-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G1oXVRHu38raQrJwkfYgGEqgBYRv7h05+QpZEMEZmO2MNKg3f6zkiSc9LU0mm2Gm Iwcr+aqxOvfYrxzSTRH2dg== 0000891804-01-000471.txt : 20010319 0000891804-01-000471.hdr.sgml : 20010319 ACCESSION NUMBER: 0000891804-01-000471 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010316 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACORN INVESTMENT TRUST CENTRAL INDEX KEY: 0000002110 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 362692100 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01829 FILM NUMBER: 1570650 BUSINESS ADDRESS: STREET 1: 227 W MONROE STE 3000 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126349200 MAIL ADDRESS: STREET 1: 227 W MONROE ST STE 3000 STREET 2: ATTN: BRUCE LAUER CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: ACORN FUND INC DATE OF NAME CHANGE: 19920703 N-30D 1 0001.txt LIBERTY ACORN FUNDS [LOGO] Liberty Acorn Funds Annual Report December 31, 2000 [GRAPHIC OMITTED] Liberty Acorn Family of Funds Annual Report 2000 >Net Asset Value Per Share as of 12/31/00
Liberty Liberty Acorn Liberty Liberty Acorn Liberty Acorn Fund International Acorn USA Foreign Forty Acorn Twenty - --------------------------------------------------------------------------------------- Class A $17.19 $23.84 $14.88 $17.15 $14.12 - --------------------------------------------------------------------------------------- Class B $17.17 $23.81 $14.87 $17.13 $14.10 - --------------------------------------------------------------------------------------- Class C $17.17 $23.81 $14.87 $17.14 $14.10 - --------------------------------------------------------------------------------------- Class Z $17.21 $23.85 $14.90 $17.15 $14.13 - ---------------------------------------------------------------------------------------
>2000 Year-End Distributions The following table details the funds' year-end distributions. The record date was November 17, 2000 and the payable date was November 24, 2000.
Liberty Liberty Acorn Liberty Liberty Acorn Liberty Acorn Fund International Acorn USA Foreign Forty Acorn Twenty - ----------------------------------------------------------------------------------------------------- Long-term Capital Gains $1.73 $3.59 None None $0.20 - ----------------------------------------------------------------------------------------------------- Short-term Capital Gains $0.13 None None None None - ----------------------------------------------------------------------------------------------------- Ordinary Income $0.06 None None None None - -----------------------------------------------------------------------------------------------------
- --------------------------------- Not FDIC May Lose Value Insured ----------------- No Bank Guarantee - --------------------------------- There is no assurance that the trends described in this report will continue or come to pass because, in part, economic and market conditions change frequently. An investment in any of these Funds presents certain risks, including stock market fluctuations due to economic and business developments. Liberty Acorn Family of Funds Annual Report 2000 Table of Contents Share Class Performance 2 Fund Performance Vs. Benchmarks 3 Squirrel Chatter: The Bubble Popped 4 Liberty Acorn Fund In a Nutshell 6 At a Glance 7 Major Portfolio Changes 16 Statement of Investments 18 Liberty Acorn International In a Nutshell 8 At a Glance 9 Major Portfolio Changes 24 Statement of Investments 26 Portfolio Diversification 30 Liberty Acorn USA In a Nutshell 10 At a Glance 11 Major Portfolio Changes 31 Statement of Investments 32 Liberty Acorn Foreign Forty In a Nutshell 12 At a Glance 13 Major Portfolio Changes 34 Statement of Investments 35 Portfolio Diversification 37 Liberty Acorn Twenty In a Nutshell 14 At a Glance 15 Major Portfolio Changes 38 Statement of Investments 39 Liberty Acorn Family of Funds Statements of Assets and Liabilities 41 Statements of Operations 42 Statements of Changes in Net Assets 44 Financial Highlights 48 Notes to Financial Statements 51 Report of Independent Auditors 54 Trustees, Officers and Contact Information 59 Notes On After-tax Returns and Tax Efficiency Included on each individual fund's "At A Glance" page, after-tax returns show the fund's (Class A shares, without sales charge) annualized after-tax total return for the time period specified. After-tax returns with shares sold shows the funds' annualized after-tax total return for the time period specified plus the tax-effects of selling your shares of the fund at the end of the period. To determine these figures, distributions are treated as taxed at the maximum tax rate in effect at the time they were paid with the balance reinvested. These rates are currently 39.6% for income and short-term capital gain distributions. Long-term capital gains are currently taxed at a 20% rate. The tax rate is applied to distributions prior to reinvestment and the after-tax portion is reinvested in the fund. State and local taxes are ignored. The returns provided by Morningstar, Inc. are calculated in a consistent manner. Tax Efficiency is derived by dividing after-tax returns by pretax returns. The highest possible percentage would be 100%, which would apply to a fund that had no taxable distributions. Because many interrelated factors effect tax efficiency, it is difficult to predict tax efficiency. 1 The Liberty Acorn Family of Funds >Share Class Performance Average Annual Total Returns through 12/31/00
Class A Class B Class C Without With Without With Without With Sales Charge Sales Charge Sales Charge Sales Charge Sales Charge Sales Charge - --------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn Fund (6/10/70) - --------------------------------------------------------------------------------------------------------------------------------- 3 month* 1.82% -4.04% 1.70% -2.85% 1.70% .79% - --------------------------------------------------------------------------------------------------------------------------------- 1 year 9.94% 3.62% 9.82% 5.18% 9.82% 8.89% - --------------------------------------------------------------------------------------------------------------------------------- 5 years 18.95% 17.55% 18.92% 18.72% 18.92% 18.92% - --------------------------------------------------------------------------------------------------------------------------------- 10 years 20.49% 19.78% 20.47% 20.47% 20.47% 20.47% - --------------------------------------------------------------------------------------------------------------------------------- Life of Fund 16.91% 16.68% 16.90% 16.90% 16.90% 16.90% - --------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn International (9/23/92) - --------------------------------------------------------------------------------------------------------------------------------- 3 month* -13.26% -18.25% -13.37% -17.15% -13.37% -14.13% - --------------------------------------------------------------------------------------------------------------------------------- 1 year -20.05% -24.65% -20.15% -23.52% -20.15% -20.82% - --------------------------------------------------------------------------------------------------------------------------------- 3 years 18.25% 15.94% 18.21% 17.49% 18.21% 18.21% - --------------------------------------------------------------------------------------------------------------------------------- 5 years 14.86% 13.51% 14.83% 14.60% 14.83% 14.83% - --------------------------------------------------------------------------------------------------------------------------------- Life of Fund 15.69% 14.86% 15.67% 15.67% 15.67% 15.67% - --------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn USA (9/04/96) - --------------------------------------------------------------------------------------------------------------------------------- 3 month* 3.33% -2.61% 3.26% -1.74% 3.26% 2.26% - --------------------------------------------------------------------------------------------------------------------------------- 1 year -9.11% -14.34% -9.18% -13.61% -9.18% -10.06% - --------------------------------------------------------------------------------------------------------------------------------- 3 years 5.76% 3.69% 5.73% 4.85% 5.73% 5.73% - --------------------------------------------------------------------------------------------------------------------------------- Life of Fund 14.89% 13.33% 14.87% 14.58% 14.87% 14.87% - --------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn Foreign Forty (11/23/98) - --------------------------------------------------------------------------------------------------------------------------------- 3 month* -10.02% -15.19% -10.13% -14.62% -10.07% -10.97% - --------------------------------------------------------------------------------------------------------------------------------- 1 year -13.35% -18.33% -13.45% -17.75% -13.40% -14.26% - --------------------------------------------------------------------------------------------------------------------------------- Life of Fund 29.75% 26.15% 29.67% 28.60% 29.71% 29.71% - --------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn Twenty (11/23/98) - --------------------------------------------------------------------------------------------------------------------------------- 3 month* -2.18% -7.80% -2.31% -7.13% -2.31% -3.28% - --------------------------------------------------------------------------------------------------------------------------------- 1 year 11.60% 5.18% 11.44% 6.44% 11.44% 10.44% - --------------------------------------------------------------------------------------------------------------------------------- Life of Fund 22.95% 19.54% 22.87% 21.73% 22.87% 22.87% - ---------------------------------------------------------------------------------------------------------------------------------
*Quarterly numbers are not annualized. Past performance does not guarantee future results. Returns and value of an investment will vary, resulting in a gain or loss on sale. All results shown assume reinvestment of distributions. The "with sales charge" returns include the maximum 5.75% sales charge for Class A shares, the appropriate Class B contingent deferred sales charge for the holding period after purchase as follows: through first year - 5%, second year - 4%, third year - 3%, fourth year - - 3%, fifth year - 2%, sixth year - 1%, thereafter - 0%; and the Class C contingent deferred sales charge of 1% for the first year only. Performance of the different share classes will vary based on differences in sales charges and fees associated with each class. Performance results reflect any voluntary waivers or reimbursements of Fund expenses by the Advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class A, B and C share (newer class shares) performance information includes returns of the Fund's Class Z shares (the oldest existing Fund class) for periods prior to the inception of the newer class shares. The new class shares were launched October 16, 2000. The Class Z share returns were not restated to reflect any expense differential (e.g., Rule 12b-1 fees) between Class Z shares and the newer class shares. Had the expense differential been reflected, the returns for the periods prior to the inception of Class A, B and C shares would have been lower. 2 >Fund Performance Vs. Benchmarks Class A Shares, Without Sales Charge, Average Annual Total Returns through 12/31/00*
