<PAGE>
Acorn Family of Funds
First Quarter Report
March 31, 2000
Managed by Wanger Asset Management, L.P.
<PAGE>
Acorn Family of Funds First Quarter Report 2000
Table of Contents
The Acorn Family of Funds
<TABLE>
<S> <C>
Performance At A Glance 1
Squirrel Chatter: The South Sea Bubble 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 23
Statement of Investments 26
Portfolio Diversification 30
Acorn USA
In a Nutshell 8
At a Glance 9
Major Portfolio Changes 31
Statement of Investments 32
Acorn Foreign Forty
In a Nutshell 10
At a Glance 11
Major Portfolio Changes 35
Statement of Investments 36
Portfolio Diversification 37
Acorn Twenty
In a Nutshell 12
At a Glance 13
Major Portfolio Changes 38
Statement of Investments 39
Trustees, Officers and Contact Information 40
</TABLE>
<PAGE>
[PICTURE OF ACORNS]
NEW IN THIS REPORT:
AFTER-TAX RETURNS
Flip through any financial magazine and
you'll see fund advertisements touting
impressive returns. What these numbers
don't show is the effect taxes have on
an investment. Mutual funds are subject
to taxes that can greatly influence the
actual return you get to keep. To help
you better understand the tax impact,
the Acorn Family of Funds is now
including after-tax performance for each
of our funds.
For an explanation of this new data, turn this over.
<PAGE>
<TABLE>
<CAPTION>
NEW IN THIS REPORT:
AFTER TAX RETURNS
- -----------------------------------------------------------------------------------------------------------------------
Pretax and After-tax Average Annual Total Returns through March 31, 2000
1 Year 5 Years
(1) (2) (3) (4)
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 98.56% 96.13% 60.65% 97.54% 25.85% 24.84% 21.64% 96.09%
-----------------------------------------------------------------------------------------------------------------------
(5) Foreign Stock
Category AVg.* 44.59% 42.39% NA 95.07% 15.54% 13.89% NA 89.38%
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Life of Fund
After-tax w/ Tax
Pretax After-tax redemption efficiency
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Acorn
International 22.76% 22.06% 19.58% 96.92%
- ------------------------------------------------------------------------
Foreign Stock
Category AVg.*2 NA NA NA NA
- ------------------------------------------------------------------------
*Source: Morningstar, Inc.
- ------------------------------------------------------------------------
</TABLE>
(1) PRETAX RETURNS
This is the same average annual total return we've shown for years. These pretax
numbers assume that all distributions you receive from the fund are reinvested
into new shares. This number does not consider the impact of the tax you pay on
income dividends or short- and long-term capital gains.
As an owner of mutual fund shares, you can be taxed two ways: on the earnings a
fund distributes to you while you own its shares and on the profits you make
when you sell or exchange shares.
(2) AFTER-TAX RETURNS
To determine after-tax total returns on shares that are owned, 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 and 20% for long-term capital gain
distributions. We use the highest tax rates to demonstrate the worst-case tax
scenario.
(3) AFTER-TAX W/REDEMPTION
After-tax returns with redemptions reflect the additional tax impact of long-
term gains or losses realized when fund shares are sold. These returns are taxed
at the maximum rate in effect at the time of sale (currently 20%) and assume
that you bought your shares at the beginning of the period.
Note: State and local taxes are not considered in the calculations.
(4) DETERMINING TAX EFFICIENCY
The tax efficiency percentage is calculated by dividing the after-tax return by
the pretax return. The closer to 100%, the more tax efficient your investment
is. For the 1-year period, Acorn International scored a 97.54% tax-efficiency
rating meaning the after-tax return was 97.54% of the pretax return. There are
many factors that affect tax efficiency. A fund's turnover rate, accounting
methods, cash flow and the types of securities held, all influence how tax-
friendly an investment is.
(5) THE BENCHMARK
How do Acorn's funds compare to their peers? To address that question, we are
including Morningstar category average performance. The returns provided by
Morningstar, Inc. are calculated in the same way as the fund calculations. As
you can see, 2.43% of Acorn International's return was lost to federal income
tax for the 1-year while its peer group lost an average of 2.2%. Morningstar
does not calculate after-tax w/ redemption or life of fund data so we have
placed "NA" for "not available" in those spaces.
The actual after-tax returns you achieve depend on your tax situation and your
own decision to sell or hold fund shares.
<PAGE>
The Acorn Family of Funds
>Performance At A Glance Average Annual Total Returns through 3/31/00
<TABLE>
<CAPTION>
Inception 1st* 1 3 5 10 Life
Date Quarter year years years years of Fund
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Acorn
Fund 6/10/70 0.43% 38.90% 22.06% 20.63% 17.40% 17.00%
- ------------------------------------------------------------------------------------------------------------------
S&P 500 2.29% 17.94% 27.37% 26.73% 18.82% 14.67%
- ------------------------------------------------------------------------------------------------------------------
Russell 2000 7.08% 37.29% 17.74% 17.22% 14.42% NA
- ------------------------------------------------------------------------------------------------------------------
Lipper Small Cap
Core Index 10.32% 44.80% 18.19% 17.68% NA NA
- ------------------------------------------------------------------------------------------------------------------
S&P MidCap 400 12.69% 38.09% 27.36% 24.03% 19.09% NA
- ------------------------------------------------------------------------------------------------------------------
Acorn
International 9/23/92 12.09% 98.56% 31.47% 25.85% -- 22.76%
- ------------------------------------------------------------------------------------------------------------------
EMI (World ex-U.S.) 2.03% 24.21% 9.24% 7.76% -- 9.43%
- ------------------------------------------------------------------------------------------------------------------
EAFE (0.11%) 25.09% 16.30% 12.38% -- 13.00%
- ------------------------------------------------------------------------------------------------------------------
IFCI Composite 1.34% 52.68% 0.94% 5.74% -- 9.13%
- ------------------------------------------------------------------------------------------------------------------
Lipper Int'l Small
Cap Funds Index 10.41% 73.39% 22.94% NA -- NA
- ------------------------------------------------------------------------------------------------------------------
Lipper Int'l
Funds Index 0.62% 36.93% 17.79% 16.67% -- 15.07%
- ------------------------------------------------------------------------------------------------------------------
Acorn
USA 9/4/96 (1.19%) 31.99% 19.94% -- -- 21.09%
- ------------------------------------------------------------------------------------------------------------------
Russell 2000 7.08% 37.29% 17.74% -- -- 15.76%
- ------------------------------------------------------------------------------------------------------------------
Lipper Small Cap
Value Index 3.60% 17.99% 8.30% -- -- 10.02%
- ------------------------------------------------------------------------------------------------------------------
S&P MidCap 400 12.96% 38.09% 27.36% -- -- 25.52%
- ------------------------------------------------- ----------------------------------------------------------------
S&P 500 2.29% 17.94% 27.37% -- -- 27.97%
- ------------------------------------------------- ----------------------------------------------------------------
Acorn Foreign
Forty 11/23/98 15.60% 92.76% -- -- -- 85.36%
- ------------------------------------------------- ----------------------------------------------------------------
EAFE (0.11%) 25.09% -- -- -- 22.75%
- ------------------------------------------------------------------------------------------------------------------
SSB World ex-US
Cap Range $2-10B (0.71%) 21.34% -- -- -- 19.13%
- ------------------------------------------------------------------------------------------------------------------
Lipper International
Funds Index 0.62% 36.93% -- -- -- 29.26%
- ------------------------------------------------------------------------------------------------------------------
Acorn
Twenty 11/23/98 2.34% 23.44% -- -- -- 29.32%
- ------------------------------------------------------------------------------------------------------------------
S&P MidCap 400 12.69% 38.09% -- -- -- 30.59%
- ------------------------------------------------------------------------------------------------------------------
Lipper Mid Cap
Value Index 4.11% 21.35% -- -- -- 14.82%
- ------------------------------------------------------------------------------------------------------------------
Russell 2000 7.08% 37.29% -- -- -- 27.70%
- ------------------------------------------------------------------------------------------------------------------
S&P 500 2.29% 17.94% -- -- -- 22.04%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
*Quarterly 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: The South Sea Bubble
[Photo Here]
In the 1999 Annual Report we retraced the route of Marco Polo in the
1280s. For those shareholders who think we started too early in the last
millennium, we are now leaping forward to 1720 London, home of the infamous
South Sea Bubble. The South Sea Bubble was the first impressive stock market
fiddle. The markets at that time were primitive by today's standards but were
driven by several very modern features: political clout, media hype, and the
power of stock options.
The South Sea Company was incorporated in 1711 by act of Parliament
with two purposes. One was to form a monopoly on English trade with Spanish
America. The second was an ingenious synthesis of finance, commerce and foreign
policy by which (pound)9 million of government debt was assigned by Parliament
to the Company. The citizens who had owned the government bonds got stock in the
South Sea Company and the interest on the bonds was paid by the treasury to the
Company. The interest provided both working capital for Spanish American trade
and free cash flow to pay dividends to Company shareholders. The swap was
compulsory but the bondholders were eager to do it because (a) the dividend on
the stock was about equal to the bond interest they had given up and (b) they
turned in the bonds for stock valued at 100, but the stock was selling at a lot
more than 100, so an enticing capital gain beckoned.
Why did the government grant this monopoly? Because a large part of the
export trading profits would go to King George I. The company's political clout
was so great that King George signed on as Governor of the Company in 1715 (that
office today might be called Honorary Chairman of the Board).
The boom-bust stock move that went down in history as the South Sea
Bubble did not begin until the end of 1719, with the stock at 123, little
improved from its initial price of 100 in 1711. At that time, a second
government debt swap was proposed, this time for (pound)31 million, a prodigious
sum at that time. To induce the treasury to authorize the swap, the Company
agreed to drop the interest rate on the bonds. The interest rate would go down
from 6% to 4% after seven years, and the Company also agreed to make an
immediate payment to the treasury of (pound)7 million. Great plan, but in order
to convince bondholders to swap for stock, the Company had to show that the
dividend on the stock would be similar to the yield on the bonds. Since the
interest the Company would collect on their bond portfolio was going to drop
from 6% to 4% in a few years, the scheme was cash flow negative if the
bondholders swapped for stock at 100. If they could be persuaded to turn in
their bonds for stock valued at 300, they would be accepting a bad enough deal
that the rest of the shareholders would come out okay. The key to the scheme was
to keep the stock at a high price and rising enough to sucker the bondholders to
turn in safe government debt in return for the chance to make a quick killing in
the stock. How could they do it?
Step one was public relations. Newspapers and pamphlets were recent
innovations in 1720, but the new technology attracted great authors including
Addison, Steele, Defoe, and Swift. The newspapers generally helped boost the
stock price, although the press could put out anti-Company blasts as well.
Another tool was the use of "stock options" to influence politicians
and the aristocracy. In the March 20, 2000, Wall Street Journal, there was a
story about dot.com companies dealing options to actors who made commercials for
them, Whoopi Goldberg and William Shatner being two.
And Now A Word From The Duchess
A company called World Online International copied the use of a Duchess
to hype stock. The company, a highly speculative Internet Service Provider from
Amsterdam, hired Sarah "Fergie" Ferguson, Duchess of York. On March 17, 2000,
World Online had an IPO at 43, underwritten by ABN Amro Rothschild, the leading
Dutch investment banker, and Goldman Sachs, the leading everywhere-else bank. As
the stock swooned after the IPO from 43 to 17 (April 14) in less than a month,
some investors who had only skimmed the prospectus at the time of the issue were
bemused to discover that the founder had sold two-thirds of her stock in a
private sale back in December./1/
2
<PAGE>
The South Sea Company had already thought of that in 1720. The Company made
deals with numerous Dukes and Earls, 138 Members of Parliament, and most
helpfully, the Duchess of Kendal, mistress of King George. Whether Whoopi or the
Duchess would appreciate the comparison, they each acted as useful spokespersons
for the corporate sponsor.
The "stock option" program was not quite as formal as it is in our
world. One of the problems that always plagued the South Sea Company was the
transfer agency bottleneck, as vigorous trading in the stock had to be processed
by a roomful of clerks scratching in big ledgers with quill pens. This method
was quite unable to keep up with trading volume./2/ The "option grants" were
entries by John Knight, cashier of the Company, in his private ledger known as
the Green Book. He simply wrote down the name of the recipient and the exercise
price of the stock, set to be somewhat above the market price at the time of the
grant. When the stock went above the exercise price, Knight delivered cash to
the lucky option holder. Since the winner had not put up any money or taken any
risk, this was a popular program. Of course, after the Bubble burst, the
Parliamentary Commission set up to investigate these events decided that the
payments received were no more than bribes.
Lest we think of 1720 as an unsophisticated period, remember that the
gentlemen we see portrayed bewigged and stiffly-posed in portraits of the time
included Voltaire writing in France, Bach churning out cantatas in Leipzig, and
the smartest person ever, Isaac Newton, doing science in England. Newton was
asked for his opinion on the South Sea Company and replied, "I can calculate the
motions of the heavenly bodies, but not the madness of the people." Newton sold
out his South Sea stock on April 20, 1720, making a 100% profit of (pound)7,000,
a fortune at the time. Unfortunately, the world's smartest man then went right
back in, lost (pound)20,000, and could never bear to hear the South Sea Company
referred to for the rest of his life. This may have been the source of the Wall
Street proverb, "Never confuse brains with a bull market."
How did the stock do? In December 1719, it started at 123. By early
April 1720, it was over 300, and at the end of April a public offering was done
at 400. In April, Parliament passed the South Sea Bill authorizing the Company
to exchange stock for government bonds, and also passed the Bubble Act. This
ruling was not intended to deflate "irrational exuberance" in South Sea stock;
to the contrary, the Bubble Act was designed to help the South Sea financing by
outlawing other companies from doing IPOs.
The stock ran higher in May and peaked in early July above 900./3/ This
was a dramatic move over a seven-month period, but rather less than the rise of
many tech stocks between October 1999 and March 2000.
What popped the Bubble? The news from France was a factor. A brilliant
Scot, John Law, forced to flee British soil because he had killed a man in a
duel over a woman, ended up in Paris. He started a French scheme quite similar
to the South Sea Company called the Mississippi Company, to trade with the
French-controlled but empty land that is now much of the United States. Also
funded by an equity-for-government-debt swap program, the Mississippi Company's
first foray to America founded the city of New Orleans but did not get further
upriver. Law's scheme collapsed in May 1720.
Another grisly bit of bearish news reached London at that time - the
outbreak of bubonic plague in Marseilles. This epidemic closed ports for
quarantine, halting foreign trade.
Whatever the trigger, by midsummer 1720 the Bubble had burst and the
South Sea stock plunged, although not to zero. It was still 200 in October 1720
and 160 in December. In fact, the Company lingered on for over a century before
being dissolved in 1854.
The aftermath of the South Sea Company collapse was typically sour.
Parliament set up a committee to investigate and punish. The South Sea officials
and directors who had assets, and many did, returned the money - they were
simply sent to the Tower of London until they volunteered to make restitution.
John Knight, the man with the Green Book containing the list of Members of
Parliament and ministers option-bribed by the company, fled to Brabant in
Belgium where he was jailed. The information that he had would have been so
damaging to so many in England that the ministers finally decided to have the
Brabant authorities orchestrate an "escape" for Mr. Knight, who then lived in
France until he bribed his way back into England in 1742.
The consequences of the South Sea Bubble were important but subtle.
There was no depression. Some people gained and others lost by speculation, but
the effect
(continued on page 22)
3
<PAGE>
Acorn Fund
>In a Nutshell
[Photo here] [Photo here]
Acorn Fund was flat in the first quarter, up 0.4%. All our domestic funds
suffered the same plight: Our lower weighting in technology vs. our benchmark
indexes (see Page 1 for performance data) hurt relative performance. We are
highly selective in the tech arena. One of our favorite investment themes is to
invest downstream from technology in software, services, media, telecom and
biotech companies that are benefiting from tech but that aren't pure technology
or Internet plays. We believe these companies often offer excellent growth at
reasonable prices.
Biotech stocks performed well in the quarter. Corvas International
delivered a 148% profit, Inhale Therapeutics inflated 75%, and Myriad Genetics
discovered a 30% gain. Acorn Twenty portfolio manager and health care analyst
John Park prescribed these companies to Acorn a few years ago when they were
cheap.
As we all know, gasoline prices skyrocketed in the first quarter. While
this was bad for drivers, it was good for the oil and gas industry. Our energy
analyst Jason Selch hit pay dirt as Acorn pumped profits from higher energy
prices. Electric and gas distribution and trading company Dynegy surged and was
Acorn's largest dollar winner in the quarter. U.S. gas and oil producers Devon
and Equitable Resources also were up substantially.
