<PAGE>
From the Desk of Ralph Wanger
Dear Shareholder:
You should have received proxy materials in the mail recently asking you to
vote on a new investment advisory agreement between Acorn and Liberty
Wanger Asset Management in connection with the sale of Wanger Asset
Management (WAM) to Liberty Financial Companies, Inc. (LFC). I want to
assure you personally that I believe the sale will be positive for our
shareholders and the company.
A question that has come up regarding our decision to sell is whether or
not I intend to retire. Considering my golf scores and my skiing abilities,
I think it is best that I keep working. All of our portfolio managers,
myself included, have signed agreements to stay with the firm for at least
the next five years.
So why are we selling? While I am not planning to retire any time soon, we
recognized the need to address succession issues that would arise upon my
eventual retirement. We have also found that our growth in recent years has
increased the administrative responsibilities of our principals. Our
partnership with LFC should allow us to shift administrative tasks to
Liberty so that we can focus on what we do best: managing money.
We feel confident that this decision will benefit shareholders in a number
of ways. First, we believe our association with a large organization
provides stability and clarifies the long-term status of WAM. This should
enable us to attract new talent to the firm. This merger will also allow us
to offer shareholders a broader range of investment products. Liberty's
subsidiaries manage more than 90 mutual funds. Additionally, by utilizing
Liberty's distribution and administrative resources, we believe we can
enhance our shareholder services.
I would like to stress that shareholders of record prior to the close of
the merger will maintain their no-load status after the sale. You will also
be able to invest without a load in many funds managed by Liberty's
affiliates (these funds may be subject to a 12b-1 fee). With this in mind,
if you know of friends who have been thinking about investing with us, you
may want to encourage them to obtain a prospectus and purchase shares now
so they can lock in their no-load status by becoming shareholders prior to
the close of the sale.
Your confidence in our products has made us successful. I thank you for
your support over the years and look forward to our future together. I
welcome the opportunity to meet you at our upcoming shareholder meeting on
September 26 in Chicago (see back cover for more details).
Sincerely,
/s/ Ralph Wanger
Ralph Wanger
Chief Investment Officer, Wanger Asset Management
<PAGE>
Following are answers to some of the questions you may have regarding our plans
to sell Wanger Asset Management (WAM) to Liberty Financial Companies.
Q: Who is Liberty Financial?
A: Boston-based Liberty Financial was founded in 1985 by Liberty Mutual
Insurance Company. Liberty Financial has more than $67 billion in financial
assets under management. Liberty Financial is a publicly traded company (NYSE:
L) and is 71% owned by Liberty Mutual Insurance. Other Liberty Financial
subsidiaries include Stein Roe & Farnham, Colonial Management Associates,
Newport Pacific Management, Crabbe Huson, Keyport, Independent Financial, and
Progress Investment Management Company. If the merger is approved, we will be
associated with a large group of highly professional asset managers.
Q: Why did WAM select Liberty Financial?
A: We wanted a partner to provide substantial strategic benefits such as:
. Knowledge of the mutual fund industry
. Strong distribution
. Solid management
. Product line fit
With $67 billion in assets under management, a sales force of more than 200
professionals, and 95 mutual fund products, Liberty Financial met our
requirements.
Q: What changes will I see as a shareholder?
A: The fund names will adopt the Liberty prefix (Liberty Acorn Fund, for
example) after the sale so be sure to look under "L", instead of "A", for daily
price listings in the newspaper. Wanger Asset Management will operate under the
name Liberty Wanger Asset Management after the closing.
Following the sale, the funds will be offered through financial advisors with a
sales charge applied. However, as a shareholder of record prior to the close,
you will maintain your no-load status after the close. You will be able to
continue to make additional investments into your account(s), as well as invest
in certain funds distributed by Liberty Financial, without paying a sales charge
(some of the funds offered through Liberty carry 12b-1 fees, however). Immediate
family members of current shareholders will also enjoy no-load status should
they choose to invest with us.
September 26 is the deadline for voting your proxy.
Turn to the back cover for information on our upcoming shareholder meeting.
<PAGE>
Acorn Family of Funds
Semiannual Report
June 30, 2000
Managed by Wanger Asset Management, L.P. 2
<PAGE>
Acorn Family of Funds Semiannual Report 2000
Table of Contents
The Acorn Family of Funds
Performance At A Glance 1
Squirrel Chatter: When Railroads were
the "New Economy" 2
Acorn Fund
In a Nutshell 4
At a Glance 5
Major Portfolio Changes 14
Statement of Investments 16
Acorn International
In a Nutshell 6
At a Glance 7
Major Portfolio Changes 22
Statement of Investments 24
Portfolio Diversification 28
Acorn USA
In a Nutshell 8
At a Glance 9
Major Portfolio Changes 29
Statement of Investments 30
Acorn Foreign Forty
In a Nutshell 10
At a Glance 11
Major Portfolio Changes 33
Statement of Investments 34
Portfolio Diversification 36
Acorn Twenty
In a Nutshell 12
At a Glance 13
Major Portfolio Changes 37
Statement of Investments 38
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' mid-year distributions. The record date
was June 20, 2000, the ex-dividend date was June 21, 2000 and the payable date
was June 26, 2000.
<TABLE>
<CAPTION>
Acorn Fund Acorn International Acorn USA Acorn Foreign Forty Acorn Twenty
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Long-term Capital Gains $1.00 $0.28 $0.30 None $0.62
------------------------------------------------------------------------------------------------------------
Short-term Capital Gains None $0.23 $0.02 $0.11 $0.27
------------------------------------------------------------------------------------------------------------
Ordinary Income $0.05 $0.66 None $0.03 None
------------------------------------------------------------------------------------------------------------
</TABLE>
Notes On After-tax Returns and Tax Efficiency
Included on each individual fund's "At A Glance" page, after-tax returns show
the fund's annualized after-tax total return for the time period specified.
After tax returns with redemptions show the funds' annualized after-tax total
return for the time period specified plus the tax-effects of selling your shares
of the fund at the end of the period. To determine these figures, distributions
are treated as taxed at the maximum tax rate in effect at the time they were
paid with the balance reinvested. These rates are currently 39.6% for income and
short-term capital gain distributions. Long-term capital gains are currently
taxed at a 20% rate. The tax rate is applied to distributions prior to
reinvestment and the after-tax portion is reinvested in the fund. State and
local taxes are ignored. The returns provided by Morningstar, Inc. are
calculated in a consistent manner.
Tax Efficiency is derived by dividing after-tax returns by pretax returns. The
highest possible score would be 100%, which would apply to a fund that had no
taxable distributions. Because many interrelated factors effect tax efficiency,
it is difficult to predict tax efficiency.
<PAGE>
Acorn Fund Turns 30!
On June 10, 1970, Acorn Fund was launched with Ralph Wanger at the helm. During
the last three decades, Ralph and Chuck McQuaid, who joined the fund in 1978,
have stood nose-to-nose with bears and bulls, and watched gimmicks and fads come
and go. In 1999, a group of academics set out to see if any active portfolio
managers had beaten the market by skill rather than luck. Only five managers
passed the test and of the five, the only team still managing portfolios was
Ralph and Chuck./1/ They have the longest combined management tenure of any of
the 735 small-company funds tracked by Morningstar./2/
Send your best wishes to Ralph and Chuck on their accomplishments of the last 30
years. Just write your message on the attached postcard.
Congratulations
on 30 Years
Acorn Fund!
You could win $1,000 worth of Acorn Fund shares!
See reverse side for details.
<PAGE>
It's Acorn Fund's Birthday But You May Get The Presents!
Test your knowledge of the events of the last 30 years by playing our on-line
trivia game for your chance to win $1,000 worth of Acorn Fund shares. Visit
www.acornfunds.com to enter./3/
Send Your Own 30th Anniversary Message To Ralph and Chuck!
/1/ The study, titled "Should Investors Avoid All Actively Managed Mutual Funds?
A Study in Bayesian Performance Evaluation," uses statistical probability
pioneered by the Rev. Thomas Bayes, an 18th century mathematician. The
researchers measured the probabilities that fund managers of 1,437 actively
managed U.S. diversified equity funds would beat benchmarks in the future. The
researchers used a range of extremely conservative assumptions-for example, that
just 1 in 5000 portfolio mangers had the ability to outperform a benchmark. The
initial assumption provides the base upon which the subsequent probability data
rests. The study's data began with 1963 and ended with 1996.
/2/ Data provided by Morningstar, Inc. through June 30, 2000.
/3/ NO PURCHASE NECESSARY. Enter via the internet at www.acornfunds.com or call
1-800-9ACORN9 to receive a mail-in entry form. All entries must be received by
9/15/00. Void where prohibited. One prize will be awarded, shares valued at
$1,000 in the Acorn Fund. Winner selected by random drawing by 9/22/00. Open to
U.S. residents 18 years old or older. Subject to complete Official Rules,
available by sending a stamped, self-addressed envelope to TRIVIA CONTEST, c/o
Wanger Asset Management, 227 Monroe, Suite 3000, Chicago, IL 60606.
Dear Ralph and Chuck:
-----
PLACE
STAMP
HERE
-----
TO: Ralph Wanger & Chuck McQuaid
227 West Monroe, Suite 3000
Chicago, Illinois 60606-5016
<PAGE>
Acorn Family of Funds
Performance At A Glance Average Annual Total Returns through 6/30/00
<TABLE>
<CAPTION>
2nd* Year* 1 3 5 10 Life
Quarter to Date year years years years of Fund
<S> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------
Acorn
Fund (6/10/70) -1.83% -1.41% 17.77% 16.31% 18.26% 16.53% 16.78%
-----------------------------------------------------------------------------------------------------
S&P 500 -2.66% -0.42% 7.25% 19.65% 23.77% 17.78% 14.43%
-----------------------------------------------------------------------------------------------------
Russell 2000 -3.78% 3.04% 14.32% 10.56% 14.25% 13.56% NA
-----------------------------------------------------------------------------------------------------
Lipper Small Cap
Core Index -1.60% 8.55% 23.62% 11.58% 15.73% NA NA
-----------------------------------------------------------------------------------------------------
S&P MidCap 400 -3.30% 8.97% 16.98% 20.32% 21.16% 18.01% NA
-----------------------------------------------------------------------------------------------------
Acorn
International (9/23/92) -14.18% -3.81% 47.57% 22.56% 20.61% -- 19.58%
-----------------------------------------------------------------------------------------------------
EMI (World ex-U.S.) -1.74% 0.25% 14.98% 6.12% 7.39% -- 8.87%
-----------------------------------------------------------------------------------------------------
EAFE -3.96% -4.06% 17.16% 10.17% 11.31% -- 11.98%
-----------------------------------------------------------------------------------------------------
IFCI Composite -10.39% -9.04% 10.72% -4.51% 1.77% -- 7.33%
-----------------------------------------------------------------------------------------------------
Lipper Int'l Small
Cap Funds Index -9.79% -0.41% 37.74% 16.47% NA -- NA
-----------------------------------------------------------------------------------------------------
Lipper Int'l
Funds Index -4.70% -4.11% 23.63% 11.90% 14.41% -- 13.85%
-----------------------------------------------------------------------------------------------------
Acorn
USA (9/4/96) -15.06% -16.08% -4.62% 8.11% -- -- 14.59%
-----------------------------------------------------------------------------------------------------
Russell 2000 -3.78% 3.04% 14.32% 10.56% -- -- 13.51%
-----------------------------------------------------------------------------------------------------
Lipper Small Cap
Value Index 1.31% 4.96% 1.05% 3.96% -- -- 9.71%
-----------------------------------------------------------------------------------------------------
S&P MidCap 400 -3.30% 8.97% 16.98% 20.32% -- -- 22.59%
-----------------------------------------------------------------------------------------------------
S&P 500 -2.66% -0.42% 7.25% 19.65% -- -- 25.05%
-----------------------------------------------------------------------------------------------------
Acorn Foreign
Forty (11/23/98) -14.03% -0.61% 51.43% -- -- -- 53.29%
-----------------------------------------------------------------------------------------------------
EAFE -3.96% -4.06% 17.16% -- -- -- 15.95%
-----------------------------------------------------------------------------------------------------
SSB World ex-US
Cap Range $2-10B -0.54% -1.25% 15.14% -- -- -- 15.55%
-----------------------------------------------------------------------------------------------------
Lipper International
Funds Index -4.70% -4.11% 23.63% -- -- -- 20.54%
-----------------------------------------------------------------------------------------------------
Acorn
Twenty (11/23/98) 1.05% 3.41% 9.81% -- -- -- 25.06%
-----------------------------------------------------------------------------------------------------
S&P MidCap 400 -3.30% 8.97% 16.98% -- -- -- 22.70%
-----------------------------------------------------------------------------------------------------
Lipper Mid Cap
Value Index -2.06% 1.96% 5.33% -- -- -- 10.93%
-----------------------------------------------------------------------------------------------------
Russell 2000 -3.78% 3.04% 14.32% -- -- -- 19.92%
-----------------------------------------------------------------------------------------------------
S&P 500 -2.66% -0.42% 7.25% -- -- -- 16.35%
-----------------------------------------------------------------------------------------------------
</TABLE>
*Quarterly and year-to-date numbers are not annualized.
Past performance does not guarantee future results. The investment return and
principal value of an investment in any Acorn fund will fluctuate so that fund
shares, when redeemed, may be worth more or less than their original cost.
Markets have recently been quite volatile and by the time you receive this
report short-term performance could be different than shown here.
Description of indexes: S&P 500 is a broad, market-weighted index of large
companies trading in the U.S. S&P Mid Cap 400 is a market-weighted index of
companies in the next size/tier down from the S&P 500. Russell 2000 is a market-
weighted index of 2000 smaller U.S. companies, formed by taking the largest
3,000 companies and eliminating the largest 1,000. EMI (World ex-US) is an index
of the bottom 20% of institutionally investable capital of countries, selected
by index sponsor, outside the U.S. EAFE is a broad index of 20 major markets in
Europe, Australia and the Far East in proportion to world stock market
capitalization. SSB World Ex-US Cap Range $2-$10 billion is a subset of Salomon
Smith Barney's Broad Market Index, representing a mid-cap developed market index
excluding the U.S. IFCI Composite is an index of 31 emerging markets which
weights securities according to their market capitalization after adjusting for
shares held by other constituents in the index. Lipper Indexes include the
largest funds tracked by Lipper, Inc. in the named category. Lipper Mid Cap
Value Funds Index -- 30 mid-cap funds investing in companies considered to be
undervalued relative to a major stock index; Lipper International Funds Index --
30 largest non-U.S. funds, not including non-U.S. small cap funds; Lipper
International Small Cap Funds Index -- 10 largest non-U.S. funds investing in
small cap companies, including Acorn International; Lipper Small Cap Core Funds
Index -- 30 largest small cap core funds, including Acorn Fund. All indexes are
unmanaged and returns include reinvested distributions. A more complete
description of each index is included in the Acorn Funds statement of additional
information.
1
<PAGE>
>Squirrel Chatter: When Railroads were the "New Economy"
[PHOTO HERE]
Watching the boom and bust cycle of Internet stocks in recent months, I thought
it might be interesting to review what happened when "New Economy" industries
took over 150 years ago. The predecessor to today's Information Revolution (the
Internet, the cell phone and the personal computer) was the Industrial
Revolution. The steam locomotive, invented in 1829 in England, was the pivotal
invention of the Industrial age. Soon after the first locomotive ran from
Manchester to Liverpool, "dot.rr" ventures began to spring up. By the end of
1845, 1,428 railway ventures had been proposed and were waiting to receive
Parliamentary permission to raise capital./1/ A great IPO boom occurred in
Britain, with all the greed, hype, and chicanery we know and love today. As
always, the bubble burst shortly thereafter, bringing the usual losses and
complaints.
Building the Union Pacific
In America, railroads were built with equal enthusiasm. In 1830 there were
only 32 miles of U.S. railroad track. By 1870 that number reached 125,000 miles.
The need for a transcontinental railroad was visualized as early as 1840, at a
time when railroads were primitive and the West was only inhabited by Indians,
who were considered to be hostile savages. The discovery of gold in California
in 1848, followed by additional gold and silver strikes in Colorado and Nevada,
made a railroad more desirable, although it was clear that any construction
still would have to be subsidized by the government. In the mid-1850s, Congress
debated building a railroad from the Midwest to California, but the slavery
issue blocked any decision. The Southern states wanted a route through Texas and
Arizona. The North, intent on blocking the extension of slavery into the West,
wanted a central route through Nebraska and Colorado.
When the Civil War started, the Southerners left Congress, allowing the
remaining Northern government to build the central route. The route was to be
from the Missouri River (eventually Omaha) through Nebraska and Wyoming to
Ogden, Utah. The Central Pacific Railroad was to build east from California
through the Sierra Nevada Mountains and link up to the Union Pacific.
The chief construction engineer of the Union Pacific was General Granville
M. Dodge. He was experienced in railroad building and had also been a successful
combat commander in the Union Army. Building a railroad through uninhabited
areas, fighting Indians along the way, matched Dodge's abilities perfectly. The
railroad "army" Dodge commanded was made up of 10,000 workmen plus 10,000 draft
animals. Advance parties of surveyors located the route. Graders, who could
grade three miles a day on level plains, followed them. The graders operated
several hundred miles ahead of the tracklayers. Bridge building gangs could
construct major bridges in 30 days or less. To accommodate the workers, a
floating civilian population of gamblers, bartenders and prostitutes built
temporary towns along the route. During 1867 and 1868, the Union Pacific had
periods in which they laid four to seven miles of track per day!/2/
Opening The West
Low freight rates transformed the country (cheap communication is doing the
same thing today). In the 1850s it cost $0.30 per pound to ship goods from St.
Joseph, Missouri to Ogden, Utah, a 1,000-mile trip ($0.60 per ton-mile). At this
rate, only the most valuable and essential items were worth shipping. The Union
Pacific was finished in 1869. By 1880, freight rates were down to $0.02 per ton-
mile, one-thirtieth of pre-rail costs. A dozen years later, the rate was less
than a penny as competition between railroads forced rates ever lower. New
industries were created as the agricultural bounty of the Midwest was made
accessible. The introduction of an inexpensive means to ship grain, cattle, coal
and mineral ore to the East brought prosperity and wealth to the West. New
cities sprung up and old ones withered./3/ Charles F. Adams, Jr., of the
Massachusetts Adams', was a serious scholar of the railroads and later became
president of the Union Pacific. He wrote in 1871:
[The railroad] makes the grass grow in the once busy streets of small
commercial centers like Nantucket, Salem and Charleston. ...It threatens
2
<PAGE>
to make a solitude of the once busy wharves of Boston, and it fills New
Hampshire with deserted farms. E Meanwhile San Francisco and Chicago spring up
like a very palace of Aladdin.
Adams was right about San Francisco and Chicago. In 1835, San Francisco was
only one shanty. In 1869 it was a big city of 170,000 and booming. The
statistics for Chicago are even more remarkable. In 1830 no more that 100 souls
survived in "an uninviting swamp." By 1847, there was a town of 8,000; ten years
later, 100,000; and in 1869 it was a major city of 300,000 and the fastest
growing city in America. /4/
Investors "downstream from the railroads" -- those that used, rather than
ran, the railroads -- made some impressive fortunes. But how successful were the
mighty railway companies themselves? Not very. Over the 70 years that marked the
strongest period in rail history (1860-1930), most railways went broke at least
once because of fierce competition. The different rail companies tried to
collude to keep rates up, but always one competitor would break ranks and re-
ignite a rate war. Bankruptcies were frequent (as with the airlines today) but
the railroads continued to operate in receivership. The Union Pacific itself
went bust in 1893. /5/ Adams wrote the following about railroad investments. If
you care to, read it twice replacing "railroad" with "Internet". Either way, it
works.
People continuously refer to the brilliant successes in railroad
enterprises; they do not so often count the failures....The profits upon
railroad enterprises, as a whole, are not excessive; the business is one which
affords in this country even less than the average return upon the capital
invested in it. [His estimate: no more than 6.8% return on assets, and this was
before the depression of 1873.]/6/
Railroads were the dominant industry from 1860 to 1930, but have been
displaced by truck lines. Today, the railroad industry makes up only 0.4% of the
S&P 500. Pop quiz: Name one of the manufacturers of steam locomotives in
1900./7/
The Internet is promoting growth in much the same way the railroads did.
Competition among Internet companies is preventing them from making substantial
profits but companies that have learned how to use the Internet to improve their
operations -- many of those stodgy "Old Economy" names -- are discovering new
avenues for growth and profits.
/s/ Ralph Wanger
Ralph Wanger
Chief Investment Officer, Wanger Asset Management, L.P.
Lead Portfolio Manager, Acorn Fund
--------------------------------------------------------------------------------
A.M. Kelly in New York has published a series of historic business books
referenced in this essay. They include:
/1/ The Commercial Crisis 1847-48 (1840), Evans, D. Morier, 1969, p. 23-38.
/2/ History of the Union Pacific (1923), Trottman, Nelson, 1966, p. 7, 22, 61.
/3/ History of the Union Pacific Railway (1895), White, Henry K, 1973, p. 71.
/4/ Chapters of Erie (1871), Adams, Charles F. and Henry, 1967, p. 346-347.
/5/ History of the Union Pacific Railway (1895), op. cit., p. 61.
/6/ Chapters of Erie (1871), op. cit., p. 410.
/7/ Locomotive manufacturers in 1900 included Baldwin and American Locomotive.
Both still exist today as part of holding companies, but they are not major
names.
3
<PAGE>
In a Nutshell
[photos here]
Acorn Fund fell 1.8% in the second quarter. The Fund fared better than the
small-and mid-cap indexes, which were down more than 3%, and performed in line
with the Lipper Small Cap Core Index (see Page 1 for performance data).
Biotech stocks posted strong returns again this quarter. Myriad Genetics
jumped 146% while Protein Design Labs doubled in value. Inhale Therapeutics rose
36%.
Takeovers also posted good results. Specialty chemical company Lilly
Industries bloomed 144% as it agreed to be acquired by Valspar, a manufacturer
and distributor of paint and coatings. Money manager Pioneer Group soared 81% on
news that Unicredito, an Italian asset manager, plans to acquire its asset
management business. Neuberger Berman and Phoenix Investment Partners, rose in
sympathy, gaining 66% and 37%, respectively.