4th+ 1 3 5 10 Life Quarter year years years years of Fund - -------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn Fund (6/10/70) 1.92% 10.06% 15.88% 18.97% 20.50% 16.91% - -------------------------------------------------------------------------------------------------------------------------------- S&P 500 -7.82% -9.10% 12.26% 18.33% 17.46% 13.85% - -------------------------------------------------------------------------------------------------------------------------------- Russell 2000 -6.91% -3.02% 4.65% 10.31% 15.53% NA - -------------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap Core Funds Index -4.19% 6.93% 7.39% 12.43% NA NA - -------------------------------------------------------------------------------------------------------------------------------- S&P MidCap 400 -3.85% 17.51% 17.10% 20.41% 19.86% NA - -------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn International (9/23/92) -13.23% -20.02% 18.27% 14.87% -- 15.69% - -------------------------------------------------------------------------------------------------------------------------------- EMI World ex-U.S. -5.56% -10.33% 7.49% 3.83% -- 6.87% - -------------------------------------------------------------------------------------------------------------------------------- EAFE -2.68% -14.17% 9.35% 7.13% -- 9.73% - -------------------------------------------------------------------------------------------------------------------------------- IFCI Composite -13.79% -31.76% -3.83% -3.67% -- 3.22% - -------------------------------------------------------------------------------------------------------------------------------- Lipper Int'l Small Cap Funds Index -10.37% -14.52% 15.18% 10.47% -- NA - -------------------------------------------------------------------------------------------------------------------------------- Lipper Int'l Funds Index -4.02% -14.72% 9.82% 10.20% -- 11.37% - -------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn USA (9/4/96) 3.47% -8.99% 5.80% -- -- 14.93% - -------------------------------------------------------------------------------------------------------------------------------- Russell 2000 -6.91% -3.02% 4.65% -- -- 10.30% - -------------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap Core Funds Index -4.19% 6.93% 7.39% -- -- 12.08% - -------------------------------------------------------------------------------------------------------------------------------- S&P MidCap 400 -3.85% 17.51% 17.10% -- -- 21.84% - -------------------------------------------------------------------------------------------------------------------------------- S&P 500 -7.82% -9.10% 12.26% -- -- 19.31% - -------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn Foreign Forty (11/23/98) -10.02% -13.35% -- -- -- 29.75% - -------------------------------------------------------------------------------------------------------------------------------- EAFE -2.68% -14.17% -- -- -- 6.18% - -------------------------------------------------------------------------------------------------------------------------------- SSB World ex-US Cap Range $2-10B -1.40% -6.05% -- -- -- 9.03% - -------------------------------------------------------------------------------------------------------------------------------- Lipper Int'l Funds Index -4.02% -14.72% -- -- -- 9.06% - -------------------------------------------------------------------------------------------------------------------------------- Liberty Acorn Twenty (11/23/98) -2.11% 11.68% -- -- -- 22.99% - -------------------------------------------------------------------------------------------------------------------------------- S&P MidCap 400 -3.85% 17.51% -- -- -- 21.13% - -------------------------------------------------------------------------------------------------------------------------------- Lipper Mid Cap Core Funds Index -7.48% 6.26% -- -- -- 21.02% - -------------------------------------------------------------------------------------------------------------------------------- Russell 2000 -6.91% -3.02% -- -- -- 11.59% - -------------------------------------------------------------------------------------------------------------------------------- S&P 500 -7.82% -9.10% -- -- -- 7.48% - --------------------------------------------------------------------------------------------------------------------------------
* Class A (newer class shares) performance information includes returns of the Fund's Class Z shares (the oldest existing Fund class) for periods prior to the inception of the newer class shares. + Quarterly numbers are not annualized. Past performance does not guarantee future results. The investment return and principal value of an investment in any Liberty Acorn Fund will fluctuate so that fund shares, when redeemed, may be worth more or less than their original cost. Description of indexes: S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. S&P Mid Cap 400 is a broad market-weighted index of 400 stocks that are in the next size/tier down from the S&P 500. Russell 2000 is an unmanaged, 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 Morgan Stanley's Europe, Australasia and Far East Index, an unmanaged, widely recognized international benchmark that comprises 20 major markets 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 Core Funds Index -- 30 mid-cap core funds; 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 Liberty Acorn International; Lipper Small Cap Core Funds Index -- 30 largest small cap core funds, including Liberty Acorn Fund. All indexes are unmanaged and returns include reinvested distributions. A more complete description of each index is included in the Liberty Acorn Funds statement of additional information. Unlike mutual funds, indexes are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. 3 >Squirrel Chatter: The Bubble Popped [PHOTO OMITTED] A year ago in our annual report, I made an unpopular prediction amid investors' love affair with technology stocks: "Many of the new Internet companies will suffer the biggest massacre of naifs since the Children's Crusade." That forecast was correct. Technology charts went vertical in early 2000, as IPO salesmen and day traders watched, hoping to keep living in their hand-to-mouse fashion. But the sector then spun downward and crashed. Energy in the '80s The Internet stocks were a spectacular example of a market mania followed by a debacle. While this latest cycle was dramatic, it was not unique. In 1980, the 1 growth stock was Schlumberger, an oil service company. From 1968 to 1980, energy stocks went from 14% to 27% of the S&P 500. During the period, every portfolio manager was an amateur geologist, with a four-color map of the Overthrust Belt pinned to his wall. Private investors lined up to buy tax-shelter drilling partnerships from good ol' Billy Bob in San Antonio because we all knew that crude oil would be $100 per barrel in 2000. ------------------------------------------------------- S&P Sector Weight: 1968 1980 1992 1999 2000 ------------------------------------------------------- Energy 14% 27% 10% 5% 6% ------------------------------------------------------- Technology 7% 10% 7% 30% 22% ------------------------------------------------------- Source: Tom Galvin, "Inside the Index," Credit Suisse First Boston. This seemed like a good idea since oil and gas was a giant, profitable, and necessary industry. Energy consumption increased steadily between 1980 and 2000. However, crude oil prices did not go up as hoped; oil stocks were a bad idea for the next twenty years. By 1999, energy stocks had dropped from 27% of the S&P 500 to a measly 5%. In comparison, technology stocks, only 7% of the S&P 500 in 1992, had a terrific run, peaking at 30% of the S&P in 1999. Private investors lined up to buy venture capital partnerships from Yoshi and Deepak in Sunnyvale because we all knew that everyone would spend $100 per day on the Internet in 2020. Are technology stocks going back down from 30% to 10% of the S&P 500? We don't know but this example suggests that may be a likely outcome. Honeyfugling Technology mania caused many to turn a blind eye to Old Economy issues including the amount of energy required to keep all this technology up and running. The good citizens of California have enjoyed enormous growth in population as New Economy companies grew in the Silicon Valley. They also kept their environment in good condition by stopping construction of smelly, ugly industrial facilities such as refineries and electrical generating plants. The Greens started with the anti-growth acronym NIMBY ("Not in my back yard") but have now raised the level to BANANA ("Build absolutely nothing anywhere near anybody!"). Total victory. No new large utility plants have been built in California for 12 years while electric consumption has increased by over 28% during this same period. "Suddenly" we have a shortage of electricity in California, with blackouts, soaring prices, nearly bankrupt utilities, and embarrassed regulators and politicians. Who could not have predicted that if you increase demand without increasing supply that would lead to a bust? California is now wallowing in the worst regulatory mess in recent history as long-term, fixed-price sales contracts are leaving suppliers short because they are forced to buy fuel in a more expensive energy market. But even utility goof-ups are nothing new. Electric utilities began in the 1900-1910 era, and took off in the 1920s. Utility stocks were a good idea; demand was soaring as households bought electric lights, irons and laundry machines; stores and theaters put in elevators and air conditioners; and factories switched to electric motors from shaft-and-belt power systems. Electric power consumption grew at 7% per year from 1910 to 1970, new generating technology allowed steady price reductions, and utilities were great stable growth companies. How could utility investors miss? One word converted a good idea into a bad one: leverage. Insull Utility Investments, United Corporation and Standard Gas and Electric built complex holding companies with very high debt loads, a precedent for Long Term Capital Management in 1998. When depression struck in 1930, the local utility companies still produced and sold electricity, but not enough to keep paying dividends(1) on their stock. That meant no cash went to the holding companies, so the holding companies went broke. The writings of the 1920s and '30s showed a general distrust for this thing called leverage: "A further serious defect of overdeveloped holding company organization is the temptation afforded to prestidigitation, double shuffling, honeyfugling, hornswoggling, and skullduggery ... all sorts of nefarious dealings."(2) 4 Congress passed the Public Utility Holding Company Act of 1935 to prevent anybody from trying such foolishness again. What Now? Internet stocks collapsed in 2000. That doesn't mean that technological change has stopped. It does mean that technology stocks are going to be valued by the same rules as the rest of the market. What this demystification of technology means to us is that a balanced approach to investing -- one that includes exposure to many different areas of the market -- continues to make the most sense. Additionally, two positive economic changes are in the pipeline: 1) Bush's proposed tax cut may help the economy and the stock market; 2) Financial Accounting Standards Board (FASB) amortization rules are likely to change, which may make corporate acquisitions even more popular.(3) 2000 Scarlet A Winners "The market value of the stock depends, not on the opinion as to the ultimate success of the undertaking, but rather how far circumstances will tend to sustain or increase the public appetite for speculation. Nothing can show this more powerfully than the fact that we see nine or ten proposals for nearly the same line of business, all at a premium, when it is well known that only one CAN succeed..."(4) These words appeared in The Economist at the height of the IPO mania in 1845 when the New Technology railway stock mania in England was at its height. As history has tried to teach us, in a speculative market it is crucial to find the one company that can succeed among the wannabe names. Our analyst team is very good at finding those companies, but we also get help from Wall Street firms and other sources. Every year we honor some of these individuals by presenting these sages with a prestigious Scarlet A diploma. To be considered in 2000, the recommended domestic stock had to increase more than 66% and gain more than $34 million during the year. On the international side, the criteria was a 50% increase and $16 million gain in 2000. Within the health care sector we have two repeat Scarlet A winners. Ron Getto, formerly of Donaldson Lufkin & Jenrette, got the award last year for NTL. This year his winning idea was First Health Group. Myriad Genetics, a biotechnology name, was a '99 winner and David Stone of Liberty Tree Advisors earns another Scarlet A for this outstanding stock in 2000. SEI Investments, a mutual fund administrator and investment manager, was a big winner in 2000. Jackson Spears of ABN AMRO gets the Scarlet A for this pick. Also an investment company, Neuberger Berman brought in high returns. Kudos to Richard Strauss of Goldman Sachs for this pick. Reed Bingham, now retired, is also a repeat winner. His gambling pick, International Game Technology, was awarded a Scarlet A in 1992 and 1993. Despite having good earnings from 1993-2000, it took seven years for the stock to top its 1993 high proving, once again, that a good company is not the same as a good stock. Gas price increases fueled Cross Timber Oil's stock. Our thanks to Brad Beago of Credit Lyonnais for bringing this one to our attention. International winners included the Netherland's Endemol, a media name brought to us by one of our top Dutch brokers, Mark de Natris. Mark, formerly with Kempen, is now with Fortis. Credit for Switzerland's Julius Baer Holding, a banking and brokerage firm, goes to David Craigin who is currently working with a London-based hedge fund, Landsdown Partners. Our thanks to David for following this sector with intelligence and persistence. Lastly, UK facilities management company Serco earns a Scarlet A for Paul Pindar of Capita Group who suggested the stock back in 1994 when the stock was woefully undervalued. /s/ Ralph Wanger Ralph Wanger Chief Investment Officer, Liberty Wanger Asset Management, L.P. Lead Portfolio Manager, Liberty Acorn Fund - -------------------------------------------------------------------------------- (1) A "dividend" was some sort of payment companies mailed to their shareholders in the olden days. Nobody remembers why they did that. Today, companies only send money to shareholders as a result of a class action suit. (2) Ripley, William Z., Main Street and Wall Street, Little Brown, Boston, 1927. Honeyfugle: To dupe, deceive or swindle (OED). (3) Goodwill won't have to be amortized. Some have dubbed the FASB rule change, "The Investment Banker Relief Act of 2001." (4) The Economist, 25 October 1845. Quoted in Devil Take the Hindmost, a History of Financial Speculation, Chancellor, Edward. Plume, NYC 2000. 