Bad news was punished severely. For example, Young Broadcasting won a
bidding war for a San Francisco TV station but promptly lost that station's
network affiliation, resulting in a cancellation of more than 60% of Young's
stock price. Carnival's bookings were slightly below target, causing its stock
to fall nearly 50%. Kronos and Sykes missed earnings estimates. While both
companies remain nicely profitable, their stocks halved.
We sold half of our position in Japan's Softbank, an Internet service
provider and investment company. We prefer to hold our positions longer than
just 12-months but this stellar performer ran up so quickly that we cheerfully
took some of our profits off the table.
/s/ Ralph Wanger /s/ Charles P. McQuaid
Ralph Wanger Charles P. McQuaid
Lead Portfolio Manager Co-Portfolio Manager
One of our favorite investment themes is to invest downstream from
technology in software, services, media, telecom and biotech companies that are
benefiting from tech but that aren't pure technology or Internet plays. We
believe these companies often offer excellent growth at reasonable prices.
Content
Remains King
As part of our enduring "downstream from technology" theme, we look closely at
intellectual content stocks. For example, when cable television companies faced
risk from satellite broadcasters, we bought programmers such as Liberty Media,
successfully predicting that its content would benefit from additional
distribution. We extended our content preference into print media, and benefited
as Petersen and CMP Media were acquired. Our most recent success in content is
PRIMEDIA, which owns 170 focused consumer publications (ranging from Fly
Fisherman to Seventeen), 70 trade magazines (including Beef and Telephony) and
thousands of hours of educational videos (shown in schools and workplaces).
Under a new management team, the company is rapidly leveraging its content onto
the Internet. PRIMEDIA stock jumped 94% in the quarter and was Acorn's second
largest dollar winner.
Because of recent market volatility, short-term performance of the Fund or its
portfolio holdings may be different than stated as of 3/31/00.
4
<PAGE>
Acorn Fund
>At a Glance Ticker Symbol: ACRNX
Pretax and After-tax Average Annual Total Returns
- -------------------------------------------------
>Through March 31, 2000
<TABLE>
<CAPTION>
1 Year 5 Year
After-tax w/ Tax After-tax w/ Tax
Pretax After-tax redemption Efficiency Pretax After-tax redemption Efficiency
- --------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C> <C> <C> <C>
ACORN FUND 38.90% 33.86% 27.55% 87.04% 20.63% 17.59% 16.30% 85.27%
- --------------------------------------------------------------------------------------------------------------------------
SMALL BLEND
CATEGORY AVG.* 40.14% 37.98% NA 94.62%/+/ 17.41% 14.84% NA 85.24%/+/
- --------------------------------------------------------------------------------------------------------------------------
SMALL GROWTH
CATEGORY AVG.* 92.80% 88.99% NA 95.89%/+/ 24.67% 21.93% NA 88.89%/+/
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
10 Year
After-tax w/ Tax
Pretax After-tax redemption Efficiency
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACORN FUND 17.40% 15.06% 14.08% 86.53%
- -------------------------------------------------------------------------
SMALL BLEND
CATEGORY AVG.* 13.96% 11.61% NA 83.17%/+/
- -------------------------------------------------------------------------
SMALL GROWTH
CATEGORY AVG.* 19.58% 17.10% NA 87.33%/+/
- -------------------------------------------------------------------------
</TABLE>
*Source: Morningstar, Inc. Morningstar listed the Fund in the Small Growth
Category as of 3/31/00 but the Fund has also regularly appeared in the Small
Blend Category so we are showing both.
"NA" indicates information not available from Morningstar. Morningstar does not
provide Life of Fund data or after tax w/ redemption returns.
/+/ Calculated by Wanger Asset Management from Morningstar data.
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 3/31/00
[PIE CHART]
Other* 11.9%
Consumer Goods/Services 12.8%
Health Care 7.8%
Industrial Goods/Services 7.7%
Real Estate 5.6%
Finance 12.8%
Energy/Minerals 7.8%
Information 33.6%
Media 3.8%
Telecom 4.6%
Computer Related
Hardware 8.0%
Software & Services 17.2%
*Other includes cash and other assets less liabilities of 10.6%.
Acorn Fund NAV on 3/31/00: $18.61
- ---------------------------------
Fund Net Assets as of 3/31/00: $4,020.9 million
- -------------------------------------------------------------------------------
>Acorn Fund Top 10 Holdings
Softbank 2.9%
Leading Internet Company in Japan
Liberty Media Group, AT&T 1.9%
Cable & Satellite Programming
Harley-Davidson 1.8%
Motorcycles & Related Merchandise
Star Cruises 1.8%
Cruising/Casino Operations
SEI Investments 1.7%
Mutual Fund Administration
AmeriCredit 1.6%
Auto Lending
First Health Group 1.5%
PPO Network
Lincare Holdings 1.4%
Home Health Care Services
Expeditors International of Washington 1.4%
International Freight Forwarder
WM Data Nordic 1.4%
Computer Services/Consulting
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.
The Value of a $10,000 Investment in Acorn Fund
- --------------------------------------------------------------------------------
>June 10, 1970 through March 31, 2000
Average Annual Total Return
- ---------------------------
1 Year 5 Years 10 Years Life of Fund
38.90% 20.63% 17.40% 17.00%
[GRAPH APPEARS HERE]
ACORN Fund S&P
6/10/70 $ 10,000 $ 10,000
70 $ 13,587 $ 12,676
71 $ 17,828 $ 14,490
72 $ 19,368 $ 17,242
73 $ 14,765 $ 14,709
74 $ 10,691 $ 10,816
75 $ 13,945 $ 14,842
76 $ 23,045 $ 18,394
77 $ 27,168 $ 17,077
78 $ 31,777 $ 18,200
79 $ 47,790 $ 21,586
80 $ 62,594 $ 28,602
81 $ 58,005 $ 27,195
82 $ 68,208 $ 33,054
83 $ 85,389 $ 40,510
84 $ 89,045 $ 43,051
85 $ 117,142 $ 56,710
86 $ 136,843 $ 67,295
87 $ 142,923 $ 70,828
88 $ 178,370 $ 82,591
89 $ 222,681 $108,761
90 $ 183,674 $105,386
91 $ 270,641 $137,492
92 $ 336,210 $147,928
93 $ 444,889 $162,882
94 $ 411,750 $165,032
95 $ 497,407 $227,047
96 $ 609,569 $279,177
97 $ 761,852 $372,320
98 $ 807,685 $478,724
6/30/99 $ 901,844 $537,999
9/30/99 $ 883,409 $504,404
12/31/99 $1,077,255 $579,455
3/31/2000 $1,081,906 $592,744
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), with the
S&P 500 Stock Index with dividends reinvested. The S&P 500 is a broad market-
weighted average of U.S. blue-chip companies. The index is unmanaged and returns
include reinvested dividends.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN
AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
5
<PAGE>
Acorn International
>In a Nutshell
[Photos here]
Acorn International rose 12.1% in the first quarter of the year, well ahead of
all its benchmarks and peer groups. Returns came from stock selection more than
country allocation. Our four best holdings, defined by contribution to return
over the quarter, were Li & Fung, Editoriale L'Espresso, Baltimore Plc., and
Amdocs, domiciled in Hong Kong, Italy, the UK and Israel, respectively. The
names that hurt performance the most this quarter were Star Cruises of
Singapore, Jafco and Trans Cosmos of Japan, Autogrill of Italy, and Atos of
France. These have all been successful holdings in the past, which gave back a
portion of their previous gains in profit taking.
If country allocation does not explain the winners and losers this quarter,
can we look to sector exposure as a better predictor of performance? There is an
important change in the international investment environment. Companies are
compared increasingly to their peers across markets, as opposed to dissimilar
companies within their home market. What three of our top performers in the
quarter have in common is that they all rose on enthusiasm for technology, while
the two Japanese names that fell both reflected disillusionment with Internet-
related investments.
There is an important change in the international investment environment.
Companies are compared increasingly to their peers across markets, as opposed to
dissimiliar companies within their home market.
We have to admit that we are not exactly sure what constitutes a technology
stock in today's world. A lot of pure "dot.com" companies are really old-
fashioned businesses distinguished only by the fact that they use the Internet
to distribute their goods or services. Some newly listed stocks have innovative
business models, but not much else in the way of operations. Other traditional
companies source a growing portion of their sales from end markets that did not
exist five years ago. Investors tend to paste hasty labels on groups and trade
them indiscriminately together, making their stock prices go up and down a lot
in a short period. Over the long term, however, fundamentals win out, and the
businesses that build value in the real economy, whatever they are called, do
the same for shareholders.
Our philosophy at Acorn International is to buy quality companies with
solid fundamentals, strong market positions, and proven management. We focus on
small- to mid-sized companies, because they have the potential to grow for a
long time. We are neither market timers nor heavy traders. We do trim hot stocks
when the party gets too wild (which happened this past quarter), and add to them
after the crowds have left and prices return to sober levels (which we have
started to do this quarter). But the most important task we face is deciding
what to own in the first place. In that respect, we have a high degree of
conviction that the core companies in the portfolio will be the winners in
retrospect five years from now.
/s/ Leah Joy Zell
Leah Joy Zell
Lead Portfolio Manager
/s/ Margaret Mary Forster
Margaret M. Forster
Co-Portfolio Manager
From Audio
to Stereo
The craze for media stocks over the last six months passed Audiofina by. Because
the ownership structure was complicated and the shares hard to buy, few
brokerage firms followed the company and management never appeared before
investors. What attracted us to this obscure Belgian holding company, however,
was its 50% ownership in a valuable TV and radio network. That obscurity ended
early in April when Pearson and Bertelsmann, two European media giants, agreed
to merge their TV and radio assets into Audiofina, making it the broadcast media
powerhouse of Europe with 22 channels, 18 radio stations, and over 120 million
viewers across 11 countries. When the stock lists in London later this year, we
believe its brand name, RTL, is poised to become a household name.
Because of recent market volatility, short-term performance of the Fund or its
portfolio holdings may be different than stated as of 3/31/00.
6
<PAGE>
Acorn International
>At a Glance Ticker Symbol: ACINX
Pretax and After-tax Average Annual Total Returns
- -------------------------------------------------
>Through March 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
1 Year 5 Year
-----------------------------------------------------------------------------------------------
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 INTERNATIONAL 98.56% 96.13% 60.65% 97.54% 25.85% 24.84% 21.64% 96.09%
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN STOCK
CATEGORY AVG.* 44.59% 42.39% NA 95.07%/+/ 15.54% 13.89% NA 89.38%/+/
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Life of Fund
-------------------------------------------
Pretax After-tax After-tax w/ Tax
redemption Efficiency
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACORN INTERNATIONAL 22.76% 22.06% 19.58% 96.92%
- ----------------------------------------------------------------------
FOREIGN STOCK
CATEGORY AVG.* NA NA NA NA
- ----------------------------------------------------------------------
</TABLE>
*Source: Morningstar, Inc.
"NA" indicates information not available from Morningstar. Morningstar does not
provide Life of Fund data or after-tax w/ redemption returns.
/+/ Calculated by Wanger Asset Management from Morningstar data.
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 3/31/00
[PIE CHART]
Health Care 3.5%
Finance 8.1%
Other* 8.8%
Industrial
Goods/Services 14.1%
Consumer
Goods/Services 15.1%
Information 50.4%
Media 5.8%
Telephone Services 7.0%
Telecom 2.5%
Computer Related
Hardware 8.2%
Computer Services 9.3%
Publishing 6.2%
Software & Services 11.4%
*Other includes cash and other assets less liabilities of 5.6%.
Fund Net Assets as of 3/31/00: $3,405.1 million
- ---------------------------------------------------
>Acorn International Top 10 Holdings
Li & Fung Hong Kong 3.5%
Sourcing of Consumer Goods
Serco Group United Kingdom 2.6%
Facilities Management
Star Cruises Singapore 2.4%
Cruise Line
Venture Manufacturing Singapore 2.4%
Electronic Manufacturing Services
Amdocs Israel 1.8%
Telecommunications Billing &
Customer Care Software
TietoEnator Finland 1.8%
Computer Services/Consulting
Editoriale L'Espresso Italy 1.7%
Newspaper & Magazine Publisher
Banca Fideuram Italy 1.7%
Life Insurance & Mutual Funds
Dimension Data South Africa 1.7%
Networks & Computer Services
Datacraft Asia Singapore 1.6%
Network Integrator
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
Acorn International NAV on 3/31/00: $39.60
- ------------------------------------------
The Value of a $10,000 Investment in Acorn International
- --------------------------------------------------------
>September 23, 1992 through March 31, 2000
Average Annual Total Return
- ---------------------------
1 Year 5 Years Life of Fund
98.56% 25.85% 22.76%
[GRAPH APPEARS HERE]
- --------------------------------------------
ACORN INT'L EMI-EX US
- --------------------------------------------
Sep-1992 $10,000.00 $10,000.00
Dec-1992 $10,679.00 $ 9,590.49
Dec-1993 $15,924.00 $12,573.13
Dec-1994 $15,319.00 $13,639.59
Dec-1995 $16,686.00 $14,355.04
Dec-1996 $20,170.00 $15,392.73
Dec-1997 $20,190.00 $13,946.49
Dec-1998 $23,305.00 $15,641.12
Jun-1999 $27,222.00 $16,839.00
Sep-1999 $29,486.00 $17,694.00
Dec-1999 $41,761.00 $19,320.00
Mar-2000 $46,808.00 $19,705.00
This graph compares the results of $10,000 invested in Acorn International on
September 23, 1992 (the date Fund shares were first offered to the public), with
all dividends and capital gains reinvested, with the EMI (World ex-U.S.). EMI
(World ex-U.S.) is Salomon Brothers' index of the bottom 20% of institutionally
investable capital of countries, as selected by Salomon, excluding the U.S. The
index is unmanaged and returns include reinvested dividends.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN
AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
7
<PAGE>
Acorn USA
>In a Nutshell
[Photo here]
Acorn USA slipped -1.2% in the first quarter lagging the Russell 2000 Index's
7.1% return. As with our other domestic funds, we trailed the index due to our
lower weighting in technology stocks. We do own technology stocks but we steered
clear of tech names that were selling based on hot stock stories rather than
real earnings.
Acorn USA's top two money-making stocks were Dynegy, an electricity and
gas marketing revolutionary that nearly doubled in price, and Gadzooks, a
popular teen clothing retailer. Of our technology names, MSI, a
telecommunication-based Internet service provider, was a winner. More reasonably
priced offshoot Internet plays like PRIMEDIA, a specialty magazine publisher and
web site developer; Aztec, an e-business consulting company; and Advanced
Lighting, a manufacturer of lighting products and fiber optics coatings, were up
between 75% and 230%.
Despite some nice wins in the Fund, two significant portfolio holdings
disappointed last quarter. Sykes (help desk call centers for personal computer
users) dropped on revenue concerns that we believe will be temporary. Galileo
(telecommunication semiconductors) missed our revenue expectations. It was sold.
Recent stock market cycles have become quite violent. We think a
sensible response is to build a portfolio of dynamic companies with strong,
multi-year growth prospects trading at good prices.
Recent stock market cycles have become quite violent. We think a
sensible response is to build a portfolio of dynamic companies with strong,
multi-year growth prospects trading at good prices.
Gadzooks
Is "In"
Gadzooks is a teenage clothing retailer. Its stock plunged in 1998 when
teenagers suddenly deemed its duds uncool. Our retailing analyst, Ben Andrews,
smelled potential as the company reinvented its product line, but held off
buying until he was convinced the old, unpopular clothing lines were purged from
inventory and replaced with cool new brand-name stuff. Last March, nine months
after the stock's mini-crash, the Fund started buying shares, right at the cusp
of a sales surge and a tripling of the stock price. A year ago, Gadzooks bombed
out; today, as kids say, it's "da bomb."
/s/ Robert A. Mohn
Robert A. Mohn
Lead Portfolio Manager
Because of recent market volatility, short-term performance of the Fund or its
portfolio holdings may be different than stated as of 3/31/00.
8
<PAGE>
Acorn USA
>At a Glance Ticker Symbol: AUSAX
Pretax and After-tax Average Annual Total Returns
- -------------------------------------------------
>Through March 31, 2000
<TABLE>
<CAPTION>
1 Year 3 Year
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 USA 31.99% 29.82% 21.19% 93.23% 19.94% 18.28% 16.01% 91.66%
- ------------------------------------------------------------------------------------------------------------------------
SMALL BLEND
CATEGORY AVG.* 40.14% 37.98% NA 94.62%/+/ 16.42% 14.44% NA 87.94%/+/
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Life of Fund
Pretax After-tax After-tax w/ Tax
Redemption Efficiency
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACORN USA 21.09% 19.65% 17.18% 93.18%
- -------------------------------------------------------------------
SMALL BLEND
CATEGORY AVG.* NA NA NA NA
- -------------------------------------------------------------------
</TABLE>
*Source: Morningstar, Inc.