Freight forwarders and logistics companies have been long-time favorites of
the Fund as they benefit from ever-improving technology. The group delivered
solid returns in the second quarter as Forward Air flew in a 70% return, C.H.
Robinson increased 33%, and Expeditors International imported a 20% profit.
Acorn's technology underweighting helped performance relative to our benchmarks
but our tech stocks did hurt absolute returns.
Technology stocks fell in the quarter. Acorn's technology underweighting
helped performance relative to our benchmarks but our tech stocks did hurt
absolute returns. Micros Systems became a micro stock, collapsing 70% on the
announcement of an earnings shortfall. Aztec Consulting dropped 73%.
Our foreign holdings declined 23%, giving up some of the magnificent 139%
gain booked last year. Japan's Softbank -- Acorn's top holding at year-end 1999
-- fell 54%. Since January, we've sold half of our Softbank position at healthy
prices, keeping much of last year's profit. Other difficult foreign holdings
were WM Data, a Swedish computer services company, off 39%, and Star Cruises
(Singapore), which plunged 38%.
Taking advantage of a discount in the telecom and media sectors, we bought
select cable television stocks that dipped into our buy target price range. We
took positions in Mediacom Communications and Insight Communications and added
to Classic Communications. Several Internet-related stocks also appeared
attractive; we increased exposure to Getty Images, a license holder of
photographs used in publications and electronic media, and Information Holdings,
a publisher of information used in professional and academic settings.
Like technology weightings today, in 1979 money managers traditionally held
close to a 30% position in energy. In the early 1980s, however, low prices and
abundant supply took oil and gas production and service companies out of the
stock market limelight. Now, after a 20-year hiatus, we are reintroducing
"energy matters" as a theme in the portfolio. Increased use of gas in
electricity plants is driving natural gas prices upward and has improved the
returns of North American natural gas companies. We hiked our existing energy
positions and added new stocks including Canadian Hunter, a Canadian gas
producer, Enerflex, a Canadian gas compressor company, and Carbo Ceramics, which
sells productivity enhancing materials for gas wells. As a result of purchases
and appreciation, our energy weighting doubled to 11%.
Scouring the IPO Wreckage
For decades companies went public after they posted profits or at least saw some
positive cash flow. A few years ago, an initial public offering boom began, and
more recently it got out of hand. Good companies went public at outrageous
prices and lousy companies went public without even attempting to present viable
business models. Predictably, the boom busted, and many 1999 and early 2000 IPO
stocks collapsed. With their demise came opportunity. In scouring the wreckage
for soundly structured businesses now selling at attractive stock prices, we
unearthed Mediacom Communications, a suburban and rural cable TV company run by
seasoned management and selling at below half of its takeover value. As of the
end of the quarter, Mediacom was up 85% from our average cost.
/s/ Ralph Wanger
Ralph Wanger
Lead Portfolio Manager
/s/ Charles P. McQuaid
Charles P. McQuaid
Co-Portfolio Manager
Because of recent market volatility, short-term performance of the Fund or its
portfolio holdings may be different than stated as of 6/30/00.
4
<PAGE>
Acorn Fund
At a Glance Ticker Symbol: ACRNX
Pretax and After-tax Average Annual Total Returns
--------------------------------------------------------------------------------
Through June 30, 2000
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
After- After-tax W/ Tax After- After-tax W/ Tax After- After-tax W/ Tax
Pretax tax redemption Efficiency Pretax tax redemption Efficiency Pretax tax redemption Efficiency
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Acorn Fund 17.77% 12.44% 15.35% 70.0% 18.26% 15.02% 14.30% 82.3% 16.53% 14.07% 13.32% 85.1%
Small Blend
Category Avg.* 17.77% 15.98% NA 89.9%+ 15.30% 12.74% NA 83.3%+ 13.03% 10.46% NA 80.3%+
Small Growth
Category Avg.* 55.14% 51.90% NA 94.1%+ 20.86% 18.21% NA 87.3%+ 17.12% 14.79% NA 86.4%+
</TABLE>
*Source: Morningstar, Inc. Morningstar listed the Fund in the Small Growth
Category as of 6/30/00 but the Fund has also regularly appeared in the Small
Blend Category so we are showing both.
+Calculated by Wanger Asset Management using Morningstar data.
"NA" indicates information not available from Morningstar. Morningstar does not
provide after-tax w/ redemption returns.
If you own the Fund in a tax-deferred account such as an IRA or a 401(k), this
information does not apply to you. Your actual after-tax returns depend on your
tax situation and will differ from those shown. After-tax returns reflect past
tax-effects and are not predictive of future tax effects.
Acorn Fund Portfolio Diversification
as a % of net assets, as of 6/30/00
[Pie chart]
13.6% Finance
24.6% Information
Software & Services 11.2%
Computer Related Hardware 6.9% 11.0% Consumer
Telecom 3.3% Goods/Services
Media 3.2%
8.8% Other*
6.0% Real Estate 11.7% Foreign Equities
7.6% Industrial
Goods/Services
9.0% Energy/Minerals
7.7% Health Care
*Other includes cash and other assets less liabilities of 7.2%.
The Value of a $10,000 Investment in Acorn Fund
June 10, 1970 through June 30, 2000
This graph compares the results of $10,000 invested in the Acorn Fund on June
10, 1970 (the date the Fund shares were first offered to the public) to the S&P
500 Stock Index. The S&P 500 provides a broad, market-weighted average of U.S.
blue-chip company stock performance. The index is unmanaged and returns for both
the index and the Fund include reinvested dividends and capital gains.
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. Small-cap
stocks are often more volatile and less liquid than larger company stocks.
Acorn Fund NAV on 06/30/00: $17.22
[GRAPH APPEARS HERE]
Acorn Fund ($) S & P 500($)
6/10/70 $ 10,000.00 $ 10,000.00
6/30/70 $ 9,694.96 $ 9,819.82
$ 12,022.83 $ 11,481.19
12/31/70 $ 13,586.67 $ 12,676.21
$ 17,020.50 $ 13,905.67
$ 17,397.32 $ 13,928.19
$ 17,571.46 $ 13,846.05
12/31/71 $ 17,828.47 $ 14,489.93
$ 20,119.24 $ 15,323.26
$ 20,562.03 $ 15,425.28
$ 18,962.10 $ 16,029.41
12/31/72 $ 19,367.63 $ 17,241.65
$ 16,566.54 $ 16,399.05
$ 13,634.79 $ 15,453.10
$ 16,831.14 $ 16,196.34
12/31/73 $ 14,765.21 $ 14,708.53
$ 15,014.52 $ 14,293.85
$ 12,506.93 $ 13,212.77
$ 9,689.46 $ 9,888.71
12/31/74 $ 10,690.52 $ 10,816.11
$ 13,016.27 $ 13,298.89
$ 15,951.13 $ 15,341.81
$ 13,640.38 $ 13,660.57
12/31/75 $ 13,945.07 $ 14,842.34
$ 18,952.95 $ 17,065.45
$ 20,502.11 $ 17,486.75
$ 20,724.01 $ 17,819.29
12/31/76 $ 23,045.01 $ 18,394.28
$ 23,906.83 $ 17,024.38
$ 26,615.44 $ 17,587.44
$ 25,625.38 $ 17,097.24
12/31/77 $ 27,168.08 $ 17,077.37
$ 26,754.03 $ 16,234.76
$ 30,094.08 $ 17,616.59
$ 34,745.67 $ 19,142.82
12/31/78 $ 31,776.68 $ 18,199.52
$ 36,376.09 $ 19,492.58
$ 40,131.51 $ 20,023.85
$ 45,298.63 $ 21,555.38
12/31/79 $ 47,790.43 $ 21,585.85
$ 42,258.39 $ 20,696.87
$ 49,111.66 $ 23,489.67
$ 56,696.98 $ 26,124.80
12/31/80 $ 62,594.14 $ 28,602.28
$ 65,118.86 $ 28,997.09
$ 64,184.59 $ 28,330.68
$ 54,131.51 $ 25,431.90
12/31/81 $ 58,004.84 $ 27,195.28
$ 53,546.39 $ 25,206.68
$ 53,692.23 $ 25,066.24
$ 56,586.13 $ 27,953.10
12/31/82 $ 68,207.61 $ 33,053.79
$ 77,580.23 $ 36,364.60
$ 87,777.18 $ 40,401.43
$ 85,388.87 $ 40,347.11
12/31/83 $ 85,388.87 $ 40,510.07
$ 80,298.09 $ 39,538.95
$ 79,416.93 $ 38,524.11
$ 87,718.95 $ 42,257.55
12/31/84 $ 89,044.97 $ 43,051.14
$ 99,746.10 $ 47,004.50
$ 107,107.02 $ 50,451.78
$ 103,142.39 $ 48,386.33
12/31/85 $ 117,142.49 $ 56,710.39
$ 132,667.70 $ 64,708.53
$ 141,428.67 $ 68,522.79
$ 132,004.50 $ 63,742.71
12/31/86 $ 136,843.05 $ 67,294.65
$ 160,298.29 $ 81,664.02
$ 164,942.45 $ 85,763.12
$ 180,518.52 $ 91,420.24
12/31/87 $ 142,992.51 $ 70,828.03
$ 159,366.10 $ 74,860.89
$ 169,946.42 $ 79,847.64
$ 173,543.17 $ 80,117.91
12/31/88 $ 178,370.18 $ 82,591.41
$ 192,253.23 $ 88,447.27
$ 204,223.07 $ 96,254.64
$ 226,493.46 $106,562.00
12/31/89 $ 222,681.33 $108,761.26
$ 217,233.62 $105,490.20
$ 229,685.52 $112,125.07
$ 175,081.35 $ 96,715.69
12/31/90 $ 183,674.24 $105,385.53
$ 219,033.08 $120,692.90
$ 226,533.44 $120,416.00
$ 246,203.85 $126,856.12
12/31/91 $ 270,640.85 $137,492.05
$ 293,112.00 $134,018.28
$ 278,828.01 $136,567.30
$ 289,723.32 $140,877.05
12/31/92 $ 336,210.38 $147,927.93
$ 368,609.61 $154,428.99
$ 393,410.52 $155,181.51
$ 429,427.62 $159,193.16
12/31/93 $ 444,888.87 $162,881.56
$ 420,332.28 $156,703.76
$ 404,705.36 $157,363.54
$ 431,587.92 $165,056.97
12/31/94 $ 411,750.28 $165,031.80
$ 423,187.78 $181,100.95
$ 458,845.90 $198,387.65
$ 496,103.89 $214,154.74
12/31/95 $ 497,406.80 $227,046.90
$ 535,443.79 $239,231.58
$ 572,749.30 $249,969.53
$ 584,766.19 $257,697.40
12/31/96 $ 609,569.17 $279,177.27
$ 594,573.12 $286,661.37
$ 674,822.25 $336,707.74
$ 767,343.97 $361,926.34
12/31/97 $ 761,852.26 $372,319.82
$ 853,328.34 $424,256.76
$ 850,977.75 $438,265.77
$ 684,966.59 $394,671.44
12/31/98 $ 807,685.20 $478,724.17
$ 778,924.89 $502,575.52
$ 901,843.77 $537,999.47
$ 883,409.10 $504,403.82
12/31/99 $1,077,255.41 $579,455.48
$1,081,906.27 $592,744.17
6/30/2000 $1,062,104.69 $576,998.01
Fund Net Assets as of 6/30/00: $3,817.6 million
Acorn Fund Top 10 Holdings
SEI Investments 1.9%
Mutual Fund Administration
Harley-Davidson 1.8%
Motorcycles & Related Merchandise
AmeriCredit 1.7%
Auto Lending
Expeditors International of
Washington 1.7%
International Freight Forwarder
Liberty Media Group, AT&T 1.7%
Cable & Satellite Programming
Myriad Genetics 1.6%
Gene Discovery & Diagnostic Products
International Game
Technology 1.6%
Slot Machines & Progressive Jackpots
Serco Group (United Kingdom) 1.5%
Facilities Management
Dynegy 1.5%
Natural Gas & Electric Processing,
Production and Marketing
First Health Group 1.4%
PPO Network
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.
5
<PAGE>
Acorn International
>In a Nutshell
[PHOTOS HERE]
Acorn International had a rough second quarter, declining 14.2%. Year-to-date,
we are down 3.8%, slightly behind the Lipper International Small Cap Funds Index
and the EMI benchmark, but in line with the larger cap Lipper International
Funds Index and the EAFE benchmark.
The spring meltdown affected the portfolio particularly in Japan where many
of our holdings had a higher correlation with the Nasdaq than we anticipated;
and among the IT service stocks in Europe, where growth has slowed post-Y2K. A
few Singapore names, Star Cruises in particular, returned to earth after
remarkable runs last year. We did a lot of selling in March and April to lock in
gains and reduce exposure to vulnerable sectors. On the other hand, our largest
position in the Fund at quarter end, Li & Fung, doubled over the six months,
giving us a welcome gain for the period of $70 million.
We have given back some ground relative to the first quarter, but have preserved
most of last year's 79.2% return. We are enjoying buying back positions at
substantial discounts to where we sold them less than three months ago.
While market corrections are unpleasant, they need to be seen in the context of
what precedes them. The Fund enjoyed an exceptionally strong 1999, as evidenced
by our trailing 12-month return of 47.6% through June 30, 2000. We have given
back some ground relative to the first quarter, but have preserved most of last
year's 79.2% return. We are enjoying buying back positions at substantial
discounts to where we sold them less than three months ago (see box).
Meanwhile, the world of equity investing outside the United States is
changing faster than we ever imagined it would. In continental Europe alone,
companies issued $153 billion worth of new equity last year, while the
comparable figure for this year through June is $92 billion. A good chunk of
this cash is funding young, fast-growing enterprises going public for the first
time. Buyers of small-to mid-cap stocks, like Acorn International, should
benefit from a larger pool of stocks from which to choose, and a growing
interest by locals in owning stocks.
As ever, we remain committed to finding the best companies in the world.
Our philosophy is to own them through up and down market cycles, allowing value
to build for shareholders over time (despite an occasional opportunistic
trade!). Li & Fung first entered the Acorn International portfolio in 1994. Even
before this year's 100% rise, we had made six times our original investment. No
one can predict when any given stock will perform, but if our core holdings
represent what we believe are high quality global companies with strong long-
term prospects, the Fund should do just fine.
/s/ Leah Joy Zell /s/ Margaret M. Forster
Leah Joy Zell Margaret M. Forster
Lead Portfolio Manager Co-Portfolio Manager
U-Turn
-------------------------------------------
UnitedGlobalCom owns cable television franchises in 23 countries, making it the
largest broadband communication company outside the United States. It had been
in the portfolio for more than five years until March, when we sold our stake
because the valuation was too rich. In the "tech wreck" of April and May, we
bought back more than we sold, at less than half the price. Since then, the
company announced a deal with Liberty Media, involving the merger of cable
assets in Europe and Latin America, leaving the combined entity with a stronger
balance sheet and the ability to play a leading role in the ongoing
consolidation of the cable industry overseas.
Because of recent market volatility, short-term performance of the Fund or its
portfolio holdings may be different than stated as of 6/30/00.
6
<PAGE>
Acorn International
>At a Glance Ticker Symbol: ACINX
Pretax and After-tax Average Annual Total Returns
>Through June 30, 2000
<TABLE>
<CAPTION>
1 Year 5 Years
-------------------------------------------- ---------------------------------------------
After-tax w/ Tax After-tax w/ Tax
Pretax After-tax redemption Efficiency Pretax After-tax redemption Efficiency
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Acorn
International 47.57% 44.37% 30.20% 93.3% 20.61% 19.36% 16.94% 93.9%
--------------------------------------------------------------------------------------------------------------
Foreign Stock
Category Avg.* 27.08% 25.16% NA 92.9%+ 13.48% 11.84% NA 87.8%+
--------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Life of Fund
---------------------------------------------
After-tax w/ Tax
Pretax After-tax redemption Efficiency
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Acorn
International 19.58% 18.74% 16.69% 95.7%
----------------------------------------------------------------
Foreign Stock
Category Avg.* NA NA NA NA
----------------------------------------------------------------
</TABLE>
*Source: Morningstar, Inc.
+Calculated by Wanger Asset Management using Morningstar data.
"NA" indicates information not available from Morningstar. Morningstar does not
provide Life of Fund data or after-tax w/ redemption returns.
If you own the Fund in a tax-deferred account such as an IRA or a 401(k), this
information does not apply to you. Your actual after-tax returns depend on your
tax situation and will differ from those shown. After-tax returns reflect past
tax-effects and are not predictive of future tax effects.
Acorn International Portfolio Diversification
>as a % of net assets, as of 6/30/00
[PIE CHART]
19.0% Business Services
8.4% Financials
4.1% Health Care
10.7% Consumer
Goods & Services
10.1% Broadcasting &
Media Content
8.4% Industrials
5.5% Telecom
5.1% Other Industries
9.0% Technology Services
11.5% Other*
4.5% Computer Software
3.7% Computer Hardware
*Other includes cash and other assets less liabilities.
[GRAPH]
The Value of a $10,000 Investment in Acorn International
>September 23, 1992 through June 30, 2000
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
the EMI World ex-U.S. The EMI World ex-U.S. is Salomon Brothers' index of the
bottom 20% of institutionally investable capital of non-U.S. countries. The
index is unmanaged and returns for the index and Fund include reinvested
dividends and capital gains.
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. Investments
in foreign securities have special risks. Refer to your prospectus for details.
Acorn International NAV as of 6/30/00: $32.82
Label Date Acorn International EMI (World ex-US)
--------------------------------------------------------
1 9/23/92 $10,000 $10,000
---------------------------------------------------
2 9/30/92 $10,010 $10,053
---------------------------------------------------
3 12/31/92 $10,690 $ 9,590
---------------------------------------------------
4 3/31/93 $12,000 $11,027
---------------------------------------------------
5 6/30/93 $12,920 $12,190
---------------------------------------------------
6 9/30/93 $13,910 $12,938
---------------------------------------------------
7 12/31/93 $15,940 $12,573
---------------------------------------------------
8 3/31/94 $15,850 $13,698
---------------------------------------------------
9 6/30/94 $15,550 $14,199
---------------------------------------------------
10 9/30/94 $16,491 $14,099
---------------------------------------------------
11 12/31/94 $15,334 $13,640
---------------------------------------------------
12 3/31/95 $14,811 $13,556
---------------------------------------------------
13 6/30/95 $15,727 $13,550
---------------------------------------------------
14 9/30/95 $16,824 $14,086
---------------------------------------------------
15 12/31/95 $16,703 $14,355
---------------------------------------------------
16 3/31/96 $18,203 $15,179
---------------------------------------------------
17 6/30/96 $19,593 $15,849
---------------------------------------------------
18 9/30/96 $19,362 $15,491
---------------------------------------------------
19 12/31/96 $20,153 $15,393
---------------------------------------------------
20 3/31/97 $20,585 $15,111
---------------------------------------------------
21 6/30/97 $21,808 $16,196
---------------------------------------------------
22 9/30/97 $21,660 $15,542
---------------------------------------------------
23 12/31/97 $20,190 $13,946
---------------------------------------------------
24 3/31/98 $23,857 $16,345
---------------------------------------------------
25 6/30/98 $24,335 $16,287
---------------------------------------------------
26 9/30/98 $20,428 $13,822
---------------------------------------------------
27 12/31/98 $23,305 $15,641
---------------------------------------------------
28 3/31/99 $23,574 $15,864
---------------------------------------------------
29 6/30/99 $27,222 $16,839
---------------------------------------------------
30 9/30/99 $29,486 $17,694
---------------------------------------------------
31 12/31/99 $41,761 $19,312
---------------------------------------------------
32 3/31/2000 $46,808 $19,705
---------------------------------------------------
33 6/30/2000 $40,171 $19,361
---------------------------------------------------
Fund Net Assets as of 6/30/00: $2,983.7 million
>Acorn International Top 10 Holdings
Li & Fung (Hong Kong) 3.7%
Sourcing of Consumer Goods
Serco Group (United Kingdom) 3.2%
Facilities Management
Amdocs (Israel) 2.5%
Telecommunications Billing &
Customer Care Software
ERG (Australia) 2.1%
Smart Card Systems for
Public Transportation
Venture Manufacturing
(Singapore) 2.0%
Electronic Manufacturing Services
Banca Fideuram (Italy) 2.0%
Life Insurance & Mutual Funds
Capita Group
(United Kingdom) 1.7%
Outsourcing Services
Star Cruises (Singapore) 1.7%
Cruise Line
Dimension Data (South Africa) 1.7%
Networks & Computer Services
Rhoen Klinikum (Germany) 1.6%
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.
7
<PAGE>
In a Nutshell
[PHOTO APPEARS HERE]
Hitting its first rough patch since its launch four years ago, Acorn USA fell
15.1% during the quarter vs. the Russell 2000, which dropped 3.8%. While short-
term performance lagged, the Fund's 14.6% return outscores the Russell's 13.5%
gain since its inception (9/4/96 - 6/30/00).
What happened? As you might expect, the (mis)behavior of our technology
holdings hurt the Fund's overall performance. In an unfortunate reversal, the
tech names that have punished us so far in 2000 are the same stocks that pushed
the Fund to the top of our peer group during the second half of last year.
Despite the wrenching readjustment we've been through, many of our top
holdings are strong growth companies trading at record-low valuations. When
investors start looking for quality, we think these names should get attention,
pushing valuations back upward.
Internet businesses are difficult to value so most investors let the stock
market dictate value and follow its lead. We know Internet stocks are worth
something. Our goal is to buy them at reasonable values. We paid reasonable
prices for the "real world" businesses of Micros Systems, Project Software and
Aztec Technology, without having to pay much for the upside potential of their
Internet ventures. During the Internet rally in the second half of 1999, these
companies doubled or tripled as the market fell in love with every Internet
possibility. Last quarter, however, the romance was over. These same businesses
were hurt by their Internet association and are essentially back where they
started. In addition, revenue shortfalls announced by Micros Systems, RCN and
Sykes Enterprises crushed their stock prices.