5 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Liberty Acorn Fund >In a Nutshell [PHOTOS OMITTED] Liberty Acorn Fund was up 9.94% (Class A shares, without sales charge) for the year, beating all of its benchmark indexes (see Page 1) except the S&P MidCap 400. For the quarter, the Fund saw positive returns, up 1.82%, while the Russell 2000, down 6.91%, and the S&P 500, off 7.82%, were negative. The market debacle that began in March brought down hundreds of stocks. We like to call the period in which stock groups run up to unsustainable levels the "bacle." Market history is made up of a series of these bacles and debacles. The 1999 to 2000 cycle was the biggest bacle/debacle we've seen. Against this backdrop, we feel surviving 2000 with a 10% return was a good result. The 1999 to 2000 cycle was the biggest bacle/debacle we've seen. Against this backdrop, we feel surviving 2000 with a 10% return was a good result. We introduced an "energy matters" theme in our March 2000 report. Energy really did matter for the year as price jumps for oil and natural gas pushed up earnings for energy companies. Cross Timbers Oil was a gusher, up 360%, Dynegy was dynamic, up 220%, and Equitable Resources doubled. You perhaps noticed that Wanger Asset Management was acquired by Liberty last year and now Liberty Financial is exploring strategic alternatives including the possible sale of Liberty. We were not alone in this trend. Consolidation across financial services companies helped stocks across our sector. Neuberger Berman surged 230%, SEI Investments rallied 184%, while Phoenix Investment doubled. Lenders TCF Financial and AmeriCredit compounded 85% and 47%, respectively. Health care stocks also strengthened in 2000. Myriad Genetics grew 256%, Protein Design Labs increased 147%, Inhale Therapeutics gained 134%, and First Health Group rose 73%. Liberty Acorn Twenty Manager John Park prescribed these stocks for Liberty Acorn Fund, helping us to achieve these healthy returns. On his recommendation, we've sold some of the Fund's winners. Liberty Acorn's foreign stocks -- roughly 9% of the portfolio -- had a dramatic 39% collapse in 2000 after having a dramatic 139% increase in 1999. Softbank softened 89%, giving back much of its 15-fold gain of 1999 (Over the last two years we realized a profit of $96 million on Softbank). NTL was down 76%. On the domestic side, Liberty Media (no relation) halved. We sold portions of all three holdings at high prices, but the Fund's remaining positions did hurt overall returns. We continue to search for reasonably priced small-cap companies that have good fundamentals. The Fund recently bought some depressed retail and even technology stocks in hopes of getting in early on a turnaround in these sectors. Steven Desanctis of Prudential Securities recently compiled data on long-term small-cap stock performance. Since 1932, there have been five major periods of small-cap outperformance, averaging 5.7 years and ranging from 3.3 to 8.5 years in duration. Because small caps began to outperform in March 1999, this up cycle is just 1.75 years old. Furthermore, small cap price-to-earnings ratios currently average about 25% below large caps. While impossible to predict how long the small-cap uptrend will continue, we think this is a great time to buy small cap stocks. /s/ Ralph Wanger /s/ Charles P. McQuaid Ralph Wanger Charles P. McQuaid Lead Portfolio Manager Co-Portfolio Manager ================================================================================ Ahead of - -------------------------------------------------------------------------------- the Crowd We've followed Dynegy a long time. Jason Selch, our energy analyst, first knew the company as Natural Gas Clearinghouse before it went public. In fact, we bought shares of Trident-NGL in anticipation of its 1995 merger with NGC, which effectively took NGC public. The Fund held a position through additional acquisitions as the company became a leader in gas processing/marketing plus unregulated electric generation/marketing. When the company agreed to merge with Illinova in 1999, Jason forecasted an improved competitive position and a much larger stock float (percentage of outstanding shares). Since Jason was the only attendee at a Chicago analyst meeting describing the merger, we knew the stock was undiscovered. Consequently, we hiked Liberty Acorn Fund's holdings. Following the completion of the merger, the stock jumped 220% in 2000 and became Liberty Acorn's fifth largest position. ================================================================================ Small-cap stocks are often more volatile and less liquid than the stocks of larger companies. Small companies may have a shorter history of operations than larger companies and may have a less diversified product line, making them more susceptible to market pressure. Investments in foreign securities have special risks, including political or economic instability, higher costs, different regulations, accounting standards, trading practices and levels of information, and currency exchange rate fluctuations. As of 12/31/00, the Fund's positions in the holdings mentioned were: Cross Timbers Oil, 2.6%; Dynegy, 2.0%; Equitable Resources, 1.2%; Neuberger Berman, 1.6%; SEI Investments, 3.0%; Phoenix Investments, 1.2%; TCF Financial, 1.1%; AmeriCredit, 2.6%; Myriad Genetics, 0.7%; Protein Design Labs, 0.5%; Inhale Therapeutics, 0.7%; First Health Group, 1.9%; Softbank, 0.4%; NTL, 0.1%; Liberty Media, 0.9%. 6 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Liberty Acorn Fund >At a Glance Ticker Symbol: ACRNX Pre tax and After-tax Average Annual Total Returns (Based on Class A share returns, with sales charge) - -------------------------------------------------------------------------------- >Through December 31, 2000
------------------------------------------------------------------------------------------------------------------ 1 Year 5 Years 10 Years ------------------------------------------------------------------------------------------------------------------ After- After- After- tax w/ Tax tax w/ Tax tax w/ Tax shares Effi- shares Effi- shares Effi- Pretax After-tax sold ciency Pretax After-tax sold ciency Pretax After-tax sold ciency - ------------------------------------------------------------------------------------------------------------------------------------ Liberty Acorn Fund 3.62% 0.02% 2.57% NM 17.55% 14.32% 13.63% 81.6% 19.78% 17.24% 16.35% 87.2% - ------------------------------------------------------------------------------------------------------------------------------------ Small Blend Category Avg.* 12.84% 9.67% NA 75.3%+ 12.95% 10.37% NA 80.1%+ 15.92% 12.95% NA 81.3%+ - ------------------------------------------------------------------------------------------------------------------------------------ Small Growth Category Avg.* -5.71% -9.65% NA NM 14.57% 11.38% NA 78.1%+ 17.05% 14.17% NA 83.1%+ - ------------------------------------------------------------------------------------------------------------------------------------
* Source: Morningstar, Inc. The Fund has regularly appeared in both Morningstar categories shown. + Calculated by Liberty Wanger Asset Management using Morningstar data. "NA" indicates information not available from Morningstar. Morningstar does not provide after-tax w/ shares sold returns. "NM" means data is not meaningful because returns were negative. 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. See Page 1 of this report for further explanation. - -------------------------------------------------------------------------------- Liberty Acorn Fund Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2000 [The following was represented by a pie chart in the printed material.] 24.5% Information Software & Services 10.9% Computer Related Hardware 8.0% Media 3.2% Telecom 2.4% 18.9% Finance 7.6% Other* 13.7% Consumer Goods/Services 6.4% Real Estate 13.9% Energy/Minerals 7.0% Industrial Goods/Services 8.0% Health Care *Other includes cash and other assets less liabilities of 5.6%. Foreign equities within the portfolio were 9.0% diversified by country as follows: 4.8% Europe; 2.4% Canada; 0.7% Asia without Japan; 0.5% Australia; 0.1% Emerging markets; 0.4% Japan; and 0.2% Latin America. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn Fund - -------------------------------------------------------------------------------- >December 31, 1990 through December 31, 2000 Illustration is based on a hypothetical $10,000 investment in Class A shares of the Fund, which includes the 5.75% maximum initial sales charge. The Fund commenced operations on 6/10/70, but until 10/16/2000, offered only the shares that are now designated Class Z shares. The historical performance of Class A, B and C shares for the period prior to 10/16/2000 is based on the performance of Acorn Fund. The Class A share returns are not restated to reflect any expense differential (e.g., Rule 12b-1 fees) between the Fund and the Acorn Fund. Had the expense differential been reflected, the returns for the period prior to the inception of the newer class shares would have been lower. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. The index is unmanaged and returns for both the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. Past performance does not guarantee future results. Fund Total Net Assets: $4,026.1 million [The following was represented by a mountain graph in the printed material.] Liberty Acorn Fund - A $64,483 S&P 500 $49,888 Liberty Acorn Fund - A with sales charge $60,775 Without sales charge Class A Class B Class C Class Z $64,483 $64,408 $64,408 $64,550 With sales charge Class A Class B Class C Class Z $60,775 $64,408 $64,408 N/A Liberty Acorn Liberty Acorn S&P Fund - A Fund - A with 500 sales charge 12/31/90 10000 9425 10000 10596 9986.73 10434 11461.7 10802.6 11179 3/31/91 11925.9 11240.1 11449.5 12309.9 11602.1 11477 12889.7 12148.5 11970.5 6/30/91 12334.2 11624.9 11422.3 12904 12162 11954.5 13393.1 12623 12236.7 9/30/91 13405.1 12634.3 12032.3 13828.7 13033.6 12193.5 13436 12663.4 11703.4 12/31/91 14735.2 13888 13039.9 15525 14632.4 12797.4 16090.1 15165 12962.4 3/31/92 15975.9 15057.3 12711 15491.8 14601.1 13083.4 15558.5 14663.9 13147.5 6/30/92 15178.8 14306 12951.6 15749.6 14844 13480 15497.6 14606.5 13205 9/30/92 15771.9 14865 13360.9 16604.6 15649.9 13406.3 17574.3 16563.8 13862.1 12/31/92 18301.9 17249.5 14032.6 19088.9 17991.3 14150.5 19035.5 17940.9 14342.9 3/31/93 20065.3 18911.5 14645.6 19561.6 18436.8 14291.1 21173.5 19956 14672.7 6/30/93 21414.9 20183.5 14715.3 21305.7 20080.6 14656.4 22711.8 21405.9 15211.9 9/30/93 23375 22031 15094.7 24265.6 22870.3 15407.2 23348.4 22005.8 15260.8 12/31/93 24216.9 22824.5 15445.5 24338 22938.6 15970.6 24043.5 22661 15537.8 3/31/94 22879.8 21564.2 14861.9 23069.7 21743.2 15052.2 22809 21497.5 15297.5 6/30/94 22029 20762.3 14922.7 22740.5 21432.9 15412.2 23788.8 22421 16042.6 9/30/94 23491.5 22140.7 15651.1 23404.6 22058.8 16001.7 22494.1 21200.7 15419.2 12/31/94 22413.1 21124.4 15647.5 21991.8 20727.2 16052.7 22706.5 21400.9 16677.2 3/31/95 23035.8 21711.2 17169.1 23291.5 21952.2 17673.9 24006.5 22626.1 18379.1 6/30/95 24976.4 23540.2 18805.5 26190.2 24684.3 19428 26467.8 24945.9 19476.5 9/30/95 27005.1 25452.3 20298.4 25876.3 24388.4 20225.4 26616.4 25085.9 21111.2 12/31/95 27076.8 25519.9 21518.7 27515.5 25933.3 22250.3 28591.3 26947.3 22457.2 3/31/96 29148.9 27472.8 22672.8 30702.5 28937.1 23006.1 31798.6 29970.2 23597.4 6/30/96 31181.7 29388.7 23687 29572.7 27872.3 22640.1 30705.3 28939.8 23117.8 9/30/96 31835.3 30004.8 24417 31673 29851.8 25090.9 32563 30690.6 26985.3 12/31/96 33184.9 31276.8 26451 34353 32377.7 28101.5 33913.3 31963.3 28323.5 3/31/97 32370.2 30509 27162.3 32548.3 30676.8 28781.1 35129.4 33109.4 30539.7 6/30/97 36741.8 34629.1 31898.7 38623 36402.2 34434.6 38800.6 36569.6 32506.3 9/30/97 41776.7 39374.5 34284.4 40544.2 38212.9 33139.3 40544.2 38212.9 34673.6 12/31/97 41476.8 39091.8 35270 40742.6 38399.9 35658 43720.9 41206.9 38228.9 3/31/98 46453.5 43782.4 40186.2 47136.3 44426 40596.1 45354.6 42746.7 39897.9 6/30/98 46325.2 43661.5 41517.7 43698.5 41185.9 41077.7 35727.9 33673.6 35141.9 9/30/98 37289.2 35145.1 37394.5 39172.3 36919.9 40431 40782.3 38437.3 42881.1 12/31/98 43971.5 41443.1 45351 43945.1 41418.3 47246.7 41963.2 39550.3 45777.3 3/31/99 42408 39969.5 47608.4 45877 43239 49450.9 46606.4 43926.5 48283.8 6/30/99 49095.2 46272.2 50953.9 49807.1 46943.2 49369.2 48352.7 45572.4 49122.4 9/30/99 48086.8 45321.8 47776.4 49539 46690.5 50800.7 53051.3 50000.8 51832 12/31/99 58637.6 55265.9 54879.7 57212.7 53923 52124.7 61452.2 57918.7 51139.6 3/31/00 58889.6 55503.5 56141 56863.8 53594.1 54451.2 55664 52463.3 53334.9 6/30/00 57812.6 54488.4 54646.9 58049.7 54711.8 53794.5 62281.5 58700.3 57135.1 9/30/00 63321.6 59680.6 54118.4 61675.2 58128.9 53891.1 58431.1 55071.3 49644.4 12/31/00 64483 60775 49888 - -------------------------------------------------------------------------------- Liberty Acorn Fund Top 10 Holdings - -------------------------------------------------------------------------------- 