"NA" indicates information not available from Morningstar. Morningstar does not
provide Life of Fund data or after-tax w/ redemption returns.
/+/ Calculated by Wanger Asset Management from Morningstar data.
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 03/31/00
[PIE CHART]
Health Care 8.7%
Consumer Goods/Services 5.2%
Industrial
Goods/Services 5.7%
Finance 8.3%
Other* 9.2%
Energy/Minerals 7.9%
Information 55%
Media 2.5%
Mobile Communications 8.4%
Telecom 6.3%
Computer Hardware 13.7%
Instrumentation 3.3%
Computer Services 5.1%
Software & Services 15.7%
*Other includes cash and other assets less liabilities of 8.9%.
Fund Net Assets as of 3/31/00: $374.5 million
- ---------------------------------------------
>Acorn USA Top 10 Holdings
Micros Systems 8.9%
Information Systems for Restaurants & Hotels
Telephone and Data Systems 5.5%
Cellular & Telephone Services
RCN 3.9%
Metro Market CLEC: Voice, Video & Internet Services
Dynegy 3.0%
Natural Gas & Electric Processing & marketing
First Health Group 2.9%
PPO Network
AmeriCredit 2.7%
Auto Lending
DSP Group 2.5%
Telecom Semiconductors
Lincare Holdings 2.4%
Home Health Care Services
JDA Software 2.3%
Applications/Software & Services for Retailers
Gadzooks 2.3%
Teen Apparel Retailer
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
Acorn USA NAV as of 3/31/00: $16.55
- -----------------------------------
The Value of a $10,000 Investment in Acorn USA
- ----------------------------------------------
>September 4, 1996 through March 31, 2000
Average Annual Total Return
- ---------------------------
1 Year 3 Years Life of Fund
31.99% 19.94% 21.09%
[GRAPH APPEARS HERE]
Date Acorn USA Russell 2000
- --------------------------------------------------------
9/4/96 $10,000 $10,000
9/96 $10,720 $10,360
12/96 $11,650 $10,899
3/97 $11,480 $10,335
6/97 $13,320 $12,011
9/97 $15,340 $13,798
12/97 $15,413 $13,335
3/98 $17,401 $14,678
6/98 $17,525 $13,993
9/98 $14,151 $11,174
12/98 $16,305 $12,997
6/99 $17,650 $14,203
9/99 $16,866 $13,305
12/99 $20,059 $15,759
3/00 $19,820 $16,876
This graph compares the results of $10,000 invested in Acorn USA on September 4,
1996 (the date Fund shares were first offered to the public), with all dividends
and capital gains reinvested, to the Russell 2000 Index. The Russell 2000 is
formed by taking the 3,000 largest U.S. companies and then eliminating the
largest 1,000, leaving a market capitalization-weighted index of 2,000 small
companies. The index is unmanaged and returns include reinvested dividends.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT
RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT
FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAT THEIR ORIGINAL COST.
9
<PAGE>
Acorn Foreign Forty
>In a Nutshell
[Photos here]
Acorn Foreign Forty had a strong first quarter, up more than 15%. Fund
performance was well ahead of its benchmark indexes, which were down slightly
over the three months (see Page 1 for performance data). Our competitors, as
measured by Lipper, were also flat, up less than 1%.
Strong stocks came from the media group. M6 Metropole TV, the French
television broadcaster we highlighted in last quarter's report, rose another
38%. We also saw larger gains in Italian publishers SEAT and L'Espresso. Cartoon
programmer Fox Kids Europe, and Luxembourg-based TV broadcaster Audiofina, were
strong in the quarter. Two of our big winners outside the media area were
telecommunication software companies: Amdocs in Israel and Comptel in Finland.
There was no clear pattern to our losers, although both Peninsular &
Oriental and Star Cruises fell after U.S. cruise line Carnival bookings
increased less than analysts had hoped. We feel the cruise industry's truly
global approach makes it a good growth industry and that the recent rough waters
will soon calm.
Acorn Foreign Forty, as well as the other Acorn funds, follows a buy
and hold investment strategy but sometimes circumstances make us vary from this
approach. For example, Softbank was expected to do well over a three- to
five-year period but it rose so quickly - increasing 20 fold in roughly 12
months - that we elected to take our profits and say sayonara to this stellar
performer. The proceeds from this sale were used to invest in technology stocks
trading at lower prices.
Acorn Foreign Forty had a strong first quarter, up more than 15%. Fund
performance was well ahead of its benchmark indexes ...
Italians just say no
to "pay as you go"
"Pay as you go" pension systems work well - provided you have more workers
paying in than retirees taking money out. In the U.S., we recognized more than a
decade ago that a critical imbalance would arise in our Social Security system
when baby boomers switched from "paying in" to "taking out." As a result,
Americans have been supplementing their social security by funding IRAs, 401(k)s
and other investment vehicles. While the process is well underway in the U.S.,
Italy is just getting started. The state "pay as you go" system was the only
game in town because private pensions were illegal until recently. With a green
light for pension investing, Italians are now pouring money into mutual funds.
Banca Fideuram, the leading Italian fund distributor and one of our top ten
holdings, is a beneficiary of this seismic change.
/s/ Marcel P. Houtzager
Marcel P. Houtzager
Co-Portfolio Manager
/s/ Roger Edgley
Roger Edgley
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 3/31/00.
10
<PAGE>
Acorn Foreign Forty
>At a Glance Ticker Symbol: ACFFX
Pretax and After-tax Average Annual Total Returns
- -------------------------------------------------
>Through March 31, 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 92.76% 92.59% 55.98% 99.81% 85.36% 85.29% 69.56% 99.92%
- ----------------------------------------------------------------------------------------------------------------------------------
FOREIGN STOCK
CATEGORY AVG.* 44.59% 42.39% NA 95.07%/+/ NA NA NA NA
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Source: Morningstar, Inc.
"NA" indicates information not available from Morningstar. Morningstar does not
provide Life of Fund data or after-tax w/ redemption returns.
/+/ Calculated by Wanger Asset Management from Morningstar data.
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 03/31/00
[PIE CHART]
Health Care 2.4%
Other* 0.3%
Consumer Goods/Services 12.5%
Industrial
Goods/Services 8.4%
Finance 16.4%
Transportation 3.3%
Information 56.7%
TV Broadcasting 6.9%
Media 3.8%
Telephone Services 13.4%
Telecom 4.1%
Computer Related
Hardware 8.8%
Computer Services 8.0%
Software & Services 11.7%
*Cash and other assets less liabilities.
Fund Net Assets as of 03/31/00: $157.4 million
- ----------------------------------------------
>Acorn Foreign Forty Top 10 Holdings
Star Cruises Singapore 5.4%
Cruise Line
Amdocs Israel 4.9%
Telecommunications Billing &
Customer Care Software
Venture Manufacturing Singapore 4.4%
Electronic Manufacturing Services
Audiofina Belgium 3.9%
TV & Radio Stations
Peninsular & Oriental United Kingdom 3.3%
Cruise Line
NetCom Sweden 3.3%
Telecommunication Services
Getronics Netherlands 3.2%
Computer Services
Editoriale L'Espresso Italy 3.1%
Newspaper & Magazine Publisher
Banca Fideuram Italy 3.1%
Life Insurance & Mutual Funds
M6 Metropole TV France 3.0%
Television Broadcaster
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
Acorn Foreign Forty NAV on 3/31/00: $23.04
- ------------------------------------------
The Value of a $10,000 Investment in Acorn Foreign Forty
- --------------------------------------------------------
>November 23, 1998 through March 31, 2000
Average Annual Total Return
- ---------------------------
1 Year Life of Fund
92.76% 85.36%
[GRAPH APPEARS HERE]
Acorn Foreign 40 EAFE
11/23/98 $10,000 $10,000
12/31/98 $11,000 $10,411
1/31/99 $11,790 $10,381
2/28/99 $11,590 $10,133
3/31/99 $11,980 $10,556
4/30/99 $12,240 $10,980
5/30/99 $12,170 $10,418
6/30/99 $13,110 $10,825
7/31/99 $13,511 $11,146
8/30/99 $13,771 $11,187
9/30/99 $13,621 $11,300
12/31/99 $19,975 $13,218
3/31/2000 $23,093 $13,205
This graph compares the results of $10,000 invested in Acorn Foreign Forty on
November 23, 1998 (the date Fund shares were first offered to the public), with
all dividends and capital gains reinvested, with EAFE. EAFE is Morgan Stanley's
Europe, Australasia and Far East Index, an unmanaged, widely recognized
international benchmark that comprises 20 major markets in Europe, Australia,
and the Far East. The index is unmanaged and returns include reinvested
dividends.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT
RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT
FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
11
<PAGE>
Acorn Twenty
>In a Nutshell
[PHOTO HERE]
Acorn Twenty finished the quarter up 2.3%, behind the S&P 400's 12.7% gain and
in-line with the S&P 500's 2.3% return. Midcap growth stocks, particularly in
technology, had a very strong quarter and their contribution to the S&P 400
explains much of its outperformance. Investor enthusiasm for technology stocks
sailed to high valuation levels in the first quarter leaving value-oriented
stocks standing on the dock. We do hold technology names, but not as many as the
index. When many of these high-flying tech stocks dropped in April, however, our
Fund benefited from Acorn's more diversified investment approach.
We had two stocks return more than 50% during the quarter. Dynegy rose
following its merger with electric utility Illinova. American Power Conversion,
dominant in the market for computer power systems, also saw strong gains. Other
winners: McLeod (telecommunication service provider) and Tektronix (analytical
instruments), now the fund's largest position, were up more than 40% for the
quarter.
Insurance stocks continued to be weak. Progressive and UICI were both off
more than 20%. Comparing insurance stocks with other companies in our universe,
we decided to move out of that sector and redeploy funds into other ideas.
Effective March 31, 2000, Mark Yost resigned from Wanger Asset Management
and no longer co-manages Acorn Twenty. Mark decided to start his own money
management firm. Looking forward, we remain excited about Acorn Twenty's future
as our team continues to look for great businesses selling at reasonable prices.
Investor enthusiasm for technology stocks sailed to high valuation levels in the
first quarter leaving value-oriented stocks standing on the dock.
- --------------------------------------------------------------------------------
TEK: Selling the "bad"
to increase value
Tektronix (TEK) manufactures test and measurement equipment used by Lucent,
Motorola, Rambus and others to design and test fiber optic systems, cell phones,
and memory chips. We analyzed TEK last year and concluded it was an attractively
valued, fast-growing, technology company. At that time, TEK's core business was
masked by its subsidiaries. In September, TEK began to sell off some of its
"bad" businesses to increase the value of its more profitable, core business. We
believe fiscal May 2000 earnings per share (eps) will include losses and low
profits from these sold businesses and we estimate eps to be between $1.20 and
$1.25. Now, unburdened by its divested businesses, TEK may earn between $2.20
and $2.25 in fiscal 2001. By looking beyond reported estimates, we purchased the
stock in October at a reasonable price. It has increased more than 40% since
then.
- --------------------------------------------------------------------------------
/S/ John H. Park
John H. Park
Lead Portfolio Manager
Because of recent market volatility, short-term performance of the Fund or its
portfolio holdings may be different than stated as of 3/31/00.
12
<PAGE>
Acorn Twenty
>At a Glance Ticker Symbol: ACTWX
Pretax and After-tax Average Annual Total Returns
- ----------------------------------------------------
>Through March 31, 2000
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
1 Year Life of Fund
----------------------------------------------------------------------------------------------------------------
Pretax After-tax After-tax w/ Tax After-tax w/ Tax
redemption Efficiency Pretax After-Tax redemption Efficiency
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ACORN TWENTY 23.44% 22.92% 14.14% 97.79% 29.32% 28.93% 23.45% 98.66%
- ------------------------------------------------------------------------------------------------------------------------------------
MID CAP BLEND
CATEGORY AVG.* 27.56% 24.86% NA 90.20%/+/ NA NA NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Source: Morningstar, Inc.
"NA" indicates information not available from Morningstar. Morningstar does not
provide Life of Fund data or after-tax w/ redemption returns.
/+/ Calculated by Wanger Asset Management from Morningstar data.
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 3/31/00
[PIE CHART]
Consumer Goods/Services 14.8%
Health Care 10.7%
Industrial
Goods/Services 2.0%
Energy/Minerals 6.5%
Finance 8.5%
Other* 4.5%
Information
Television Programming 4.0%
Telecommunications/
Wireline Communications 10.7%
Mobile Communications 4.3%
Contract Manufacturing 5.2%
Instrumentation 13.9%
Computed Related Hardware 4.3%
Business Information 10.6%
*Cash and other assets less liabilities.
Acorn Twenty NAV on 3/31/00: $14.02
- --------------------------------------
Fund Net Assets as of 3/31/00: $66.3 million
- ------------------------------------------------------------------------------
>Acorn Twenty Top 10 Holdings
Tektronix 8.5%
Analytical Instruments
Dynegy 6.5%
Energy Marketing, Processing & Generation
Reynolds & Reynolds 5.7%
Business Forms & Computer Systems for Car Dealers
First Health Group 5.6%
PPO Network
SEI Investments 5.4%
Mutual Fund Administration
McLeod USA 5.4%
Super Regional CLEC: Local, Long Distance & Internet Services
RCN 5.3%
Metro Market CLEC: Voice, Video & Internet Services
Herman Miller 5.3%
Office Furniture
Jabil Circuit 5.2%
Electronic Manufacturing Services
Jones Apparel 5.1%
Women's Apparel
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.