While our technology exposure has hurt Fund performance, we want to assure
shareholders that we are not being overly aggressive in this area. As of June
30, 24% of the Fund's assets were invested in technology stocks, with an
additional 12% in communications stocks, some of which mimic the techs (RCN, a
new age fiber optics telecom network) and some of which act nothing like a tech
stock (Commonwealth Telephone, a local phone company). Overall, our tech
weighting has been, and remains, close to the small-cap benchmark weighing.
Despite the wrenching readjustment we've been through, many of our top
holdings are strong growth companies trading at record-low valuations. When
investors start looking for quality, we think these names should get attention,
pushing valuations back upward.
/s/ Robert A. Mohn
Robert A. Mohn
Lead Portfolio Manager
--------------------------------------------------------------------------------
It's Electric!
------------------
Dynegy was a thinly-traded natural gas processing company (going by the name of
NGC Corp) when we started buying it in 1996. Already a force in the gas trading
business, Dynegy had grand designs on the much larger and newly deregulated
electricity industry. Dynegy had the trading smarts to tackle the complexities
of the U.S. electricity market but needed its own source of electricity. It got
that last year by acquiring Illinova, an Illinois electric utility. Wall Street
ignored Dynegy's deft strategic move, allowing our energy analyst, Jason Selch,
to buy more of the undervalued stock late in 1999. The market finally saw the
light this year and recognized Dynegy as a true electric powerhouse, doubling
the stock price.
--------------------------------------------------------------------------------
Because of recent market volatility, short-term performance of the Fund or its
portfolio holdings may be different than stated as of 6/30/00.
8
<PAGE>
At a Glance Ticker Symbol: AUSAX
Pretax and After-tax Average Annual Total Returns
--------------------------------------------------------------------------------
Through June 30, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
1 Year 3 Years Life of Fund
-----------------------------------------------------------------------------------------------------------------------
After- After-tax Tax After- After-tax Tax After- After-tax Tax
Pretax tax redemption Efficiency Pretax tax redemption Efficiency Pretax tax redemption Efficiency
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Acorn USA -4.62% -6.57% -0.67% NM 8.11% 6.43% 6.39% 79.3% 14.59% 13.19% 11.90% 90.4%
------------------------------------------------------------------------------------------------------------------------------------
Small Blend
Category
Avg.* 17.77% 15.98% NA 89.9%+ 10.08% 8.20% NA 81.3%+ NA NA NA NA
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Source: Morningstar, Inc.
+Calculated by Wanger Asset Management using Morningstar data.
"NM" indicates data is not meaningful because returns were negative.
"NA" indicates information not available from Morningstar. Morningstar does not
provide Life of Fund data or after-tax w/ redemption returns.
If you own the Fund in a tax-deferred account such as an IRA or a 401(k), this
information does not apply to you. Your actual after-tax returns depend on your
tax situation and will differ from those shown. After-tax returns reflect past
tax-effects and are not predictive of future tax effects.
--------------------------------------------------------------------------------
Acorn USA Portfolio Diversification
--------------------------------------------------------------------------------
>as a % of net assets, as of 6/30/00 [Pie Chart Appears Here]
48.0% Information
Software & Services 9.2%
Mobile Communications 9.2%
Instrumentation 6.8%
Computer Related Hardware 7.5%
Business Info & Marketing Services 5.7%
Computer Services 3.9%
Telecom 3.4%
Media 2.3%
11.0% Other*
4.9% Consumer
Goods/Services
10.8% Finance
9.5% Energy/Minerals
8.1% Industrial
Goods/Services
7.7% Health Care
*Other includes cash and other assets less liabilities of 7.9%.
--------------------------------------------------------------------------------
[GRAPH]
The Value of a $10,000 Investment in Acorn USA
--------------------------------------------------------------------------------
>September 4, 1996 through June 30, 2000
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) to the Russell
2000 Index. The Russell 2000 is formed by taking the 3,000 largest U.S.
companies and eliminating the largest 1,000, leaving a market capitalization-
weighted index of 2,000 small companies. The index is unmanaged and returns for
both the index and the Fund include reinvested dividends and capital gains.
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 that
their original cost. Small-cap stocks are often more volatile and less liquid
than larger company stocks.
Acorn USA NAV as of 6/30/00: $13.74
Lable A B
-------------------------------------------------------
Date Acorn USA ($) Russell 2000 ($)
9/4/96 $ 10,000 $ 10,000
9/30/96 $ 10,720 $ 10,360
12/31/96 $ 11,650 $ 10,899
3/31/97 $ 11,480 $ 10,335
6/30/97 $ 13,320 $ 12,011
9/30/97 $ 15,340 $ 13,798
12/31/97 $ 15,413 $ 13,335
3/31/98 $ 17,401 $ 14,678
6/30/98 $ 17,525 $ 13,993
9/30/98 $ 14,151 $ 11,174
12/31/98 $ 16,305 $ 12,997
3/31/99 $ 15,016 $ 12,292
6/30/99 $ 17,650 $ 14,203
9/30/99 $ 16,866 $ 13,305
12/31/99 $ 20,059 $ 15,759
3/31/2000 $ 19,820 $ 16,876
4/30/2000 $ 17,568 $ 15,860
5/31/2000 $ 16,526 $ 14,936
6/30/2000 $ 16,834 $ 16,238
-------------------------------------------------------
--------------------------------------------------------------------------------
Fund Net Assets as of 6/30/00: $305.0 million
--------------------------------------------------------------------------------
>Acorn USA Top 10 Holdings
Telephone and Data Systems 6.1%
Cellular & Telephone Services
Dynegy 4.0%
Natural Gas & Electric Processing,
Production and Marketing
JDA Software 3.8%
Applications/Software & Services for Retailers
First Health 3.7%
PPO Network
Perkin Elmer 3.4%
Analytical Instruments for Biotech/Telecom
AmeriCredit 3.4%
Auto Lending
Tektronix 3.4%
Analytical Instruments
Micros Systems 3.2%
Information Systems for
Restaurants & Hotels
Conectiv 2.7%
Electric Utility
Lincare Holdings 2.3%
Home Health Care Services
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
--------------------------------------------------------------------------------
9
<PAGE>
Acorn Foreign Forty
>In a Nutshell
[PHOTO APPEARS HERE]
U.S. technology market volatility caused tremors around the globe during the
second quarter creating a challenging investment environment for Acorn Foreign
Forty. The Fund dropped 14.0% vs. the EAFE Index, off 4.0%, and the SSB World ex
U.S. Cap Range Index, down 0.5%. While the Fund's quarterly performance lagged
its benchmarks, one-year and life-of-fund returns were still well ahead of
comparative indexes (see Page 1 for additional performance information).
Recent additions to Acorn Foreign Forty served the Fund well during the
quarter. ERG Limited, an Australian producer of smart cards used in public
transportation and telecommunications, was up nearly 74%. Newcomer Saipem, an
Italian provider of offshore oil services, was up 31%, and Computershare, an
Australian financial software company, saw a 30% gain. Among our veteran
holdings, SSL International, a UK health care provider, rose 23% and Pargesa, a
Swiss conglomerate, gained nearly 21%.
Meanwhile, strong long-term performers gave back some ground over the three
months. Canada's ATI Technologies, a manufacturer of graphic chips, plummeted
nearly 52% after announcing component shortages that would keep it from meeting
earnings estimates. Telecommunication stocks also declined, hurting UK telecom
company Thus, off 46%, and Japanese call center operator Bellsystem24, down 42%.
Singapore-based Star Cruises hit choppy water, sinking nearly 40% on news of
slowing demand across the cruise industry. However, we remain optimistic about
Star's Asian prospects.
While this was a tough quarter for the Fund, we are heartened by the rapid
expansion taking place in international equity markets and by the Fund's strong
finish (up 4.9% in June). We believe the quarter's corrections were overdue and
that a renewed emphasis on valuation will become increasingly important.
While this was a tough quarter for the Fund, we are heartened by the rapid
expansion taking place in international equity markets and by the Fund's strong
finish (up 4.9% in June).
Making the
Internet
As an Internet infrastructure company like Cisco, Sun or Nortel, how do you grow
when your manufacturing plants aren't keeping pace with demand? You form
partnerships with companies that are focused on electronics manufacturing and
outsource production to them. One of our favorite names in this business is
Canada's Celestica. The third largest EMS (Electronic Manufacturing Services)
company in the world, its revenues are expected to exceed $7 billion this year.
The EMS industry is changing the landscape for technology and telecommunications
manufacturing, allowing companies like Cisco to focus on what they do best:
research and development, acquiring new technologies and marketing. Celestica
has the opportunity to provide manufacturing services to a wide range of great
companies, growing with these companies and their products. Recently, large
telecom firms (Lucent, Nortel) have begun to outsource production to EMS
companies, providing a major source of new growth.
/s/ Marcel P. Houtzager /s/ Roger Edgley
------------------------ ------------------------------
Marcel P. Houtzager Roger Edgley
Co-Portfolio Manager Co-Portfolio Manager
Acorn Foreign Forty is a non-diversified fund. This may make the fund's returns
more volatile than a more diversified fund.
Because of recent market volatility, short-term performance of the Fund or its
portfolio holdings may be different than stated as of 6/30/00.
10
<PAGE>
Acorn Foreign Forty
>At a Glance Ticker Symbol: ACFFX
Pretax and After-tax Average Annual Total Returns
--------------------------------------------------------------------------------
>Through June 30, 2000
<TABLE>
<CAPTION>
1 Year Life of Fund
Pretax After-tax After-tax w/ Tax Pretax After-tax After-Tax W/ Tax
redemption Efficiency redemption Efficiency
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Acorn Foreign Forty 51.43% 51.02% 31.25% 99.2% 53.29% 52.94% 43.43% 99.3%
---------------------------------------------------------------------------------------------------------------------------
Foreign Stock
Category Avg.* 27.08% 25.16% NA 92.9%+ NA NA NA NA
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Source: Morningstar, Inc.
+Calculated by Wanger Asset Management using Morningstar data.
"NA" indicates information not available from Morningstar. Morningstar does not
provide Life of Fund data or after-tax w/ redemption returns.
If you own the Fund in a tax-deferred account such as an IRA or a 401(k), this
information does not apply to you. Your actual after-tax returns depend on your
tax situation and will differ from those shown. After-tax returns reflect past
tax-effects and are not predictive of future tax effects.
--------------------------------------------------------------------------------
Acorn Foreign Forty Portfolio Diversification
--------------------------------------------------------------------------------
>as a % of net assets, as of 6/30/00
[PIE CHART]
0.9% Energy & Minerals
16.1% Finance
2.3% Other*
10.3% Consumer
Goods/Services
58.9% Information
8.6% Industrial Telephone Services 10.8%
Goods/Services Computer Services 7.3%
Software & Services 5.0%
TV Broadcasting 11.7%
2.9% Health Care Transaction Processors 6.7%
Business Software 7.9%
Telecom 5.5%
Computer Related Hardware 4.0%
*Other includes cash and other assets less liabilities.
--------------------------------------------------------------------------------
The Value of a $10,000 Investment in Acorn Foreign Forty
>November 23, 1998 through June 30, 2000
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) to the
EAFE Index. 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 index and Fund returns
include reinvested dividends and capital gains.
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. Investments
in foreign securities have special risks. Refer to your prospectus for details.
Acorn Foreign Forty NAV on 6/30/00: $19.67
[GRAPH APPEARS HERE]
Label A B
------------------------------------------------------------------
Label Date Acorn Foreign Forty($) EAFE ($)
------------------------------------------------------------------
1 Nov 23, 98 $10,000 $10,000
2 Dec 31, 98 $11,000 $10,411
3 Jan 31, 99 $11,790 $10,381
4 Feb 28, 99 $11,590 $10,133
5 Mar 31, 99 $11,980 $10,556
6 Apr 30, 99 $12,240 $10,980
7 May 30, 99 $12,170 $10,418
8 Jun 30, 99 $13,110 $10,825
9 Jul 31, 99 $13,511 $11,146
10 Aug 30, 99 $13,771 $11,187
11 Sep 30, 99 $13,621 $11,300
12 Oct 31, 99 $14,132 $11,723
13 Nov 30, 99 $16,999 $12,130
14 Dec 31, 99 $19,975 $13,219
15 Jan 31, 2000 $19,665 $12,379
16 Feb 29, 2000 $24,245 $12,712
17 Mar 31, 2000 $23,093 $13,205
18 Apr 30, 2000 $21,258 $12,510
19 May 31, 2000 $18,923 $12,204
20 Jun 30, 2000 $19,853 $12,682
------------------------------------------------------------------
Fund Net Assets as of 6/30/00: $143.8 million
>Acorn Foreign Forty Top 10 Holdings
Amdocs (Israel) 5.6%
Telecommunications Billing &
Customer Care Software
ERG (Australia) 4.3%
Smart Card Systems for
Public Transportation
Venture Manufacturing
(Singapore) 4.0%
Electronic Manufacturing Services
Audiofina (Belgium) 3.7%
TV & Radio Stations
Star Cruises (Singapore) 3.6%
Cruise Line
Comverse Technology (Israel) 3.6%
Voicemail & Related Systems
Banca Fideuram (Italy) 3.5%
Life Insurance & Mutual Funds
Irish Life & Permanent (Ireland) 3.2%
Life Insurance
Netcom (Sweden) 3.1%
Telecommunication Services
Celestica (Canada) 3.0%
Electronic Manufacturing Services
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
11
<PAGE>
Acorn Twenty
>In a Nutshell
[PHOTO APPEARS HERE]
Acorn Twenty finished the second quarter up 1.1%, ahead of the S&P MidCap 400's
3.3% loss and the S&P 500's 2.7% drop. The Fund's concentrated strategy drove
the quarter's outperformance with four stocks posting gains of 30% or better.
Several of the Fund's winners shared a common theme: They provide tools to high-
growth industries like technology, telecommunications, and the life sciences.
Several of the Fund's winners shared a common theme: They provide tools to
high-growth industries like technology, telecommunications, and the life
sciences. Techne, for example, rose 88% during the quarter as investors realized
biotech and drug companies will likely increase spending on the company's
cytokines (cellular proteins used to test drug/cell interaction) and reagents
(enzymes used in chemical reactions as catalysts) now that the human genome has
been sequenced. Similarly, Waters gained 31% as growth accelerated in its mass
spectrometry (a devise used to measure the molecular weight of a substance using
light) business due to increased protein analysis following the gene sequencing
breakthrough. Tektronix, a winner last quarter, rose 32% after reporting strong
results in its test and measurement instrument business, which sells products to
the high-growth technology and telecommunications industries.
Two significant losers during the quarter were Reynolds & Reynolds, a
manufacturer of business forms and computer systems used by car dealers, and H&R
Block, a familiar name in tax preparation services. Reynolds & Reynolds lost 32%
after announcing a dilutive equity transaction with partner General Motors. H&R
Block fell 27% on disappointing earnings news that followed this year's tax
season. Both of these names have strong franchises in growing industries and
generate significant cash flow. Therefore, we are willing to be patient until
the market comes to appreciate the value of their businesses.
While the overall market was shaken by volatility in the technology sector
during the quarter, Acorn Twenty continues to follow the "downstream from
technology" approach. This theme is not only prevalent in stocks mentioned
previously, but also in more prosaic industries. Herman Miller, for example,
manufactures office furniture, hardly a high-tech industry. Miller does,
however, use technology extensively to provide customers with three-dimensional
product models on its web page. By taking advantage of technology's increasing
power and decreasing price, Miller has become the premier company within its
industry.
Ending the quarter on a high note, Acorn Twenty was up 9.3% in June. The
market appears to be favoring mid-cap stocks, as this group has outperformed
large- and small-cap stocks so far this year.* This environment should prove
favorable to the Fund's concentrated, mid-cap approach going forward.
/s/ John H. Park
John H. Park
Lead Portfolio Manager
--------------------------------------------------------------------------------
Hidden Earnings
------------------------
Uncovered
Techne is the leading manufacturer of cytokines (cellular proteins used to test
drug/cell interaction) and reagents (enzymes used in chemical reactions as
catalysts) used by biotechnology and pharmaceutical companies to run tests in
drug manufacturing. Techne is highly profitable with 76% gross margins, lots of
free cash and sales growth of 16% per year. In 1998, Techne bought the research
products business of Genzyme for $42 million. While most companies amortize
goodwill over 20 or more years, Techne's conservative management amortizes
goodwill over six years. Thus, earnings per share were reduced by 30 cents. We
added back the amortization expense in our analysis and concluded that Techne
was reasonably priced given its strong growth prospects. The stock has more than
doubled since our initial purchase and is the Fund's second largest position.
--------------------------------------------------------------------------------
*As of June 30, 2000, the S&P MidCap 400 was up 8.97% while the large-cap
focused S&P 500 was down 0.42% and the small-cap Russell 2000 Index posted a
3.04% return.
Because of recent market volatility, short-term performance of the Fund or its
portfolio holdings may be different than stated as of 6/30/00.
12
<PAGE>
Acorn Twenty
>At a Glance Ticker Symbol:ACTWX
<TABLE>
<CAPTION>
Pretax and After-tax Average Annual Total Returns
--------------------------------------------------------------------------------------------------------------------------
>Through June 30, 2000
1 Year Life of Fund
After- After-tax w/ Tax After- After-tax w/ Tax
Pretax Tax redemption Efficiency Pretax Tax redemption Efficiency
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Acorn Twenty 9.81% 7.55% 6.83% 77.0% 25.06% 23.45% 19.82% 93.6%
---------------------------------------------------------------------------------------------------------------------------
Mid Cap Blend
Category Avg.* 11.87% 9.48% NA 79.9%(+) NA NA NA NA
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Source: Morningstar, Inc.
+Calculated by Wanger Asset Management using Morningstar data.
"NA" indicates information not available from Morningstar. Morningstar does not
provide Life of Fund data or after-tax w/ redemption returns.
If you own the Fund in a tax-deferred account such as an IRA or a 401(k), this
information does not apply to you. Your actual after-tax returns depend on your
tax situation and will differ from those shown. After-tax returns reflect past
tax-effects and are not predictive of future tax effects.
--------------------------------------------------------------------------------
Acorn Twenty Portfolio Diversification
--------------------------------------------------------------------------------
>as a % of net assets, as of 6/30/00
[Pie Chart appears here]
5.6% Energy/Minerals
5.7% Industrial
Goods/Services
6.1% Finance
13.9% Consumer
Goods/Services
14.8% Health Care
2.3% Other*
51.6% Information
Instrumentation 19.0%
Business Info. &
Marketing Services 11.7%
Telecom 7.4%
Contract Manufacturing 6.4%
Television Programming 3.5%
Computer Related Hardware 3.6%
*Cash and other assets less liabilities.
--------------------------------------------------------------------------------
The Value of a $10,000 Investment in Acorn Twenty
>November 23, 1998 through June 30, 2000
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) 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 Index is unmanaged and
returns for the index and the Fund include reinvested dividends and capital
gains.
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. Acorn Twenty
is a non-diversified fund. This may make fund returns more volatile than a more
diversified fund.
Acorn Twenty NAV on 6/30/00: $13.27
[Graph appears here]
<TABLE>
<CAPTION>
----------------------------------------------------------
----------------------------------------------------------
Date Acorn Twenty($) S&P MidCap 400 ($)
----------------------------------------------------------
<S> <C> <C>
Nov 23, 98 $10,000 $10,000
----------------------------------------------------------
Dec 31, 98 $10,710 $11,109
----------------------------------------------------------
Jan 31, 99 $11,000 $10,676
----------------------------------------------------------
Feb 28, 99 $10,710 $10,117
----------------------------------------------------------
Mar 31, 99 $11,480 $10,400
----------------------------------------------------------
Apr 30, 99 $12,710 $11,220
----------------------------------------------------------
May 31, 99 $12,730 $11,270
----------------------------------------------------------
Jun 30, 99 $13,040 $11,872
----------------------------------------------------------
Jul 30, 99 $13,190 $11,620
----------------------------------------------------------
Aug 31, 99 $12,060 $11,222
----------------------------------------------------------
Sep 30, 99 $12,110 $10,875
----------------------------------------------------------
Oct 31, 99 $12,970 $11,429
----------------------------------------------------------
Nov 30, 99 $13,250 $12,029
----------------------------------------------------------
Dec 31, 99 $13,700 $12,744
----------------------------------------------------------
Jan 31, 2000 $13,474 $12,385
----------------------------------------------------------
Feb 29, 2000 $13,555 $13,252
----------------------------------------------------------
Mar 31, 2000 $14,171 $14,361
----------------------------------------------------------
Apr 30, 2000 $13,464 $13,860
----------------------------------------------------------
May 31, 2000 $13,100 $13,687
----------------------------------------------------------
Jun 30, 2000 $14,320 $13,888
----------------------------------------------------------
</TABLE>
Fund Net Assets as of 6/30/00: $61.5 million
>Acorn Twenty Top 10 Holdings
Tektronix 10.8%
Analytical Instruments
Techne 8.7%
Cytokines, Antibodies, other
Reagents for Life Sciences
Jabil Circuit 6.4%
Electronic Manufacturing Services
SEI Investments 6.1%
Mutual Fund Administration
Dynegy 5.6%
Natural Gas & Electric Processing,
Production and Marketing
First Health 5.3%
PPO Network
Herman Miller 5.3%
Office Furniture
Waters 4.7%
Chromatography, Mass Spectrometry, Thermo Analysis
Harley-Davidson 4.6%
Motorcycles & Related Merchandise
Pinnacle Holdings 4.6%
Towers for Cellular, PCS & Paging
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 FundOs holdings.