1. SEI Investments 3.0% Mutual Fund Administration 2. AmeriCredit 2.6% Auto Lending 3. International Game Technology 2.6% Slot Machines & Progressive Jackpots 4. Cross Timbers Oil 2.6% Natural Gas Producer 5. Dynegy 2.0% Natural Gas & Electric Processing, Production and Marketing 6. First Health Group 1.9% PPO Network 7. Expeditors International of Washington 1.9% International Freight Forwarder 8. National Data 1.6% Credit Card & Health Claims Processor 9. Neuberger Berman 1.6% Major Asset Management Company 10. Harley-Davidson 1.5% Motorcycles & Related Merchandise The Fund's top 10 holdings and portfolio diversification will vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 7 - -------------------------------------------------------------------------------- I - -------------------------------------------------------------------------------- Liberty Acorn International >In a Nutshell [PHOTO OMITTED] Liberty Acorn International declined 13.26% (Class A shares, without sales charge) in the fourth quarter of 2000, ending the year down 20.05%. It was a difficult investment climate for the international category in general, with the average international mutual fund down just shy of 15%* for the 12 months ended December 31, 2000. We have one of the most knowledgeable and experienced teams in the industry for finding great companies early. We believe today's more balanced investment climate favors our style of research-intensive analysis. Much of what hurt the Fund's performance in 2000 was the opposite of what helped in the past. Our best market in 1999 was Japan (portfolio holdings made $250 million for the Fund), and our worst market in 2000 was Japan (Fund investments lost $217 million). Sectors that recently drove portfolio performance shifted into reverse in 2000. European Information Technology service stocks, for example, suffered a post-Y2K hangover, dropping Finland and Sweden to the bottom of European rankings after years of being among the top performers. Technology in general performed poorly whether quoted in Taiwan, Israel or elsewhere. Currency trends also favored the dollar in 2000, producing losses for the Fund on holdings denominated in foreign currencies of $143 million. Several stocks that contributed the most to performance in 2000 did so because we sold them near the top. Reducing our positions in Editoriale L'Espresso and Baltimore Technologies by half during the first quarter allowed us to book $33 million in year 2000 gains, on top of the $96 million made last year. The Fund also picked up a combined $44 million windfall on Lusomundo and Endemol. Both of these stocks were acquired by telecom companies at the height of the craze for media content. Other big gainers for the Fund that are still large holdings, include Li & Fung (+$44 million), Serco (+$31 million), and relative newcomer Amdocs (+$29 million). We learned long ago not to try to time markets. Our approach with Liberty Acorn International is to concentrate on what we know best -- small-cap foreign stocks that are not in every institutional investor's portfolio. In our experience, when such stocks become institutional darlings their prices can soar. We have one of the most knowledgeable and experienced teams in the industry for finding great companies early. We believe today's more balanced investment climate favors our style of research-intensive analysis. Should you call and not find us at home, we are out looking for undiscovered investment ideas that may propel performance in years to come. /s/ Leah Joy Zell Leah Joy Zell Lead Portfolio Manager ================================================================================ Building Barriers - -------------------------------------------------------------------------------- to Entry Netherlands-based Buhrmann distributes office supplies to corporate accounts. Its Corporate Express division is 1 in the world, but has plenty of room to grow because the industry is very fragmented. That will change as customers look to fewer suppliers for better service. Buhrmann has the IT systems, delivery infrastructure, and strong management to emerge a winner in the consolidation sweepstakes. Already 7% of its business is conducted online. At 12-times projected 2001 earnings, we think it is a bargain. ================================================================================ * Based on the Lipper International Small-Cap Funds Category average, down 14.52% for the 1-year period ended 12/31/00. The category contained 79 funds. Investments in foreign securities have special risks, including political or economic instability, higher costs, different regulations, accounting standards, trading practices and levels of information, and currency exchange rate fluctuations. Small-cap stocks are often more volatile and less liquid than the stocks of larger companies. Small companies may have a shorter history of operations than larger companies and may have a less diversified product line, making them more susceptible to market pressure. As of 12/31/00, the Fund's positions in the holdings mentioned were: Editoriale L'Espresso, 0.0%; Baltimore Technologies, 0.2%; Lusomundo, 0.0%; Endemol, 0.0%; Li & Fung, 3.2%; Serco, 2.5%; Amdocs, 2.0%. 8 - -------------------------------------------------------------------------------- I - -------------------------------------------------------------------------------- Liberty Acorn International >At a Glance Ticker Symbol: ACINX Pretax and After-tax Average Annual Total Returns (Based on Class A share returns, with sales charge) - -------------------------------------------------------------------------------- >Through December 31, 2000
------------------------------------------------------------------------------------------------------------------- 1 Year 5 Years Life of Fund ------------------------------------------------------------------------------------------------------------------- After- After- After- tax w/ Tax tax w/ Tax tax w/ Tax shares Effi- shares Effi- shares Effi- Pretax After-tax sold ciency Pretax After-tax sold ciency Pretax After-tax sold ciency - ------------------------------------------------------------------------------------------------------------------------------------ Liberty Acorn International -24.65% -27.42% -14.93% NM 13.51% 11.74% 10.77% 86.9% 14.86% 13.75% 12.56% 92.5% - ------------------------------------------------------------------------------------------------------------------------------------ Foreign Stock Category Avg.* -15.66% -17.73% NA NM 9.43% 7.43% NA 78.8%+ NA NA NA NA - ------------------------------------------------------------------------------------------------------------------------------------
* Source: Morningstar, Inc. + Calculated by Liberty Wanger Asset Management using Morningstar data. "NA" indicates information not available from Morningstar. Morningstar does not provide Life of Fund data or after-tax w/ shares sold returns. "NM" means data is not meaningful because returns were negative. 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. See Page 1 of this report for further explanation. - -------------------------------------------------------------------------------- Liberty Acorn International Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2000 [The following was represented by a pie chart in the printed material.] 19.7% Business Services 12.8% Consumer Goods & Services 12.0% Other * 10.1% Broadcasting & Media Content 7.5% Industrials 1.6% Telecommunications 2.7% Computer Hardware 10.1% Financials 3.9% Computer Software 8.7% Other Industries 4.6% Technology Services 6.3% Health Care *Other includes cash and other assets less liabilities of 12.0%. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn International - -------------------------------------------------------------------------------- >September 23, 1992 through December 31, 2000 Illustration is based on a hypothetical $10,000 investment in Class A shares of the Fund, which includes the 5.75% maximum initial sales charge. The Fund commenced operations on 9/23/92, but until 10/16/2000, offered only the shares that are now designated Class Z shares. The historical performance of Class A, B and C shares for the period prior to 10/16/2000 is based on the performance of Acorn International. The Class A share returns are not restated to reflect any expense differential (e.g., Rule 12b-1 fees) between the Fund and Acorn International. Had the expense differential been reflected, the returns for the period prior to the inception of the newer class shares would have been lower. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The EMI World ex-U.S. is Salomon Brothers' index of the bottom 20% of institutionally investable capital of countries outside the U.S. The index is unmanaged and returns for the index and Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. Past performance does not guarantee future results. Total Net Assets: $2,479.1 million [The following was represented by a mountain graph in the printed material.] Liberty Acorn International - A $33,388 Liberty Acorn Fund - A with sales charge $31,468 EMI World ex-US $17,324 Without sales charge Class A Class B Class C Class Z $33,388 $33,348 $33,348 $33,402 With sales charge Class A Class B Class C Class Z $31,468 $33,348 $33,348 N/A Liberty Acorn Liberty Acorn EMI World Fund - A International ex-US - A with sales charge 9/23/92 10000 9425 10000 9/30/92 10010 9434.43 10053 12/31/92 10690.8 10076.1 9590.49 3/31/93 12000.7 11310.7 11026.7 6/30/93 12920.5 12177.6 12190.7 9/30/93 13910.3 13110.5 12937.3 12/31/93 15939.8 15023.2 12573.3 3/31/94 15849.3 14938 13698 6/30/94 15548.7 14654.7 14198.6 9/30/94 16491.1 15542.8 14099.2 12/31/94 15334 14452.3 13639.8 3/31/95 14810.5 13958.8 13556.5 6/30/95 15726.5 14822.2 13550.1 9/30/95 16824.8 15857.4 14085.5 12/31/95 16704.9 15744.3 14354.8 3/31/96 18205.9 17159 15178.6 6/30/96 19596.1 18469.3 15849.2 9/30/96 19365.4 18251.9 15490.1 12/31/96 20157.2 18998.2 15393.2 3/31/97 20589.7 19405.8 15110.5 6/30/97 21813.3 20559 16196.5 9/30/97 21666.8 20421 15542.4 12/31/97 20196.2 19034.9 13946.6 3/31/98 23862.4 22490.3 16345.2 6/30/98 24339.3 22939.8 16287.4 9/30/98 20431.6 19256.8 13823 12/31/98 23308.5 21968.3 15641.6 3/31/99 23580.3 22224.4 15865.1 6/30/99 27230.1 25664.3 16840.8 9/30/99 29496.1 27800.1 17698.3 12/31/99 41776.4 39374.2 19315.6 3/31/00 46826.5 44134 19707 6/30/00 40186.1 37875.4 19363.3 9/30/00 38507.3 36293.1 18343.7 12/31/00 33388 31468 17324 - -------------------------------------------------------------------------------- Liberty Acorn International Top 10 Holdings - -------------------------------------------------------------------------------- 1. Li & Fung (Hong Kong) 3.2% Sourcing of Consumer Goods 2. Serco Group (United Kingdom) 2.5% Facilities Management 3. Rhoen Klinikum (Germany) 2.4% Hospital Management 4. Autogrill (Italy) 2.2% Restaurants & Catering for Travelers 5. Amdocs (Israel) 2.0% Telecommunications Billing & Customer Care Software 6. Venture Manufacturing (Singapore) 1.9% Electronic Manufacturing Services 7. Cie Fin Richemont (Switzerland) 1.6% Luxury Goods 8. Capita Group (United Kingdom) 1.5% Outsourcing Services 9. Irish Life & Permanent (Ireland) 1.5% Savings Products 10. Orix (Japan) 1.4% Finance Leasing The Fund's top 10 holdings and portfolio diversification will vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. - -------------------------------------------------------------------------------- 9 - -------------------------------------------------------------------------------- U - -------------------------------------------------------------------------------- Liberty Acorn USA >In a Nutshell [PHOTO OMITTED] Liberty Acorn USA ended the quarter up 3.3% (Class A shares, without sales charge), strongly outperforming the Russell 2000, down 6.91%. For 2000, the Fund was down 9.1%, underperforming the 3.02% decline of the Russell 2000 Index. The year 2000 consisted of two very distinct six-month periods for Liberty Acorn USA. At June 30, the Fund was down 16.1% due largely to the mid-March Nasdaq collapse that sent tech stocks reeling. But the Fund regained its footing in early July and posted an 8.3% return for the second half of the year. Going forward, we are optimistic about the prospects for the Fund and small caps in general. Small stocks have finally started to outperform large stocks* and valuations in smaller company growth names continue to be very attractive. For the quarter and the year, two health-care stocks topped the portfolio performance list. First Health Group operates the largest national Preferred Provider Organization (PPO) network and while it operates very differently from HMOs, it tends to follow the HMO market cycle. In 2000, the HMO sector nearly doubled returns. The Fund's other health-care winner was Lincare Holdings, a leading provider of respiratory-care equipment. Favorable rulings that eased some of the regulatory pressure on the company breathed new life into the stock mid-year, causing it to triple. Dynegy was another big winner for 2000. Natural gas prices are more than triple what they were last year and electricity prices are also on the rise. As