 864 1,453
Less shares redeemed 15 18
----------------
Net increase in shares outstanding 849 1,435
- ------------------------------------------------------------------
</TABLE>
6. Investment Transactions
Investment Transactions (excluding money market instruments) for each of the
Funds are as follows:
<TABLE>
<CAPTION>
6 months
Acorn Fund ended 6/30,
- ----------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Investment securities:
Purchases $553,191 $ 830,390
Proceeds from sales 981,142 1,048,096
================================================================
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn International ended 6/30,
- ----------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Investment securities:
Purchases $433,766 $570,304
Proceeds from sales 425,671 709,630
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn USA ended 6/30,
- ----------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Investment securities:
Purchases $76,468 $178,181
Proceeds from sales 68,204 95,639
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn Twenty ended 6/30,
- ----------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Investment securities:
Purchases $44,022 $34,025
Proceeds from sales 25,599 4,483
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn Foreign Forty ended 6/30,
- ----------------------------------------------------------------
(in thousands) 1999 1998
<S> <C> <C>
Investment securities:
Purchases $32,000 $13,984
Proceeds from sales 9,409 974
- ----------------------------------------------------------------
</TABLE>
51
<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
Steven A. Radis
Vice President and Secretary
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
52
<PAGE>
Directions to 1999 Annual Shareholder Meeting
Bank One Auditorium (formerly First Chicago) is located on the Plaza Level of
the Bank One building. The Bank One building is located in the center of the
Loop, bordered by Dearborn Street on the east, Madison Street on the north,
Clark Street on the west and Monroe Street on the south.
From the south:
Take I-57 (which merges with I-94, also known as the Dan Ryan Expressway). Take
the Dan Ryan into Chicago. Follow the signs for the Kennedy Expressway West.
Travel on the Kennedy and exit using the Monroe Street exit. Turn right (east)
from the exit onto Monroe Street. Proceed east on Monroe Street to Dearborn.
From the north:
Take the Kennedy Expressway (I-90/94) south to Chicago. Exit in the city at
Monroe Street. Turn left (east) from the exit onto Monroe Street. Proceed east
on Monroe Street to Dearborn.
From the west:
Take the Eisenhower Expressway (I-290) from the west. This becomes Congress
Street in the city. Take Congress east to Dearborn Street. Turn left (north) on
Dearborn to Monroe Street.
From the southwest:
Take the Stevenson Expressway (I-55). Exit to the Kennedy Expressway (North-
Wisconsin). Travel on the Kennedy and exit using the Monroe Street exit. Turn
right (east) from the exit onto Monroe Street. Proceed east on Monroe Street to
Dearborn.
TURN OVER FOR PARKING INFORMATION
<PAGE>
Parking information for 1999 Annual Shareholder Meeting
Private lot (indoor) located in the Bank One building. Entrance is at
40 South Clark (directly across from the Bank One building). Clark is
one-way south. Space is limited.
Cost: $$$$
Public lot located 1/2 block east of Bank One on Madison Street. Limited spaces.
Entrance on the south side of Madison between Dearborn and State Streets.
Madison is one-way west.
Cost: $$$
Mid Continental Plaza Parking located on Monroe Street 2-1/2 blocks east of the
Bank One building. Entrance is on the south side (right) of Monroe between
Wabash and Michigan Avenues. Monroe is one-way east.
Cost: $$$
Grant Park Underground (indoor) located 3-1/2 blocks east of the Bank One
building on Monroe Street. Entrance is on the north side of Monroe Street
between Columbus Drive and Lake Shore Drive. Monroe is two-way between Lake
Shore Drive and Michigan Avenue. West of Michigan, Monroe is one-way east.
Cost: $$
CTA
Cost $
Cost Key
- --------
Most expensive $$$$
Least expensive $
<PAGE>
The discussions in this report of portfolio companies are for illustration only
and are not recommendations of individual stocks. The information is believed to
be accurate, but the information and the views of the portfolio managers may
change. The Acorn funds invest in the stocks of small and midsized companies
that may be more volatile than the stocks of larger companies.
<PAGE>
[PICTURE APPEARS HERE]
The Acorn
- ------------------------
Family of Funds
WAM Brokerage Services, L.L.C.
P.O. Box 8502
Boston, MA 02266-8502
FIRST CLASS
PRE-SORT
U.S. POSTAGE
PAID
CHICAGO, IL
PERMIT NO. 1200