13
<PAGE>
Acorn Fund
>Major Portfolio Changes in the Second Quarter
Number of Shares
3/31/00 6/30/00
Additions
----------------------------------------------------------
Information
Acxiom 350,000 550,000
Choicepoint 356,000 416,000
Classic Communications 600,000 800,000
ClickSoftware Technologies 0 846,000
Commonwealth Telephone 354,000 520,000
Dionex 282,000 342,000
Getty Images 800,000 1,010,000
Infomedia (Australia) 0 202,000
Information Holdings 400,000 475,000
Insight Communications 0 200,000
JD Edwards 0 535,000
Kronos 713,000 750,000
MAPICS 300,000 1,450,000
MDSI Mobil Data Solutions
(Canada) 0 140,000
Mediacom Communications 0 1,000,000
Micros Systems 765,000 895,000
Navigant Consulting 900,000 1,350,000
Nelvana (Canada) 0 360,000
Objective System Integrators 0 45,000
Price Communications 420,000 470,000
Salem Communications 500,000 750,000
Startec Global Communications 230,000 430,000
TeleSpectrum Worldwide 765,000 1,000,000
THQ 312,000 876,000
Tidel Technologies 400,000 658,000
Health Care
----------------------------------------------------------
Syncor International 0 60,000
----------------------------------------------------------
Consumer Goods/Services
Airtours (United Kingdom) 1,330,000 1,700,000
Calloway Golf 200,000 400,000
Carnival 1,500,000 1,600,000
Gadzooks 750,000 875,000
Hunter Douglas (Netherlands) 312,439 365,000
Isle of Capri Casino 934,000 1,140,000
ITT Educational Services 1,000,000 1,175,000
Jones Apparel 900,000 1,020,000
Helen of Troy 1,190,000 2,126,000
Hon Industries 130,000 500,000
Michaels Stores 0 110,000
Pinnacle Entertainment 360,000 420,000
Royal Caribbean Cruises 0 500,000
----------------------------------------------------------
Finance
Affiliated Managers Group 350,000 800,000
CCB Financial 198,000 248,000
Chittenden 414,000 484,000
Neuberger Berman 742,000 800,000
TCF Financial 974,000 1,026,000
----------------------------------------------------------
Industrial Goods/Services
Advanced Lighting Technologies 350,000 435,000
EGL 0 100,000
Forward Air 300,000 355,000
Spartech 245,000 476,000
----------------------------------------------------------
Energy/Minerals
Atmos Energy 600,000 700,000
Basin Exploration 380,000 460,000
Canadian Hunter Exploration
(Canada) 0 500,000
Carbo Ceramics 0 180,000
Cross Timbers Oil 1,715,000 2,363,000
Enerflex Systems (Canada) 0 430,000
Evergreen Resources 310,000 620,000
Newpark Resources 2,000,000 2,730,000
Pennaco Energy 450,000 876,000
Precision Drilling (Canada) 730,000 800,000
Saipem (Italy) 2,250,000 3,310,000
US Aggregates 500,000 600,000
-----------------------------------------------------------
Other Industries
CH Energy 130,000 200,000
General Growth Properties 200,000 300,000
SL Green Realty 730,000 775,000
Utilicorp United 500,000 875,000
14
<PAGE>
Principal Amount or
Number of Shares
3/31/00 6/30/00
Sales
--------------------------------------------------------------------------
Information
Activision 300,000 150,000
Atos (France) 230,000 180,000
Bellsystem24 (Japan) 5,000 0
Data Transmission Network 819,000 0
Entra Data (Sweden) 100,000 0
Getronics (Netherlands) 171,084 425,000
(includes effect of 3 for 1 stock split)
Metrika Systems 232,000 0
Natsteel Electronics (Singapore) 2,000,000 1,000,000
Onix Systems 266,000 0
Pinnacle Holdings 350,000 300,000
RCN 584,000 250,000
Softbank (Japan) 132,000 360,000
(includes effect of 200% stock dividend)
Thermo Optek 265,000 0
Thermo Optek, 5% Note
Due 10/15/00 $5,000,000 0
Thermo Quest 613,000 0
Thermoquest, 5% Note
Due 8/15/00 $1,500,000 0
WM Data Nordic (Sweden) 1,000,000 4,500,000
(includes effect of 5 for 1 stock split)
Young Broadcasting 772,000 650,000
--------------------------------------------------------------------------
Health Care
Acuson 443,000 0
CuraGen 342,000 0
First Health 1,952,000 1,668,000
Genome Therapeutics 380,000 0
Lincare Holdings 2,000,000 730,000
--------------------------------------------------------------------------
Consumer Goods/Services
Borders Group 1,700,000 1,561,000
MotherNature.com 156,000 0
National RV Holdings 110,000 0
Panera Bread 400,000 0
Quiksilver 325,000 50,000
Unifi 600,000 450,000
--------------------------------------------------------------------------
Finance
Creditrust 700,000 0
Pioneer Group 730,000 624,000
UICI 863,000 558,000
United Fire & Casualty 266,000 0
--------------------------------------------------------------------------
Industrial Goods
A M Castle 95,000 0
Aeroporti di Roma (Italy) 1,000,000 0
--------------------------------------------------------------------------
Energy/Minerals
Canadian Natural Resources
(Canada) 95,000 0
Devon Energy 600,000 550,000
Equitable Resources 900,000 754,000
Hanover Compressor 160,000 150,000
(includes effect of 2 for 1 stock split)
Ulster Petroleums (Canada) 550,000 0
15
<PAGE>
>Statement of Investments (unaudited) June 30, 2000
Number of Shares Value (000)
------------------------------------------------------------------------
Number of Shares Value (000)
------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 92.8%
Information: 29.1%
Media
>Broadcasting: 0.7%
650,000 Young Broadcasting (b) $ 16,697
Television Stations
750,000 Salem Communications (b) 6,961
Radio Stations for Religious Programming
400,000 Shop at Home (b) 1,869
Television Home Shopping Network
100,000 Cumulus Media (b) 912
Radio Stations in Small Cities
------------------------------------------------------------------------
26,439
>Television Programming/CATV: 3.1%
2,600,000 Liberty Media Group, AT&T 63,050
Cable & Satellite Programming
1,000,000 Mediacom Communications (b) 15,375
Cable Television Franchises
500,000 Corus Entertainment (Canada) (b) 13,329
CATV Programming & Radio Stations
600,000 Playboy Enterprises (b) 7,725
CATV & Satellite Programming, Publishing
800,000 Classic Communications (b) 7,150
Cable Television in Rural Areas
360,000 Nelvana (Canada) (b) 5,979
Cartoons & Children's Books
200,000 Insight Communications (b) 3,125
CATV Franchises in MidWest
700,000 Cinar (Canada) (b) 2,450
Children's TV Programming
------------------------------------------------------------------------
118,183
Telecommunications
>Telecommunications/Wireline
Communications: 1.4%
520,000 Commonwealth Telephone (b) 24,472
Rural Phone Franchises & CLEC
300,000 NTL (United Kingdom) (b) 17,963
Voice, Video & Data Services
250,000 RCN (b) 6,344
Metro Market CLEC: Voice, Video & Internet Services
430,000 Startec Global Communications (b) 4,425
International Telecommunications
------------------------------------------------------------------------
53,204
>Mobile Communications: 2.2%
450,000 Telephone and Data Systems 45,113
Cellular & Telephone Services
300,000 Pinnacle Holdings (b) 16,200
Towers for Cellular, PCS & Paging
355,000 COMARCO (b) (c) 11,537
Wireless Network Testing
470,000 Price Communications (b) 11,074
Cellular Telephone Services
------------------------------------------------------------------------
83,924
>Telecommunications Equipment: 0.2%
658,000 Tidel Technologies (b) 6,539
ATM Machines
------------------------------------------------------------------------
Computer Related Hardware
>Computer Hardware/Related Systems: 1.5%
550,000 American Power Conversion (b) $ 22,447
Uninterruptable Power Systems
750,000 Kronos (b) (c) 19,500
Labor Management Solutions
895,000 Micros Systems (b) (c) 16,613
Information System for Restaurants & Hotels
------------------------------------------------------------------------
58,560
>Gaming Equipment: 2.8%
2,342,000 International Game Technology (b) 62,063
Slot Machines & Progressive Jackpots
500,000 Anchor Gaming (b) 23,969
Slot Machines & Casinos
5,800,000 Aristocrat Leisure (Australia) 19,675
Slot Machines
------------------------------------------------------------------------
105,707
>Contract Manufacturing: 1.7%
500,000 Solectron (b) 20,938
Electronic Manufacturing Services
400,000 Jabil Circuit (b) 19,850
Electronic Manufacturing Services
350,000 Applied Power 11,725
Electronic Enclosures & Industrial Products
70,000 Plexus (b) 7,910
Electronic Manufacturing Services
1,000,000 Natsteel Electronics (Singapore) 3,065
Electronic Manufacturing Services
------------------------------------------------------------------------
63,488
>Instrumentation: 1.5%
680,000 Varian (b) 31,365
Analytical Instruments
480,000 Mettler Toledo (b) 19,200
Laboratory Equipment
342,000 Dionex (b) 9,148
Ion & Liquid Chromatography
------------------------------------------------------------------------
59,713
Software/Services
>Business Software: 2.0%
1,075,000 Systems & Computer Technology (b) 21,500
Enterprise Software & Services
876,000 JDA Software Group (b) 16,808
Applications/Software & Services for Retailers
295,000 Hyperion Solutions (b) 9,569
Analytical Application Software
1,450,000 MAPICS (b) (c) 8,338
Mid Market ERP Systems
535,000 JD Edwards (b) 8,058
Mid Market ERP Software
846,000 ClickSoftware Technologies (b) 5,922
Service Chain Optimization Software
556,000 Indus International (b) 4,761
Enterprise Asset Management Software
45,000 Objective System Integrators (b) 481
Telecom Network Management
------------------------------------------------------------------------
75,437
16
<PAGE>
Principal Amount or
Number of Shares Value (000)
------------------------------------------------------------------------
Number of Shares Value (000)
>Consumer Software: 0.4%
876,000 THQ (b) $ 10,676
Entertainment Software
$ 6,500,000 Activision, 6.75% Note Due 1/1/05 4,290
150,000 Activision (b) 975
Entertainment Software
200,000 3DO Company (b) 1,569
Entertainment Software
------------------------------------------------------------------------
17,510
>Computer Services: 3.0%
4,500,000 WM Data Nordic (Sweden) 24,883
Computer Services/Consulting
180,000 Atos (France) (b) 16,910
Computer Services/Transaction Processing
400,000 American Management Systems (b) 13,131
Software Development Services
800,000 Sykes Enterprises (b) 10,300
Call Center Services
1,000,000 Dimension Data (South Africa) (b) 8,274
Networks & Computer Services
950,000 RCM Technologies (b) (c) 7,006
Technology Staffing Services
425,000 Getronics (Netherlands) 6,580
Computer Services/Consulting
400,000 Pomeroy Computer Resources (b) 5,900
Network Integration Services
1,000,000 TeleSpectrum Worldwide (b) 4,563
Call & Web Center Services
500,000 Cambridge Technology (b) 4,359
Software Implementation Services
1,500,000 Aztec Technology Partners (b) (c) 3,281
Application Development & Maintenance Services
640,000 Computer Task Group 3,240
Application Development & Staffing Services
140,000 MDSI Mobile Data Solutions
(Canada) (b) 3,220
Mobile Workforce Management Software
109,000 Meta Group (b) 2,098
IT Publications & Consulting Services
214,000 Analysts International 1,993
Technology Staffing Services
------------------------------------------------------------------------
115,738
>Business Information/Marketing
Services/Publishing: 4.0%
1,010,000 Getty Images (b) 37,433
Photographs for Publications & Electronic Media
1,100,000 PRIMEDIA (b) 25,025
Specialty Magazines & Other Publications
416,000 Choicepoint (b) 18,512
Fraud Protection Information
475,000 Information Holdings (b) 17,575
Scientific & Medical Publications,
Patent Information
2,500,000 InfoUSA (b) 16,250
Business Data for Sales Leads
550,000 Acxiom (b) 14,987
Database Marketing Services
445,000 West Teleservices (b) 11,264
Customer Care & Sales Support
1,350,000 Navigant Consulting (b) $ 5,738
Consulting Firm
200,000 Bell & Howell (b) 4,850
Information Services for Education &
Automotive Markets
202,000 Infomedia (Australia) (b) 121
Publisher of Electronic Catalog for Auto Parts
------------------------------------------------------------------------
151,755
>Internet: 2.1%
360,000 Softbank (Japan) 48,996
Leading Internet Company in Japan
225,000 MasTec (b) 8,592
Telecom Infrastructure Construction
100,000 RSA Security (b) 6,925
Enterprise Security Software
2,683 Bigfoot International (b) (c) 4,024
263,158 Bigfoot International, Series A (b) (c) 2,500
Internet Direct Marketing
496,000 Online Resources (b) 3,193
Internet Banking Technology
197,725 Internet Commerce (b) 2,695
E-Commerce Service Network
303,376 NeoPlanet, Series A (b) 2,641
Web Browser
47,855 GIGA (b) 263
29,714 GIGA Warrants (b) 10
Data on Information Technology
20,000 Navidec (b) 178
Internet Computer Services
------------------------------------------------------------------------
80,017
>Electronics Distribution: 0.6%
890,000 Pioneer-Standard Electronics 13,128
Component & Computer Distribution
300,000 Kent Electronics (b) 8,944
Component Distribution & Contract Assembly
------------------------------------------------------------------------
22,072
>Transaction Processors: 1.9%
1,812,000 National Data (c) 41,676
Credit Card & Health Claims Processor
1,211,000 Concord EFS (b) 31,486
Credit Card Processor
------------------------------------------------------------------------
73,162
----------
Information: Total 1,111,448
------------------------------------------------------------------------
Health Care: 7.9%
>Biotechnology/Drug Delivery: 5.6%
425,000 Myriad Genetics (b) 62,933
Gene Discovery & Diagnostic Products
266,000 Protein Design Labs (b) 43,878
Computer Designed Monoclonal Antibodies
405,000 Inhale Therapeutic Systems (b) 41,095
Pulmonary Drug Delivery
1,358,000 Corvas International (b) (c) 16,296
Rational Drug Design
476,000 NPS Pharmaceuticals (b) 12,733
Small Molecule Drugs
130,000 Incyte Pharmaceutical (b) 10,684
Gene Sequencing
17
<PAGE>
Acorn Fund
>Statement of Investments, continued
Number of Shares Value (000)
Number of Shares Value (000)
823,000 Microcide Pharmaceuticals (b) (c) $ 7,098
Antibiotics
7,628,845 Nadro, Series L (Mexico) 5,813
Pharmaceutical Distributor
316,000 Guilford Pharmaceuticals (b) 4,760
Drug Delivery & Neurology Drugs
325,000 Genzyme Molecular
Oncology Division (b) 4,509
Gene Expression Technology & Cancer Drugs
707,000 Synaptic Pharmaceuticals (b) (c) 3,623
Receptor Targeted Drug Design
-------------------------------------------------------------
213,422
>Medical Equipment: 0.2%
411,000 Orthofix International (b) 7,347
Bone Fixation & Stimulation Devices
>Hospital/Laboratory Supplies: 0.1%
27,000 Techne (b) 3,510
Cytokines, Antibodies, Other Reagents
for Life Sciences
>Services: 2.0%
1,668,000 First Health (b) 54,731
PPO Network
730,000 Lincare Holdings (b) 17,976
Home Health Care Services
60,000 Syncor International (b) 4,320
Nuclear Pharmacy for Radiopharmaceuticals
962,000 Magellan Health Services (b) 1,203
Mental Health Services
-------------------------------------------------------------
78,230
--------
Health Care: Total 302,509
-------------------------------------------------------------
Consumer Goods/Services: 13.1%
Goods
>Leisure Vehicles: 2.1%
1,800,000 Harley-Davidson 69,300
Motorcycles & Related Merchandise
2,470,000 Ducati Motor (Italy) (b) 6,357
Motorcycles & Related Merchandise
300,000 Thor Industries 6,300
RV's & Busses
-------------------------------------------------------------
81,957
>Furniture: 0.7%
660,000 Herman Miller 17,078
Office Furniture
500,000 Hon Industries 11,750
Office Furniture & Fireplaces
-------------------------------------------------------------
28,828
>Beverages: 0.1%
23,000 Binding-Brauerei (Germany) 4,299
Brewery
>Nondurables: 0.4%
2,126,000 Helen of Troy (b) (c) 11,892
Personal Care Products
440,000 First Years 4,895
Infant & Toddler Products
-------------------------------------------------------------
16,787
>Durable Goods: 0.3%
365,000 Hunter Douglas (Netherlands) 9,919
Decorative Window Coverings
>Textiles/Apparel: 1.1%
1,020,000 Jones Apparel (b) $ 23,970
Women's Apparel
775,000 Nautica Enterprises (b) 8,283
Men's Casual Apparel
450,000 Unifi (b) 5,569
Polyester & Nylon Fabrics
85,000 Gildan Activewear (b) 3,124
Cotton T-Shirts
-------------------------------------------------------------
40,946
Services
>Retail: 2.3%
1,561,000 Borders Group (b) 24,293
Bookstores
405,000 Whole Foods Market (b) 16,732
Natural Food Supermarkets
1,250,000 Pier 1 Imports 12,188
Imported Furniture & Tchotchkes
875,000 Gadzooks (b) (c) 10,158
Teen Apparel Retailer
1,050,000 N. Brown Group (United Kingdom) 8,226
Mail Order Clothing in Large Sizes
400,000 Calloway Golf 6,525
Premium Golf Clubs & Balls
110,000 Michaels Stores (b) 5,039
Craft & Hobby Specialty Retailer
153,000 Gaiam (b) 2,831
Healthy Living Catalog & E-Commerce
50,000 Quiksilver (b) 778
Gen Y Clothing
-------------------------------------------------------------
86,770
>Travel: 0.1%
300,000 Fairfield Communities (b) 2,363
Time-Sharing Vacation Resorts
>Consumer Services: 2.1%
1,540,000 Bally Total Fitness (b) (c) 39,077
National Chain of Fitness Centers
1,175,000 ITT Educational Services (b) 20,636
Technology Oriented Postsecondary
Degree Programs
1,700,000 Airtours (United Kingdom) 8,930
Packaged Tour Vacations
270,000 Steiner Leisure (b) 6,109
Spas & Hair/Skin Products on Cruise Ships
234,000 Education Management (b) 4,227
Postsecondary Education
-------------------------------------------------------------
78,979
>Casinos: 1.7%
1,500,000 Station Casinos (b) 37,500
Casinos & Riverboats
1,140,000 Isle of Capri Casino (b) 15,461
Five Casinos in Secondary Markets
420,000 Pinnacle Entertainment (b) 8,164
Casinos in Secondary Markets & Card Clubs
535,000 Monarch Casino & Resort (b) (c) 3,076
Casino/Hotel in Reno
113,000 Lakes Gaming (b) 1,003
Hotel & Casino in Biloxi & Gulfport
-------------------------------------------------------------
65,204
18
<PAGE>
Number of Shares Value (000)
Number of Shares Value (000)
>Cruise Lines: 2.2%
7,999,000 Star Cruises (Singapore) (b) $ 43,195
Cruising/Casino Operations
1,600,000 Carnival 31,200
Largest Cruise Line
500,000 Royal Caribbean Cruises 9,250
Major Cruise Line
410,000 Royal Olympic Cruise (b) 1,435
Cruises in Mediterranean
-------------------------------------------------------------
85,080
---------
Consumer Goods/Services: Total 501,132
Finance: 14.7%
>Banks: 1.8%
1,026,000 TCF Financial 26,355
Great Lakes Bank
730,000 Texas Regional Bancshares 18,524
TexMex Bank
484,000 Chittenden 11,828
Vermont & Western Massachusetts Bank
248,000 CCB Financial 9,176
North Carolina Bank
400,000 Eldorado Bancshares (b) 2,900
California Bank
-------------------------------------------------------------
68,783
>Savings & Loans: 1.1%
1,757,000 Peoples Bank Bridgeport 32,285
Connecticut Savings & Loan
824,000 Commonwealth Bancorp (c) 9,785
Philadelphia Savings & Loan
-------------------------------------------------------------
42,070
>Insurance: 2.7%
765,000 Protective Life 20,368
Life/Dental Insurance
820,000 HCC Insurance Holdings 15,478
Aviation Insurance
100,000 Markel (b) 14,163
22,627 Markel CVR (b) 165
Specialty Insurance
511,000 Leucadia National 11,657
Insurance Holding Company
675,000 Philadelphia Consolidated Holding (b) (c) 11,348
Specialty Insurance
300,000 RLI 10,425
Specialty Insurance
158,000 ASR Verzekeringsgroep (Netherlands) 8,224
Auto/Life Insurance
210,000 StanCorp Financial 6,746
Group Life, Disability & 401K
558,000 UICI (b) 3,662
Insurance/Specialty Insurance
-------------------------------------------------------------
102,236
>Money Management: 6.4%
1,842,000 SEI Investments 73,335
Mutual Fund Administration
800,000 Neuberger Berman 37,200
Major Asset Management Company
800,000 Affiliated Managers Group (b) 36,400
Mutual Fund & Pension Manager
3,099,000 Phoenix Investment Partners (c) $ 32,539
Mutual Fund & Pension Manager
624,000 Pioneer Group (b) 26,442
Equity Mutual Funds
1,500,000 Banca Fideuram (Italy) 22,719
Life Insurance & Mutual Funds
1,250,000 Edinburgh Fund Managers
(United Kingdom) 10,436
Investment Management
240,000 BKF Capital Group 3,810
Institutional Money Manager
200,000 The Investment Company of China
(China) 1,216
Closed-End Fund
-------------------------------------------------------------
244,097
>Finance Companies: 2.7%
3,912,000 AmeriCredit (b) (c) 66,504
Auto Lending
750,000 DVI Health Services (b) (c) 12,000
Leases for Big Medical Equipment
965,000 Ace Cash Express (b) (c) 11,459
Check Cashing Stores
1,820,000 World Acceptance (b) (c) 9,555
Personal Loans
1,375,000 Capital Trust (b) (c) 5,500
Mortgage Loans
-------------------------------------------------------------
105,018
Finance: Total 562,204
-------------------------------------------------------------
Industrial Goods/Services: 9.1%
>Steel: 0.5%
820,000 Gibraltar Steel (c) 11,480
Steel Processing
650,000 AK Steel 5,200
Carbon & Stainless Steel Producer
420,000 Atchison Casting (b) (c) 2,415
Steel Foundries
-------------------------------------------------------------
19,095
>Industrial Goods: 1.1%
1,150,000 Clarcor 22,856
Engines, Mobile & Environmental Filtration
560,000 Applied Industrial Technologies 9,170
Industrial Components Distribution
435,000 Advanced Lighting Technologies (b) 8,047
Metal Halide Lighting
-------------------------------------------------------------
40,073
>Specialty Chemicals & Industrial Materials: 1.8%
1,145,000 Lilly Industries, Cl. A 34,422
Industrial Coatings
346,111 SYMEX (b) 14,748
Combinatorial Materials
476,000 Spartech 12,852
Plastics Distribution & Compounding
732,000 RPM 7,412
Specialty Coatings & Paint
139,000 Brunswick Technologies (b) 1,168
Fiberglass Fabric for Composites
--------------------------------------------------------------
70,602
19
<PAGE>
>Statement of Investments, continued
-------------------------------------------------------------------------------