an electricity and natural gas marketer, Dynegy is a beneficiary of these trends. Its stock also tripled in 2000. Underperformers were -- no surprise -- largely technology and telecommunication names. While Micros Systems, a developer of systems used in restaurants and hotels, went up during the fourth quarter, it was not enough to offset earlier losses. Other stocks that hurt the Fund's performance included Sykes (call center services), RCN (local market telecom services), Project Software (software developer) and Telephone and Data Systems (telephone services). The Fund sold Sykes and RCN mid-year. We do continue to own select tech and telecom stocks. We kept names that we feel control a specific market niche. As long-term investors, we will keep stocks that are down as long as the original reason for the purchase still holds true. Going forward, we are optimistic about the prospects for the Fund and small caps in general. Small stocks have finally started to outperform large stocks* and valuations in smaller company growth names continue to be very attractive. /s/ Robert A. Mohn Robert A. Mohn Lead Portfolio Manager ================================================================================ Reaping Profits from - -------------------------------------------------------------------------------- Debits and Credits Concord EFS was a 2000 find that ended the year among Liberty Acorn USA's top performers. A credit card processor, Concord's success has come from recognizing untapped opportunities. Concord recently announced plans to acquire Star Systems, the second largest debit card network in the country. This acquisition will give Concord a 50% share of all debit transaction processing. It was a smart move considering credit card transaction growth is hovering in the teens, while debit card usage is growing by more than 30%. They also introduced the pay-at-the-pump option found in nearly all modern gas stations today. With a growth rate of more than 40%, it is not surprising that this stock more than doubled in 2000. ================================================================================ * From 12/31/99 to 12/31/00, the Russell 2000 was down 3.02% while the large-cap focused S&P 500 declined 9.10%. Small-cap stocks are often more volatile and less liquid than the stocks of larger companies. Small companies may have a shorter history of operations than larger companies and may have a less diversified product line, making them more susceptible to market pressure. As of 12/31/00, the Fund's positions in the holdings mentioned were: First Health Group, 2.9%; Lincare Holdings, 4.3%; Dynegy, 3.2%; Micros Systems, 4.3%; Sykes, 0.0%; RCN, 0.0%; Project Software, 0.6%; Telephone and Data Systems, 7.0%; Concord EFS, 0.0%. 10 - -------------------------------------------------------------------------------- U - -------------------------------------------------------------------------------- Liberty Acorn USA >At a Glance Ticker Symbol: AUSAX Pretax and After-tax Average Annual Total Returns (Based on Class A share returns, with sales charge) - -------------------------------------------------------------------------------- >Through December 31, 2000
------------------------------------------------------------------------------------------------------------------- 1 Year 3 Years Life of Fund ------------------------------------------------------------------------------------------------------------------- After- After- After- tax w/ Tax tax w/ Tax tax w/ Tax shares Effi- shares Effi- shares Effi- Pretax After-tax sold ciency Pretax After-tax sold ciency Pretax After-tax sold ciency - ------------------------------------------------------------------------------------------------------------------------------------ Liberty Acorn USA -14.34% -14.75% -10.62% NM 3.69% 2.31% 2.39% 62.6% 13.33% 12.10% 10.60% 90.7% - ------------------------------------------------------------------------------------------------------------------------------------ Small Blend Category Avg.* 12.84% 9.67% NA 75.3%+ 7.01% 5.14% NA 73.3%+ NA NA NA NA - ------------------------------------------------------------------------------------------------------------------------------------
* Source: Morningstar, Inc. + Calculated by Liberty Wanger Asset Management using Morningstar data. "NA" indicates information not available from Morningstar. Morningstar does not provide Life of Fund data or after-tax w/ shares sold returns. "NM" means data is not meaningful because returns were negative. 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. See Page 1 of this report for further explanation. - -------------------------------------------------------------------------------- Liberty Acorn USA Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2000 [The following was represented by a pie chart in the printed material.] 12.6% Finance 35.6% Information Telecommunications 11.3% Software & Services 18.2% Computer Related Hardware 4.3% Media 2.2% 11.9% Energy/Minerals 15.0% Health Care 12.4% Other* 8.0% Consumer Goods/Services 4.5% Industrial Goods/Services *Other includes cash and other assets less liabilities of 7.2%. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn USA - -------------------------------------------------------------------------------- >September 4, 1996 through December 31, 2000 Illustration is based on a hypothetical $10,000 investment in Class A shares of the Fund, which includes the 5.75% maximum initial sales charge. The Fund commenced operations on 9/4/96, but until 10/16/00, offered only the shares that are now designated Class Z shares. The historical performance of Class A, B and C shares for the period prior to 10/16/00 is based on the performance of Acorn USA. The Class A share returns are not restated to reflect any expense differential (e.g., Rule 12b-1 fees) between the Fund and Acorn USA. Had the expense differential been reflected, the returns for the period prior to the inception of the newer class shares would have been lower. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The Russell 2000 is a market-weighted index of 2,000 smaller U.S. companies formed by taking the largest 3,000 U.S. companies and eliminating the largest 1,000. The index is unmanaged and returns for both the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. Past performance does not guarantee future results. Total Net Assets: $224.2 million [The following was represented by a mountain graph in the printed material.] Liberty Acorn USA - A $18,231 Russell 2000 $15,283 Liberty Acorn USA - A with sales charge $17,182 Liberty Acorn USA: Without sales charge Class A Class B Class C Class Z $18,231 $18,218 $18,218 $18,255 With sales charge Class A Class B Class C Class Z $17,182 $18,018 $18,218 N/A Liberty Acorn Liberty Acorn Russell USA - A USA - A with 2000 sales charge 9/4/96 10000 9425 10000 9/30/96 10720 10103.6 10359.9 12/31/96 11649.3 10979.5 10898.9 3/31/97 11479.9 10819.8 10335.3 6/30/97 13319.1 12553.2 12010.7 9/30/97 15339.8 14457.8 13798.3 12/31/97 15413.4 14527.1 13336.2 3/31/98 17401.7 16401.1 14677.7 6/30/98 17526.7 16519 13993.4 9/30/98 14153.6 13339.8 11174.3 12/31/98 16307.7 15370 12996.7 3/31/99 15017.9 14154.4 12291.7 6/30/99 17652.3 16637.3 14203.3 9/30/99 16867.7 15897.8 13305.2 12/31/99 20060.5 18907 15759.4 3/31/00 19821.4 18681.7 16875.8 6/30/00 16835.2 15867.2 16237.9 9/30/00 17643.5 16629 16417.4 12/31/00 18231.5 17183.2 15283 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Liberty Acorn USA Top 10 Holdings 1. AmeriCredit 7.3% Auto Lending 2. Telephone and Data Systems 7.0% Cellular & Telephone Services 3. Conectiv 4.7% Electric Utility 4. National Data 4.4% Credit Card & Health Claims Processor 5. Lincare Holdings 4.3% Home Health Care Services 6. Micros Systems 4.3% Information Systems for Restaurants & Hotels 7. JDA Software 3.4% Applications/Software & Services for Retailers 8. Dynegy 3.2% Natural Gas & Electric Processing, Production and Marketing 9. Tektronix 3.2% Analytical Instruments 10. ITT Educational Services 3.0% Technology Oriented Postsecondary Degree Programs The Fund's top 10 holdings and portfolio diversification will vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. - -------------------------------------------------------------------------------- 11 - -------------------------------------------------------------------------------- F40 - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty >In a Nutshell [PHOTOS OMITTED] Liberty Acorn Foreign Forty ended the fourth quarter of 2000 down 10.0% (Class A shares, without sales charge) and finished the year off 13.4%. The Fund underperformed its benchmark indexes for the quarter (see Page 1) but ended the year slightly ahead of the EAFE Index and the Lipper International Funds Index. While the Fund proved its ability to outperform on the bull market side in 1998 and 1999, this year gave Liberty Acorn Foreign Forty a chance to test its bear market strength. We believe the final scores for 2000 suggest the Fund has been able to compete in down cycles as well. The bear market in technology and Internet stocks was not just a U.S. phenomenon. Technology and telecom stocks around the world mimicked the Nasdaq's 39% drop. The bear market in technology and Internet stocks was not just a U.S. phenomenon. Technology and telecom stocks around the world mimicked the Nasdaq's 39% drop. Computer service companies Sema Group and Getronics; electronic manufacturing company Venture Manufacturing; and telecoms Netcom and Global TeleSystems were among the hardest hit stocks in the portfolio. While the Fund sold Getronics and Global Telesystems, we have maintained exposure to tech and telecom names that we believe are world-class companies. For the quarter and the year, stocks under our pension theme offered stellar performance. ASR Verzekeringsgroep, an auto and life insurance company based in the Netherlands, was acquired by Fortis, also in the Netherlands, driving in some nice gains for the Fund. Irish Life & Permanent, an Irish life insurance name, also saw strong returns on news of continued earnings growth. Another boost at year-end came from energy stocks. The Fund raised its exposure to energy during the fourth quarter on a recommendation from Jason Selch, our energy analyst. Our thanks to him for getting us in early on the energy upswing. Lastly, the euro, which had been on a downward slide all year, rallied suddenly in December, gaining 8%. The Fund has already seen a substantial recovery in the prices of many of the stocks that lagged in 2000 and our long-standing policy of being fully invested (no more than 5% in cash) is paying off. Having swung too far to the optimistic side early in 2000 and too far to the pessimistic side later in the year, we believe the markets have reached a sustainable level. Given that the companies in the Fund's portfolio continue to see strong earnings growth and remain reasonably priced, we believe they should outperform in this type of environment. Looking forward, we are optimistic about the prospects for international markets. We believe demographic and economic factors point to a highly favorable international investing climate: Foreign currencies are strengthening. Companies are becoming more productive through use of technology, restructuring, and outsourcing. Many foreign countries are in a different economic cycle than ours, and are earlier in the growth phase. And most importantly, Europe is in the middle of a big shift in favor of equity investing. /s/ Marcel P. Houtzager /s/ Roger Edgley Marcel P. Houtzager Roger Edgley Co-Portfolio Manager Co-Portfolio Manager ================================================================================ Calling Amdocs - -------------------------------------------------------------------------------- One of this year's top performers under our outsourcing theme was Amdocs. Headquartered in Israel, the company runs a two-part business. First, Amdocs licenses billing software primarily used by telephone companies. Unlike many of its competitors, however, it also installs and maintains the software. With billing constituting one of the largest expenses telephone companies incur, Amdocs provides a means to cut costs while improving what is often antiquated billing software. Not only is it offering a good product that is selling well, we believe the company also is low risk. The length of Amdocs' consulting contracts is often years. This means its growth numbers and earnings estimates are generally right on target because it has booked the business so far in advance. We bought the stock just after it came to the market three years ago and it has been a consistent performer. In 2000, it increased 90%. ================================================================================ Liberty Acorn Foreign Forty is a non-diversified fund. The performance of its holdings will have a greater impact on the Fund's total return, and may make the Fund's returns more volatile than a more diversified fund. Mid-cap stocks tend to be more volatile and may be less liquid than the stocks of larger companies. Investments in foreign securities have special risks, including political or economic instability, higher costs, different regulations, accounting standards, trading practices and levels of information, and currency exchange rate fluctuations. As of 12/31/00, the Fund's positions in the holdings mentioned were: Sema Group, 0.03%; Getronics, 0.0%; Venture Manufacturing, 3.1%; Netcom, 2.9%; Global TeleSystems, 0.0%; ASR Verzekeringsgroep, 0.0%; Irish Life & Permanent, 5.0%. 12 - -------------------------------------------------------------------------------- F40 - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty >At a Glance Ticker Symbol: ACFFX Pretax and After-tax Average Annual Total Returns (Based on Class A share returns, with sales charge) - -------------------------------------------------------------------------------- >Through December 31, 2000