The Value of a $10,000 Investment in Acorn Twenty
- ---------------------------------------------------------------------------
>November 23, 1998 through March 31, 2000
Average Annual Total Return
- ---------------------------
1 Year Life of Fund
23.44% 29.32%
[GRAPH APPEARS HERE]
ACORN 20 MidCap 400
- --------------------------------------------
11/23/98 $10,000 $10,000
12/31/98 $10,710 $11,109
1/31/99 $11,000 $10,676
2/28/99 $10,710 $10,117
3/31/99 $11,480 $10,400
4/30/99 $12,710 $11,220
5/31/99 $12,730 $11,270
6/30/99 $13,040 $11,872
7/30/99 $13,190 $11,620
8/31/99 $12,060 $11,222
9/30/99 $12,110 $10,875
12/31/99 $13,850 $12,745
3/31/2000 $14,171 $14,361
This graph compares the results of $10,000 invested in Acorn Twenty on November
23, 1998 (the date Fund shares were first offered to the public), with all
dividends and capital gains reinvested, to the S&P MidCap 400. The S&P MidCap
400 is a market value-weighted index of 400 stocks that are in the next tier
down from the S&P 500. The Index is unmanaged and returns include reinvested
dividends.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN
AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
13
<PAGE>
Acorn Fund
>Major Portfolio Changes in the First Quarter
Number of Shares
-------------------------
12/31/99 3/31/00
Additions
- ---------------------------------------------------------------------
Information
American Management Systems 250,000 400,000
Anchor Gaming 450,000 500,000
Aristocrat Leisure (Australia) 1,000,000 1,400,000
Bell & Howell 0 200,000
Bellsystem24 (Japan) 0 5,000
Cinar (Canada) 300,000 700,000
Classic Communications 200,000 600,000
Concord EFS 380,000 1,211,000
Dimension Data (South Africa) 0 1,000,000
Dionex 98,000 282,000
Hyperion Solutions 200,000 280,000
Indus International 300,000 556,000
JDA Software Group 687,000 876,000
MasTec 0 147,000
Navigant Consulting 0 900,000
Playboy Enterprises 550,000 600,000
Plexus 35,000 77,000
Pomeroy Computer Resources 0 400,000
RCM Technologies 642,000 925,000
Salem Communications 137,000 500,000
Sykes Enterprises 650,000 850,000
TeleSpectrum Worldwide 0 765,000
THQ 245,000 312,000
Tidel Technologies 0 400,000
Varian 520,000 680,000
- ---------------------------------------------------------------------
Consumer Goods/Services
Bally Total Fitness 1,250,000 1,540,000
Borders Group 1,600,000 1,700,000
Calloway Golf 100,000 200,000
Carnival 1,100,000 1,500,000
Fairfield Communities 0 200,000
Helen of Troy 460,000 1,190,000
Herman Miller 520,000 660,000
Hon Industries 0 130,000
Isle of Capri Casino 650,000 934,000
ITT Educational Services 600,000 1,000,000
Jones Apparel 730,000 900,000
National RV Holdings 0 110,000
Pier 1 Imports 0 1,200,000
Quiksilver 200,000 325,000
Station Casinos 1,080,000 1,500,000
Number of Shares
-------------------------
12/31/99 3/31/00
- ---------------------------------------------------------------------
Finance
Ace Cash Express 570,000 1,000,000
Affiliated Managers Group 300,000 350,000
Commonwealth Bancorp 702,000 824,000
Neuberger Berman 650,000 742,000
Protective Life 600,000 765,000
SEI Investments 555,000 614,000
TCF Financial 799,000 974,000
Texas Regional Bancshares 672,000 730,000
- ---------------------------------------------------------------------
Industrial Goods/Services
Clarcor 1,000,000 1,108,000
Spartech 100,000 245,000
- ---------------------------------------------------------------------
Energy/Minerals
Newpark Resources 1,120,000 2,000,000
Penn West Petroleum 0 240,000
Pennaco Energy 0 450,000
Precision Drilling (Canada) 530,000 730,000
Saipem (Italy) 1,250,000 2,250,000
Ulster Petroleums (Canada) 400,000 550,000
US Aggregates 283,000 500,000
- ---------------------------------------------------------------------
Other Industries
Amli Residential 250,000 490,000
BRE Properties 250,000 450,000
Cornerstone Properties 820,000 1,145,000
First Industrial Realty Trust 500,000 675,000
HRPT Properties 0 1,000,000
LaSalle Hotel Properties 699,000 1,099,000
Macerich 400,000 625,000
Manufactured Home Communities 400,000 700,000
SL Green Realty 500,000 730,000
Summit Properties 250,000 520,000
Utilicorp United 200,000 500,000
14
<PAGE>
Number of Shares
-------------------------
12/31/99 3/31/00
Sales
- ---------------------------------------------------------------------
Information
3DO Company 250,000 183,000
AC Nielsen 403,000 0
Activision 400,000 300,000
Aztec Technology Partners 1,616,000 1,210,000
Bisys 95,000 0
Comverse Technology 36,000 0
Fox Kids Europe (Netherlands) 9,000 0
Granite Broadcasting 250,000 0
Information Holdings 450,000 400,000
Liberty Media Group, AT&T 1,500,000 1,300,000
Musicmaker.com 250,000 0
National Data 1,874,000 1,812,000
NTL (United Kingdom) 250,000 300,000
(includes effect of 5 for 4 stock split)
Oak Industries 200,000 0
Softbank (Japan) 235,000 132,000
Solectron 400,000 500,000
(includes effect of 2 for 1 stock split)
Telephone and Data Systems 580,000 450,000
Thus (United Kingdom) 36,000 0
- ---------------------------------------------------------------------
Health Care
Corvas International 1,508,000 1,358,000
CuraGen 230,000 342,000
(includes effect of 2 for 1 stock split)
Genome Therapeutics 664,000 380,000
Guilford Pharmaceutical 351,000 316,000
Incyte Pharmaceuticals 160,000 130,000
Inhale Therapeutic Systems 450,000 405,000
Lincare Holdings 2,038,000 2,000,000
Microcide Pharmaceuticals 915,000 823,000
Myriad Genetics 525,000 425,000
NPS Pharmaceuticals 529,000 476,000
Protein Design Labs 329,000 266,000
Wesley Jessen Vision 299,000 0
Number of Shares
-------------------------
12/31/99 3/31/00
- ---------------------------------------------------------------------
Consumer Goods/Services
Harley-Davidson 1,000,000 900,000
- ---------------------------------------------------------------------
Finance
Acceptance Insurance 612,000 0
Baldwin & Lyons, Cl. B 488,000 0
Peoples Bank Bridgeport 1,842,000 1,757,000
Pioneer Group 1,034,000 730,000
UICI 1,291,000 863,000
- ---------------------------------------------------------------------
Industrial Goods/Services
A M Castle 245,000 95,000
Advanced Lighting Technologies 550,000 350,000
C H Robinson 350,000 300,000
- ---------------------------------------------------------------------
Energy/Minerals
AES Corporation 1,164,000 450,000
Canadian Natural
Resources (Canada) 385,000 95,000
Hanover Compressor 205,000 160,000
- ---------------------------------------------------------------------
Other Industries
Unisource Energy 865,000 665,000
At March 31, 2000 Acorn Fund's foreign portfolio of investments as a percent of
net assets was diversified as follows:
Value (000) Percent
- ----------------------------------------------------------------------
Japan $122,001 3.1%
United Kingdom 112,758 2.8
Singapore 84,233 2.1
Sweden 57,465 1.4
Canada 53,494 1.3
Italy 46,049 1.2
France 29,712 0.7
Netherlands 29,140 0.7
Australia 13,053 0.3
Value (000) Percent
- ----------------------------------------------------------------------
Argentina $ 12,875 0.3%
Mexico 9,042 0.2
South Africa 8,908 0.2
Germany 3,962 0.1
China 1,272 0.1
--------------------------
TOTAL FOREIGN PORTFOLIO 583,964 14.5
15
<PAGE>
Acorn Fund
>Statement of Investments (Unaudited) March 31, 2000
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 89.4%
- --------------------------------------------------------------------------------
Information: 33.6%
Media
>BROADCASTING: 1.2%
819,000 Data Transmission Network $ 23,290
Data Services for Farmers
772,000 Young Broadcasting 14,668
Television Stations
500,000 Salem Communications 5,969
Radio Stations for Religious Programming
300,000 Shop at Home 2,588
Television Home Shopping Network
100,000 Cumulus Media 1,437
Radio Stations in Small Cities
- --------------------------------------------------------------------------------
47,952
>TELEVISION PROGRAMMING/CATV: 2.6%
1,300,000 Liberty Media Group, AT&T 77,025
Cable & Satellite Programming
500,000 Corus Entertainment (Canada) 13,087
CATV Programming & Radio Stations
600,000 Playboy Enterprises 11,925
CATV & Satellite Programming, Publishing
700,000 Cinar (Canada) 4,900
Children's TV Programming
- --------------------------------------------------------------------------------
106,937
Telecommunications
>TELECOMMUNICATIONS/WIRELINE
COMMUNICATIONS: 2.2%
584,000 RCN 31,463
Metro Market CLEC: Voice, Video & Internet Services
300,000 NTL (United Kingdom) 27,844
Voice, Video & Data Services
354,000 Commonwealth Telephone 16,616
Rural Phone Franchises & CLEC
600,000 Classic Communications 9,450
Cable Television in Rural Areas
230,000 Startec Global Communications 4,830
International Telecommunications
- --------------------------------------------------------------------------------
90,203
>MOBILE COMMUNICATIONS: 2.3%
450,000 Telephone and Data Systems 49,950
Cellular & Telephone Services
350,000 Pinnacle Holdings 19,338
Towers for Cellular, PCS & Paging
355,000 COMARCO 12,114
Wireless Network Testing
420,000 Price Communications 9,660
Cellular Telephone Services
- --------------------------------------------------------------------------------
91,062
>TELECOMMUNICATIONS EQUIPMENT: 0.1%
400,000 Tidel Technologies 3,500
ATM Machines
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Computer Related Hardware
>COMPUTER HARDWARE/RELATED SYSTEMS: 2.3%
765,000 Micros Systems $48,147
Information System for Restaurants & Hotels
550,000 American Power Conversion 23,581
Uninterruptable Power Systems
713,000 Kronos 21,123
Labor Management Solutions
- --------------------------------------------------------------------------------
92,851
>GAMING EQUIPMENT: 2.1%
2,342,000 International Game Technology 50,792
Slot Machines & Progressive Jackpots
500,000 Anchor Gaming 18,969
Slot Machines & Casinos
1,400,000 Aristocrat Leisure (Australia) 13,053
Slot Machines
- --------------------------------------------------------------------------------
82,814
>CONTRACT MANUFACTURING: 1.6%
500,000 Solectron 20,031
Electronic Manufacturing Services
400,000 Jabil Circuit 17,300
Electronic Manufacturing Services
2,000,000 Natsteel Electronics (Singapore) 13,096
Electronic Manufacturing Services
350,000 Applied Power 9,975
Electronic Enclosures & Industrial Products
77,000 Plexus 5,130
Electronic Manufacturing Services
- --------------------------------------------------------------------------------
65,532
>INSTRUMENTATION: 2.0%
680,000 Varian 26,095
Analytical Instruments
480,000 Mettler Toledo 19,650
Laboratory Products
613,000 Thermoquest 10,268
$ 1,500,000 Thermoquest, 5% Note Due 8/15/00 1,534
Mass Spectrometry & Chromatography
282,000 Dionex 9,288
Ion & Liquid Chromatography
$ 5,000,000 Thermo Optek, 5% Note Due 10/15/00 5,350
265,000 Thermo Optek 3,942
Elemental & Molecular Spectroscopy
266,000 Onix Systems 2,377
Field Measurement & Sensor Equipment
232,000 Metrika Systems 2,074
Gamma Ray Instrumentation
- --------------------------------------------------------------------------------
80,578
Software/Services
>BUSINESS SOFTWARE: 1.5%
1,075,000 Systems & Computer Technology 25,128
Enterprise Software & Services
876,000 JDA Software Group 12,811
Applications/Software & Services for Retailers
280,000 Hyperion Solutions 9,100
Analytical Application Software
16
<PAGE>
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------------------------------
300,000 MAPICS $ 4,781
Mid Market ERP Systems
556,000 Indus International 4,656
Enterprise Asset Management Software
100,000 Entra Data (Sweden) 3,067
Business Software
- --------------------------------------------------------------------------------
59,543
>CONSUMER SOFTWARE: 0.4%
$ 6,500,000 Activision, 6.75% Note Due 1/1/05 5,655
300,000 Activision 3,619
Entertainment Software
312,000 THQ 5,577
Entertainment Software
183,000 3DO Company 1,773
Entertainment Software
- --------------------------------------------------------------------------------
16,624
>COMPUTER SERVICES: 4.8%
1,000,000 WM Data Nordic (Sweden) 54,398
Computer Services/Consulting
230,000 Atos (France) 29,712
Computer Services/Transaction Processing
400,000 American Management Systems 17,525
Software Development Services
850,000 Sykes Enterprises 16,203
Call Center Services
171,084 Getronics (Netherlands) 13,080
Computer Services/Consulting
925,000 RCM Technologies 11,563
Technology Staffing Services
1,210,000 Aztec Technology Partners 9,642
Application Development & Maintenance Services
1,000,000 Dimension Data (South Africa) 8,908
Networks & Computer Services
790,000 Computer Task Group 8,690
Application Development & Staffing Services
400,000 Pomeroy Computer Resources 7,350
Network Integration Services
500,000 Cambridge Technology 6,781
Software Implementation Services
765,000 TeleSpectrum Worldwide 5,355
Call & Web Center Services
109,000 Meta Group 2,841
IT Publications & Consulting Services
214,000 Analysts International 2,113
Technology Staffing Services
- --------------------------------------------------------------------------------
194,161
>BUSINESS INFORMATION/
MARKETING SERVICES/PUBLISHING: 3.9%
1,100,000 PRIMEDIA 35,200
Specialty Magazines & Other Publications
800,000 Getty Images 28,750
Photographs for Publications & Electronic Media
2,400,000 InfoUSA 21,900
Business Data for Sales Leads
Number of Shares Value (000)
- --------------------------------------------------------------------------------
356,000 Choicepoint $ 13,305
Fraud Protection Information
400,000 Information Holdings 12,525
Scientific & Medical Publications, Patent Information
350,000 Acxiom 11,637
Database Marketing Services
445,000 West Teleservices 11,459
Customer Care & Sales Support
900,000 Navigant Consulting 9,900
Consulting Firm
200,000 Bell & Howell 6,250
Information Services for Education & Automotive Markets
5,000 Bellsystem24 (Japan) 4,241
Call Centers
- --------------------------------------------------------------------------------
155,167
>INTERNET: 4.1%
132,000 Softbank (Japan) 117,759
Leading Internet Company in Japan
147,000 MasTec 13,083
Telecom Infrastructure Construction
496,000 Online Resources 8,525
Internet Banking Technology
197,725 Internet Commerce 8,502
E-Commerce Service Network
100,000 RSA Security 5,181
Enterprise Security Software
2,683 Bigfoot International 4,024
263,158 Bigfoot International, Series A 2,500
Internet Direct Marketing
303,376 NeoPlanet, Series A 2,641
Web Browser
61,000 Navidec 946
Internet Computer Services
47,855 GIGA 526
29,714 GIGA Warrants 32
Data on Information Technology
- --------------------------------------------------------------------------------
163,719
>ELECTRONICS DISTRIBUTION: 0.6%
890,000 Pioneer-Standard Electronics 14,018
Component & Computer Distribution
300,000 Kent Electronics 8,756
Component Distribution & Contract Assembly
- --------------------------------------------------------------------------------
22,774
>TRANSACTION PROCESSORS: 1.9%
1,812,000 National Data 47,112
Credit Card & Health Claims Processor
1,211,000 Concord EFS 27,777
Credit Card Processor
- --------------------------------------------------------------------------------
74,889
---------
INFORMATION: TOTAL 1,348,306
17
<PAGE>
Acorn Fund
>Statement of Investments, continued
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Health Care: 7.8%
>BIOTECHNOLOGY/DRUG DELIVERY: 4.3%
405,000 Inhale Therapeutic Systems $ 30,172
Pulmonary Drug Delivery
425,000 Myriad Genetics 25,606
Gene Discovery & Diagnostic Products
266,000 Protein Design Labs 21,147
Computer Designed Monoclonal Antibodies
342,000 CuraGen 15,988
Gene Based Drug Development
1,358,000 Corvas International 14,938
Rational Drug Design
130,000 Incyte Pharmaceutical 11,367
Gene Sequencing
823,000 Microcide Pharmaceuticals 10,699
Antibiotics
7,628,845 Nadro, Series L (Mexico) 9,042
Pharmaceutical Distributor
380,000 Genome Therapeutics 8,954
Gene Discovery Services
316,000 Guilford Pharmaceuticals 7,347
Drug Delivery & Neurology Drugs
476,000 NPS Pharmaceuticals 7,170
Small Molecule Drugs
707,000 Synaptic Pharmaceuticals 5,126
Receptor Targeted Drug Design