>Outsourcing Services & Training: 0.5%
2,600,000 Labor Ready (b) (c) $ 17,225
Temporary Manual Labor
600,000 GP Strategies (b) (c) 2,850
Training Programs
500,000 International Total Services (b) (c) 531
Aviation Services
-------------------------------------------------------------------------------
20,606
>Logistics: 2.9%
1,400,000 Expeditors International of Washington 66,500
International Freight Forwarder
300,000 C H Robinson 14,850
Truck Freight Forwarder
355,000 Forward Air (b) 14,200
Freight Transportation Between Airports
759,000 Hub Group (b) 11,338
Truck & Rail Freight Forwarder
700,000 Airnet Systems (b) (c) 3,194
Check & Other Small Package Shipment
-------------------------------------------------------------------------------
110,082
>Other Industrial Services: 2.3%
7,200,000 Serco Group (United Kingdom) 56,953
Facilities Management
1,526,000 Wackenhut, Cl. B (b) 14,306
31,000 Wackenhut, Cl. A (b) 401
Prison Management
520,000 Mobile Mini (b) 11,473
Leases Portable Storage Units
100,000 EGL (b) 3,075
Domestic Freight Forwarder
-------------------------------------------------------------------------------
86,208
----------
Industrial Goods/Services: Total 346,666
-------------------------------------------------------------------------------
Energy/Minerals: 11.1%
>Independent Power: 1.1%
900,000 AES Corporation (b) 41,062
Global Electric Producer
>Oil/Gas Producers: 5.1%
2,363,000 Cross Timbers Oil (c) 52,281
Natural Gas Producer
550,000 Devon Energy 30,903
Oil & Gas Producer
800,000 Precision Drilling (Canada) (b) 30,883
Oil & Gas Well Driller
2,100,000 Tesoro Petroleum (b) (c) 21,263
Oil Refinery/Gas Producer
620,000 Evergreen Resources (b) 18,368
Coal Seam Gas Producer
876,000 Pennaco Energy (b) 14,345
Coal Seam Gas Producer
500,000 Canadian Hunter Exploration (Canada) (b) 10,613
Natural Gas Producer
460,000 Basin Exploration (b) 8,223
Oil & Gas Producer
240,000 Penn West Petroleum (Canada) (b) 5,928
Oil & Gas Producer
845,000 Tipperary (b) (c) 2,905
Coal Seam Gas Producer
-------------------------------------------------------------------------------
195,712
-------------------------------------------------------------------------------
>Distribution/Marketing/Refining: 2.8%
828,000 Dynegy $ 56,563
Natural Gas & Electric Processing,
Production & Marketing
754,000 Equitable Resources 36,380
Natural Gas Utility & Producer
700,000 Atmos Energy 12,250
Natural Gas Utility
-------------------------------------------------------------------------------
105,193
>Mining: 0.3%
600,000 US Aggregates 10,875
Aggregrates, Ready Mix & Asphalt
>Oil Services: 1.8%
2,730,000 Newpark Resources (b) 25,764
Oilfield Fluid Management & Equipment Rental
3,310,000 Saipem (Italy) 19,672
Offshore Construction & Drilling
430,000 Enerflex Systems (Canada) 11,173
Natural Gas Compressor Manufacturer
180,000 Carbo Ceramics 6,322
Manufacturer of Ceramic Pellets for Gas Wells
150,000 Hanover Compressor (b) 5,700
Natural Gas Compressor Rental
-------------------------------------------------------------------------------
68,631
----------
Energy/Minerals: Total 421,473
-------------------------------------------------------------------------------
Other Industries: 7.8%
>Real Estate: 6.2%
968,000 The Rouse Company 23,958
Regional Shopping Malls
775,000 SL Green Realty 20,731
Downtown Office Buildings
675,000 First Industrial Realty Trust 19,913
Industrial Properties
903,125 Security Capital European Realty (b) 18,063
Strategic Real Estate Investments
700,000 Manufactured Home Communities 16,756
Manufactured Home Communities
466,000 Forest City Enterprises, Cl. B 16,572
Shopping Malls
1,099,000 LaSalle Hotel Properties (c) 15,798
Upscale/Full Service Hotels
625,000 Macerich Company 13,789
Regional Shopping Malls
488,000 Equity Office Properties 13,450
Largest Owner of Office Buildings
450,000 BRE Properties 12,994
Apartments
490,000 Amli Residential 11,546
Midwestern Apartments
520,000 Summit Properties 10,920
Southeastern Apartments
300,000 General Growth Properties 9,525
Shopping Malls REIT
412,000 IRSA (Argentina) 9,425
Real Estate Management & Development
385,000 First Washington Realty Trust (c) 8,494
240,000 First Washington Realty Trust, Cv. Pfd. (c) 6,690
Community Shopping Centers
20
<PAGE>
-------------------------------------------------------------------------------
1,000,000 HRPT Properties $ 6,125
Suburban Office Buildings
190,000 Consolidated Tomoka 2,304
16,000 Acres of Florida Land
-------------------------------------------------------------------------------
237,053
>Waste Management: 0.2%
327,000 Stericycle (b) 7,848
Medical Waste Disposal
>Regulated Utilities: 1.4%
875,000 Utilicorp United 17,391
Global Utility Holding Company
665,000 Unisource Energy 9,975
Electric Utility in Arizona
600,000 Conectiv 9,337
Electric Utility in New Jersey, Delaware & Maryland
1,245,000 Azurix (b) 8,715
Global Water Utility
200,000 CH Energy 6,787
Electric Utility in New York
-------------------------------------------------------------------------------
52,205
----------
Other Industries: Total 297,106
----------
Other Securities: 0.0% 27
-------------------------------------------------------------------------------
Total Common Stocks and Other
----------
Equity-Like Securities: 92.8% $3,542,565
(Cost: $2,363,410)
Short-Term Obligations: 8.2%
Yield 6.50%-7.15% Due 7/5-8/17/00
$ 162,549 Xerox $ 162,281
69,881 Sears Roebuck 69,815
27,408 Equilon 27,328
21,058 GE Capital 21,007
20,832 US West 20,786
12,000 US Treasury Bill 11,915
----------
(Amortized Cost: $312,132) 313,132
----------
Total Investments: 101.0% 3,855,697
(Cost: $2,676,542)
Cash and Other Assets Less Liabilities: (1.0%) (38,127)
----------
Total Net Assets: 100% $3,817,570
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
>Notes to Statement of Investments:
(a) At June 30, 2000, for federal income tax purposes cost of investments was
$2,677,278,000 and net unrealized appreciation was $1,178,419,000, consisting of
gross unrealized appreciation of $1,509,140,000 and gross unrealized
depreciation of $330,721,000.
(b) Non-income producing security.
(c) On June 30, 2000, the Fund held the following percentages of the outstanding
voting shares of the companies listed below:
Sirena Apparel..................................................... 9.92%
Gadzooks........................................................... 9.78%
World Acceptance................................................... 9.77%
Ace Cash Express................................................... 9.50%
RCM Technologies................................................... 9.05%
First Washington Realty Trust...................................... 8.65%
COMARCO............................................................ 8.11%
MAPICS............................................................. 8.03%
Helen of Troy...................................................... 7.47%
International Total Services....................................... 7.31%
Microcide Pharmaceuticals.......................................... 7.29%
Commonwealth Bancorp............................................... 7.12%
Phoenix Investment Partners........................................ 7.00%
Tesoro Petroleum................................................... 6.76%
Aztec Technology Partners.......................................... 6.64%
Bigfoot International.............................................. 6.54%
Capital Trust...................................................... 6.53%
Gibraltar Steel.................................................... 6.52%
Synaptic Pharmaceuticals........................................... 6.52%
LaSalle Hotel Properties........................................... 6.50%
Bally Total Fitness................................................ 6.46%
Airnet Systems..................................................... 6.43%
Corvas International............................................... 6.43%
Labor Ready........................................................ 6.08%
Kronos............................................................. 6.03%
Monarch Casino & Resort............................................ 5.67%
Philadelphia Consolidated Holding.................................. 5.57%
National Data...................................................... 5.53%
Atchison Casting................................................... 5.48%
GP Strategies...................................................... 5.31%
DVI Health Services................................................ 5.28%
Micros Systems..................................................... 5.19%
Americredit........................................................ 5.16%
Cross Timbers Oil.................................................. 5.13%
Tipperary.......................................................... 5.03%
The aggregate cost and value of investments in these companies at June 30, 2000,
was $506,711,000 and $507,031,000, respectively. The market value of these
securities represents 13.28% of the total net assets at June 30, 2000. During
the six months ended June 30, 2000, cost of purchases and proceeds from sales in
affiliated companies was $64,970,000 and $44,867,000, respectively. Dividends
received from these companies amounted to $1,692,000 and net realized gain on
sales of investments in such companies amounted to $5,460,000.
(d) On June 30, 2000, the market value of foreign securities amounted to
$445,426,000 and represented 11.67% of total net assets. The Fund's foreign
portfolio was diversified as follows:
United Kingdom $102,508 2.69%
Canada 83,575 2.19%
Japan 48,996 1.28%
Italy 48,748 1.28%
Singapore 46,260 1.21%
Sweden 24,883 .65%
Netherlands 24,723 .65%
Australia $ 19,796 .52%
France 16,910 .44%
Argentina 9,425 .25%
South Africa 8,274 .22%
Mexico 5,813 .15%
Germany 4,299 .11%
China 1,216 .03%
21
<PAGE>
Acorn International
>Major Portfolio Changes in the Second Quarter
Number of Shares
---------------------
3/31/00 6/30/00
Additions
----------------------------------------------------------------
Europe
>Germany/Austria
Flughafen Wien (Austria) 165,000 235,000
IFCO Systems 100,000 225,000
MobilCom 110,000 175,000
Stinnes 0 395,000
Teleplan International 0 50,000
United GlobalCom (Austria) 0 350,000
>Denmark
ISS International Service Systems 125,000 200,000
>Finland
Helsinki Telephone 100,000 150,000
>Sweden
Autoliv 0 350,000
Icon Medialab 0 50,000
Mandator 1,350,000 1,500,000
Modern Times Group 500,000 525,000
>Belgium
Audiofina 185,000 250,000
Telindus Group 100,000 130,000
(formerly known as Telinfo)
Ubizen 15,000 100,000
(includes effect of 4 for 1 stock split)
>United Kingdom/Ireland
Capita Group 2,000,000 2,100,000
Hays 3,000,000 3,500,000
Holmes Place 0 1,400,000
Incepta 5,000,000 6,500,000
Irish Life & Permanent (Ireland) 1,800,000 2,000,000
Orchestream Holdings 0 750,000
SSL International 1,800,000 2,000,000
>Switzerland
Bachem 7,000 8,500
Cie Fin Richemont 14,000 15,000
Givaudan 0 15,000
Kuoni Reisen 0 25,000
Pargesa 0 4,000
>Italy
Class Editori 750,000 850,000
Saipem 2,000,000 2,250,000
>Spain
Red Electrica 1,200,000 1,500,000
TPI 300,000 1,200,000
(includes effect of 3 for 1 stock split)
>Netherlands
ASR Verzekeringsgroep 95,000 150,000
Hunter Douglas 0 310,000
Kempen 450,000 475,000
----------------------------------------------------------------
Asia
>Hong Kong
TVB 3,650,000 4,250,000
>Japan
Hirose Electric 80,000 100,000
Orix 275,000 285,000
Ryohin Keikaku 200,000 240,000
Shobunsha 150,000 200,000
>Taiwan
Advantech 2,000,000 3,000,000
(includes effect of 2 for 1 stock split)
Chroma Ate 3,000,000 4,550,000
(includes effect of 30% stock dividend)
>South Korea
Cheil Jedang 150,000 175,000
S1 Corporation 1,200,000 1,400,000
Samsung 1,000,000 1,700,000
----------------------------------------------------------------
Latin America
>Mexico
Wal-Mart de Mexico 5,500,000 6,500,000
>Brazil
Embratel 800,000 1,000,000
----------------------------------------------------------------
Other Countries
>Australia
Computershare 5,000,000 6,000,000
Infomedia 0 1,508,000
>Canada
Canadian Hunter 0 300,000
Corus Entertainment 850,000 1,000,000
Mosaic 850,000 1,375,000
>Israel
Amdocs 850,000 965,000
Comverse Technology 85,000 325,000
(includes effect of 2 for 1 stock split)
DSP Group 250,000 300,000
Gilat Satellite Network 200,000 240,000
>United States
MIH 400,000 500,000
22
<PAGE>
Number of Shares
---------------------
3/31/00 6/30/00
Sales
----------------------------------------------------------------------------
Europe
>Germany/Austria
Dialog Semiconductor 160,000 300,000
(includes effect of 2 for 1 stock split)
EM.TV & Merchandising 240,000 0
Telesens 115,000 0
>Finland
F-Secure 100,000 0
TietoEnator 1,000,000 950,000
>Norway
Enitel 200,000 160,000
>Sweden
Utfors 125,000 0
WM Data Nordic 850,000 3,750,000
(includes effect of 5 for 1 stock split)
>France
Atos 250,000 200,000
Genset 250,000 0
Imerys 25,000 0
>United Kingdom
Baltimore Technologies 250,000 2,000,000
(includes effect of 10 for 1 stock split)
Fairey Group 1,200,000 1,000,000
MG 1,600,000 0
SkyePharma 6,000,000 0
St. James Capital 3,800,000 1,400,000
Thus 1,000,000 0
>Italy
Editoriale L'Espresso 3,000,000 2,500,000
>Spain/Portugal
Indra Sistemas 500,000 0
Filmes Lusomundo (Portugal) 425,000 0
PT Multimedia (Portugal) 100,000 0
>Netherlands
Getronics 500,000 1,200,000
(includes effect of 3 for 1 stock split)
----------------------------------------------------------------------------
Asia
>Hong Kong
E-New Media 40,000,000 0
Li & Fung 26,000,000 22,200,000
>Japan
Avex 100,000 0
Densei Lambda 400,000 270,000
Fast Retailing 50,000 40,000
Future Systems 15 0
JAFCO 75,000 0
Nichii Gakkan 45,000 0
OBIC 30,000 20,000
Omega Project 600,000 0
(formerly known as Bodysonic)
Pasona Softbank 20,000 0
Trans Cosmos 65,000 55,000
>Taiwan
Cosmo Electronics 750,000 218,000
(includes effect of 21.8% stock dividend)
(includes effect of 4 for 1 rights distribution)
Hitron Technology 3,000,000 2,750,000
Systex 3,500,000 3,500,000
(includes effect of 7 for 5 stock split)
>Singapore
Datacraft Asia 6,000,000 4,000,000
Natsteel Electronics 5,500,000 2,750,000
----------------------------------------------------------------------------
Latin America
>Mexico
Grupo Carso 1,500,000 0
Kimberly Clark de Mexico 3,500,000 0
----------------------------------------------------------------------------
Other Countries
>Australia
AAPT 4,500,000 3,100,000
>Canada
ATI Technologies 1,500,000 0
Celestica 1,000,000 900,000
Dundee Realty 4,000,000 0
Clearnet Communications 150,000 0
Creo Products 275,000 150,000
>Israel
Radware 100,000 0
>South Africa
Dimension Data 6,500,000 6,000,000
>United States
Global TeleSystems 750,000 0
23
<PAGE>
Acorn International
>Statement of Investments (unaudited) June 30, 2000
Number of Shares Value (000)
---------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 88.5%
---------------------------------------------------------------------------
Europe: 47.1%
>Germany/Austria: 5.3%
600,000 Rhoen Klinikum Pfd. $ 26,745
500,000 Rhoen Klinikum 19,891
Hospital Management
175,000 MobilCom 17,564
Telecommunication Services
350,000 United GlobalCom (Austria) (b) 16,362
Voice, Video & Data Services
300,000 Dialog Semiconductor (b) 15,242
Custom Semiconductors for Cell Phones
60,000 Fresenius, Pfd. 13,746
Dialysis Equipment & Solutions
235,000 Flughafen Wien (Austria) 8,400
Vienna Airport Authority
395,000 Stinnes 7,952
Logistics
200,000 Pfeiffer Vacuum Technologies 7,765
Vacuum Pump Manufacturer
100,000 Austria Technologies
& Systemtechnik (b) 7,669
Printed Circuit Board Manufacturer
50,000 Teleplan International (b) 7,621
After-Sale Warranty Repair Services
225,000 IFCO Systems (b) 6,018
Shipping Container Leasing/Logistics
315,000 Takkt 2,959
Mail Order Retailer of Office & Warehouse Durables
---------------------------------------------------------------------------
157,934
>Denmark: 0.5%
200,000 ISS International Service Systems (b) 15,291
Cleaning Services
>Finland: 2.3%
950,000 TietoEnator 31,828
Computer Services/Consulting
150,000 Helsinki Telephone 14,753
Telecommunications Provider
1,500,000 Talentum (c) 13,876
Trade Journals & Internet Services
625,000 Fiskars, Series A 6,195
Scissors & Gardening Tools
95,400 Spar Finland 3,155
Grocery/Convenience Stores
---------------------------------------------------------------------------
69,807
>Norway: 0.2%
160,000 Enitel (b) 6,233
Telecommunications Provider
>Sweden: 3.8%
1,000,000 Sigma $ 27,135
Technical Consulting
525,000 Modern Times Group (b) 25,140
TV, Newspapers and Electronic Commerce
3,750,000 WM Data Nordic 20,736
Computer Services/Consulting
1,500,000 Adcore (b) 11,629
(formerly known as Information Highway)
Internet Consulting
1,500,000 Mandator 9,834
Computer & Internet Consulting
350,000 Autoliv 8,422
Seatbelts & Airbags
300,000 Micronic Laser Systems (b) 6,122
Video Display Manufacturing Equipment
375,000 SwitchCore (b) 3,933
Communication Semiconductors
50,000 Icon Medialab (b) 633
Internet Consulting
---------------------------------------------------------------------------
113,584
>France/Belgium: 4.5%
775,000 NRJ 37,889
Radio Network
250,000 Audiofina (Belgium) 32,353
TV & Radio Broadcaster
200,000 Atos (b) 18,788
Computer Services/Transaction Processing
130,000 Telindus Group (Belgium) 15,739
(formerly known as Telinfo)
Network Integration Services
500,000 Fininfo 15,577
Data Feeds for French Banks & Brokers
20,000 Penauille Polyservice 9,653
Industrial Cleaning/Airport Services
100,000 Ubizen (Belgium) (b) 3,547
Internet Security Services/Software
---------------------------------------------------------------------------
133,546
>United Kingdom/Ireland: 13.7%
12,000,000 Serco Group 94,921
Facilities Management
2,100,000 Capita Group 51,407
Outsourcing Services
575,000 NTL (b) 34,428
Voice, Video & Data Services Via Cable Networks
2,000,000 SSL International 21,573
Medical & Footcare Products
5,000,000 Taylor Nelson 19,946
Market Research Services
3,500,000 Hays 19,525
Outsourcing Services Conglomerate
24
<PAGE>
Number of Shares Value (000)
----------------------------------------------------------------------------
6,100,000 Chloride Group $ 17,638
Electrical Equipment Manufacturer/Retailer
2,000,000 Irish Life & Permanent (Ireland) 16,929
Savings Products
2,000,000 Baltimore Technologies (b) 15,139
Security Software
400,000 Euro Money Publications 14,685
Financial Publications
3,750,000 FKI 13,341
Materials Handling Equipment
6,500,000 Incepta 13,088
Business Information & Marketing Services
3,500,000 Smith & Nephew 12,929
Medical Equipment & Supplies
2,500,000 Photobition Group 10,843
Production of Graphics for Exhibits
1,000,000 ITNET 9,954
Outsourcing Services
1,130,000 Oxford Asymmetry (b) 8,417
Chemical Products & Services
2,000,000 Rotork 7,479
Valve Actuators for Oil & Water Pipelines
1,000,000 Fairey Group 7,024
Electronic Products
1,000,000 Expro International 6,260
Offshore Oil Field Services
1,400,000 Holmes Place 5,426
Health Clubs
1,400,000 St. James Capital 5,277
Life Insurance
750,000 Orchestream Holdings (b) 3,588
Network Management Software
----------------------------------------------------------------------------
409,817
>Switzerland: 5.7%
15,000 Cie Fin Richemont 40,542
Luxury Goods
100,000 Selecta Group 31,117
Vending Machine Owner/Operator
6,000 Julius Baer 23,799
Private Banking, Brokerage & Mutual Funds
8,500 Bachem 18,086
Peptides
6,500 Sarasin & Cie Bank 16,789
Private Banking
25,000 Kuoni Reisen 11,607
Tour Operator
15,000 Bon Appetit 9,686
Wholesale Food Distributor and Speciality
Restaurant/Retailer
4,000 Pargesa 9,151
Industrial & Media Conglomerate
10,000 Phoenix Mecano 5,719
Electrical Components Manufacturer
15,000 Givaudan (b) 4,580
Industrial Fragrances & Flavors
----------------------------------------------------------------------------
171,076
>Italy: 6.8%
4,000,000 Banca Fideuram $ 60,583
Life Insurance & Mutual Funds
3,850,000 Autogrill 41,224
Restaurants & Catering for Travelers
2,500,000 Editoriale L'Espresso 29,717
Newspaper & Magazine Publisher
1,500,000 Mediolanum 24,502
Life Insurance & Mutual Funds
2,250,000 Saipem 13,372
Offshore Construction & Drilling
850,000 Class Editori 12,499
Newspapers & On-Line Financial Data
1,400,000 Aeroporti di Roma 11,931
Airport Management
910,000 Gruppo Coin (b) 9,683
Food & Clothing Retailer
----------------------------------------------------------------------------
203,511
>Spain: 1.9%
1,500,000 Red Electrica 17,255
Spanish Power Grid
1,200,000 TPI 11,377
Spanish Telephone Directories
500,000 Cortefiel 10,890
Apparel Retailer
750,000 Prosegur 8,807
Security Guards
500,000 Aguas de Barcelona 6,710
Water Utility
----------------------------------------------------------------------------
55,039
>Netherlands: 2.0%
475,000 Kempen 23,905
Stock Brokerage/Investment Management
1,200,000 Getronics 18,578
Computer Services/Consulting
310,000 Hunter Douglas 8,425
Decorative Window Coverings
150,000 ASR Verzekeringsgroep 7,808
Auto/Life Insurance
----------------------------------------------------------------------------
58,716
>Hungary: 0.4%
1,200,000 Matav 8,382
70,000 Matav ADR 2,411
Telecommunications Provider
----------------------------------------------------------------------------
10,793
---------
Europe: Total 1,405,347
----------------------------------------------------------------------------
Asia: 22.2%
>Hong Kong: 4.5%
22,200,000 Li & Fung 111,067
Sourcing of Consumer Goods