--------------------------------------------------------------------------- 1 Year Life of Fund --------------------------------------------------------------------------- After- After- tax w/ Tax tax w/ Tax shares Effi- shares Effi- Pretax After-tax sold ciency Pretax After-tax sold ciency - ---------------------------------------------------------------------------------------------------------- Liberty Acorn Foreign Forty -18.33% -18.55% -13.33% NM 26.15% 25.93% 20.87% 99.2% - ---------------------------------------------------------------------------------------------------------- Foreign Stock Category Avg.* -15.66% -17.73% NA NM NA NA NA NA - ----------------------------------------------------------------------------------------------------------
* Source: Morningstar, Inc. "NA" indicates information not available from Morningstar. Morningstar does not provide Life of Fund data or after-tax w/ shares sold returns. "NM" means data is not meaningful because returns were negative. 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. See Page 1 of this report for further explanation. - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2000 [The following was represented by a pie chart in the printed material.] 19.9% Software & Services 20.5% Finance 10.5% Industrial Goods 9.7% Computer Related Hardware 3.9% Other* 9.6% Energy & Minerals 5.4% Health Care 6.3% Media 7.7% Telecommunications 6.5% Consumer Goods/Services * Other includes cash and other assets less liabilities of 3.5%. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn Foreign Forty - -------------------------------------------------------------------------------- >November 23, 1998 through December 31, 2000 Illustration is based on a hypothetical $10,000 investment in Class A shares of the Fund, which includes the 5.75% maximum initial sales charge. The Fund commenced operations on 11/23/98, but until 10/16/2000, offered only the shares that are now designated Class Z shares. The historical performance of Class A, B and C shares for the period prior to 10/16/2000 is based on the performance of Acorn Foreign Forty. The Class A share returns are not restated to reflect any expense differential (e.g., Rule 12b-1 fees) between the Fund and Acorn Foreign Forty. Had the expense differential been reflected, the returns for the period prior to the inception of the newer class shares would have been lower. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. 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 in proportion to world stock market capitalizations. The index and Fund returns include reinvested dividends and capital gains. It is not possible to invest directly in an index. Past performance does not guarantee future results. Total Net Assets: $137.6 million [The following was represented by a mountain graph in the printed material.] Liberty Acorn Foreign Forty - A $17,309 Liberty Acorn Foreign Forty - A with sales charge $16,314 EAFE $11,346 Without sales charge Class A Class B Class C Class Z $17,309 $17,289 $17,299 $17,309 With sales charge Class A Class B Class C Class Z $16,314 $16,989 $17,299 N/A Liberty Acorn Liberty Acorn EAFE Foreign Forty Foreign Forty - A - A with sales charge 11/23/98 10000 9425 11/30/98 10140 9556.95 10016.3 12/31/98 10999.9 10367.4 10411.4 11789.7 11111.8 10380.7 11589.2 10922.9 10133.3 3/31/99 11978.6 11289.9 10556.2 12238.6 11534.9 10984 12168.8 11469.1 10418.3 6/30/99 13108.2 12354.5 10824.5 13509.4 12732.6 11146.2 13770.1 12978.3 11187 9/30/99 13620 12836.9 11299.6 14130.7 13318.2 11722.8 16996.5 16019.2 12130.1 12/31/99 19972.5 18824.1 13218.8 19661 18530.5 12378.9 24240 22846.2 12712.1 3/31/00 23088.6 21761 13204.9 21255.4 20033.2 12510 18919.4 17831.5 12204.5 6/30/00 19848.3 18707.1 12681.7 19465.3 18346 12150.1 20263.3 19098.2 12255.5 9/30/00 19234 18128 11658.8 18487.7 17424.7 11500 16126.8 15199.5 11400 12/31/00 17309 16314 11346 - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty Top 10 Holdings - -------------------------------------------------------------------------------- 1. Fortis (Netherlands) 6.4% Financial Services Conglomerate 2. Irish Life & Permanent (Ireland) 5.0% Life Insurance 3. Computershare (Australia) 4.2% Financial Software/Services 4. Celestica (Canada) 4.1% Electronic Manufacturing Services 5. Talisman Energy (Canada) 4.0% Oil & Gas Producer 6. Comverse Technology (Israel) 3.9% Voicemail & Related Systems 7. Hays (United Kingdom) 3.8% Outsourcing Services 8. Amdocs (Israel) 3.3% Telecommunications Billing & Customer Care Software 9. Julius Baer Holding (Switzerland) 3.2% Private Banking, Brokerage & Mutual Funds 10. Venture Manufacturing (Singapore) 3.1% Electronic Manufacturing Services The Fund's top 10 holdings and portfolio diversification will vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. - -------------------------------------------------------------------------------- 13 - -------------------------------------------------------------------------------- 20 - -------------------------------------------------------------------------------- Liberty Acorn Twenty >In a Nutshell [PHOTO OMITTED] Liberty Acorn Twenty finished 2000 up 11.60% (Class A shares, without sales charge). This return lagged behind the S&P MidCap 400's 17.51% gain but beat the S&P 500, down 9.10%. During the quarter, the Fund declined 2.18%, outperforming the S&P MidCap 400, off 3.85%, and the S&P 500, down 7.82%. Since inception, the Class A shares without sales charge of the Fund has a cumulative return of 54.54% vs. the S&P 400's 49.75%, the S&P 500's 16.4% and the Lipper Mid Cap Core Fund Index's 49.47% return over the same period. We are pleased with both the relative and absolute performance of the Fund since its inception. We are pleased with both the relative and absolute performance of the Fund since its inception. Winners in the year 2000 came from many different areas of the market. SEI Investments gained 182% as tremendous asset growth during the year translated into stellar revenue and earnings increases. Waters returned 101% as biotech and drug companies increased protein research following the sequencing of the human genome. Waters' mass spectrometry analytical instruments are key components for protein analysis and characterization. First Health Group rose 74% as business in its key PPO line reaccelerated following a major new client addition. Other big drivers for the Fund included Tektronix, Perkin Elmer, Dynegy, Expeditors International of Washington and TCF Financial. All of these stocks gained at least 40% for the year. There were some losers in 2000 as well. The Fund's holdings in telecom and technology stocks were not immune to the market's disdain for such issues. Liberty Media, a standout for Liberty Acorn Twenty last year (as well as for many prior years in the Liberty Acorn Fund), fell 52%. Plagued by poor investments in public securities dealing with the Internet, Liberty Media's stock was under pressure as the Internet bubble burst. Another 1999 standout, Telephone and Data Systems, lost 35% as cash flow growth fell short of expectations. Jabil Circuit fell 34% following a disappointing earnings announcement in December, and McLeod USA fell 29% as comparable firms in its industry reported poor results. In each case, our analysts believe the long-term outlook remains sound and the Fund has held or added to its positions. Finally, I wish to acknowledge the Acorn domestic research team. We have had a number of new people join our group, including Susie Pinsky (consumer products and services), Harold Lichtenstein (real estate and insurance), Grant McKay (technology hardware), and Rob Chalupnik (industrial goods and services). I want to offer my personal thanks to this fine group of people as well as to Ralph Wanger (chief investment officer), Chuck McQuaid (telecommunications and media), Rob Mohn (financial services), Jason Selch (energy), and Ben Andrews (technology software) for making 2000 a successful year for Liberty Acorn Twenty. /s/ John H. Park John H. Park Lead Portfolio Manager ================================================================================ A Healthy Return - -------------------------------------------------------------------------------- First Health Group is the nation's largest direct contracted Preferred Provider Organization (PPO) with nearly 90% of the United States' population having access to its network of hospitals and doctors. Its clients include large, multi-sited self-insured corporations like McDonald's and Hewlett Packard. These companies use First Health for its employee health benefits programs, ensuring access to any doctor in its network. Being the largest direct contracted PPO allows First Health to negotiate the largest discounts with its doctors and hospitals and First Health then gets paid a percentage of the savings it negotiated when a patient uses the network. Its business model has created a highly cash generative company with a defensible barrier to entry. After integrating a problematic acquisition two years ago, the company is back on track growing revenue and earnings in the double digits. The stock was up 100% since Liberty Acorn Twenty first purchased it in 1999. ================================================================================ Liberty Acorn Twenty is a non-diversified fund. The performance of each of its holdings will have a greater impact on the Fund's total return, and may make the Fund's returns more volatile than a more diversified fund. Mid-cap stocks tend to be more volatile and may be less liquid than the stocks of larger companies. As of 12/31/00, the Fund's positions in the holdings mentioned were: SEI Investments, 10.5%; Waters, 3.3%; First Health Group, 6.2%; Tektronix, 5.8%; Perkin Elmer, 3.5%; Dynegy, 6.0%; Expeditors International of Washington, 3.2%; TCF Financial, 4.2%; Liberty Media, 2.7%; Telephone and Data Systems, 4.6%; Jabil Circuit, 2.7%; McLeod USA, 1.6%. 14 - -------------------------------------------------------------------------------- 20 - -------------------------------------------------------------------------------- Liberty Acorn Twenty >At a Glance Ticker Symbol: ACTWX Pretaxand After-tax Average Annual Total Returns (Based on Class A share returns, with sales charge) - -------------------------------------------------------------------------------- >Through December 31, 2000
--------------------------------------------------------------------------- 1 Year Life of Fund --------------------------------------------------------------------------- After- After- tax w/ Tax tax w/ Tax shares Effi- shares Effi- Pretax After-tax sold ciency Pretax After-tax sold ciency - ---------------------------------------------------------------------------------------------------------- Liberty Acorn Twenty 5.18% 3.16% 1.89% 61.0% 19.54% 18.21% 15.02% 93.2% - ---------------------------------------------------------------------------------------------------------- Mid Cap Blend Category Avg.* 3.37% 0.53% NA 15.7%+ NA NA NA NA - ----------------------------------------------------------------------------------------------------------