325,000 Genzyme Molecular Oncology Division 4,916
Gene Expression Technology & Cancer Drugs
- --------------------------------------------------------------------------------
172,472
>MEDICAL EQUIPMENT: 0.3%
407,000 Orthofix International 7,123
Bone Fixation & Stimulation Devices
443,000 Acuson 6,562
Ultrasound Devices
- --------------------------------------------------------------------------------
13,685
>HOSPITAL/LABORATORY SUPPLIES: 0.1%
27,000 Techne 1,863
Cytokines, Antibodies, Other Reagents for Life Sciences
>SERVICES: 3.1%
1,952,000 First Health Group 61,732
PPO Network
2,000,000 Lincare Holdings 56,750
Home Health Care Services
1,280,000 Magellan Health Services 6,160
Mental Health Services
- --------------------------------------------------------------------------------
124,642
-------
HEALTH CARE: TOTAL 312,662
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Consumer Goods/Services: 12.8%
Goods
>LEISURE VEHICLES: 2.2%
900,000 Harley-Davidson $ 71,437
Motorcycles & Related Merchandise
341,000 Thor Industries 8,291
RV's & Busses
2,400,000 Ducati Motor (Italy) 6,534
Motorcycles & Related Merchandise
110,000 National RV Holdings 1,739
Recreational Vehicles
- --------------------------------------------------------------------------------
88,001
>FURNITURE: 0.5%
660,000 Herman Miller 18,480
Office Furniture
130,000 Hon Industries 3,347
Office Furniture & Fireplaces
- --------------------------------------------------------------------------------
21,827
>BEVERAGES: 0.1%
23,000 Binding Brauerei (Germany) 3,962
Brewery
>NONDURABLES: 0.3%
1,190,000 Helen of Troy 8,181
Personal Care Products
401,000 First Years 2,782
Infant & Toddler Products
- --------------------------------------------------------------------------------
10,963
>DURABLE GOODS: 0.2%
312,439 Hunter Douglas (Netherlands) 7,983
Decorative Window Coverings
>TEXTILES/APPAREL: 1.1%
900,000 Jones Apparel 28,687
Women's Apparel
750,000 Nautica Enterprises 8,813
Men's Casual Apparel
600,000 Unifi 5,363
Polyester & Nylon Fabrics
85,000 Gildan Activewear 2,773
Cotton T-Shirts
- --------------------------------------------------------------------------------
45,636
18
<PAGE>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Services
>RETAIL: 2.6%
1,700,000 Borders Group $ 29,219
Bookstores
400,000 Whole Foods Market 16,575
Natural Food Supermarkets
750,000 Gadzooks 16,266
Teen Apparel Retailer
1,100,000 N. Brown Group (United Kingdom) 12,442
Mail Order Clothing in Large Sizes
1,200,000 Pier 1 Imports 12,300
Imported Furniture & Tchotchkes
325,000 Quiksilver 5,708
Gen Y Clothing
200,000 Calloway Golf 3,100
Premium Golf Clubs & Balls
400,000 Panera Bread 3,000
Bakery & Deli Restaurants
160,000 Gaiam 2,800
Healthy Living Catalog & E-Commerce
156,000 MotherNature.com 492
Healthy Living E-Commerce
- -------------------------------------------------------------------------------
101,902
>TRAVEL: 0.0%
200,000 Fairfield Communities 1,587
Time-Sharing Vacation Resorts
>CONSUMER SERVICES: 1.7%
1,540,000 Bally Total Fitness 37,730
National Chain of Fitness Centers
1,000,000 ITT Educational Services 16,000
Technology Oriented Postsecondary
Degree Programs
1,330,000 Airtours (United Kingdom) 7,145
Packaged Tour Vacations
270,000 Steiner Leisure 5,198
Spas & Hair/Skin Products on Cruise Ships
234,000 Education Management 3,379
Postsecondary Education
- -------------------------------------------------------------------------------
69,452
>CASINOS: 1.4%
1,500,000 Station Casinos 32,719
Casinos & Riverboats
934,000 Isle of Capri Casino 11,675
Five Casinos in Secondary Markets
360,000 Pinnacle Entertainment 7,313
Casinos in Secondary Markets & Card Clubs
535,000 Monarch Casino & Resort 1,873
Casino/Hotel in Reno
113,000 Lakes Gaming 897
Hotel & Casino in Biloxi & Gulfport
- --------------------------------------------------------------------------------
54,477
Number of Shares Value (000)
- --------------------------------------------------------------------------------
>CRUISE LINES: 2.7%
8,130,000 Star Cruises (Singapore) $ 71,138
Cruising/Casino Operations
1,500,000 Carnival 37,219
Largest Cruise Line
410,000 Royal Olympic Cruise 1,128
Cruises in Mediterranean
- --------------------------------------------------------------------------------
109,485
---------
CONSUMER GOODS/SERVICES: TOTAL 515,275
- --------------------------------------------------------------------------------
Finance: 12.8%
>BANKS: 1.6%
974,000 TCF Financial 23,193
Great Lakes Bank
730,000 Texas Regional Bancshares 18,569
TexMex Bank
414,000 Chittenden 12,291
Vermont & West Massachusetts Bank
198,000 CCB Financial 8,761
North Carolina Bank
400,000 Eldorado Bancshares 3,200
California Bank
- --------------------------------------------------------------------------------
66,014
>SAVINGS & LOANS: 1.2%
1,757,000 Peoples Bank Bridgeport 36,787
Connecticut Savings & Loan
824,000 Commonwealth Bancorp 10,454
Philadelphia Savings & Loan
- --------------------------------------------------------------------------------
47,241
>INSURANCE: 2.6%
765,000 Protective Life 24,289
Life/Dental Insurance
100,000 Markel 14,550
22,627 Markel CVR 136
Specialty Insurance
511,000 Leucadia National 12,136
Insurance Holding Company
820,000 HCC Insurance Holdings 10,865
Aviation Insurance
300,000 RLI 10,050
Specialty Insurance
675,000 Philadelphia Consolidated Holding 9,956
Specialty Insurance
154,308 ASR Verzekeringsgroep (Netherlands) 8,077
Auto/Life Insurance
210,000 StanCorp Financial 5,749
Group Life, Disability & 401K
863,000 UICI 5,717
Insurance/Specialty Insurance
266,000 United Fire & Casualty 5,121
Property & Casualty
- --------------------------------------------------------------------------------
106,646
19
<PAGE>
Acorn Fund
>Statement of Investments, continued
Number of Shares Value (000)
- -------------------------------------------------------------------------------
>MONEY MANAGEMENT: 4.7%
614,000 SEI Investments $ 69,651
Mutual Fund Administration
3,069,000 Phoenix Investment Partners 23,785
Mutual Fund & Pension Manager
1,500,000 Banca Fideuram (Italy) 21,932
Life Insurance & Mutual Funds
742,000 Neuberger Berman 20,915
Major Asset Management Company
730,000 Pioneer Group 16,973
Equity Mutual Funds
350,000 Affiliated Managers Group 16,625
Mutual Fund & Pension Manager
1,250,000 Edinburgh Fund Managers
(United Kingdom) 13,161
Investment Management
240,000 Baker Fentress 2,895
Closed-End Investment Company
200,000 The Investment Company of China
(China) 1,272
Closed-End Fund
- -------------------------------------------------------------------------------
187,209
>FINANCE COMPANIES: 2.7%
3,912,000 AmeriCredit 63,814
Auto Lending
1,000,000 Ace Cash Express 17,125
Check Cashing Stores
750,000 DVI Health Services 10,687
Leases for Big Medical Equipment
1,820,000 World Acceptance 9,214
Personal Loans
1,375,000 Capital Trust 5,500
Mortgage Loans
700,000 Creditrust 2,100
Buys Defaulted Credit Card Paper
- -------------------------------------------------------------------------------
108,440
--------
FINANCE: TOTAL 515,550
- -------------------------------------------------------------------------------
Industrial Goods/Services: 7.7%
>STEEL: 0.6%
820,000 Gibraltar Steel 13,479
Steel Processing
650,000 AK Steel 6,744
Carbon & Stainless Steel Producer
420,000 Atchison Casting 2,914
Steel Foundries
95,000 A M Castle 1,187
Steel Distribution
- -------------------------------------------------------------------------------
24,324
>INDUSTRIAL GOODS: 0.9%
1,108,000 Clarcor 19,667
Engines, Mobile & Environmental Filtration
553,000 Applied Industrial Technologies 8,848
Industrial Components Distribution
350,000 Advanced Lighting Technologies 6,562
Metal Halide Lighting
- -------------------------------------------------------------------------------
35,077
>SPECIALTY CHEMICALS & INDUSTRIAL
MATERIALS: 1.2%
346,111 SYMEX $ 14,329
Combinatorial Materials
1,145,000 Lilly Industries, Cl. A 14,169
Industrial Coatings
245,000 Spartech 8,422
Plastics Distribution & Compounding
732,000 RPM 8,052
Specialty Coatings & Paint
139,000 Brunswick Technologies 730
Fiberglass Fabric for Composites
- -------------------------------------------------------------------------------
45,702
>OUTSOURCING SERVICES & TRAINING: 0.7%
2,500,000 Labor Ready 24,688
Temporary Manual Labor
600,000 GP Strategies 2,475
Training Programs
500,000 International Total Services 828
Aviation Services
- -------------------------------------------------------------------------------
27,991
>LOGISTICS: 2.2%
1,400,000 Expeditors International of Washington 55,650
International Freight Forwarder
759,000 Hub Group 11,575
Truck & Rail Freight Forwarder
300,000 C H Robinson 11,175
Truck Freight Forwarder
300,000 Forward Air 7,106
Freight Transportation Between Airports
860,000 AirNet Systems 4,192
Check & Other Small Package Shipment
- -------------------------------------------------------------------------------
89,698
>OTHER INDUSTRIAL SERVICES: 2.1%
1,200,000 Serco Group (United Kingdom) 52,166
Facilities Management
1,526,000 Wackenhut, Cl. B 15,355
31,000 Wackenhut, Cl. A 432
Prison Management
520,000 Mobile Mini 10,140
Leases Portable Storage Units
1,000,000 Aeroporti di Roma (Italy) 6,603
Airport Management
- -------------------------------------------------------------------------------
84,696
--------
INDUSTRIAL GOODS/SERVICES: TOTAL 307,488
20
<PAGE>
Number of Shares Value (000)
- ---------------------------------------------------------------------------
Energy/Minerals: 7.8%
>INDEPENDENT POWER:0.9%
450,000 AES Corporation $ 35,437
1,852 AES Corporation Warrants 258
Global Electric Producer
- ---------------------------------------------------------------------------
5,695
>OIL/GAS PRODUCERS: 3.3%
600,000 Devon Energy 29,137
Oil & Gas Producer
730,000 Precision Drilling (Canada) 24,412
Oil & Gas Well Driller
2,100,000 Tesoro Petroleum 24,150
Oil Refinery/Gas Producer
1,715,000 Cross Timbers Oil 22,402
Oil & Gas Producer
310,000 Evergreen Resources 7,498
Oil & Gas Producer
450,000 Pennaco Energy 6,159
Coal Seam Gas Producer
240,000 Penn West Petroleum 5,836
Oil & Gas Producer
380,000 Basin Exploration 5,676
Oil & Gas Producer
800,000 Tipperary 2,900
Coal Seam Gas Producer
550,000 Ulster Petroleums (Canada) 2,746
Oil & Gas Producer
95,000 Canadian Natural Resources (Canada) 2,513
Oil & Gas Producer
- ---------------------------------------------------------------------------
133,429
>DISTRIBUTION/MARKETING/REFINING: 2.5%
828,000 Dynegy 51,957
Natural Gas & Electric Processing, Production
& Marketing
900,000 Equitable Resources 40,331
Natural Gas Utility & Producer
600,000 Atmos Energy 9,825
Natural Gas Utility
- ---------------------------------------------------------------------------
102,113
>MINING: 0.2%
500,000 US Aggregates 7,188
Aggregates, Ready Mix & Asphalt
>OIL SERVICES: 0.9%
2,000,000 Newpark Resources 16,000
Oilfield Fluid Management & Equipment Rental
2,250,000 Saipem (Italy) 10,980
Offshore Construction
160,000 Hanover Compressor 9,100
Natural Gas Compressor Rental
- ---------------------------------------------------------------------------
36,080
--------
ENERGY/MINERALS: TOTAL 314,505
- ---------------------------------------------------------------------------
Other Industries : 6.9%
>REAL ESTATE: 5.6%
968,000 The Rouse Company 20,449
Regional Shopping Malls
1,145,000 Cornerstone Properties 19,966
Downtown Office Buildings
675,000 First Industrial Realty Trust 18,394
Industrial Properties
903,125 Security Capital European Realty 18,063
Strategic Real Estate Investments
730,000 SL Green Realty 17,338
Downtown Office Buildings
700,000 Manufactured Home Communities 16,188
Manufactured Home Communities
466,000 Forest City Enterprises, Cl. B 15,844
Shopping Malls
1,099,000 LaSalle Hotel Properties 13,737
Upscale/Full Service Hotels
625,000 Macerich Company 12,891
Regional Shopping Malls
412,000 IRSA (Argentina) 12,875
Real Estate Management & Development
450,000 BRE Properties 11,616
Apartments
490,000 Amli Residential 10,045
Midwestern Apartments
520,000 Summit Properties 9,945
Southeastern Apartments
1,000,000 HRPT Properties 8,687
Suburban Office Buildings
385,000 First Washington Realty Trust 7,147
240,000 First Washington Realty Trust, Cv. Pfd. 5,895
Community Shopping Centers
200,000 General Growth Properties 6,087
Shopping Malls REIT
190,000 Consolidated Tomoka 2,102
16,000 Acres of Florida Land
- ---------------------------------------------------------------------------
227,269
>WASTE MANAGEMENT: 0.2%
327,000 Stericycle 8,175
Medical Waste Disposal
>REGULATED UTILITIES: 1.1%
600,000 Conectiv 10,500
Electric Utility in New Jersey, Delaware & Maryland
665,000 Unisource Energy 9,767
Electric Utility in Arizona
1,300,000 Azurix 9,750
Water Utility Holding Company
500,000 Utilicorp United 9,031
Global Utility Holding Company
130,000 CH Energy 3,949
Electric Utility in New York
- ---------------------------------------------------------------------------
42,997
21
<PAGE>
Acorn Fund
>Statement of Investments, continued
Value (000)
-------------------------------------------------------------------------
OTHER INDUSTRIES: TOTAL $ 278,441
OTHER SECURITIES: 0.0% 19
----------
TOTAL COMMON STOCKS AND OTHER
EQUITY-LIKE SECURITIES: 89.4% 3,592,246
SHORT-TERM OBLIGATIONS: 10.1% 407,447
----------
TOTAL INVESTMENTS: 99.5% 3,999,693
CASH AND OTHER ASSETS LESS LIABILITIES: 0.5% 21,270
----------
TOTAL NET ASSETS: 100% $4,020,963
=========================================================================
>Squirrel Chatter
(continued from page 3)
on balance was neutral. Stockbrokers, pejoratively called "stock-jobbers",
were considered dishonest, foreign and an unpleasantly novel element in
English society. Not surprisingly, the collapse of 1720 made their reputation
even worse.
Venture capital dried up after the fall due to distrust of any
speculative venture, as well as IPOs being illegal thanks to the Bubble Act.
The lack of new capital may have set back the onset of the Industrial
Revolution by a few years, but factories and railroads showed up eventually.
Great Britain continued on its path to top-nation status for the next 150
years. Sir Isaac Newton's scientific fame was not diminished by his South Sea
loss.
/s/ Ralph Wanger
Ralph Wanger
Chief Investment Officer, Wanger Asset Management
Lead Portfolio Manager, Acorn Fund
Downwind From Technology
High-tech companies of the early 1700s included the British East India
Company, which had a trade monopoly with India, and a similarly named Dutch
company trading exclusively in present-day Indonesia. These companies
capitalized on a technological advantage of the time: naval superiority.
Using this technology, the founders of the South Sea Company figured they
could also profit from the overseas trading boom by incorporating a company
to trade with Spanish America. Unfortunately, their business plan was
seriously flawed. No one at the South Sea Company knew anything about America
or trading, and Spanish authorities had no intention of letting Englishmen in
on their trade monopoly. Only a few shiploads of English merchandise were
sent to America and these items lost money. A stronger effort was made in the
slave trade, with 45 shiploads of Africans carried between 1716 and 1718.
This horrid scheme failed for a more horrid reason - too many slaves died in
transit./4/
- --------------------------------------------------------------------------------
/1/ Wall Street Journal, April 14, 2000. None of our funds bought any of the
stock at any time.
/2/ This method was also enormously difficult to unravel after the fall.
/3/ Most trading of the time was conducted in a coffeehouse that often saw a
difference in stock price from one end of the room to the other. Because of
this, it is difficult to nail down what the South Sea Company stock's high
mark was but it is believed to have never traded above 1,000.
/4/ The main source for this essay is John Carswell's The South Sea Bubble, 1993
revised edition, Alan Sutton, Dover, NH, 1993.