4,250,000 TVB 28,350
Television Broadcasting
----------------------------------------------------------------------------
139,417
25
<PAGE>
Acorn International
Statement of Investments, continued
Number of Shares Value (000)
---------------------------------------------------------------------------
>Japan: 7.8%
285,000 Orix $ 42,155
Finance Leasing
240,000 Ryohin Keikaku 30,622
Own Brand Specialty Retailer
150,000 Nintendo 26,256
Video Games
35,000 Bellsystem24 17,201
Call Centers
40,000 Fast Retailing 16,786
Discount Apparel Retailer
100,000 Hirose Electric 15,604
Electrical Connectors
200,000 Konami 12,665
Video Game Software Developer
110,000 Otsuka Kagu 11,332
Furniture Retailer
110,000 Misumi 11,280
Distributor of Capital Goods Components
20,000 OBIC 9,073
Computer Integrator
55,000 Trans Cosmos 8,276
Information Technology Services & Investments
200,000 Shobunsha 7,013
Map Publisher
100,000 Benesse 6,947
Correspondence Education
180,000 Wilson Learning 6,805
Corporate Training
270,000 Densei Lambda 5,576
Power Supplies
55,000 Stella Chemifa 4,262
Specialty Chemicals
---------------------------------------------------------------------------
231,853
>Taiwan: 2.2%
3,000,000 Advantech 15,877
Computer Based Industrial Automation
7,500,000 Phoenixtec Power 13,636
Uninterruptable Power Supply Manufacturer
3,500,000 Systex (b) 12,273
Systems Integrator & Internet Services
2,750,000 Hitron Technology 10,938
Network Integration & Internet Services
4,550,000 Chroma Ate 10,193
Test & Measurement Instruments
218,000 Cosmo Electronics (b) 545
Relay & Opto-Coupler Manufacturer
---------------------------------------------------------------------------
63,462
>Malaysia: 0.5%
2,000,000 Unisem 14,211
Semiconductor Assembly
>South Korea: 2.0%
1,400,000 S1 Corporation $ 20,717
Security Services
1,700,000 Samsung 14,652
Trading Company
2,500,000 Korea Technology Investments 8,968
Venture Capital
175,000 Cheil Jedang 8,020
Consumer Staples
400,000 SK Corporation 7,336
Oil Refining
---------------------------------------------------------------------------
59,693
>Singapore: 5.2%
6,000,000 Venture Manufacturing 61,076
Electronic Manufacturing Services
9,350,000 Star Cruises (b) 50,490
Cruise Line
4,000,000 Datacraft Asia 35,200
Network Integrator
2,750,000 Natsteel Electronics 8,430
Electronic Manufacturing Services
---------------------------------------------------------------------------
155,196
--------
Asia: Total 663,832
---------------------------------------------------------------------------
Latin America: 2.8%
>Mexico: 1.7%
5,000,000 Corp Interamericana de
Entretenimiento (b) 19,708
Special Events & Live Entertainment
6,500,000 Wal-Mart de Mexico (b) 15,155
Discount Stores
9,000,000 Grupo Industrial Bimbo 14,208
Bread, Baked Goods & Snacks
---------------------------------------------------------------------------
49,071
>Brazil: 0.8%
1,000,000 Embratel 23,625
Long Distance Telecommunications Provider
>Argentina: 0.3%
400,000 IRSA GDS 9,150
Real Estate Management & Development
--------
Latin America: Total 81,846
26
<PAGE>
Number of Shares Value (000)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Other Countries: 16.4%
>Australia: 4.0%
8,000,000 ERG $ 62,297
Smart Card Systems for Public Transportation
6,000,000 Computershare 30,945
Financial Software/Services
2,500,000 KeyCorp (b) (c) 14,064
Smart Card Technology
3,100,000 AAPT (b) 10,200
Telecommunications Provider
1,508,000 Infomedia (b) 905
Publisher of Electronic Catalog for Auto Parts
----------------------------------------------------------------------------
118,411
>Canada: 5.3%
900,000 Celestica (b) 43,794
Electronic Manufacturing Services
1,000,000 Corus Entertainment (b) 26,659
CATV Programming & Radio Stations
720,000 Canadian Natural Resources (b) 20,895
Oil & Gas Producer
1,000,000 Power Financial 19,876
Life Insurance & Mutual Funds
1,375,000 Mosaic (b) 16,704
Outsourcing Market Services
500,000 Penn West Petroleum (b) 12,351
Oil & Gas Producer
1,350,000 Bracknell (b) 6,742
Electrical Contractor & Facilities Management
300,000 Canadian Hunter (b) 6,368
Natural Gas Producer
150,000 Creo Products (b) 3,412
Commercial Printing Machinery
500,000 Cinar (b) 1,750
Children's TV Programming
----------------------------------------------------------------------------
158,551
>Israel: 4.6%
965,000 Amdocs (b) 74,064
Telecommunications Billing & Customer Care Software
325,000 Comverse Technology (b) 30,225
Voicemail & Related Systems
300,000 DSP Group (b) 16,800
DSP Based Semiconductors & Intellectual Property
240,000 Gilat Satellite Network (b) 16,650
Satellite Communications Equipment
----------------------------------------------------------------------------
137,739
>South Africa: 1.7%
6,000,000 Dimension Data (b) $ 49,646
Networks & Computer Services
>Russia: 0.0%
$1,500,000 Khanty Mansiysk
10% Notes Due 10/14/02 750
4,129 Khanty Mansiysk (b) 179
Oil Production in Russia
----------------------------------------------------------------------------
929
>United States: 0.8%
500,000 MIH (b) 15,016
Pay-TV & Interactive TV Technology
500,000 Carnival 9,750
Largest Cruise Line Operator
----------------------------------------------------------------------------
24,766
-----------
Other: Total 490,042
Total Common Stocks and Other
-----------
Equity-Like Securities: 88.5% 2,641,067
(Cost: $1,580,548)
Short-Term Obligations: 10.7%
Yield 6.45-6.75% Due 7/3-7/17/00
$123,071 Sears Roebuck 122,810
110,238 Xerox 110,048
30,927 US West 30,893
30,427 Equilon 30,377
26,443 American Express 26,434
-----------
(Amortized Cost: $320,562) 320,562
-----------
Total Investments: 99.2% 2,961,629
(Cost: $1,901,110)
Cash and Other Assets less Liabilities: 0.8% 22,093
-----------
Total Net Assets: 100% $ 2,983,722
============================================================================
--------------------------------------------------------------------------------
>Notes to Statement of Investments
(a) At June 30, 2000, for federal income tax purposes cost of investments was
$1,957,959,000 and net unrealized appreciation was $1,003,670,000
consisting of gross unrealized appreciation of $1,123,081,000 and gross
unrealized depreciation of $119,411,000.
(b) Non-income producing security.
(c) On June 30, 2000, the Fund held the following percentages of the
outstanding voting shares of the affiliated companies (ownership of at
least 5%) listed below:
Talentum (Finland).................................... 9.19%
Key Corp (Australia).................................. 6.92%
The aggregate cost and value of investments in these companies at June 30, 2000,
was $18,864,000 and $27,940,000 respectively. The market value of these
securities represents .94% of the total net assets at June 30, 2000. During the
six months ended June 30, 2000, the cost of purchases and proceeds from sales in
affiliated companies was $2,943,000 and $32,963,000 respectively. Net realized
gain on sales of investments in such companies amounted to $27,934,000. There
were no dividends received from these companies during the six months ended June
30, 2000.
(d) At June 30, 2000, $792,135,000 or 26.55% of the Fund's net assets were
denominated in the Euro currency.
27
<PAGE>
Acorn International
>Portfolio Diversification
At June 30, 2000, the Fund's portfolio of investments as a percent of net assets
was diversified as follows:
Value (000) Percent
---------------------------------------------------------------
>Computer Hardware
Semiconductors $ 56,308 1.9%
Telephone Equipment 39,923 1.3
PCs and Peripherals 14,064 0.5
---------------------------------------------------------------
110,295 3.7
>Computer Software
Telephone Related 104,289 3.5
Internet 22,274 0.7
Enterprise Resource Planning (ERP) 9,073 0.3
---------------------------------------------------------------
135,636 4.5
>Technology Services
Network/SI 117,891 4.0
Full Service 89,931 3.0
Internet/Web Consulting 34,414 1.1
Embedded Systems 27,135 0.9
---------------------------------------------------------------
269,371 9.0
>Telecom
Incumbent 66,735 2.2
Cable 50,791 1.7
Alternative Provider 32,172 1.1
Internet Service Providers (ISP) 15,016 0.5
---------------------------------------------------------------
164,714 5.5
>Broadcasting & Media Content
Hybrid Internet 108,995 3.7
Radio & TV Broadcasting 98,592 3.3
Media Content Providers 74,343 2.5
Market Research 19,946 0.6
---------------------------------------------------------------
301,876 10.1
>Health Care
Services 55,053 1.9
Devices & Consumables 48,248 1.6
Biotechnology 18,086 0.6
---------------------------------------------------------------
121,387 4.1
>Business Services
Business Process Outsourcing 266,726 8.9
Business Services 263,555 8.9
Logistics 21,591 0.7
Consumer Services 13,752 0.5
---------------------------------------------------------------
565,624 19.0
>Financials
Asset Management 149,579 5.0
Insurance 49,890 1.7
Lending Institutions 42,155 1.4
Venture Capital 8,968 0.3
---------------------------------------------------------------
250,592 8.4
>Consumer Goods & Services
Retail Outlets $ 148,533 5.0%
Leisure 96,982 3.3
Branded Goods 69,370 2.3
Distribution/E-Commerce 2,959 0.1
---------------------------------------------------------------
317,844 10.7
>Industrials
Electronic Manufacturing Services 113,300 3.8
Electronic Manufacturing 48,695 1.6
Goods 44,635 1.5
R&D Design Firms 32,141 1.1
Distribution 11,280 0.4
---------------------------------------------------------------
250,051 8.4
>Other Industries
Energy 60,175 2.0
Utilities 44,296 1.5
Conglomerates 40,056 1.3
Real Estate 9,150 0.3
---------------------------------------------------------------
153,677 5.1
Total Common Stocks and
--------------------------
Other Equity-Like Securities: 2,641,067 88.5
Short-Term Obligations: 320,562 10.7
--------------------------
Total Investments: 2,961,629 99.2
Cash and Other Assets less
Liabilities: 22,093 0.8
--------------------------
Net Assets: $2,983,722 100.0%
28
<PAGE>
Acorn USA
>Major Portfolio Changes in the Second Quarter
Number of Shares
----------------
Additions 3/31/00 6/30/00
----------------------------------------------------------------------------
Information
Commonwealth Telephone 0 66,000
Ezenia 30,000 168,400
Information Holdings 0 48,600
Kronos 35,000 100,300
Mediacom Communications 0 305,000
Perkin Elmer 65,000 158,000
RCM Technologies 173,000 301,000
Reynolds & Reynolds 0 142,600
Salem Communications 122,700 270,700
Sykes Enterprises 421,500 450,500
----------------------------------------------------------------------------
Consumer Goods/Services
ITT Educational Services 153,000 245,000
----------------------------------------------------------------------------
Finance
Chittenden 93,500 126,500
Neuberger Berman 0 74,700
TCF Financial 59,000 79,000
----------------------------------------------------------------------------
Industrial Goods/Services
EGL 0 19,800
----------------------------------------------------------------------------
Energy/Minerals
Carbo Ceramics 0 31,300
Newpark Resources 135,000 371,000
----------------------------------------------------------------------------
Other Industries
Conectiv 281,000 523,000
----------------------------------------------------------------------------
Sales
Information
American Power Conversion 185,000 131,000
Aspect Communications 205,100 114,200
CACI International 185,000 159,700
Cambridge Technologies 60,000 0
Classic Communications 65,000 0
Data Transmission Network 209,100 0
DSP Group 143,100 92,100
Navidec 125,000 0
Objective Systems 163,000 0
RCN 272,800 80,000
TV Guide 21,000 0
West TeleServices 130,000 89,000
Young Broadcasting 39,500 0
----------------------------------------------------------------------------
Health Care
Genome Therapeutics 44,900 0
Genset 26,000 0
Genzyme Molecular
Onocology Division 55,000 0
Lincare Holdings 315,400 285,400
Maxygen 33,100 13,100
Myriad Genetics 26,700 10,000
----------------------------------------------------------------------------
Consumer Goods/Services
NuSkin Enterprises 157,600 0
----------------------------------------------------------------------------
Finance
Markel 2,100 0
Markel CVR 2,108 0
Pioneer Group 36,800 0
Protective Life 66,000 0
----------------------------------------------------------------------------
Industrial Goods/Services
Insurance Auto Auctions 347,400 319,400
Labor Ready 150,000 0
29
<PAGE>
Acorn USA
>Statement of Investments (unaudited) June 30, 2000
Number of Shares Value (000)
-------------------------------------------------------------------------
Common Stocks: 92.1%
-------------------------------------------------------------------------
Information: 48.0%
>Broadcasting: 0.8%
270,700 Salem Communications (b) $ 2,512
Radio Stations for Religious Programming
>Television Programming: 1.5%
305,000 Mediacom Communications (b) 4,689
Cable Television Franchises
>Telecommunications/Wireline Communications: 1.7%
66,000 Commonwealth Telephone (b) 3,106
Rural Phone Franchises & CLEC
80,000 RCN (b) 2,030
Metro Market CLEC: Voice, Video &
Internet Services
-------------------------------------------------------------------------
5,136
>Mobile Communications: 9.2%
186,000 Telephone and Data Systems (b) 18,647
Cellular & Telephone Services
121,800 Comarco (b) 3,959
Wireless Network Testing
229,000 Diversinet (b) 2,719
Wireless PKI Security
112,400 Price Communications (b) 2,648
Cellular Telephone Services
-------------------------------------------------------------------------
27,973
>Telecommunications Equipment: 1.7%
114,200 Aspect Telecommunications (b) 4,489
Call Center Software
168,400 Ezenia (b) 747
Multimedia Communications
-------------------------------------------------------------------------
5,236
>Computer Services: 3.9%
450,500 Sykes Enterprises (b) 5,800
Call Center Services
170,000 Pomeroy Computer Resources (b) 2,508
Network Integration Services
301,000 RCM Technologies (b) 2,220
Technology Staffing Services
635,000 Aztec Technology Partners (b) 1,389
Technology Staffing Services
-------------------------------------------------------------------------
11,917
>Business Software: 4.6%
598,000 JDA Software (b) 11,474
Applications/Software & Services for Retailers
132,000 Project Software (b) 2,376
Enterprise Maintenance Software
-------------------------------------------------------------------------
13,850
>Transaction Processors: 3.4%
268,300 National Data 6,171
Credit Card & Health Claims Processor
165,500 Concord EFS (b) 4,303
Credit Card Processor
-------------------------------------------------------------------------
10,474
>Internet: 1.2%
350,000 MSI Holdings (b) $ 2,538
Web Hosting
188,000 Online Resources (b) 1,210
Internet Banking Technology
-------------------------------------------------------------------------
3,748
>Business Information/
Marketing Services: 5.7%
169,000 PRIMEDIA (b) 3,845
Specialty Magazines & Other Publications
102,800 Getty Images (b) 3,810
Photographs for Publications & Electronic Media
159,700 CACI International (b) 3,114
Technology Services for Government
142,600 Reynolds & Reynolds 2,602
Computer Systems for Car Dealers
89,000 West TeleServices (b) 2,253
Customer Care & Sales Support
48,600 Information Holdings (b) 1,798
Scientific & Medical Publications, Patent Information
-------------------------------------------------------------------------
17,422
>Instrumentation: 6.8%
158,000 Perkin Elmer 10,448
Analytical Instruments for Biotech/Telecom
140,000 Tektronix 10,360
Analytical Instruments
-------------------------------------------------------------------------
20,808
>Semiconductors/Related Equipment: 1.7%
92,100 DSP Group (b) 5,158
Telecom Semiconductors
>Computer Hardware/Related Systems: 5.8%
527,600 Micros Systems (b) 9,794
Information Systems for Restaurants & Hotels
131,000 American Power Conversion (b) 5,346
Uninterruptable Power Systems
100,300 Kronos (b) 2,608
Labor Management Solutions
-------------------------------------------------------------------------
17,748
--------
Information: Total 146,671
-------------------------------------------------------------------------
Health Care: 7.7%
>Biotechnology/Drug Delivery: 1.4%
363,636 Metabolex, Series F (b) 2,000
Drugs for Diabetes
10,000 Myriad Genetics (b) 1,481
Gene Discovery & Diagnostic Products
13,100 Maxygen (b) 744
Molecular Breeding
-------------------------------------------------------------------------
4,225
30
<PAGE>
Acorn USA
>Statement of Investments, continued
Principle Amount or
Number of Shares Value (000)
Number of Shares Value (000)
-------------------------------------------------------------------------
>Services: 6.3%
343,000 First Health (b) $ 11,255
PPO Network
285,400 Lincare Holdings (b) 7,028
Home Health Care Services
856,100 Magellan Health Services (b) 1,070
Mental Health Services
-------------------------------------------------------------------------
19,353
--------
Health Care: Total 23,578
-------------------------------------------------------------------------
Consumer Goods/Services: 4.9%
>Consumer Services: 2.6%
245,000 ITT Educational Services (b) 4,303
Technology Oriented Postsecondary Degree Programs
547,000 Telespectrum (b) 2,496
Call Center Services
43,000 Bally Total Fitness (b) 1,091
National Chain of Fitness Centers
-------------------------------------------------------------------------
7,890
>Retail: 2.3%
395,000 Gadzooks (b) 4,586
Teen Apparel Retailer
58,500 Whole Foods Market (b) 2,417
Natural Food Supermarkets
-------------------------------------------------------------------------
7,003
--------
Consumer Goods/Services: Total 14,893
-------------------------------------------------------------------------
Finance: 10.8%
>Banks: 2.1%
126,500 Chittenden 3,091
Vermont & West Massachusetts Bank
79,000 TCF Financial 2,029
Great Lakes Bank
41,000 Texas Regional Bancshares 1,040
TexMex Bank
-------------------------------------------------------------------------
6,160
>Finance Companies: 4.4%
613,500 AmeriCredit (b) 10,429
Auto Lending
590,000 World Acceptance (b) 3,098
Personal Loans
-------------------------------------------------------------------------
13,527
>Money Management: 1.7%
74,700 Neuberger Berman 3,474
Major Asset Management Company
163,000 Phoenix Investment Partners 1,712
Mutual Fund & Pension Manager
-------------------------------------------------------------------------
5,186
-------------------------------------------------------------------------
>Insurance: 2.6%
637,700 UICI (b) $ 4,185
Insurance/Specialty Finance
93,000 Leucadia National 2,122
Insurance Holding Company
332,100 Acceptance Insurance (b) 1,660
Crop Insurance
-------------------------------------------------------------------------
7,967
--------
Finance: Total 32,840
-------------------------------------------------------------------------
Industrial Goods/Services: 8.1%
>Industrial Goods: 0.7%
111,400 Advanced Lighting Technologies (b) 2,061
Metal Halide Lighting
Specialty Chemicals: 2.0%
202,600 Lilly Industries, Cl. A 6,091
Industrial Coatings
>Other Industrial Services: 5.4%
319,400 Insurance Auto Auctions (b) 6,747
Auto Salvage Services
346,000 Hub Group (b) 5,168
Truck & Rail Freight Forwarder
422,500 Wackenhut, Cl. B (b) 3,961
Prison Management
19,800 EGL (b) 609
Domestic Freight Forwarder
-------------------------------------------------------------------------
16,485
--------
Industrial Goods/Services: Total 24,637
-------------------------------------------------------------------------
Energy/Minerals: 9.5%
>Oil Services: 1.5%
371,000 Newpark Resources (b) 3,501
Oilfield Fluid Management
31,300 Carbo Ceramics 1,099
Manufacturer of Ceramic Pellets for Gas Wells
-------------------------------------------------------------------------
4,600
>Oil/Gas Producers: 1.6%
485,800 Tesoro Petroleum (b) 4,919
Oil Refinery/Gas Reserves
>Distribution/Marketing/Refining: 6.4%
176,700 Dynegy 12,071
Natural Gas & Electric Processing,
Production & Marketing
83,300 Equitable Resources 4,019
Natural Gas Utility & Producer
193,000 Atmos Energy 3,377
Natural Gas Utility
-------------------------------------------------------------------------
19,467
--------
Energy/Minerals: Total 28,986
31
<PAGE>
Principle Amount or
Number of Shares Value (000)
Principal Amount Value (000)
-------------------------------------------------------------------------
Other Industries: 3.1%
>Real Estate: 0.4%
47,000 The Rouse Company $ 1,163
Regional Shopping Malls
>Regulated Utilities: 2.7%
523,000 Conectiv 8,139
Electric Utility in New Jersey, Delaware & Maryland
--------
Other Industries: Total 9,302
Total Common Stocks: 92.1% 280,907
(Cost: $296,427)
-------------------------------------------------------------------------
Short-Term Obligations: 7.1%
Yield 6.70%-6.85% Due 7/3-7/6/00
$ 7,891 Citigroup $ 7,885
7,542 GE International 7,535
6,312 Ford Motor Puerto Rico 6,310
-------------------------------------------------------------------------
(Amortized Cost: $21,730) 21,730
--------
Total Investments: 99.2% 302,637
(Cost: $318,157)
Cash and Other Assets Less Liabilities: 0.8% 2,353
--------
Total Net Assets: 100% $304,990
=========================================================================
Notes to Statement of Investments
(a) At June 30, 2000, for federal income tax purposes cost of investments was
$318,547,000 and net unrealized depreciation was $15,910,000, consisting of
gross unrealized appreciation of $60,321,000 and gross unrealized depreciation
of $76,231,000.