* Source: Morningstar, Inc. + Calculated by Liberty Wanger Asset Management using Morningstar data. "NA" indicates information not available from Morningstar. Morningstar does not provide Life of Fund data or after-tax w/ shares sold returns. If you own the Fund in a tax-deferred account such as an IRA or a 401(k), this information does not apply to you. Your actual after-tax returns depend on your tax situation and will differ from those shown. After-tax returns reflect past tax-effects and are not predictive of future tax effects. See Page 1 of this report for further explanation. - -------------------------------------------------------------------------------- Liberty Acorn Twenty Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2000 [The following was represented by a pie chart in the printed material.] 3.2% Industrial Goods/Services 8.8% Energy/Minerals 6.1% Other* 36.6% Information 14.6% Finance Instrumentation 12.6% Business Information 7.5% Telecommunications 6.2% Media 5.8% Computer Related Hardware 2.7% Software & Services 1.8% 15.0% Health Care 15.7% Consumer Goods/Services * Cash and other assets less liabilities. - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Liberty Acorn Twenty - -------------------------------------------------------------------------------- >November 23, 1998 through December 31, 2000 Illustration is based on a hypothetical $10,000 investment in Class A shares of the Fund, which includes the 5.75% maximum initial sales charge. The Fund commenced operations on 11/23/98, but until 10/16/2000, offered only the shares that are now designated Class Z shares. The historical performance of Class A, B and C shares for the period prior to 10/16/2000 is based on the performance of Acorn Twenty. The Class A share returns are not restated to reflect any expense differential (e.g., Rule 12b-1 fees) between the Fund and Acorn Twenty. Had the expense differential been reflected, the returns for the period prior to the inception of the newer class shares would have been lower. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The S&P MidCap 400 is a broad, market-weighted index of 400 stocks that are in the next size/tier down from the S&P 500. The Index is unmanaged and returns for the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. Past performance does not guarantee future results. Total Net Assets: $75.1 million [The following was represented by a mountain graph in the printed material.] Liberty Acorn Twenty - A $15,454 S&P MidCap 400 $14,975 Liberty Acorn Twenty - A with sales charge $14,566 Without sales charge Class A Class B Class C Class Z $15,454 $15,433 $15,433 $15,465 With sales charge Class A Class B Class C Class Z $14,566 $15,133 $15,433 N/A Liberty Acorn Liberty Acorn S&P Twenty - A Twenty - A MidCap with sales 400 charge 11/23/98 10000 9425 10030 9453.28 10000 12/31/98 10710 10094.2 11208 11000.3 10367.8 10772 10709.9 10094 10207.6 3/31/99 11479.9 10819.8 10493.4 12709.4 11978.6 11320.2 12729.7 11997.8 11370 6/30/99 13040.4 12290.5 11977.2 13190.3 12431.9 11723.3 12059.9 11366.5 11322.4 9/30/99 12109.4 11413.1 10972.5 12969.1 12223.4 11532.1 13249.2 12487.4 12137.5 12/31/99 13846.8 13050.6 12858.5 13472.9 12698.2 12495.9 13553.8 12774.4 13370.6 3/31/00 14170.5 13355.6 14489.7 13463.4 12689.2 13984 13099.8 12346.6 13809.2 6/30/00 14319.4 13496.1 14012.2 13931.4 13130.3 14233.6 15431.8 14544.5 15823.5 9/30/00 15799.1 14890.6 15715.9 15928.6 15012.7 15183.1 14382 13555 14036.8 12/31/00 15454 14566 14975 - -------------------------------------------------------------------------------- Liberty Acorn Twenty Top 10 Holdings - -------------------------------------------------------------------------------- 1. SEI Investments 10.5% Mutual Fund Administration 2. First Health Group 6.2% PPO Network 3. Dynegy 6.0% Natural Gas & Electric Processing, Production and Marketing 4. Tektronix 5.8% Analytical Instruments 5. Boston Scientific 4.8% Stents & Catheters 6. Herman Miller 4.8% Office Furniture 7. Telephone and Data Systems 4.6% Cellular & Telephone Services 8. Jones Apparel 4.5% Women's Apparel 9. TCF Financial 4.2% Great Lakes Bank 10. H&R Block 4.0% Tax Preparation The Fund's top 10 holdings and portfolio diversification will vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. - -------------------------------------------------------------------------------- 15 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Liberty Acorn Fund >Major Portfolio Changes in the Fourth Quarter Principal Amount or Number of Shares ------------------------ 9/30/00 12/31/00 Additions - ----------------------------------------------------------------- Information American Management Systems 400,000 580,000 Avocent 0 150,000 Cambridge Technology 500,000 1,500,000 Citadel Communications 226,000 350,000 Clicksoftware Technologies 1,300,000 1,400,000 Cubic 1,400 181,000 Excel Technologies 0 200,000 Gemplus International (France) 0 360,000 Hyperion Solutions 320,000 650,000 Information Holdings 475,000 500,000 JD Edwards 825,000 875,000 Kent Electronics 300,000 625,000 MAPICS 1,450,000 1,490,000 Meta Group 109,000 385,000 Navigant Consulting 2,000,000 2,100,000 New Horizons Worldwide 0 114,000 Pinnacle Holdings 500,000 750,000 PRIMEDIA 1,100,000 1,200,000 Project Software 0 55,000 Startec Global Communications 430,000 590,000 Zebra Technologies 0 155,000 - ----------------------------------------------------------------- Health Care Edwards Lifesciences 0 670,000 Microdose 0 326,000 Serologicals 0 742,000 Syncor International 232,000 472,000 - ----------------------------------------------------------------- Consumer Goods/Services Borders Group 1,561,000 1,700,000 Callaway Golf 600,000 900,000 Christopher & Banks 0 284,000 Ducati Motor (Italy) 4,100,000 5,000,000 Helen of Troy 2,200,000 2,300,000 Hunter Douglas (Netherlands) 365,000 440,000 Intrawest (Canada) 0 90,000 ITT Educational Services 1,250,000 1,300,000 Michaels Stores 246,000 300,000 Monaco Coach 24,000 230,000 Pinnacle Entertainment 420,000 650,000 Whole Foods Market 420,000 450,000 Zale 110,000 240,000 - ----------------------------------------------------------------- Finance Fortis (Netherlands) 0 474,000 Kempen (Netherlands) 95,000 140,000 Republic 0 26,000 - ----------------------------------------------------------------- Industrial Goods/Services Forward Air 355,000 500,000 Spartech 800,000 850,000 - ----------------------------------------------------------------- Energy/Minerals Carbo Ceramics 387,000 429,000 Chiles Offshore 284,000 450,000 Cross Timbers Oil 3,620,000 3,700,000 Evergreen Resources 620,000 730,000 Maverick Tube 650,000 1,100,000 Newpark Resources 2,900,000 2,990,000 Ogden 0 400,000 Orion Power 0 254,000 U.S. Aggregates 607,000 882,000 - ----------------------------------------------------------------- Other Industries Azurix 1,245,000 1,345,000 Conectiv 600,000 700,000 General Growth Properties 300,000 400,000 Regus (United Kingdom) 0 135,000 Vail Resorts 200,000 700,000 16 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Number of Shares ------------------------ 9/30/00 12/31/00 Sales - ----------------------------------------------------------------- Information Concord EFS 856,000 816,000 MasTec 250,000 0 MDSI Mobile Data Solutions (Canada) 380,000 0 Nelvana (Canada) 370,000 0 NTL (United Kingdom) 300,000 250,000 Playboy Enterprises 600,000 0 Price Communications 470,000 250,000 Shop at Home 400,000 0 Sykes Enterprises 400,000 0 3DO Company 200,000 0 Uecomm (Australia) 324,750 0 VelocityHSI 90,000 0 Vitalstream 225,461 140,000 West Teleservices 340,000 77,000 WM-Data Solutions (Sweden) 3,000,000 2,500,000 - ----------------------------------------------------------------- Health Care Corvas International 1,358,000 1,258,000 Inhale Therapeutic Systems 610,000 550,000 Myriad Genetics 400,000 320,000 NPS Pharmaceuticals 476,000 426,000 Protein Design Labs 258,000 218,000 Techne 27,000 0 (includes effect of a 2 for 1 stock split) - ----------------------------------------------------------------- Consumer Goods/Services Education Management 234,000 200,000 Pier 1 Imports 1,250,000 1,150,000 Rent-to-Own 240,000 0 Thor Industries 241,000 0 - ----------------------------------------------------------------- Finance Ace Cash Express 750,000 636,000 ASR Verzekeringsgroep (Netherlands) 158,000 0 Pioneer Group 624,000 0 SEI Investments 1,145,000 1,085,000 - ----------------------------------------------------------------- Industrial Goods/Services Lilly Industries, CL. A 1,000,000 0 Serco Group (United Kingdom) 7,200,000 6,100,000 - ----------------------------------------------------------------- Energy/Minerals AES Corporation 300,000 150,000 Basin Exploration 460,000 310,000 - ----------------------------------------------------------------- Other Industries HRPT Properties 1,000,000 0 Stericycle 327,000 262,000 Utilicorp United 900,000 800,000 17 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Liberty Acorn Fund >Statement of Investments December 31, 2000 Number of Shares Value (000) - ----------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 94.4% - ----------------------------------------------------------------- Information: 24.5% Media >Broadcasting: 1.0% 650,000 Young Broadcasting (b) $ 21,765 Television Stations 850,000 Salem Communications (b) 12,697 Radio Stations for Religious Programming 350,000 Citadel Communications (b) 4,200 Mid Market Radio Stations - ----------------------------------------------------------------- 38,662 >Television Programming/CATV: 2.2% 2,600,000 Liberty Media Group, AT&T (b) 35,262 Cable & Satellite Programming 1,016,000 Corus Entertainment (Canada) (b) 26,435 CATV Programming & Radio Stations 1,000,000 Mediacom Communications (b) 17,188 Cable Television Franchises 200,000 Insight Communications (b) 4,700 CATV Franchises in Midwest 700,000 Cinar (Canada) (b) 2,844 Children's TV Programming 900,000 Classic Communications (b) (c) 1,969 CATV Franchises in Rural Areas - ----------------------------------------------------------------- 88,398 Telecommunications >Telecommunications/Wireline Communications: 0.7% 520,000 Commonwealth Telephone (b) 18,200 Rural Phone Franchises & CLEC 250,000 NTL (United Kingdom) (b) 5,984 Voice, Video & Data Services 590,000 Startec Global Communications (b) (c) 2,286 International Telecommunications - ----------------------------------------------------------------- 26,470 >Mobile Communications: 1.5% 450,000 Telephone & Data Systems 40,500 Cellular & Telephone Services 533,000 COMARCO (c) 7,195 Wireless Network Testing 750,000 Pinnacle Holdings (b) 6,797 Towers for Cellular, PCs & Paging 250,000 Price Communications (b) 4,203 Cellular Telephone Services - ----------------------------------------------------------------- 58,695 >Telecommunications Equipment: 0.2% 850,000 Tidel Technologies (b) 4,888 $ 3,000,000 Tidel Technologies, 6% Note Due 9/8/04 3,000 ATM Machines - ----------------------------------------------------------------- 7,888 Computer Related Hardware >Computer Hardware/Related Systems: 1.6% 737,000 Kronos (b) (c) 22,801 Labor Management Solutions 975,000 Micros Systems (b) (c) 17,794 Information System for Restaurants & Hotels 155,000 Zebra Technologies (b) $ 6,324 Bar Code Printing Hardware, Supplies & Software 370,000 American Power Conversion (b) 4,579 Uninterruptable Power Systems 150,000 Avocent (b) 4,050 Computer Control Switches 200,000 Excel Technologies (b) 3,991 Laser Systems & Electro-Optical Components 360,000 Gemplus International (France) 3,222 Smart Cards Products & Solutions - ----------------------------------------------------------------- 62,761 >Gaming Equipment: 4.0% 2,200,000 International Game Technology (b) 105,611 Slot Machines & Progressive Jackpots 1,000,000 Anchor Gaming 39,000 Slot Machines & Casinos 6,250,000 Aristocrat Leisure (Australia) 18,048 Slot Machines - ----------------------------------------------------------------- 162,659 >Contract Manufacturing: 0.9% 500,000 Solectron 16,950 Electronic Manufacturing Services 387,000 APW (b) 13,061 Electronic Enclosures 320,000 Jabil Circuit (b) 8,120 Electronic Manufacturing Services - ----------------------------------------------------------------- 38,131 >Instrumentation: 1.3% 480,000 Mettler Toledo (b) 26,100 Laboratory Equipment 427,000 Varian (b) 14,465 Analytical Instruments 351,000 Dionex (b) 12,109 Ion & Liquid Chromatography - ----------------------------------------------------------------- 52,674 >Semiconductors/Related Equipment: 0.2% 300,000 DSP Group (b) 6,314 Telecom Semiconductors - ----------------------------------------------------------------- Software/Services >Business Software: 1.5% 875,000 JD Edwards (b) 15,586 Mid Market ERP Software 1,075,000 Systems & Computer Technology (b) 13,236 Enterprise Software & Services 876,000 JDA Software Group (b) 11,443 Applications/Software & Services for Retailers 650,000 Hyperion Solutions (b) 10,034 Analytical Application Software 1,490,000 MAPICS (b) (c) 7,450 Mid Market ERP Software 1,400,000 ClickSoftware Technologies (b) (c) 2,450 Service Chain Optimization Software 556,000 Indus International (b) 1,181 Enterprise Asset Management Software 55,000 Project Software (b) 590 Enterprise Maintenance Software - ----------------------------------------------------------------- 61,970 18 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Number of Shares Value (000) - ----------------------------------------------------------------- >Consumer Software: 0.7% 900,000 THQ (b) $ 21,938 Entertainment Software $ 6,500,000 Activision, 6.7% Note Due 1/1/05 5,947 150,000 Activision (b) 2,269 Entertainment Software - ----------------------------------------------------------------- 30,154 >Computer Services: 1.5% 2,500,000 WM Data Nordic (Sweden) 12,026 Computer Services/Consulting 580,000 American Management Systems (b) 11,491 Software Development Services 1,400,000 Dimension Data (United Kingdom) (b) 9,628 Networks & Computer Services 120,000 Atos (France) (b) 8,479 Computer Services/Transaction Processing 400,000 Pomeroy Computer Resources (b) 6,100 Network Integration Services 1,500,000 Cambridge Technology (b) 3,937 Software Implementation Services 950,000 RCM Technologies (b) (c) 3,444 Technology Staffing Services 385,000 Meta Group (b) 2,503 IT Publications & Consulting Services 114,000 New Horizons Worldwide (b) 1,582 Computer Training Services 140,000 Vitalstream (b) 1,147 Streaming Services for the Internet 214,000 Analysts International 816 Technology Staffing Services 1,500,000 Aztec Technology Partners (b) (c) 328 Application Development & Maintenance