22
<PAGE>
Acorn International
>Major Portfolio Changes in the First Quarter
Number of Shares
--------------------
12/31/99 3/31/00
Additions
- ----------------------------------------------------------------
Europe
>GERMANY
Austria Technologies & Systemtechnik 0 100,000
Dialog Semiconductor 100,000 160,000
Fresenius, Pfd. 50,000 60,000
IFCO Systems 0 100,000
MobilCom 0 110,000
Pfeiffer Vacuum Technologies 150,000 200,000
Takkt 0 300,000
Telesens 0 115,000
>DENMARK
ISS International Service Systems 0 125,000
>NORWAY
Enitel 160,000 200,000
>SWEDEN
Micronic Laser Systems 0 285,000
Modern Times Group 400,000 500,000
SwitchCore 0 75,000
Utfors 0 125,000
>FRANCE/BELGIUM
Audiofina (Belgium) 0 185,000
Genset 0 250,000
Imerys 0 25,000
Telinfo (Belgium) 0 100,000
Ubizen (Belgium) 0 15,000
>UNITED KINGDOM/IRELAND
Chloride Group 3,206,400 6,000,000
Expro International 0 1,000,000
Fairey Group 715,000 1,200,000
FKI 128,000 3,500,000
Hays 0 3,000,000
Incepta 0 5,000,000
Irish Life & Permanent (Ireland) 750,000 1,800,000
MG 0 1,600,000
NTL 450,000 580,000
(includes effect of 5 for 4 stock split)
Oxford Asymmetry 0 1,130,000
Photobition Group 2,125,000 2,500,000
Rotork 1,700,000 2,000,000
SkyePharma 0 6,000,000
Smith & Nephew 3,000,000 3,500,000
SSL International 1,500,000 1,800,000
St James Capital 2,840,000 3,800,000
Taylor Nelson 3,500,000 5,000,000
Number of Shares
--------------------
12/31/99 3/31/00
>SWITZERLAND
Bachem 5,000 7,000
Cie Fin Richemont 10,000 14,000
Julius Baer 1,600 6,000
Selecta Group 80,000 100,000
>ITALY
Autogrill 3,000,000 3,750,000
Gruppo Coin 650,000 897,000
Saipem 1,250,000 2,000,000
>SPAIN
Aguas de Barcelona 400,000 500,000
Cortefiel 450,000 500,000
Prosegur 650,000 750,000
Red Electrica 0 1,200,000
TPI 0 300,000
>NETHERLANDS
ASR Verzekeringsgroep 0 95,000
Kempen 420,000 450,000
- ----------------------------------------------------------------
Asia
>HONG KONG
E-New Media 0 40,000,000
TVB 3,500,000 3,650,000
>JAPAN
Avex 0 100,000
Bellsystem24 15,000 35,000
Benesse 40,000 100,000
Bodysonic 0 600,000
Densei Lambda 300,000 400,000
Fast Retailing 0 50,000
Future System 0 15
Hirose Electric 0 80,000
Konami 0 190,000
Misumi 75,000 110,000
(includes effect of 11 for 10 stock split)
Nichii Gakkan 0 45,000
Orix 175,000 275,000
(includes effect of 6 for 5 stock split)
Otsuka Kagu 40,000 55,000
Pasona Softbank 0 20,000
Ryohin Keikaku 180,000 200,000
Shobunsha 0 150,000
Stella Chemifa 0 55,000
Wilson Learning 24,400 165,000
>TAIWAN
Advantech 0 2,000,000
Cosmo Electronics 0 750,000
Phoenixtec Power 4,000,000 6,000,000
Systex 3,000,000 3,500,000
23
<PAGE>
Acorn International
>Major Portfolio Changes in the First Quarter
Number of Shares
---------------------
12/31/99 3/31/00
>SOUTH KOREA
Cheil Jedang 100,000 150,000
(includes effect of a 20% stock dividend)
Korea Technology Investments 1,000,000 2,500,000
S1 Corporation 1,000,000 1,200,000
(includes effect of a 4.1% stock dividend)
Samsung 0 1,000,000
SK Corporation 0 400,000
- --------------------------------------------------------------------
Latin America
>MEXICO
Grupo Carso 0 1,500,000
Wal-Mart de Mexico 5,450,000 5,500,000
(formerly known as Cifra SA)
>BRAZIL
Embratel 750,000 800,000
- --------------------------------------------------------------------
Other Countries
>AUSTRALIA
Computershare 4,500,000 5,000,000
ERG 7,500,000 8,000,000
KeyCorp 2,000,000 2,500,000
>CANADA
ATI Technologies 0 1,500,000
Clearnet Communications 0 150,000
Corus Entertainment 500,000 850,000
Creo Products 0 275,000
Mosaic 110,000 850,000
Power Financial 750,000 1,000,000
>ISRAEL
Comverse Technology 0 85,000
DSP Group 0 250,000
(includes effect of 2 for 1 stock split)
Gilat Satellite Network 170,000 200,000
Radware 75,000 100,000
>SOUTH AFRICA
Dimension Data 6,000,000 6,500,000
>UNITED STATES
Carnival 0 500,000
Global TeleSystems 475,000 750,000
24
<PAGE>
Number of Shares
---------------------------
12/31/99 3/31/00
Sales
- ----------------------------------------------------------------------
Europe
>GERMANY/AUSTRIA
Pixelpark 28,000 0
UnitedGlobalCom (Austria) 250,000 0
>FINLAND
Helsinki Telephone 120,000 100,000
TietoEnator 1,200,000 1,000,000
>SWEDEN
Information Highway 160,000 1,500,000
(includes effect of 10 for 1 stock split)
Sigma 1,085,000 1,000,000
WM Data Nordic 950,000 850,000
>FRANCE
Atos 375,000 250,000
NRJ 62,000 50,000
>UNITED KINGDOM/IRELAND
Baltimore Technologies 500,000 250,000
Bodycote 2,250,000 0
Esat Telecom (Ireland) 150,000 0
Euro Money Publications 500,000 400,000
Exel 3,500,000 0
(formerly known as NFC)
Flextech 500,000 0
HALMA 3,400,000 0
Hogg Robinson 1,500,000 0
ITNET 1,350,000 1,000,000
Logica 500,000 0
Ocean Group 290,000 0
>SWITZERLAND
Societe Generale d'Affichage 5,000 0
Phoenix Mecano 30,000 10,000
>ITALY
Class Editori 1,500,000 750,000
Editoriale L'Espresso 6,000,000 3,000,000
SEAT Pagine Gialle 4,000,000 0
>SPAIN
Mapfre Vida 400,000 0
>NETHERLANDS
Fox Kids Europe 65,000 0
Versatel 27,000 0
>HUNGARY
Gedeon Richter 100,000 0
- ----------------------------------------------------------------------
Asia
>HONG KONG
SmarTone Telecom 3,000,000 0
Li & Fung 30,000,000 26,000,000
>INDIA
Zurich India Quantum 1,998,000 0
>JAPAN
Aiful 50,000 0
C Two-Network 35,000 0
Fuji Software 180,000 0
JAFCO 130,000 75,000
Kokuyo 400,000 0
Nichiei 175,000 0
Nidec 75,000 0
Nintendo 160,000 155,000
Taiyo Ink 77,000 0
Trans Cosmos 85,000 65,000
Yamaha 800,000 0
>PHILIPPINES
Int'l Container Terminal Services 36,918,000 0
>SINGAPORE
Datacraft Asia 8,000,000 6,000,000
Natsteel Electronics 7,500,000 5,500,000
Venture Manufacturing 6,500,000 6,000,000
- ----------------------------------------------------------------------
Latin America
>MEXICO
Grupo Continental 5,000,000 0
>BRAZIL
TeleSudeste Celular 340,000 0
>ARGENTINA
El Sitio 30,000 0
>PERU
Enrique Ferreyros 7,000,000 0
- ----------------------------------------------------------------------
Other Countries
>AUSTRALIA
AAPT 5,000,000 4,500,000
>CANADA
Celestica 1,200,000 1,000,000
LGS Group 600,000 0
Leitch Technology 400,000 0
>ISRAEL
ECI Telecom 350,000 0
Galileo Technology 650,000 0
>UNITED STATES
AES Corporation 300,000 0
Azurix 500,000 0
25
<PAGE>
Acorn International
>Statement of Investments (Unaudited) March 31, 2000
Number of Shares Value (000)
- -----------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 94.4%
- -----------------------------------------------------------
Europe: 46.4%
>GERMANY/AUSTRIA: 4.1%
600,000 Rhoen Klinikum Pfd. $ 27,157
500,000 Rhoen Klinikum 20,095
Hospital Management
240,000 EM.TV & Merchandising 19,704
Children's Media Production,
Merchandising & Distribution
110,000 MobilCom 15,684
Telecommunication Services
60,000 Fresenius, Pfd. 13,320
Dialysis Equipment & Solutions
160,000 Dialog Semiconductor 12,555
Custom Semiconductors for Cell Phones
200,000 Pfeiffer Vacuum Technologies 7,808
Vacuum Pump Manufacturer
100,000 Austria Technologies & Systemtechnik 6,698
Printed Circuit Board Manufacturer
165,000 Flughafen Wien (Austria) 6,126
Vienna Airport Authority
115,000 Telesens 4,952
Telecommunications Billing Software
300,000 Takkt 2,842
Mail Order Retailer of Office &
Warehouse Durables
100,000 IFCO Systems 2,368
Shipping Container Leasing/Logistics
- -----------------------------------------------------------
139,309
>DENMARK: 0.2%
125,000 ISS International Service Systems 8,194
Cleaning Services
>FINLAND: 3.5%
1,000,000 TietoEnator 59,998
Computer Services/Consulting
1,500,000 Talentum 33,013
Trade Journals & Internet Services
100,000 Helsinki Telephone 9,665
Telecommunications Provider
100,000 F-Secure 7,169
Security Software
625,000 Fiskars, Series A 6,280
Scissors & Gardening Tools
95,400 Spar Finland 3,403
Grocery/Convenience Stores
- -----------------------------------------------------------
119,528
>NORWAY: 0.3%
200,000 Enitel 8,887
Telecommunications Provider
>SWEDEN: 4.3%
850,000 WM Data Nordic 46,238
Computer Services/Consulting
1,000,000 Sigma 24,769
Technical Consulting
500,000 Modern Times Group $ 24,306
TV, Newspapers and Electronic Commerce
1,350,000 Mandator 23,438
Computer Services/Consulting
1,500,000 Information Highway 13,715
Internet Consulting
75,000 SwitchCore 5,599
Communication Semiconductors
285,000 Micronic Laser Systems 5,212
Video Display Manufacturing Equipment
125,000 Utfors 4,630
Scandinavian Alternative Telecom
- -----------------------------------------------------------
147,907
>FRANCE/BELGIUM: 4.3%
50,000 NRJ 37,080
Radio Network
250,000 Atos 32,295
Computer Services/Transaction Processing
185,000 Audiofina (Belgium) 22,748
TV & Radio Stations
50,000 Fininfo 15,645
Data Feeds for French Banks & Brokers
20,000 Penauille Polyservice 12,440
Industrial Cleaning/Airport Services
100,000 Telinfo (Belgium) 11,913
Network Integration Services
250,000 Genset 8,121
Gene Discovery, Pharmacogenomics,
Gene Libraries
25,000 Imerys 3,045
Industrial Minerals Producer
15,000 Ubizen (Belgium) 2,698
Internet Security Services/Software
- -----------------------------------------------------------
145,985
>UNITED KINGDOM/IRELAND: 13.8%
2,000,000 Serco Group 86,944
Facilities Management
580,000 NTL 53,831
Voice, Video & Data Services
Via Cable Networks
2,000,000 Capita Group 51,145
Outsourcing Services
250,000 Baltimore Technologies 34,299
Security Software
5,000,000 Taylor Nelson 22,055
Market Research Services
2,500,000 Photobition Group 20,938
Production of Graphics for Exhibits
3,000,000 Hays 19,634
Outsourcing Services
400,000 Euro Money Publications 19,144
Financial Publications
1,800,000 Irish Life & Permanent (Ireland) 16,363
Savings Products
1,800,000 SSL International 15,908
Medical & Footcare Products
26
<PAGE>
Number of shares Value (000)
- ---------------------------------------------------------------------------
3,800,000 St James Capital $ 15,398
Life Insurance
3,500,000 FKI 12,870
Autonomous Manufacturer
1,000,000 ITNET 12,563
Outsourcing Services
6,000,000 Chloride Group 11,869
Electrical Equipment Manufacturer/Retailer
6,000,000 SkyePharma 10,529
Drug Delivery
3,500,000 Smith & Nephew 10,092
Medical Equipment & Supplies
5,000,000 Incepta 9,572
Business Information & Marketing Services
2,000,000 Rotork 8,774
Valve Actuators for Oil & Water Pipelines
1,200,000 Fairey Group 8,375
Electronic Products
1,130,000 Oxford Asymmetry 7,842
Chemical Products & Services
1,000,000 Thus 7,474
Telecommunications Provider
1,600,000 MG 6,981
Metals Trading
1,000,000 Expro International 5,998
Offshore Oil Field Services
- ---------------------------------------------------------------------------
468,598
>SWITZERLAND: 4.1%
14,000 Cie Fin Richemont 35,575
Luxury Goods
100,000 Selecta Group 33,199
Vending Machine Owner/Operator
6,000 Julius Baer 22,590
Private Banking, Brokerage & Mutual Funds
6,500 Sarasin & Cie Bank 17,983
Private Banking
7,000 Bachem 13,683
Peptides
15,000 Bon Appetit 12,621
Wholesale Food Distributor and Speciality
Restaurant/Retailer
10,000 Phoenix Mecano 4,884
Electrical Components Manufacturer
- ---------------------------------------------------------------------------
140,535
>ITALY: 6.4%
3,000,000 Editoriale L'Espresso 58,878
Newspaper & Magazine Publisher
4,000,000 Banca Fideuram 58,486
Life Insurance & Mutual Funds
3,750,000 Autogrill 34,807
Restaurants and Catering for Travelers
1,500,000 Mediolanum 26,511
Life Insurance & Mutual Funds
750,000 Class Editori 11,698
Newspapers & On-Line Financial Data
2,000,000 Saipem 9,760
Offshore Oil Services
1,400,000 Aeroporti di Roma $ 9,244
Airport Management
897,000 Gruppo Coin 9,236
Food & Clothing Retailer
- ---------------------------------------------------------------------------
218,620
>SPAIN/PORTUGAL: 3.1%
425,000 Filmes Lusomundo (Portugal) 32,514
Newspapers, Radio, Video, Film Distribution
300,000 TPI 13,059
Spanish Telephone Directories
500,000 Indra Sistemas 12,009
Computer Services/Consulting
500,000 Cortefiel 11,842
Apparel Retailer
1,200,000 Red Electrica 11,804
Spanish Power Grid
750,000 Prosegur 9,035
Security Guards
100,000 PT Multimedia (Portugal) 8,899
Cable TV, Satellite Operator
& Internet Service Provider
500,000 Aguas de Barcelona 7,870
Water Utility
- ---------------------------------------------------------------------------
107,032
>NETHERLANDS: 1.9%
500,000 Getronics 38,228
Computer Services/Consulting
450,000 Kempen 20,454
Stock Brokerage/Investment Management
95,000 ASR Verzekeringsgroep 4,973
Auto/Life Insurance
- ---------------------------------------------------------------------------
63,655
>HUNGARY: 0.4%
1,200,000 Matav 10,535
70,000 Matav ADR 3,124
Telecommunications Provider
- ---------------------------------------------------------------------------
13,659
---------
EUROPE: TOTAL 1,581,909
- ---------------------------------------------------------------------------
Asia: 28.7%
>HONG KONG: 4.9%
26,000,000 Li & Fung 120,542
Sourcing of Consumer Goods
3,650,000 TVB 32,462
Television Broadcasting
40,000,000 E-New Media 12,971
Internet Billing Service
- ---------------------------------------------------------------------------
165,975
>JAPAN: 10.4%
275,000 Orix 39,816
Finance Leasing
200,000 Ryohin Keikaku 36,270
Own Brand Specialty Retailer
27
<PAGE>
Acorn International
>Statement of Investments, continued
Number of Shares Value (000)
- ---------------------------------------------------------------------------
35,000 Bellsystem24 $ 29,688
Call Centers
155,000 Nintendo 27,278
Video Games
50,000 Fast Retailing 22,010
Apparel Retailer
30,000 OBIC 21,060
Computer Integrator
100,000 Avex 19,061
Music Content
65,000 Trans Cosmos 18,379
Information Technology Services & Investments
75,000 JAFCO 16,819
Venture Capital Fund
55,000 Otsuka Kagu 15,766
Furniture Retailer
600,000 Bodysonic 13,221
Media Content Provider
190,000 Konami 12,968
Video Game Software Developer
110,000 Misumi 12,334
Distributor of Capital Goods Components
80,000 Hirose Electric 11,302
Electrical Connectors
400,000 Densei Lambda 10,959
Power Supplies
165,000 Wilson Learning 10,457
Corporate Training
100,000 Benesse 10,432
Correspondence Education
150,000 Shobunsha 8,804
Map Publisher
45,000 Nichii Gakkan 6,107
Healthcare Personnel Outsourcing
15 Future Systems 5,338
IT Services
55,000 Stella Chemifa 4,724
Specialty Chemicals
20,000 Pasona Softbank 1,170
Temporary Employment
- ---------------------------------------------------------------------------
353,963
>TAIWAN: 3.2%
3,500,000 Systex 33,815
Systems Integrator & Internet Services
3,000,000 Hitron Technology 27,506
Network Integration & Internet Services
2,000,000 Advantech 17,483
Computer Based Industrial Automation
6,000,000 Phoenixtec Power 13,802
Uninterruptable Power Supply Manufacturer
3,000,000 Chroma Ate 11,042
Test & Measurement Instruments
750,000 Cosmo Electronics 6,901
Relay & Opto-Coupler Manufacturer
- ---------------------------------------------------------------------------
110,549
>MALAYSIA: 0.6%
2,000,000 Unisem $ 20,789
Semiconductor Assembly
>SOUTH KOREA: 2.0%
1,200,000 S1 Corporation 18,349
Security Services
2,500,000 Korea Technology Investments 16,037
Venture Capital
1,000,000 Samsung 13,436
Trading Company
150,000 Cheil Jedang 9,866
Consumer Staples
400,000 SK Corporation 9,229
Oil Refining
- ---------------------------------------------------------------------------
66,917
>SINGAPORE: 7.6%
9,500,000 Star Cruises 83,125
Cruise Line
6,000,000 Venture Manufacturing 82,432
Electronic Manufacturing Services
6,000,000 Datacraft Asia 56,100
Network Integrator
5,500,000 Natsteel Electronics 36,013
Electronic Manufacturing Services
- ---------------------------------------------------------------------------
257,670
--------
ASIA: TOTAL 975,863
- ---------------------------------------------------------------------------
Latin America: 3.0%
>MEXICO: 2.1%