(b) Non-income producing security.
32
<PAGE>
Acorn Foreign Forty
>Major Portfolio Changes in the Second Quarter
Number of Shares
------------------------
3/31/00 6/30/00
Additions
--------------------------------------------------------------------------
Europe
>Germany
MobilCom 0 19,600
>Sweden
Modern Times Group 0 65,000
>United Kingdom/Ireland
Irish Life & Permanent (Ireland) 500,000 550,000
Sema Group 100,000 178,666
>Italy
Saipem 0 225,000
>Netherlands
Getronics 65,000 254,000
(includes effect of 3 for 1 stock split)
--------------------------------------------------------------------------
Asia
>Singapore
Venture Manufacturing 500,000 560,000
--------------------------------------------------------------------------
Other Countries
>Australia
Computershare 0 650,000
ERG 0 800,000
Infomedia 0 113,000
>Israel
Comverse Technology 5,000 55,000
(includes effect of 2 for 1 stock split)
>United States
Global TeleSystems 0 200,000
Number of Shares
------------------------
3/31/00 6/30/00
Sales
--------------------------------------------------------------------------
Europe
>Belgium
Audiofina 50,000 41,000
>United Kingdom
St. James Capital 700,000 0
>Italy
Editoriale L'Espresso 250,000 180,000
SEAT Pagine Gialle 800,000 0
--------------------------------------------------------------------------
Asia
>Japan
Nintendo 12,000 0
--------------------------------------------------------------------------
Other Countries
>Australia
One.Tel Limited 1,290,000 0
>Canada
ATI Technologies 250,000 0
Power Financial 50,000 0
>Israel
Gilat Satellite Network 14,500 0
>United States
Global Telesystems 2,988,000 0
33
<PAGE>
Acorn Foreign Forty
>Statement of Investments (unaudited) June 30, 2000
Number of Shares Value (000)
----------------------------------------------------------------------------
Common Stocks: 97.7%
----------------------------------------------------------------------------
Europe: 60.5%
>Germany: 2.8%
50,000 Rhoen Klinikum $ 1,989
Hospital Management
19,600 MobilCom 1,967
Telecommunication Services
----------------------------------------------------------------------------
3,956
>Finland: 2.3%
165,000 Comptel 3,337
Telephone Billing Software
>Sweden: 5.3%
60,000 Netcom (b) 4,453
Telecommunication Services
65,000 Modern Times Group (b) 3,113
TV, Newspapers and Electronic Commerce
----------------------------------------------------------------------------
7,566
>France/Belgium: 7.8%
41,000 Audiofina (Belgium) 5,306
TV & Radio Broadcaster
70,000 M6 Metropole TV 4,268
Television Broadcaster
18,000 Atos (b) 1,691
Computer Services/Transaction Processing
----------------------------------------------------------------------------
11,265
>United Kingdom/Ireland: 22.4%
550,000 Irish Life & Permanent (Ireland) 4,655
Life Insurance
500,000 Peninsular & Oriental (b) 4,284
Cruise Line
600,000 Hays 3,347
Outsourcing Services
71,000 Energis (b) 2,664
Telecommunication Services
178,666 Sema Group (b) 2,543
Computer Software & Services
170,000 WPP Group (b) 2,484
Advertising
100,000 Capita Group (b) 2,448
Outsourcing Services
100,000 Logica 2,368
Computer Software & Services
200,000 SSL International 2,157
Medical & Footcare Products
270,000 Serco Group 2,136
Facilities Management
27,500 NTL (b) 1,647
Voice, Video & Data Services
363,100 Thus (b) 1,523
Telecommunication Services
----------------------------------------------------------------------------
32,256
Number of Shares Value (000)
----------------------------------------------------------------------------
>Switzerland: 4.8%
1,000 Julius Baer Holding $ 3,967
Private Banking, Brokerage & Mutual Funds
800 Pargesa Holdings 1,830
Industrial & Media Conglomerate
390 Cie Fin Richemont 1,054
Luxury Goods, Tobacco & Pay TV
----------------------------------------------------------------------------
6,851
>Italy: 5.9%
330,000 Banca Fideuram 4,998
Life Insurance & Mutual Funds
180,000 Editoriale L'Espresso 2,139
Newspapers & Magazines Publisher
225,000 Saipem 1,337
Offshore Construction & Drilling
----------------------------------------------------------------------------
8,474
>Spain: 1.7%
110,000 Indra Sistemas 2,526
Computer Services
>Netherlands: 7.5%
80,693 ASR Verzekeringsgroep 4,200
Auto/Life Insurance
254,000 Getronics 3,932
Computer Services
165,000 Fox Kids Europe (b) 2,610
Cartoons
----------------------------------------------------------------------------
10,742
-------
Europe: Total 86,973
----------------------------------------------------------------------------
Asia: 14.7%
>Japan: 7.1%
10,000 Fast Retailing 4,196
Discount Apparel Retailer
24,000 Orix 3,550
Finance Leasing
5,000 Bellsystem24 2,457
Call Centers
----------------------------------------------------------------------------
10,203
>Singapore: 7.6%
560,000 Venture Manufacturing 5,700
Electronic Manufacturing Services
969,000 Star Cruises (b) 5,233
Cruise Line
----------------------------------------------------------------------------
10,933
-------
Asia: Total 21,136
34
<PAGE>
Acorn Foreign Forty
>Statement of Investments, continued
Number of Shares Value (000)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other Countries: 22.5%
>Australia: 6.7%
800,000 ERG $ 6,230
Smart Card Systems for Public Transportation
650,000 Computershare 3,352
Financial Software/Services
113,000 Infomedia (b) 68
Publisher of Electronic Catalog for Auto Parts
----------------------------------------------------------------------------
9,650
>Canada: 5.0%
90,000 Celestica (b) 4,379
Electronic Manufacturing Services
100,000 Clearnet Communications (b) 2,767
Telecommunications Services
----------------------------------------------------------------------------
7,146
>Israel: 9.1%
105,000 Amdocs (b) 8,059
Telecommunications Billing & Customer Care Software
55,000 Comverse Technology (b) 5,115
Voicemail & Related Systems
----------------------------------------------------------------------------
13,174
Principle Amount or
Number of Shares Value (000)
----------------------------------------------------------------------------
>United States: 1.7%
200,000 Global TeleSystems (b) $ 2,413
Telecommunication Services
--------
Other: Total 32,383
--------
Total Common Stocks: 97.7% 140,492
(Cost: $119,238)
Short Term Obligations: 2.1%
$ 3,051 First Capital 6.90% Due 7/3/00 3,050
(Amortized Cost: $3,050)
--------
Total Investments: 99.8% 143,542
(Cost: $122,288)
Cash and Other Assets Less Liabilities: 0.2% 297
--------
Total Net Assets: 100% $143,839
============================================================================
------------------------------------------------------------------------------
Notes to Statement of Investments
(a) At June 30, 2000, for federal income tax purposes cost of investments was
$122,593,000 and net unrealized appreciation was $20,949,000, consisting of
gross unrealized appreciation of $36,234,000 and gross unrealized depreciation
of $15,285,000.
(b) Non-income producing security.
(c) At June 30, 2000, $47,866,000 or 33.28% of the Fund's net assets were
denominated in the Euro currency.
35
<PAGE>
Acorn Foreign Forty
>Portfolio Diversification
At June 30, 2000, the Fund's portfolio of investments as a parent of net assets
was diversified as follows:
Value (000) Percent
----------------------------------------------------------------------------
>Information
Telephone Services $ 15,477 10.8%
Broadcasting 15,297 10.6
Business Software 11,396 7.9
Computer Services 10,534 7.3
Transaction Processors 9,582 6.7
Contract Manufacturing 5,700 4.0
Telephone Equipment 5,115 3.6
Mobile Communications 2,767 1.9
Business Information 2,526 1.8
Advertising 2,484 1.7
Publishing 2,207 1.5
CATV 1,647 1.1
----------------------------------------------------------------------------
84,732 58.9
>Health Care
Pharmaceuticals 2,157 1.5
Hospital Management 1,989 1.4
----------------------------------------------------------------------------
4,146 2.9
>Consumer Goods/Services
Cruises 9,517 6.6
Retail 4,196 2.9
Entertainment 1,054 0.8
----------------------------------------------------------------------------
14,767 10.3
>Finance
Finance Companies $ 7,517 5.2%
Money Management 4,998 3.5
Savings & Loans 4,655 3.2
Insurance 4,200 2.9
Closed End Funds 1,830 1.3
----------------------------------------------------------------------------
23,200 16.1
>Industrial Goods/Services
Outsourcing Services 7,931 5.5
Electrical Components 4,379 3.1
----------------------------------------------------------------------------
12,310 8.6
>Energy/Minerals
Oil Services 1,337 0.9
----------------------------------------------------------------------------
1,337 0.9
Total Common Stocks: 140,492 97.7
Short Term Obligations: 3,050 2.1
--------------------------
Total Investments: 143,542 99.8
Cash and Other Assets Less
Liabilities: 297 0.2
--------------------------
Net Assets $143,839 100.0%
----------------------------------------------------------------------------
36
<PAGE>
Acorn Twenty
>Major Portfolio Changes in the Second Quarter
Number of Shares Held
---------------------
Additions 3/31/00 6/30/00
-------------------------------------------------------------------------
Information
Getty Images 0 65,000
Perkin Elmer 21,000 32,000
-------------------------------------------------------------------------
Industrial Goods/Services
Expeditors International
of Washington 0 45,000
-------------------------------------------------------------------------
Sales
Information
McLeod USA 42,000 84,000
(includes effect of 3 for 1 stock split)
RCN 65,000 0
Tektronix 100,000 90,000
-------------------------------------------------------------------------
Health Care
First Health 118,700 100,000
-------------------------------------------------------------------------
Finance
Comdisco 46,000 0
-------------------------------------------------------------------------
Energy/Minerals
Dynegy 69,000 50,000
37
<PAGE>
Acorn Twenty
>Statement of Investments (unaudited) June 30, 2000
Principal Amount or
Number of Shares Value (000)
Number of Shares Value (000)
Common Stocks: 97.7%
Information: 51.6%
-------------------------------------------------------------------------------
>Television Programmimg: 3.5%
90,000 Liberty Media Group, AT&T $ 2,182
Cable & Satellite Programming
>Telecommunications/Wireline Communications: 2.8%
84,000 McLeod USA (b) 1,738
Super Regional CLEC: Local, Long Distance & Internet Services
>Instrumentation: 19.0%
90,000 Tektronix 6,660
Analytical Instruments
23,000 Waters 2,871
Chromatography, Mass Spectrometry, Thermal Analysis
32,000 Perkin Elmer 2,116
Analytical Instruments for Biotech, Telecom
-------------------------------------------------------------------------------
11,647
>Mobile Communications: 4.6%
52,000 Pinnacle Holdings (b) 2,808
Towers for Cellular, PCS & Paging
>Contract Manufacturing: 6.4%
79,000 Jabil Circuit 3,920
Electronic Manufacturing Services
>Computer Hardware & Related
Equipment: 3.6%
54,000 American Power Conversion (b) 2,204
Uninterruptable Power Systems
>Business Information: 11.7%
132,600 Reynolds & Reynolds 2,420
Business Forms & Computer Systems for Car Dealers
65,000 Getty Images (b) 2,409
Photographs for Publications & Electronic Media
73,000 H & R Block 2,363
Tax Preparation
-------------------------------------------------------------------------------
7,192
--------
Information: Total 31,691
-------------------------------------------------------------------------------
Health Care: 14.8%
>Biotechnology/Drug Delivery: 0.8%
6,000 Incyte Pharmaceutical (b) $ 493
Gene Sequencing
>Hospital/Laboratory Supplies: 8.7%
41,100 Techne (b) 5,343
Cytokines, Antibodies, Other Reagents for Life Sciences
>Services: 5.3%
100,000 First Health (b) 3,281
PPO Network
-------
Health Care: Total 9,117
-------------------------------------------------------------------------------
Consumer Goods/Services: 13.9%
>Leisure Vehicles: 4.6%
74,000 Harley-Davidson 2,849
Motorcycles & Related Merchandise
>Furniture & Manufacturers: 9.3%
125,000 Herman Miller 3,234
Office Furniture
105,000 Jones Apparel (b) 2,468
Women's Apparel
-------------------------------------------------------------------------------
5,702
-------
Consumer Goods/Services: Total 8,551
-------------------------------------------------------------------------------
Finance: 6.1%
>Money Management: 6.1%
94,500 SEI Investments 3,762
Mutual Fund Administration
Finance: Total 3,762
-------------------------------------------------------------------------------
Industrial Goods/Services: 5.7%
>Logistics: 3.5%
45,000 Expeditors International of Washington 2,138
International Freight Forwarder
>Other Industrial Services: 2.2%
120,000 ServiceMaster 1,365
Facilities Management
-------
Industrial Goods/Services: Total 3,503
38
<PAGE>
Acorn Twenty
>Statement of Investments, continued
Number of Shares Value (000)
Principal Amount Value (000)
-------------------------------------------------------------------------------
Energy/Minerals: 5.6%
>Oil Refining/Marketing/Distribution: 5.6%
50,000 Dynegy 3,416
Natural Gas & Electric Processing, Production & Marketing
Energy/Minerals: Total 3,416
Total Common Stocks: 97.7% 60,040
(Cost: $47,454)
-------------------------------------------------------------------------------
Short-Term Obligations: 2.3%
$ 1,441 First Capital 6.90% Due 7/3/00 $ 1,441
(Amortized Cost: $1,441) --------
Total Investments: 100% 61,481
(Cost: $48,895)
Cash and Other Assets Less Liabilities: 0.0% (10)
--------
Total Net Assets: 100% $ 61,471
-------------------------------------------------------------------------------
Notes to Statement of Investments
(a) At June 30, 2000, for federal income tax purposes cost of investments was
$48,897,000 and net unrealized appreciation was $12,584,000, consisting of gross
unrealized appreciation of $15,330,000 and gross unrealized depreciation of
$2,746,000.
(b) Non-income producing security.
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>
<TABLE>
<CAPTION>
Acorn Family of Funds
>Statements of Assets and Liabilities (unaudited)
Acorn Acorn Acorn Acorn Acorn
(in thousands) Fund International USA Foreign Forty Twenty
----------------------------------------------------------------------------------------------------------------------------------
6/30/00
<S> <C> <C> <C> <C> <C>
Assets
Investments, at value (cost: Acorn Fund $2,676,542;
Acorn International $1,901,110; Acorn USA $318,157;
Acorn Foreign Forty $122,288; Acorn Twenty $48,895) $ 3,855,697 $ 2,961,629 $ 302,637 $143,542 $ 61,481
Cash 87 21,052 1 - -
Organization costs - - 25 - -
Net unrealized appreciation on
foreign forward currency contracts - 89 - - -
Receivable for:
Securities sold 22,582 19,256 2,723 1,010 -
Fund shares sold 1,832 6,896 118 46 7
Dividends and interest 2,422 3,225 22 143 24
Other assets 502 268 36 - -
----------------------------------------------------------------------------------------------------------------------------------
Total assets 3,883,122 3,012,415 305,562 144,741 61,512
Liabilities and Net Assets
Payable for:
Securities purchased 17,810 25,909 347 68 -
Fund shares redeemed 46,689 1,669 73 759 -
Organization costs - - 26 - -
----------------------------------------------------------------------------------------------------------------------------------
Other 1,053 1,115 126 75 41
----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 65,552 28,693 572 902 41
Net assets applicable to Fund shares outstanding $ 3,817,570 $ 2,983,722 $ 304,990 $143,839 $ 61,471
----------------------------------------------------------------------------------------------------------------------------------
Fund shares outstanding 221,654 90,901 22,192 7,313 4,632
----------------------------------------------------------------------------------------------------------------------------------
Pricing of Shares
Net asset value, offering price and redemption price
per share $ 17.22 $ 32.82 $ 13.74 $ 19.67 $ 13.27
----------------------------------------------------------------------------------------------------------------------------------
Analysis of Net Assets
Paid-in capital $ 2,354,404 $ 1,596,370 $ 319,438 $113,032 $ 48,733
Accumulated net realized gain on sales
of investments, futures and foreign
currency transactions 280,123 395,993 1,514 9,882 333
Net unrealized appreciation (depreciation) of investments and
and other assets (net of unrealized PFIC gains of $65,710
for Acorn International and $305 for Acorn Foreign Forty) 1,179,150 994,764 (15,520) 20,947 12,586
Undistributed net investment income (loss) 3,893 (3,405) (442) (22) (181)
----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to
Fund shares outstanding $ 3,817,570 $ 2,983,722 $ 304,990 $143,839 $ 61,471
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
Acorn Family of Funds
>Statements of Operations (unaudited)
<TABLE>
<CAPTION>
Acorn
International
Six months Year Six months Year
(in thousands) ended 6/30, ended 12/31, ended 6/30, ended 12/31,
-------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Investment Income:
Dividends $17,871 $ 34,159 $ 12,152 $ 20,878
Interest 10,729 11,416 5,909 4,883
-------------------------------------------------------------------------------------------------------------------
28,600 45,575 18,061 25,761
Foreign taxes withheld (179) (330) (1,532) (2,094)
-------------------------------------------------------------------------------------------------------------------
Total investment income 28,421 45,245 16,529 23,667
Expenses:
Investment advisory 13,360 23,437 12,225 15,668
Administration 976 1,699 774 961
Custodian 608 875 2,022 2,321
Transfer and dividend disbursing agent 688 1,312 712 1,380
Reports to shareholders 233 448 234 446
Legal and audit 145 229 87 136
Registration and blue sky 36 64 66 58
Trustees' and other 359 683 255 399
-------------------------------------------------------------------------------------------------------------------
Total expenses 16,405 28,747 16,375 21,369
Less custodian fees paid indirectly -- -- -- --
Less reimbursement of expenses by advisor -- -- -- --
-------------------------------------------------------------------------------------------------------------------
Net expenses 16,405 28,747 16,375 21,369
-------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 12,016 16,498 154 2,298
Net Realized and Unrealized Gain
(Loss) on Investments,
Futures and Foreign Currency Transactions:
Net realized gain on sales of investments 287,373 915,362 390,709 205,354
Net realized gain (loss) on foreign
currency transactions -- (110) 1,135 1,133
Net realized loss on futures (2,727) (6,918) -- (403)
Change in net unrealized appreciation
of investments and foreign currency
transactions (358,941) 92,272 (522,912) 1,054,166
-------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments, futures and foreign
currency transactions (74,295) 1,000,606 (131,068) 1,260,250
-------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(62,279) $1,017,104 $(130,914) $1,262,548
===================================================================================================================
</TABLE>
See accompanying notes to financial statements
42
<PAGE>
<TABLE>
<CAPTION>
Acorn
Acorn USA Foreign Forty Acorn Twenty
Six months Year Six months Year Six months Year
ended 6/30, ended 12/31, ended 6/30, ended 12/31, ended 6/30, ended 12/31,
--------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999
<S> <C> <C> <C> <C> <C>
$603 $2,223 $831 $459 $167 $280
914 1,259 206 158 79 130
--------------------------------------------------------------------------------------------------------------------------
1,517 3,482 1,037 617 246 410
-- -- (94) (42) -- --
--------------------------------------------------------------------------------------------------------------------------
1,517 3,482 943 575 246 410
1,631 2,805 664 426 285 503
88 150 35 22 16 28
26 43 117 85 7 12
102 218 62 60 63 105
39 95 41 53 40 75
28 41 17 29 14 29
26 26 18 25 11 20
48 85 10 6 7 17
--------------------------------------------------------------------------------------------------------------------------
1,988 3,463 964 706 443 789
(4) (6) (1) (13) (6) (11)
-- -- -- (42) (10) (23)
--------------------------------------------------------------------------------------------------------------------------
1,984 3,457 963 651 427 755
--------------------------------------------------------------------------------------------------------------------------
(467) 25 (20) (76) (181) (345)
2,063 38,768 9,924 792 496 5,015
-- -- -- -- -- --
-- -- -- -- -- --
(63,202) 30,941 (16,843) 36,932 1,148 8,906
--------------------------------------------------------------------------------------------------------------------------
(61,139) 69,709 (6,919) 37,724 1,644 13,921
--------------------------------------------------------------------------------------------------------------------------
$(61,606) $69,734 $(6,939) $37,648 $1,463 $13,576
==========================================================================================================================
</TABLE>
43
<PAGE>
Acorn Family of Funds
>Statements of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
Acorn
International
Six months Year Six months Year
(in thousands) ended 6/30, ended 12/31, ended 6/30, ended 12/31,
------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
<S> <C> <C> <C> <C>
From Operations:
Net investment income (loss) $ 12,016 $ 16,498 $ 154 $ 2,298
Net realized gain on sales of investments,
futures and foreign currency transactions 284,646 908,334 391,844 206,084
Change in net unrealized appreciation of
investments and foreign currency transactions (358,941) 92,272 (522,912) 1,054,166
------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (62,279) 1,017,104 (130,914) 1,262,548
Distributions to Shareholders From:
Net investment income (10,651) (16,501) (58,157) (16,992)
Net realized gain (213,028) (638,460) (44,940) (119,344)
------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (223,679) (654,961) (103,097) (136,336)
From Fund Share Transactions:
Reinvestment of dividend and capital
gain distributions 205,092 586,161 96,097 128,048
Proceeds from other shares sold 426,888 346,317 928,463 648,562
------------------------------------------------------------------------------------------------------------------------------
631,980 932,478 1,024,560 776,610
Payments for shares redeemed (449,291) (923,243) (675,030) (760,116)
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Fund share transactions 182,689 9,235 349,530 16,494
------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (103,269) 371,378 115,519 1,142,706
Net Assets:
Beginning of period 3,920,839 3,549,461 2,868,203 1,725,497
------------------------------------------------------------------------------------------------------------------------------
End of period $3,817,570 $3,920,839 $2,983,722 $2,868,203
==============================================================================================================================
Undistributed Net Investment Income (Loss) $ 3,893 $ 2,528 ($3,405) $ 54,598
=============================================================================================================================
</TABLE>
See accompanying notes to financial statements
44
<PAGE>
<TABLE>
<CAPTION>
Acorn
Foreign Forty
Six months Year Six months Year Six months Year
ended 6/30, ended 12/31, ended 6/30, ended 12/31, ended 6/30, ended 12/31,
------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999
<S> <C> <C> <C> <C> <C>
$(467) $25 $(20) $(76) $(181) $(345)
2,063 38,768 9,924 792 496 5,015
(63,202) 30,941 (16,843) 36,932 1,148 8,906
-------------------------------------------------------------------------------------------------------------------------------
(61,606) 69,734 (6,939) 37,648 1,463 13,576
-- -- (221) -- -- --
(7,217) (28,268) (809) (99) (3,897) (705)
-------------------------------------------------------------------------------------------------------------------------------
(7,217) (28,268) (1,030) (99) (3,897) (705)
7,066 25,972 971 94 3,728 658
66,434 118,916 126,311 66,325 10,193 34,563
-------------------------------------------------------------------------------------------------------------------------------
73,500 144,888 127,282 66,419 13,921 35,221
(71,115) (95,877) (82,825) (12,402) (18,486) (13,346)
-------------------------------------------------------------------------------------------------------------------------------
2,385 49,011 44,457 54,017 (4,565) 21,875
-------------------------------------------------------------------------------------------------------------------------------
(66,438) 90,477 36,488 91,566 (6,999) 34,746
371,428 280,951 107,351 15,785 68,470 33,724
-------------------------------------------------------------------------------------------------------------------------------
$ 304,990 $371,428 $143,839 $107,351 $61,471 $ 68,470
===============================================================================================================================
($442) $25 ($22) $219 ($181) --
===============================================================================================================================
</TABLE>
45
<PAGE>
Acorn Family of Funds
>Financial Highlights (unaudited)
<TABLE>
<CAPTION>
Six months Year
ended 6/30, ended 12/31,
---------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period 2000 1999
<S> <C> <C>
Net Asset Value, beginning of period $18.53 $16.85
Income From Investment Operations
Net investment income .06 .09
Net realized and unrealized gain (loss) on investments,
foreign currency and futures (.32) 5.22
---------------------------------------------------------------------------------------------------------------------
Total from investment operations (.26) 5.31
Less Distributions
Dividends from net investment income (0.05) (0.09)
Distributions from net realized and
unrealized gains reportable for federal income taxes (1.00) (3.54)
---------------------------------------------------------------------------------------------------------------------
Total distributions (1.05) (3.63)
---------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $17.22 $18.53
=====================================================================================================================
Total Return (a) (1.41%) 33.4%
Ratios/Supplemental Data
Ratio of expenses to average net assets .84%* .85%
Ratio of net investment income to average net assets .62%* .49%
Portfolio turnover rate 35%* 34%
Net assets at end of period (in millions) $3,818 $3,921
</TABLE>
(a) Total return is not annualized for periods less than one year.
* Annualized
<TABLE>
<CAPTION>
Six months Year
Acorn International ended 6/30, ended 12/31,
---------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period 2000 1999
<S> <C> <C>
Annualized Net Asset Value, beginning of period $35.33 $20.82
Income From Investment Operations
Net investment income (loss) - .83
Net realized and unrealized gain (loss) on investments,
foreign currency and futures (1.34) 15.45
---------------------------------------------------------------------------------------------------------------------
Total from investment operations (1.34) 16.28
Less Distributions
Dividends from net investment income (.66) (.22)
Distributions from net realized and
unrealized gains reportable for federal income taxes (.51) (1.55)
---------------------------------------------------------------------------------------------------------------------
Total distributions (1.17) (1.77)
---------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $32.82 $35.33
=====================================================================================================================
Total Return (a)
Ratios/Supplemental Data (3.8)% 79.2%
Ratio of expenses to average net assets 1.06%* 1.11%
Ratio of net investment income (loss) to average net assets .01%* .12%
Portfolio turnover rate 76%* 46%
Net assets at end of period (in millions) $2,984 $2,868
</TABLE>
(a) Total return is not annualized for periods less than one year.
* Annualized
<TABLE>
<CAPTION>
Six months Year
Acorn USA ended 6/30, ended 12/31,
---------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period 2000 1999
<S> <C> <C>
Net Asset Value, beginning of period $16.75 $14.80
Income From Investment Operations
Net investment income (loss) (b) (.02) -
Net realized and unrealized gain (loss) on investments,
foreign currency and futures (2.67) 3.32
--------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.69) 3.32
--------------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends from net investment income - -
Distributions from net realized and
unrealized gains reportable for federal income taxes (.32) (1.37)
--------------------------------------------------------------------------------------------------------------------
Total distributions (.32) (1.37)
--------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $13.74 $16.75
====================================================================================================================
Total Return (c) (16.1%) 23.0%
Ratios/Supplemental Data
Ratio of expenses to average net assets (a) 1.13% 1.15%
Ratio of net investment income (loss) to average net assets (.27%)* 0.00%
Portfolio turnover rate 65%* 49%
Net assets at end of period (in millions) $ 305 $ 371
</TABLE>
(a) In accordance with a requirement by the Securities and Exchange Commission,
the Acorn USA ratio reflects gross custodian fees. This ratio net of custodian
fees paid indirectly would have been 1.79% for the year ended December 31, 1996.
(b) Net investment income (loss) per share was based upon the average shares
outstanding during each period.
(c) Total return is not annualized for periods less than one year.
* Annualized
See accompanying notes to financial statements
46
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994 1993 1992 1991
$16.99 $15.04 $13.60 $12.24 $13.95 $11.06 $ 9.32 $ 6.51
.04 .15 .09 .11 .06 .04 .07 .11
.91 3.57 2.93 2.42 (1.10) 3.50 2.16 2.95
--------------------------------------------------------------------
.95 3.72 3.02 2.53 (1.04) 3.54 2.23 3.06
(0.03) (0.16) (.11) (.09) (.11) (.06) (.08) (.10)
(1.06) (1.61) (1.47) (1.08) (.56) (.59) (.41) (.15)
--------------------------------------------------------------------
(1.09) (1.77) (1.58) (1.17) (.67) (.65) (.49) (.25)
--------------------------------------------------------------------
$16.85 $16.99 $15.04 $13.60 $12.24 $13.95 $11.06 $ 9.32
====================================================================
6.0% 25.0% 22.6% 20.8% (7.4%) 32.3% 24.2% 47.3%
.84% .56% .57% .57% .62% .65% .67% .72%
.30% .75% .53% .89% .55% .30% .72% 1.30%
24% 32% 33% 29% 18% 20% 25% 25%
$3,549 $3,681 $2,842 $2,399 $1,983 $2,035 $1,449 $1,150
</TABLE>
<TABLE>
<CAPTION>
Inception 9/23
through 12/31,
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994 1993 1992
$18.39 $19.61 $16.59 $15.24 $15.94 $10.69 $10.00
.17 .40 .13 .16 .07 - (.03)
2.68 (.34) 3.29 1.20 (.67) 5.25 .72
-------------------------------------------------------------------
2.85 .06 3.42 1.36 (.60) 5.25 .69
(.15) (.38) (.12) - - - -
(.27) (.90) (.28) (.01) (.10) - -
-------------------------------------------------------------------
(.42) (1.28) (.40) (.01) (.10) - -
-------------------------------------------------------------------
$20.82 $18.39 $19.61 $16.59 $15.24 $15.94 $10.69
===================================================================
15.4% 0.2% 20.7% 8.9% (3.8%) 49.1% 6.9%
1.12% 1.19% 1.17% 1.22% 1.24% 1.21% 2.35%*
.86% .58% .51% .90% 0.48% 0.06% (1.37%)*
37% 39% 34% 26% 20% 19% 20%*
$1,725 $1,623 $1,773 $1,276 $1,363 $ 907 $ 30
</TABLE>
<TABLE>
<CAPTION>
Year Year Inception 9/4
ended 12/31 ended 12/31 through 12/31
-----------------------------------------
<S> <C> <C>
1998 1997 1996
$15.12 $11.65 $10.00
(.07) (.07) (.02)
.87 3.83 1.67
-----------------------------------------
.80 3.76 1.65
-----------------------------------------
- -
(1.12) (.29) -
-----------------------------------------
(1.12) (.29) -
-----------------------------------------
$14.80 $15.12 $11.65
=========================================
5.8% 32.3% 16.5%
1.20% 1.35% 1.85%*
(0.42%) (.49%) (.99%)*
42% 33% 20%*
$ 281 $ 185 $ 53
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
6 months Year Inception 11/23
Acorn Foreign Forty ended 6/30, ended 12/31, through 12/31,
----------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period 2000 1999 1998
<S> <C> <C> <C>
Net Asset Value, beginning of period $ 19.93 $ 11.00 $ 10.00
Income From Investment Operations
Net investment loss (c) - (.02) (.01)
Net realized and unrealized gain (loss) on investments (.12) 8.98 1.01
---------------------------------------------------------------------------------------------------------------------------
Total from investment operations (.12) 8.96 1.00
---------------------------------------------------------------------------------------------------------------------------
Less Distributions
Dividends from net investment income (.03) - -
Distributions from net realized and unrealized gains reportable for
federal income taxes (.11) (.03) -
---------------------------------------------------------------------------------------------------------------------------
Total distributions (.14) (.03) -
---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 19.67 $ 19.93 $ 11.00
===========================================================================================================================
Total Return (d) (0.6%) 81.6% 10.0%
Ratios/Supplemental Data
Ratio of expenses to average net assets (a) (c) 1.37%* 1.48% 1.73%
Ratio of net investment loss to average net assets (c) (.03%)* (.17%) (.78%)
Portfolio turnover rate 74%* 60% 90%
Net assets at end of period (in millions) $ 144 $ 107 $ 16
</TABLE>
(a) In accordance with a requirement by the Securities and Exchange Commission,
the Acorn Foreign Forty 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 December 31, 1998 and the year ended
December 31, 1999.
(b) Net investment 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 December 31, 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 to average net assets would have
been 2.70% and (1.75%), respectively, for the period ended 12/31/98 and 1.57%
and (.26%), respectively, for the year ended 12/31/99.
(d) Total return is not annualized for periods less than one year.
* Annualized
<TABLE>
<CAPTION>
6 months Year Inception 11/23
Acorn Twenty ended 6/30, ended 12/31, through 12/31,
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For a share outstanding throughout each period 2000 1999 1998
Net Asset Value, beginning of period $ 13.70 $ 10.71 $ 10.00
Income From Investment Operations
Net investment loss (b) (.04) (.08) -
Net realized and unrealized gain on investments .50 3.21 .71
------------------------------------------------------------------------------------------------------------------------
Total from investment operations .46 3.13 .71
========================================================================================================================
Less Distributions
Dividends from net investment income - - -
Distributions from net realized and unrealized gains reportable
for federal income taxes (.89) (.14) -
------------------------------------------------------------------------------------------------------------------------
Total distributions (.89) (.14) -
========================================================================================================================
Net Asset Value, end of period $ 13.27 $ 13.70 $ 10.71
Total Return (d) 3.4% 29.3% 7.1%
Ratios/Supplemental Data
Ratio of expenses to average net assets (a) (c) 1.37%* 1.37% 1.41%*
Ratio of net investment income (loss) to average net assets (c) (.57%)* (.62%) 0.22%*
Portfolio turnover rate 170%* 101% 173%*
Net assets at end of period (in millions) $ 61 $ 68 $ 34
</TABLE>
(a) In accordance with a requirement by the Security and Exchange Commission,
the Acorn Twenty 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 December 31, 1998, the year ended December
31, 1999 and the six months ended June 30, 2000.
(b) Net investment income 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, 2000. Without the reimbursement, the ratio of
expenses to average net assets and the ratio of net investment income to average
net assets would have been 1.83% and (.21%), respectively, for the period ended
12/31/98, 1.41% and (.66%), respectively, for the year ended 12/31/99 and 1.40%
and (.60%), respectively, for the six months ended June 30, 2000.
(d) Total return is not annualized for periods less than one year.
* 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 Foreign Forty and Acorn Twenty
(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, 2000. Acorn
International entered into forward contracts to sell foreign currency as
described below:
Acorn International
Foreign Settlement U.S. Dollar Unrealized
Amount (000) Currency Date Proceeds (000) Gain (000)
------------------------------------------------------------------------
5,260,000 Japanese Yen 9/22/00 $50,488 $89
----------
$89
==========
Acorn USA, Acorn Twenty and Acorn Foreign Forty did not enter into any futures
or forward foreign currency contracts during the six months ended June 30 2000.
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.
At June 30, 2000, Acorn International had cumulative net unrealized
appreciation on PFICS of $65,710,000 of which $66,039,000 was recognized in
1999.
At June 30, 2000, Acorn Fund had no cumulative net unrealized appreciation
on PFICs.
At June 30, 2000, Acorn Foreign Forty had cumulative net unrealized
appreciation on PFICS of $305,000, of which $286,000 was recognized in 1999.
Distributions relating to PFICs are treated as ordinary income for Federal
income tax purposes. 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 $1.300 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 Foreign Forty
-----------------------------------------------------------------------------
On average daily net assets .95%
Acorn Twenty
-----------------------------------------------------------------------------
On average daily net assets .90%
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. The Funds paid trustees' fees and expenses of the following:
<TABLE>
<CAPTION>
6 months
ended 6/30,
-------------------------------------------------------
(in thousands) 2000 1999
<S> <C> <C>
Acorn Fund $168 $293
Acorn International 122 150
Acorn USA 18 24
Acorn Foreign Forty 6 2
Acorn Twenty 4 4
----------------
$318 $473
----------------
</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 though August 2001.
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 in 1999 or 2000.
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) 2000 1999
<S> <C> <C>
Shares sold 23,285 19,615
Shares issued in reinvestment of
dividend and capital gain distributions 11,903 33,973
---------------------
35,188 53,588
Less shares redeemed 25,152 52,676
---------------------
Net increase in shares outstanding 10,036 912
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn International ended 6/30,
---------------------------------------------------------------------
(in thousands) 2000 1999
<S> <C> <C>
Shares sold 25,410 25,580
Shares issued in reinvestment of
dividend and capital gain distributions 2,915 4,028
----------------------
28,325 29,608
Less shares redeemed 18,602 31,304
----------------------
Net increase (decrease)
in shares outstanding 9,723 (1,696)
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn USA ended 6/30,
---------------------------------------------------------------------
(in thousands) 2000 1999
<S> <C> <C>
Shares sold 4,280 7,922
Shares issued in reinvestment of
dividend and capital gain distributions 509 1,645
---------------------
4,789 9,567
Less shares redeemed 4,767 6,383
---------------------
Net increase in shares outstanding 22 3,184
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn Foreign Forty ended 6/30,
---------------------------------------------------------------------
(in thousands) 2000 1999
<S> <C> <C>
Shares sold 5,810 4,836
Shares issued in reinvestment of
dividend and capital gain distributions 48 7
---------------------
5,858 4,843
Less shares redeemed 3,932 891
---------------------
Net increase in shares outstanding 1,926 3,952
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn Twenty ended 6/30,
---------------------------------------------------------------------
(in thousands) 2000 1999
<S> <C> <C>
Shares sold 758 2,862
Shares issued in reinvestment of
dividend and capital gain distributions 283 51
---------------------
1,041 2,913
Less shares redeemed 1,405 1,067
---------------------
Net increase (decrease)
in shares outstanding (364) 1,846
=====================================================================
</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) 2000 1999
<S> <C> <C>
Investment securities:
Purchases $636,325 $1,092,137
Proceeds from sales 621,656 1,809,918
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn International ended 6/30,
---------------------------------------------------------------------
(in thousands) 2000 1999
<S> <C> <C>
Investment securities:
Purchases $1,095,963 $846,014
Proceeds from sales 1,094,884 844,062
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn USA ended 6/30,
---------------------------------------------------------------------
(in thousands) 2000 1999
<S> <C> <C>
Investment securities:
Purchases $111,421 $138,244
Proceeds from sales 104,145 135,001
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn Foreign Forty ended 6/30,
---------------------------------------------------------------------
(in thousands) 2000 1999
<S> <C> <C>
Investment securities:
Purchases $94,271 $76,252
Proceeds from sales 48,797 26,238
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
6 months
Acorn Twenty ended 6/30,
---------------------------------------------------------------------
(in thousands) 2000 1999
<S> <C> <C>
Investment securities:
Purchases $51,713 $71,463
Proceeds from sales 56,819 53,710
=====================================================================
</TABLE>
51
<PAGE>
The Acorn
---------------------------
Family of Funds
Trustees
Irving B. Harris
Chairman
James H. Lorie
Vice Chairman
Leo A. Guthart
Jerome Kahn, Jr.
Steven N. Kaplan
David C. Kleinman
Charles P. McQuaid
Roger S. Meier
Allan B. Muchin
Robert E. Nason
Katherine Schipper
Ralph Wanger
Officers
Ralph Wanger
President
Roger D. Edgley
Vice 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
Leah J. Zell
Vice President
Investment Advisor
Wanger Asset Management, L.P.
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
1-800-922-6769
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 LLC
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.
Our e-mail address is: [email protected]
Find out what's new - visit our web site at: www.acornfunds.com
52
<PAGE>
RSVP for the Annual Shareholder Meeting
On September 26, 2000
If you plan to attend, please tear out and mail this postage-paid postcard.
To ensure our presenters are addressing the issues that are most important to
you, please consider submitting a question in the space indicated. If you aren't
able to make it but would like to ask a question of our management team, please
mark that you won't be attending and include your question in the space
provided. A transcript of the meeting, along with answers to the questions asked
and submitted, will be posted on our web site following the meeting.
You may also submit questions via e-mail to [email protected].
RSVP today by sending back this card!
Even if you can't make it, send us your question.
I will be attending. I can't make it but I do have a question.
My question is:
NO
YES
________________________________________________________
NAME
________________________________________________________
ADDRESS
________________________________________________________
CITY STATE ZIP
<PAGE>
There is a private lot (indoor) located in the Bank One building. The entrance
is at 40 S. Clark directly across from the Bank One building. Clark is one-way
south. Space is limited.
A public lot is located half a block east of the Bank One building on Madison
Street. Space is limited. The entrance is on the south side of Madison between
Dearborn and State Streets. Madison is one-way west.
Mid-Continental Plaza parking is located on Monroe Street two blocks east of the
Bank One building. The entrance is on the south side (right) of Monroe Street
between Wabash and Michigan Avenues. Monroe is one-way east.
Grant Park Underground (indoor) parking is located three blocks east of the Bank
One building on Monroe Street. The entrance is on the north side of Monroe
Street between Columbus Drive and Lake Shore. Monroe is two-way between Lake
Shore Drive and Michigan Avenue. West of Michigan, Monroe is a one-way east.
For directions using public transportation, call (312) 836-7000 for CTA travel
information.
-----------------
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
--------------------------------------------- -----------------
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 21202 CHICAGO, IL
---------------------------------------------
POSTAGE WILL BE PAID BY ADDRESSEE
TO: Meeting Coordinator
Wanger Asset Management
227 W. Monroe, Suite 3000
Chicago, Illinois 60606-9830
<PAGE>
Acorn Family of Funds Information
Minimum Initial Investment for All Funds $1,000
$1,000 for an IRA
Minimum Subsequent Investment $100
Exchange Fee None
Acorn Fund ACRNX
Management Fee 0.69%
12b-1 Fee None
Other Expenses 0.16%
------
Expense Ratio 0.85%
Acorn International ACINX
Management Fee 0.81%
12b-1 Fee None
Other Expenses 0.30%
------
Expense Ratio 1.11%
Acorn USA AUSAX
Management Fee 0.93%
12b-1 Fee None
Other Expenses 0.22%
------
Expense Ratio 1.15%
Acorn Foreign Forty ACFFX
Management Fee 0.95%
12b-1 Fee None
Other Expenses 0.62%
Less Expense Reimbursement (0.09%)
Net Expense Ratio 1.48%*
Acorn Twenty ACTWX
Management Fee 0.90%
12b-1 Fee None
Other Expenses 0.51%
Less Expense Reimbursement (0.04%)
Net Expense Ratio 1.37%*
Fees and expenses are for the fiscal year ended December 31, 1999 and for Acorn
Foreign Forty and Acorn Twenty, include the effect of Wanger Asset Management's
undertaking to reimburse those funds for any ordinary operating expenses, net of
custodian fees paid indirectly, exceeding 1.45% and 1.35% of their average net
assets, respectively. These expense limitations are voluntary and can be
terminated by either the Funds or Wanger Asset Management on 30 days' notice to
the other.
*Includes custodian fees paid indirectly. Net of those fees, the Net Expense
Ratios of Acorn Foreign Forty and Acorn Twenty would have been 1.45% and 1.35%,
respectively.
<PAGE>
The Acorn
------------------------
Family of Funds
WAM Brokerage Services, L.L.C.
P.O. Box 8502
Boston, MA 02266-8502
<PAGE>
Mark Your Calendar For
The 2000 Annual
Shareholder Meeting
When: September 26, 2000
9 a.m. to 10 a.m., Central time
Where: Bank One Auditorium, Plaza Level
38 South Dearborn Street
Chicago, IL 60602
Refreshments will be served.
Directions to the 2000 Annual Shareholder Meeting
The Bank One Auditorium is located on the Plaza Level of the Bank One
building (formerly First Chicago). 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. Please RSVP by returning the postcard included
in the back of the shareholder report.
Please RSVP by returning the postcard included in the back of the
shareholder report.
<PAGE>
Please Join Us
At The 2000
Annual Meeting
For Shareholders
On September 26.
Look inside for
more details.
The Acorn
----------------------
Family of Funds [STAMP APPEARS HERE]
WAM Brokerage Services, L.L.C.
P.O. Box 8502
Boston, MA 02266-8502
Member NASD