5,000,000 Corp Interamericana de
Entretenimiento 25,186
Special Events & Live Entertainment
9,000,000 Grupo Industrial Bimbo 14,623
Bread, Baked Goods & Snacks
5,500,000 Wal-mart de Mexico 13,304
(formerly known as Cifra SA)
Discount Stores
3,500,000 Kimberly Clark de Mexico 12,030
Paper Products
1,500,000 Grupo Carso 5,698
Conglomerate
- ---------------------------------------------------------------------------
70,841
>BRAZIL 0.6%
800,000 Embratel 20,500
Long Distance Telecommunications Provider
>ARGENTINA: 0.3%
400,000 IRSA GDS 12,500
Real Estate Management & Development
-------
LATIN AMERICA: TOTAL 103,841
28
<PAGE>
Number of Shares Value (000)
- ---------------------------------------------------------------------------
Other Countries: 16.3%
>AUSTRALIA: 3.9%
8,000,000 ERG $ 55,116
Smart Card Systems for Public Transportation
4,500,000 AAPT 26,222
Telecommunications Provider
2,500,000 KeyCorp 25,722
Smart Card Technology
5,000,000 Computershare 23,703
Financial Software/Services
- ---------------------------------------------------------------------------
130,763
>CANADA: 5.6%
1,000,000 Celestica 52,590
Electronic Manufacturing Services
1,500,000 ATI Technologies 26,605
Computer Graphics Chips & Boards
850,000 Corus Entertainment 22,248
CATV Programming & Radio Stations
720,000 Canadian Natural Resources 19,044
Oil & Gas Producer
1,000,000 Power Financial 14,809
Life Insurance & Mutual Funds
500,000 Penn West Petroleum 12,157
Oil & Gas Producer
275,000 Creo Products 11,997
Commercial Printing Machinery
850,000 Mosaic 11,417
Outsourcing Market Services
1,350,000 Bracknell 6,509
Electrical Contractor & Facilities Management
150,000 Clearnet Communications 6,199
Mobile Communications
500,000 Cinar 3,500
Children's TV Programming
4,000,000 Dundee Realty 2,893
Real Estate
- ---------------------------------------------------------------------------
189,968
>ISRAEL: 3.6%
850,000 Amdocs 62,634
Telecommunications Billing &
Customer Care Software
200,000 Gilat Satellite Network 23,450
Satellite Communications Equipment
250,000 DSP Group 16,500
DSP Based Semiconductors & Intellectual Property
85,000 Comverse Technology 16,065
Voicemail & Related Systems
100,000 Radware 3,875
Internet Infrastructure & Internet Traffic
- ---------------------------------------------------------------------------
122,524
>SOUTH AFRICA: 1.7%
6,500,000 Dimension Data 57,899
Networks & Computer Services
Principal Amount or
Number of Shares Value (000)
- ---------------------------------------------------------------------------
>RUSSIA: 0.0%
$1,500,000 Khanty Mansiysk 10% Notes
Due 10/14/02 $ 750
4,085 Khanty Mansiysk 169
Oil Production in Russia
- ---------------------------------------------------------------------------
919
>UNITED STATES: 1.5%
400,000 MIH 24,400
Pay-TV
750,000 Global TeleSystems 15,375
Telecommunications Provider
500,000 Carnival 12,406
Largest Cruise Line Operator
- ---------------------------------------------------------------------------
52,181
----------
OTHER: TOTAL 554,254
TOTAL COMMON STOCKS AND OTHER
----------
EQUITY-LIKE SECURITIES: 94.4% 3,215,867
SHORT-TERM OBLIGATIONS: 5.4% 184,099
----------
TOTAL INVESTMENTS: 99.8% 3,399,966
CASH AND OTHER ASSETS LESS LIABILITIES: 0.2% 5,133
----------
TOTAL NET ASSETS: 100% $3,405,099
===========================================================================
29
<PAGE>
Acorn International
>Portfolio Diversification
At March 31, 2000, the Fund's portfolio of investments as a percent of net
assets was diversified as follows:
Value (000) Percent
- ---------------------------------------------------------------------------
>INFORMATION
Computer Services $ 316,432 9.3%
Telephone Services 235,877 7.0
Publishing 211,848 6.2
Business Software 154,867 4.5
Contract Manufacturing 118,445 3.5
Transaction Processors 104,541 3.1
Business Information 90,676 2.7
Semiconductors 87,260 2.5
Telephone Equipment 67,021 2.0
Radio 63,958 1.9
Broadcasting 58,710 1.7
CATV 53,831 1.6
Instrumentation 48,741 1.4
Internet 26,489 0.8
Computer Hardware 25,671 0.8
Programming 19,704 0.6
Mobile Communications 19,420 0.5
Advertising 11,417 0.3
- --------------------------------------------------------------------------
1,714,908 50.4
>HEALTH CARE
Hospital Management 47,252 1.4
Pharmaceuticals 26,437 0.8
Medical Equipment 23,412 0.7
Biotechnology 15,963 0.4
Services 6,107 0.2
- --------------------------------------------------------------------------
119,171 3.5
>CONSUMER GOODS/SERVICES
Retail 112,049 3.3
Entertainment 110,736 3.3
Consumer Services 89,173 2.6
Travel 83,125 2.4
Restaurants 34,807 1.0
Consumer Software 27,278 0.8
Food 24,490 0.7
Nondurables 18,310 0.5
Cruise Lines 12,406 0.4
Consumer Goods Distribution 3,403 0.1
- --------------------------------------------------------------------------
515,777 15.1
>FINANCE
Money Management $ 101,034 3.0%
Finance Companies 56,635 1.7
Insurance 51,542 1.5
Banks 40,573 1.1
Brokerage 27,435 0.8
- --------------------------------------------------------------------------
277,219 8.1
>INDUSTRIAL GOODS/SERVICES
Outsourcing Services 296,664 8.7
Electrical Components 93,334 2.7
Machinery Processing 29,453 0.9
Industrial Services 21,211 0.6
Conglomerates 19,133 0.6
Speciality Chemicals 18,407 0.5
Industrial Materials 3,045 0.1
- --------------------------------------------------------------------------
481,247 14.1
>ENERGY/MINERALS
Oil/Gas Producers 32,119 0.9
Oil Services 15,759 0.5
Oil Refining 9,229 0.3
- --------------------------------------------------------------------------
57,107 1.7
>OTHER INDUSTRIES
Regulated Utilities 19,675 0.5
Real Estate 15,393 0.5
Transportation 15,370 0.5
- --------------------------------------------------------------------------
50,438 1.5
TOTAL COMMON STOCKS AND
----------------------
OTHER EQUITY-LIKE SECURITIES 3,215,867 94.4
SHORT-TERM OBLIGATIONS 184,099 5.4
----------------------
TOTAL INVESTMENTS 3,399,966 99.8
CASH AND OTHER ASSETS LESS
LIABILITIES 5,133 0.2
----------------------
NET ASSETS $3,405,099 100%
==========================================================================
30
<PAGE>
Acorn USA
>Major Portfolio Changes in the First Quarter
Number of Shares
------------------
12/31/99 3/31/00
Additions
- ------------------------------------------------------------------------
Information
American Power Conversion 129,000 185,000
Cambridge Technologies 0 60,000
Classic Communications 37,100 65,000
Concord EFS 0 165,500
Diversinet 73,000 229,000
DSP Group 0 143,100
Ezenia 0 30,000
Getty Images 56,800 92,800
JDA Software 486,300 598,000
Kronos 0 35,000
MSI Holdings 0 350,000
Objective Systems 0 163,000
Online Resources 121,000 188,000
Perkin Elmer 0 65,000
Pomeroy Computer Resources 0 170,000
Project Software 119,000 132,000
RCM Technologies 0 173,000
RCN 207,800 272,800
Salem Communications 36,300 122,700
Sykes Enterprises 312,500 421,500
Tektronix 0 145,000
- ------------------------------------------------------------------------
Health Care
Metabolex, Series F 0 363,636
- ------------------------------------------------------------------------
Consumer Goods/Services
Gadzooks 375,000 395,000
ITT Educational Services 112,000 153,000
TeleSpectrum 122,500 507,000
- ------------------------------------------------------------------------
Energy/Minerals
Conectiv 0 281,000
Newpark Resources 0 135,000
Number of Shares
------------------
12/31/99 3/31/00
Sales
- ------------------------------------------------------------------------
Information
Activision 15,500 0
Applied Power 92,000 0
Aspect Communications 257,100 205,100
Aztec Technology Partners 820,000 635,000
CACI International 206,000 185,000
Computer Task Group 151,700 0
Galileo Technology 232,000 0
International Game Technology 146,000 0
Meta Group 16,700 0
National Data 298,300 268,300
Price Communications 131,400 106,400
TV Guide 68,000 21,000
- ------------------------------------------------------------------------
Health Care
First Health 390,000 343,000
Lincare Holdings 341,400 315,400
- ------------------------------------------------------------------------
Finance
Markel 13,800 2,100
(includes effect of merger with Terra Nova Bermuda)
People's Bank Bridgeport 38,000 0
- ------------------------------------------------------------------------
Industrial Goods/Services
Advanced Lighting Technologies 140,000 108,000
Atchison Casting 79,000 0
Labor Ready 210,000 150,000
- ------------------------------------------------------------------------
Energy/Minerals
Atmos Energy 248,000 193,000
MidAmerican Energy 855,400 0
31
<PAGE>
Acorn USA
>Statement of Investments (Unaudited) March 31, 2000
Number of Shares Value (000)
- ----------------------------------------------------------------------------
Common Stocks: 91.1%
- ----------------------------------------------------------------------------
Information: 55.0%
>BROADCASTING: 2.2%
209,100 Data Transmission Network $ 5,946
Data Services for Farmers
122,700 Salem Communications 1,465
Radio Stations for Religious Programming
39,500 Young Broadcasting 750
Television Stations
- ----------------------------------------------------------------------------
8,161
>TELEVISION PROGRAMMING: 0.3%
21,000 TV Guide 1,009
TV Program Guides & Programming
>TELECOMMUNICATIONS/WIRELINE
COMMUNICATIONS: 4.2%
272,800 RCN 14,697
Metro Market CLEC: Voice, Video &
Internet Services
65,000 Classic Communications 1,024
Cable Television in Rural Areas
- ----------------------------------------------------------------------------
15,721
>MOBILE COMMUNICATIONS: 8.4%
186,000 Telephone and Data Systems 20,646
Cellular & Telephone Services
121,800 Comarco 4,156
Wireless Network Testing
229,000 Diversinet 4,094
Wireless PKI Security
106,400 Price Communications 2,447
Cellular Telephone Services
- ----------------------------------------------------------------------------
31,343
>TELECOMMUNICATIONS EQUIPMENT: 2.1%
205,100 Aspect Communications 7,602
Call Center Software
30,000 Ezenia 315
Multimedia Communications
- ----------------------------------------------------------------------------
7,917
>COMPUTER SERVICES: 5.1%
421,500 Sykes Enterprises 8,035
Call Center Services
635,000 Aztec Technology Partners 5,060
Technology Staffing Services
170,000 Pomeroy Computer Resources 3,124
Network Integration Services
173,000 RCM Technologies 2,162
Technology Staffing Services
60,000 Cambridge Technologies 814
Network Integration Services
- ----------------------------------------------------------------------------
19,195
>BUSINESS SOFTWARE: 5.0%
598,000 JDA Software 8,746
Applications/Software & Services for Retailers
132,000 Project Software 7,458
Enterprise Maintenance Software
163,000 Objective Systems 2,476
Telecom Network Management
- ----------------------------------------------------------------------------
18,680
Number of Shares Value (000)
- ----------------------------------------------------------------------------
>TRANSACTION PROCESSORS: 2.9%
268,300 National Data $ 6,976
Credit Card & Health Claims Processor
165,500 Concord EFS 3,796
Credit Card Processor
- ---------------------------------------------------------------------------
10,772
>INTERNET: 3.1%
350,000 MSI Holdings 6,484
Web Hosting
188,000 Online Resources 3,231
Internet Banking Technology
125,000 Navidec 1,937
Internet Computer Services
- ---------------------------------------------------------------------------
11,652
>BUSINESS INFORMATION/
MARKETING SERVICES: 4.7%
185,000 CACI International 5,538
Technology Services for Government
169,000 PRIMEDIA 5,408
Specialty Magazines & Other Publications
130,000 West TeleServices 3,347
Customer Care & Sales Support
92,800 Getty Images 3,335
Photographs for Publications & Electronic Media
- ---------------------------------------------------------------------------
17,628
>INSTRUMENTATION: 3.3%
145,000 Tektronix 8,120
Analytical Instruments
65,000 Perkin Elmer 4,322
Analytical Instruments for Biotech/Telecom
- ---------------------------------------------------------------------------
12,442
>SEMICONDUCTORS/RELATED
EQUIPMENT: 2.5%
143,100 DSP Group 9,445
Telecom Semiconductors
>COMPUTER HARDWARE/
RELATED SYSTEMS: 11.2%
527,600 Micros Systems 33,206
Information Systems for Restaurants & Hotels
185,000 American Power Conversion 7,932
Uninterruptable Power Systems
35,000 Kronos 1,037
Labor Management Solutions
- ---------------------------------------------------------------------------
42,175
--------
INFORMATION: TOTAL 206,140
- ---------------------------------------------------------------------------
Health Care: 8.7%
>BIOTECHNOLOGY/DRUG DELIVERY: 2.3%
33,100 Maxygen 2,158
Molecular Breeding
363,636 Metabolex, Series F 2,000
Drugs for Diabetes
26,700 Myriad Genetics 1,609
Gene Discovery & Diagnostic Products
32
<PAGE>
Number of Shares Value (000)
- ------------------------------------------------------------------
44,900 Genome Therapeutics $ 1,058
Gene Discovery Services
26,000 Genset 845
Genomics
55,000 Genzyme Molecular Oncology Division 832
Gene Expression Technology & Cancer Drugs
- ------------------------------------------------------------------
8,502
>SERVICES: 6.4%
343,000 First Health Group 10,847
PPO Network
315,400 Lincare Holdings 8,949
Home Health Care Services
856,100 Magellan Health Services 4,120
Mental Health Services
- ------------------------------------------------------------------
23,916
--------
HEALTH CARE: TOTAL 32,418
- ------------------------------------------------------------------
Consumer Goods/Services: 5.2%
>CONSUMER SERVICES: 2.2%
507,000 Telespectrum 3,549
Call Center Services
153,000 ITT Educational Services 2,448
Technology Oriented Postsecondary
Degree Programs
157,600 NuSkin Enterprises 1,251
Personal Care/Herbal Products
43,000 Bally Total Fitness 1,053
Fitness Centers
- ------------------------------------------------------------------
8,301
>RETAIL: 3.0%
395,000 Gadzooks 8,567
Teen Apparel Retailer
58,500 Whole Foods Market 2,424
Natural Food Supermarkets
- ------------------------------------------------------------------
10,991
--------
CONSUMER GOODS/SERVICES: TOTAL 19,292
- ------------------------------------------------------------------
Finance: 8.3%
>BANKS: 1.4%
93,500 Chittenden 2,776
Vermont & West Massachusetts Bank
59,000 TCF Financial 1,405
Great Lakes Bank
41,000 Texas Regional Bancshares 1,043
TexMex Bank
- ------------------------------------------------------------------
5,224
>FINANCE COMPANIES: 3.5%
613,500 AmeriCredit 10,008
Auto Lending
590,000 World Acceptance 2,987
Personal Loans
- ------------------------------------------------------------------
12,995
>MONEY MANAGEMENT: 0.6%
163,000 Phoenix Investment Partners $ 1,263
Mutual Fund & Pension Manager
36,800 Pioneer Group 856
Equity Mutual Funds
- ------------------------------------------------------------------
2,119
>INSURANCE: 2.8%
637,700 UICI 4,225
Insurance/Specialty Finance
332,100 Acceptance Insurance 1,806
Crop Insurance
93,000 Leucadia National 2,209
Insurance Holding Company
66,000 Protective Life 2,095
Life/Dental Insurance
2,100 Markel 306
2,108 Markel CVR 13
Specialty Insurance
- ------------------------------------------------------------------
10,654
--------
FINANCE: TOTAL 30,992
- ------------------------------------------------------------------
Industrial Goods/Services: 5.7%
>INDUSTRIAL GOODS: 0.5%
108,000 Advanced Lighting Technologies 2,025
Metal Halide Lighting
>SPECIALTY CHEMICALS: 0.7%
202,600 Lilly Industries, Cl. A 2,507
Industrial Coatings
>OTHER INDUSTRIAL SERVICES: 4.5%
347,400 Insurance Auto Auctions 5,862
Auto Salvage Services
346,000 Hub Group 5,276
Truck & Rail Freight Forwarder
422,500 Wackenhut, Cl. B 4,251
Prison Management
150,000 Labor Ready 1,481
Temporary Manual Labor
- ------------------------------------------------------------------
16,870
--------
INDUSTRIAL GOODS/SERVICES: TOTAL 21,402
- ------------------------------------------------------------------
Energy/Minerals: 7.9%
>INDEPENDENT POWER: 1.3%
281,000 Conectiv 4,917
Electric Utility
>OIL SERVICES: 0.3%
135,000 Newpark Resources 1,080
Oilfield Fluid Management
>OIL/GAS PRODUCERS: 1.4%
473,800 Tesoro Petroleum 5,449
Oil Refinery/Gas Reserves
33
<PAGE>
Acorn USA
>Statement of Investments, continued
Number of Shares Value (000)
- ------------------------------------------------------------------
>DISTRIBUTION/MARKETING/REFINING: 4.9%
181,700 Dynegy $ 11,402
Natural Gas & Electric Processing &
Marketing
83,300 Equitable Resources 3,733
Natural Gas Utility & Producer
193,000 Atmos Energy 3,160
Natural Gas Utility
- ------------------------------------------------------------------
18,295
--------
ENERGY/MINERALS: TOTAL 29,741
- ------------------------------------------------------------------
Real Estate: 0.3%
47,000 The Rouse Company 993
Regional Shopping Malls
--------
REAL ESTATE: TOTAL 993
--------
TOTAL COMMON STOCKS: 91.1% 340,978
SHORT-TERM OBLIGATIONS: 9.7% 36,475
--------
TOTAL INVESTMENTS: 100.8% 377,453
CASH AND OTHER ASSETS LESS LIABILITIES: (0.8%) (2,931)
--------
TOTAL NET ASSETS: 100% $374,522
- ------------------------------------------------------------------
34
<PAGE>
Acorn Foreign Forty
>Major Portfolio Changes in the First Quarter
Number of Shares
----------------------
12/31/99 3/31/00
Additions
- --------------------------------------------------------------------------------
Europe
>GERMANY
Rhoen Klinikum 30,000 50,000
>FINLAND
Comptel 21,200 33,000
>BELGIUM
Audiofina 40,000 50,000
>UNITED KINGDOM/IRELAND
Hays 120,000 600,000
(includes effect of a 2 for 1 stock split)
Irish Life & Permanent 170,000 500,000
Peninsular & Oriental 0 500,000
SSL International 90,000 200,000
Thus 220,000 320,000
>SWITZERLAND
Julius Baer Holding 0 1,000
>ITALY
Editoriale L'Espresso 208,000 250,000
>NETHERLANDS
ASR Verzekeringsgroep 0 78,900
Fox Kids Europe 5,000 165,000
Getronics 40,000 65,000
- --------------------------------------------------------------------------------
Asia
>JAPAN
Bellsystem24 0 5,000
Fast Retailing 0 10,000
Orix 0 24,000
(includes effect of a 6 for 5 stock split)
>SINGAPORE
Star Cruises 400,000 969,000
Venture Manufacturing 325,000 500,000
- --------------------------------------------------------------------------------
Other Countries
>AUSTRALIA
One.Tel Limited 0 1,290,000
>CANADA
ATI Technologies 0 250,000
Clearnet Communications 0 90,600
>ISRAEL
Amdocs 90,000 105,000
Comverse Technology 0 5,000
Gilat Satellite Network 0 14,500
>UNITED STATES
Global Telesystems 2,568,000 2,988,000
Sales
- --------------------------------------------------------------------------------
Europe
>UNITED KINGDOM
Airtours 85,000 0
Carlton Communications 250,000 0
Exel 300,000 0
(formerly known as NFC)
Logica 150,000 100,000
Sema Group 120,000 100,000
>ITALY
Mediolanum 70,000 0
Saipem SpA 300,000 0
>SPAIN
Mapfre Vida 43,000 0
>NETHERLANDS
Hunter Douglas 60,000 0
- --------------------------------------------------------------------------------
Asia
>HONG KONG
SmarTone Telecom 324,900 0
>JAPAN
Shohkoh Fund 4,000 0
Softbank 7,000 0
- --------------------------------------------------------------------------------
Other Countries
>CANADA
Canadian Natural Resources 70,000 0
>UNITED STATES
Azurix 100,000 0
35
<PAGE>
Acorn Foreign Forty
>Statement of Investments (Unaudited) March 31, 2000
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks: 99.7%
- --------------------------------------------------------------------------------
Europe: 63.1%
>GERMANY: 1.3%
50,000 Rhoen Klinikum $ 2,010
Hospital Management
>FINLAND: 2.3%
33,000 Comptel 3,650
Telephone Billing Software
>SWEDEN: 3.3%
60,000 Netcom 5,174
Telecommunication Services
>FRANCE/BELGIUM: 8.4%
50,000 Audiofina (Belgium) 6,148
TV & Radio Stations
7,000 M6 Metropole TV 4,783
Television Broadcaster
18,000 Atos 2,325
Computer Services/Transaction Processing
- --------------------------------------------------------------------------------
13,256
>UNITED KINGDOM/IRELAND: 25.4%
500,000 Peninsular & Oriental 5,197
Cruise Line
500,000 Irish Life & Permanent (Ireland) 4,545
Life Insurance
600,000 Hays 3,927
Outsourcing Services
82,000 Energis 3,824
Telecommunication Services
100,000 Logica 3,352
Computer Software & Services
170,000 WPP Group 2,989
Advertising
700,000 St James Capital 2,836
Life Insurance
100,000 Capita Group 2,557
Outsourcing Services
27,500 NTL 2,552
Voice, Video & Data Services
320,000 Thus 2,392
Telecommunication Services
100,000 Sema Group 1,997
Computer Software & Services
45,000 Serco Group 1,956
Facilities Management
200,000 SSL International 1,768
Medical & Footcare Products
- --------------------------------------------------------------------------------
39,892
>SWITZERLAND: 4.0%
1,000 Julius Baer Holding 3,765
Private Banking, Brokerage & Mutual Funds
800 Pargesa Holdings 1,541
Industrial & Media Conglomerate
390 Cie Fin Richemont 991
Luxury Goods, Tobacco & Pay TV
- --------------------------------------------------------------------------------
6,297
>ITALY: 8.7%
250,000 Editoriale L'Espresso $ 4,907
Newspaper & Magazine Publisher
330,000 Banca Fideuram 4,825
Life Insurance & Mutual Funds
800,000 SEAT Pagine Gialle 3,965
Yellow Pages
- --------------------------------------------------------------------------------
13,697
>SPAIN: 1.7%
110,000 Indra Sistemas 2,642
Computer Services
>NETHERLANDS: 8.0%
65,000 Getronics 4,970
Computer Services
78,900 ASR Verzekeringsgroep 4,130
Auto/Life Insurance
165,000 Fox Kids Europe 3,474
Cartoons
- --------------------------------------------------------------------------------
12,574
--------
EUROPE: TOTAL 99,192
- --------------------------------------------------------------------------------
Asia: 18.8%
>JAPAN: 9.0%
10,000 Fast Retailing 4,402
Apparel Retailer
5,000 Bellsytem24 4,241
Call Centers
24,000 Orix 3,475
Finance Leasing
12,000 Nintendo 2,112
Video Games
- --------------------------------------------------------------------------------
14,230
>SINGAPORE: 9.8%
969,000 Star Cruises 8,479
Cruise Line
500,000 Venture Manufacturing 6,869
Electronic Manufacturing Services
- --------------------------------------------------------------------------------
15,348
--------
ASIA: TOTAL 29,578
- --------------------------------------------------------------------------------
Other Countries: 17.8%
>AUSTRALIA: 0.9%
1,290,000 One.Tel Limited 1,409
Telecommunication Services
>CANADA: 8.7%
90,000 Celestica 4,733
Electronic Manufacturing Services
250,000 ATI Technologies 4,434
Computer Graphics Chips & Boards
90,600 Clearnet Communications 3,744
Telecommunications Services
50,000 Power Financial 740
Life Insurance & Mutual Funds
- --------------------------------------------------------------------------------
13,651
36
<PAGE>
Number of Shares Value (000)
- -------------------------------------------------------------------------------
>ISRAEL: 6.6%
105,000 Amdocs $ 7,737
Telecommunications Billing & Customer Care Software
14,500 Gilat Satellite Network 1,700
Satellite Communications Equipment & Services
5,000 Comverse Technology 945
Voicemail & Related Systems
- -------------------------------------------------------------------------------
10,382
>UNITED STATES: 1.6%
2,988,000 Global TeleSystems 2,615
Telecommunication Services
OTHER: TOTAL $ 28,057
---------
TOTAL COMMON STOCKS: 99.7% 156,827
SHORT TERM OBLIGATIONS: 0.6% 1,001
---------
TOTAL INVESTMENTS: 100.3% 157,828
CASH AND OTHER ASSETS LESS LIABILITIES: (0.3%) (431)
---------
TOTAL NET ASSETS: 100% $157,397
================================================================================
>Portfolio Diversification
At March 31, 2000 the Fund's portfolio of investments as a percent of net assets
was diversified as follows:
Value (000) Percent
- -------------------------------------------------------------------------------
>INFORMATION
Telephone Services $ 21,005 13.4%
Computer Services 12,644 8.0
Broadcasting 10,931 6.9
Business Software 7,737 4.9
Contract Manufacturing 6,869 4.4
Publishing 4,907 3.1
Semiconductors 4,434 2.8
Mobile Communications 3,744 2.4
Television Programming 3,474 2.2
Advertising 2,989 1.9
Telephone Equipment 2,645 1.7
Business Information 2,642 1.7
Instrumentation 2,615 1.7
CATV 2,552 1.6
- -------------------------------------------------------------------------------
89,188 56.7
>HEALTH CARE
Hospital Management 2,010 1.3
Pharmaceuticals 1,768 1.1
- -------------------------------------------------------------------------------
3,778 2.4
>CONSUMER GOODS/SERVICES
Cruises 8,479 5.4
Retail 4,402 2.8
Leisure Products 3,650 2.3
Consumer Software 2,112 1.4
Entertainment 991 0.6
- -------------------------------------------------------------------------------
19,634 12.5
>FINANCE
Insurance $ 12,252 7.8%
Money Management 4,825 3.1
Banks 3,765 2.4
Finance Companies 3,474 2.2
Closed End Funds 1,541 0.9
- -------------------------------------------------------------------------------
25,857 16.4
>INDUSTRIAL GOODS/SERVICES
Outsourcing Services 8,440 5.4
Electrical Components 4,733 3.0
- -------------------------------------------------------------------------------
13,173 8.4
>OTHER INDUSTRIES
Transportation 5,197 3.3
------------------------
TOTAL COMMON STOCKS: 156,827 99.7%
SHORT TERM OBLIGATIONS: 1,001 0.6%
CASH AND OTHER ASSETS LESS
LIABILITIES: (431) (0.3)
------------------------
NET ASSETS: $157,397 100.0%
===============================================================================
37
<PAGE>
Acorn Twenty
>Major Portfolio Changes in the First Quarter
Number of Shares
------------------------
12/31/99 3/31/00
Additions
- --------------------------------------------------------------------------------
Information
American Power Conversion 0 66,000
Jabil Circuit 0 79,000
Perkin Elmer 0 21,000
Pinnacle Holdings 0 52,000
Reynolds & Reynolds 0 140,000
Tektronix 41,000 100,000
Waters 0 23,000
- --------------------------------------------------------------------------------
Health Care
Incyte Pharmaceutical 0 6,000
Techne 0 41,100
- --------------------------------------------------------------------------------
Consumer Goods/Services
Harley-Davidson 0 37,000
- --------------------------------------------------------------------------------
Finance
Comdisco 0 46,000
- --------------------------------------------------------------------------------
Energy/Minerals
Dynegy 0 69,000
Sales
- --------------------------------------------------------------------------------
Information
Liberty Media Group, AT&T 82,000 45,000
McLeod USA 68,000 42,000
National Data 72,000 0
RCN 82,000 65,000
Telephone and Data Systems 30,000 0
- --------------------------------------------------------------------------------
Health Care
First Health 75,000 118,700
Lincare Holdings 185,000 0
- --------------------------------------------------------------------------------
Consumer Goods/Services
Harrah's Entertainmnt 105,000 0
Royal Caribbean Cruises 45,000 0
- --------------------------------------------------------------------------------
Finance
AmeriCredit 255,000 0
Progressive 28,000 0
UICI 143,000 0
- --------------------------------------------------------------------------------
Industrial Goods/Services
ServiceMaster 225,000 120,000
- --------------------------------------------------------------------------------
Energy/Minerals
AES Corporation 56,000 0
MidAmerican Energy 95,000 0
- --------------------------------------------------------------------------------
38
<PAGE>
Acorn Twenty
>Statement of Investments (Unaudited) March 31, 2000
Number of Shares Value (000)
- -------------------------------------------------------------------------------
Common Stocks: 95.5%
- -------------------------------------------------------------------------------
Information: 53.0%
>TELEVISION PROGRAMMING: 4.0%
45,000 Liberty Media Group, AT&T $ 2,666
Cable & Satellite Programming
>TELECOMMUNICATIONS/WIRELINE
COMMUNICATIONS: 10.7%
42,000 McLeod USA 3,562
Super Regional CLEC: Local, Long Distance
& Internet Services
65,000 RCN 3,502
Metro Market CLEC: Voice, Video & Internet Services
- -------------------------------------------------------------------------------
7,064
>INSTRUMENTATION: 13.9%
100,000 Tektronix 5,600
Analytical Instruments
23,000 Waters 2,191
Chromatography, Mass Spectrometry, Thermo Analysis
21,000 Perkin Elmer 1,396
Analytical Instruments for Biotech, Telecom
- -------------------------------------------------------------------------------
9,187
>MOBILE COMMUNICATIONS: 4.3%
52,000 Pinnacle Holdings 2,873
Towers for Cellular, PCS & Paging
>CONTRACT MANUFACTURING: 5.2%
79,000 Jabil Circuit 3,417
Electronic Manufacturing Services
>COMPUTER HARDWARE & RELATED
EQUIPMENT: 4.3%
66,000 American Power Conversion 2,830
Uniterruptable Power Systems
>BUSINESS INFORMATION: 10.6%
140,000 Reynolds & Reynolds 3,780
Business Forms & Computer Systems for Car Dealers
73,000 H & R Block 3,267
Tax Preparation
- -------------------------------------------------------------------------------
7,047
--------
INFORMATION: TOTAL 35,084
- -------------------------------------------------------------------------------
Health Care: 10.7%
>BIOTECHNOLOGY/DRUG DELIVERY: 0.8%
6,000 Incyte Pharmaceutical 524
Gene Sequencing
>HOSPITAL/LABORATORY SUPPLIES: 4.3%
41,100 Techne 2,836
Cytokines, Antibodies, Other Reagents
for Life Sciences
>SERVICES: 5.6%
118,700 First Health Group $ 3,754
PPO Network
--------
HEALTH CARE: TOTAL 7,114
- -------------------------------------------------------------------------------
Consumer Goods/Services: 14.8%
>LEISURE VEHICLES: 4.4%
37,000 Harley-Davidson 2,937
Motorcycles & Related Merchandise
>FURNITURE & MANUFACTURERS: 10.4%
125,000 Herman Miller 3,500
Office Furniture
105,000 Jones Apparel 3,347
Women's Apparel
- -------------------------------------------------------------------------------
6,847
--------
CONSUMER GOODS/SERVICES: TOTAL 9,784
- -------------------------------------------------------------------------------
Finance: 8.5%
>FINANCE COMPANIES: 3.1%
46,000 Comdisco 2,030
Computer Leasing, Venture Capital & CLEC Business
>MONEY MANAGEMENT: 5.4%
31,500 SEI Investments 3,573
Mutual Fund Administration
--------
FINANCE: TOTAL 5,603
- -------------------------------------------------------------------------------
Industrial Goods/Services: 2.0%
>OTHER INDUSTRIAL SERVICES: 2.0%
120,000 ServiceMaster 1,350
Facilities Management
--------
INDUSTRIAL GOODS/SERVICES: TOTAL 1,350
- -------------------------------------------------------------------------------
Energy/Minerals: 6.5%
>OIL REFINING/MARKETING/DISTRIBUTION: 6.5%
69,000 Dynegy 4,330
Energy Marketing, Processing, & Generation
--------
ENERGY/MINERALS: TOTAL 4,330
--------
TOTAL COMMON STOCKS: 95.5% 63,265
SHORT-TERM OBLIGATIONS: 1.7% 1,147
--------
TOTAL INVESTMENTS: 97.2% 64,412
CASH AND OTHER ASSETS LESS LIABILITIES: 2.8% 1,855
--------
TOTAL NET ASSETS: 100% $ 66,267
===============================================================================
39
<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
40
<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
Twenty and Acorn Foreign Forty, 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 1.35% and 1.45% 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 Twenty and Acorn Foreign Forty would have been 1.35% and 1.45%,
respectively.
<PAGE>
The Acorn --------------------
- -----------------------
Family of Funds FIRST CLASS
PRE-SORT
WAM Brokerage Services, L.L.C. U.S. POSTAGE
P.O. Box 8502 PAID
Boston, MA 02266-8502 CHICAGO, IL
Member NASD PERMIT NO. 1200
--------------------