Services - ----------------------------------------------------------------- 61,481 >Business Information/Marketing Services/Publishing: 3.4% 1,010,000 Getty Images (b) 32,320 Photographs for Publications & Electronic Media 416,000 Choicepoint (b) 27,274 Fraud Protection Information 700,000 Acxiom (b) 27,256 Database Marketing Services 1,200,000 PRIMEDIA (b) 14,325 Specialty Magazines & Other Publications 500,000 Information Holdings (b) 11,719 Scientific & Medical Publications, Patent Information 2,500,000 InfoUSA (b) 8,438 Business Data for Sales Leads 2,100,000 Navigant Consulting (b) (c) 8,006 Consulting Firm 200,000 Bell & Howell (b) 3,300 Information Services for Education & Automotive Markets 350,000 Profit Recovery Group (b) 2,231 Accounts Payable Audits 77,000 West Teleservices (b) 2,166 Customer Care & Sales Support - ----------------------------------------------------------------- 137,035 >Internet: 0.6% 430,000 Softbank (Japan) 14,912 Leading Internet Company in Japan 100,000 RSA Security (b) 5,288 Enterprise Security Software 517,820 Bigfoot International, Series A (b) (c) 1,476 263,158 Bigfoot International (b) 526 Internet Direct Marketing 496,000 Online Resources (b) 992 Internet Banking Technology 300,000 Navidec (b) 731 Internet Computer Services 197,000 Internet Commerce (b) 566 E-Commerce Service Network 250,000 NeoPlanet, Series A (b) 250 53,376 NeoPlanet, Series B (b) 53 Web Browser 29,714 GIGA Warrants (b) 7 Data on Information Technology - ----------------------------------------------------------------- 24,801 >Electronics Distribution: 0.5% 625,000 Kent Electronics (b) 10,313 Component Distribution & Network Integration 890,000 Pioneer-Standard Electronics 9,790 Component & Computer Distribution - ----------------------------------------------------------------- 20,103 >Transaction Processors: 2.7% 1,812,000 National Data (c) 66,365 Credit Card & Health Claims Processor 816,000 Concord EFS (b) 35,853 Credit Card Processor 181,000 Cubic 4,649 Smart Card Systems for Public Transportation - ----------------------------------------------------------------- 106,867 --------- Information: Total 985,063 - ----------------------------------------------------------------- Health Care: 8.0% >Biotechnology/Drug Delivery: 3.2% 550,000 Inhale Therapeutic Systems (b) 27,775 Pulmonary Drug Delivery 320,000 Myriad Genetics 26,480 Gene Discovery & Diagnostic Products 426,000 NPS Pharmaceuticals (b) 20,448 Small Molecule Drugs 218,000 Protein Design Labs 18,939 Computer Designed Monoclonal Antibodies 1,258,000 Corvas International (b) 18,084 Rational Drug Design 316,000 Guilford Pharmaceuticals (b) 5,688 Drug Delivery & Neurology Drugs 823,000 Microcide Pharmaceuticals (b) (c) 3,395 Antibiotics 325,000 Genzyme Molecular Oncology Division (b) 2,986 Gene Expression Technology & Cancer Drugs 150,000 Gene Logic (b) 2,756 Gene Expression Database 19 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Liberty Acorn Fund >Statement of Investments, continued Number of Shares Value (000) - ----------------------------------------------------------------- 7,628,000 Nadro, Series L (Mexico) $ 2,300 Pharmaceutical Distributor 326,000 Microdose (b) 2,005 Drug Inhalers - ----------------------------------------------------------------- 130,856 >Medical Equipment: 1.1% 759,000 Steris (b) 12,239 Sterilization Devices 670,000 Edwards Lifesciences (b) 11,892 Heart Valves 350,000 Haemonetics (b) 10,806 Blood & Plasma Collection Equipment 469,000 Orthofix International (b) 8,970 Bone Fixation & Stimulation Devices - ----------------------------------------------------------------- 43,907 >Services: 3.7% 1,668,000 First Health Group (b) 77,666 PPO Network 730,000 Lincare Holdings (b) 41,656 Home Health Care Services 472,000 Syncor International 17,169 Nuclear Pharmacy for Radiopharmaceuticals 742,000 Serologicals (b) 11,176 Blood Collection & Antibody Production - ----------------------------------------------------------------- 147,667 -------- Health Care: Total 322,430 - ----------------------------------------------------------------- Consumer Goods/Services: 13.7% Goods >Leisure Vehicles: 1.8% 1,500,000 Harley-Davidson 59,625 Motorcycles & Related Merchandise 5,000,000 Ducati Motor (Italy) (b) 9,092 Motorcycles & Related Merchandise 230,000 Monaco Coach (b) 4,068 Recreational Vehicles - ----------------------------------------------------------------- 72,785 >Furniture: 0.8% 660,000 Herman Miller 18,975 Office Furniture 500,000 Hon Industries 12,750 Office Furniture & Fireplaces - ----------------------------------------------------------------- 31,725 >Beverages: 0.1% 23,000 Binding-Brauerei (Germany) 4,011 Brewery >Nondurables: 0.4% 2,300,000 Helen of Troy (b) (c) 11,213 Personal Care Products 601,000 First Years (c) 4,846 Infant & Toddler Products - ----------------------------------------------------------------- 16,059 >Durable Goods: 0.3% 440,000 Hunter Douglas (Netherlands) 12,105 Decorative Window Coverings >Textiles/Apparel: 1.3% 1,100,000 Jones Apparel (b) 35,406 Women's Apparel 880,000 Nautica Enterprises (b) $ 13,406 Men's Casual Apparel 85,000 Gildan Activewear (b) 3,326 Cotton T-Shirts 200,000 Unifi 1,788 Polyester & Nylon Fabrics - ----------------------------------------------------------------- 53,926 Services >Retail: 3.0% 450,000 Whole Foods Market (b) 27,506 Natural Food Supermarkets 1,700,000 Borders Group (b) 19,868 Bookstores 900,000 Callaway Golf 16,762 Premium Golf Clubs & Balls 875,000 Gadzooks (b) (c) 12,906 Teen Apparel Retailer 1,150,000 Pier 1 Imports 11,859 Imported Furniture & Tchotchkes 2,000,000 N. Brown Group (United Kingdom) 8,731 Mail Order Clothing in Large Sizes 284,000 Christopher & Banks 8,005 Specialty Women's Retailer at Moderate Price Levels 300,000 Michaels Stores (b) 7,950 Craft & Hobby Specialty Retailer 240,000 Zale (b) 6,975 Specialty Retailer of Jewelry 137,000 Gaiam (b) 2,115 Healthy Living Catalog & E-Commerce - ----------------------------------------------------------------- 122,677 >Travel: 0.2% 400,000 Fairfield Communities (b) 5,625 Time-Sharing Vacation Resorts 90,000 Intrawest (Canada) 1,786 Owner/Operator of Ski Resorts - ----------------------------------------------------------------- 7,411 >Consumer Services: 2.3% 1,540,000 Bally Total Fitness (b) (c) 52,167 National Chain of Fitness Centers 1,300,000 ITT Educational Services (b) 28,600 Technology Oriented Post-secondary Degree Programs 200,000 Education Management (b) 7,150 Post-secondary Education 300,000 Steiner Leisure (b) 4,200 Spas & Hair/Skin Products on Cruise Ships - ----------------------------------------------------------------- 92,117 >Casinos: 1.5% 2,250,000 Station Casinos 33,609 Casinos & Riverboats 1,170,000 Isle of Capri Casinos (b) 12,431 Five Casinos in Secondary Markets 650,000 Pinnacle Entertainment (b) 8,775 Casinos in Secondary Markets & Card Clubs 535,000 Monarch Casino & Resort (b) (c) 2,541 Casino/Hotel in Reno 113,000 Lakes Gaming 1,059 Hotel & Casino in Biloxi & Gulfport - ----------------------------------------------------------------- 58,415 20 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Number of Shares Value (000) - ----------------------------------------------------------------- >Cruise Lines: 2.0% 1,600,000 Carnival $ 49,300 Largest Cruise Line 39,995,000 Star Cruises (Singapore) (b) 27,996 Cruising/Casino Operations 410,000 Royal Olympic Cruise (b) 1,179 Cruises in Mediterranean - ----------------------------------------------------------------- 78,475 --------- Consumer Goods/Services: Total 549,707 - ----------------------------------------------------------------- Finance: 18.9% >Banks: 2.3% 1,026,000 TCF Financial 45,721 Great Lakes Bank 803,000 Texas Regional Bancshares 26,098 TexMex Bank 484,000 Chittenden 14,671 Vermont & Western Massachusetts Bank 400,000 Eldorado Bancshares 5,500 California Bank 26,000 Republic 281 Michigan Bank - ----------------------------------------------------------------- 92,271 >Savings & Loans: 1.4% 1,757,000 Peoples Bank Bridgeport 45,462 Connecticut Savings & Loan 824,000 Commonwealth Bancorp (c) 12,720 Philadelphia Savings & Loan - ----------------------------------------------------------------- 58,182 >Insurance: 3.1% 765,000 Protective Life 24,671 Life/Dental Insurance 820,000 HCC Insurance Holdings 22,089 Aviation Insurance 675,000 Philadelphia Consolidated Holding (b) (c) 20,841 Specialty Insurance 511,000 Leucadia National 18,109 Insurance Holding Company 100,000 Markel (b) 18,100 23,000 Markel CVR (b) 69 Specialty Insurance 300,000 RLI 13,406 Specialty Insurance 210,000 StanCorp Financial 10,027 Group Life, Disability & 401K - ----------------------------------------------------------------- 127,312 >Money Management: 8.1% 1,085,000 SEI Investments 121,520 Mutual Fund Administration & Investment Management 800,000 Neuberger Berman 64,850 Major Asset Management Company 3,099,000 Phoenix Investment Partners (c) 48,616 Mutual Fund & Pension Manager 800,000 Affiliated Managers Group (b) 43,900 Mutual Fund & Pension Manager 1,500,000 Banca Fideuram (Italy) 20,774 Life Insurance & Mutual Funds 1,250,000 Edinburgh Fund Managers (United Kingdom) $ 12,863 Investment Management 140,000 Kempen (Netherlands) 7,716 Stock Brokerage/Investment Management 240,000 BKF Capital Group 4,380 Institutional Money Manager 200,000 The Investment Company of China (China) 1,014 Closed-End Fund 124,000 Harbor Global (b) 620 Russian Investment Manager - ----------------------------------------------------------------- 326,253 >Finance Companies: 4.0% 3,912,000 AmeriCredit (b) (c) 106,602 Auto Lending 474,000 Fortis (Netherlands) (b) 15,452 Financial Services Conglomerate 800,000 DVI Health Services (b) (c) 13,650 Leases for Big Medical Equipment 1,820,000 World Acceptance (b) (c) 10,010 Personal Loans 636,000 Ace Cash Express (b) (c) 6,877 Check Cashing Stores 1,375,000 Capital Trust (b) 6,789 Mortgage Loans - ----------------------------------------------------------------- 159,380 -------- Finance: Total 763,398 - ----------------------------------------------------------------- Industrial Goods/Services: 7.0% >Steel: 0.4% 840,000 Gibraltar Steel (c) 14,753 Steel Processing 420,000 Atchison Casting (b) (c) 1,181 Steel Foundries - ----------------------------------------------------------------- 15,934 >Industrial Goods: 1.0% 1,150,000 Clarcor 23,791 Mobile & Industrial Filters 560,000 Applied Industrial Technologies 11,515 Industrial Components Distribution 650,000 Advanced Lighting Technologies (b) 4,306 Metal Halide Lighting - ----------------------------------------------------------------- 39,612 >Specialty Chemicals & Industrial Materials: 0.8% 850,000 Spartech 17,478 Plastics Distribution & Compounding 347,000 SYMEX (b) 12,492 Combinatorial Materials - ----------------------------------------------------------------- 29,970 >Conglomerates: 0.0% 350,000 Actuant 1,050 Position Control Systems & Branded Tools >Outsourcing Services & Training: 0.3% 2,700,000 Labor Ready (b) (c) 8,944 Temporary Manual Labor 600,000 GP Strategies (b) 2,588 Training Programs 21 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Liberty Acorn Fund >Statement of Investments, continued Number of Shares Value (000) - ----------------------------------------------------------------- 500,000 International Total Services (b) (c) $ 300 Aviation Services - ----------------------------------------------------------------- 11,832 >Logistics: 2.7% 1,400,000 Expeditors International of Washington 75,163 International Freight Forwarder 500,000 Forward Air (b) 18,656 Freight Transportation Between Airports 759,000 Hub Group (b) (c) 6,831 Truck & Rail Freight Forwarder 200,000 EGL (b) 4,787 International & Domestic Freight Forwarder 700,000 Airnet Systems (b) (c) 2,669 Check & Other Small Package Shipment - ----------------------------------------------------------------- 108,106 >Other Industrial Services: 1.8% 6,100,000 Serco Group (United Kingdom) 48,793 Facilities Management 1,526,000 Wackenhut, Cl. B (b) 13,162 31,000 Wackenhut, Cl. A (b) 419 Prison Management 520,000 Mobile Mini (b) 11,960 Leases Portable Storage Units - ----------------------------------------------------------------- 74,334 -------- Industrial Goods/Services: Total 280,838 - ----------------------------------------------------------------- Energy/Minerals: 13.9% >Independent Power: 0.6% 30150,000 AES Corporation 8,306 Global Electric Producer 254,000 Orion Power (b) 6,255 Wholesale Electric Generator 400,000 Ogden (b) 6,150 Electric Power Developer 250,000 Millennium Cell (b) 2,563 Fuel Cell Technology - ----------------------------------------------------------------- 23,274 >Oil/Gas Producers: 6.8% 3,700,000 Cross Timbers Oil (c) 102,675 Natural Gas Producer 550,000 Devon Energy 33,533 Oil & Gas Producer 800,000 Precision Drilling (Canada) (b) 30,022 Oil & Gas Well Driller 730,000 Evergreen Resources (b) 28,196 Coal Seam Gas Producer 2,100,000 Tesoro Petroleum (b) (c) 24,413 Oil Refinery/Gas Producer 1,100,000 Pennaco Energy (b) (c) 21,587 Coal Seam Gas Producer 700,000 Canadian Hunter Exploration (Canada) (b) 19,194 Natural Gas Producer 310,000 Basin Exploration 7,905 Oil & Gas Producer 240,000 Penn West Petroleum (Canada) (b) 5,988 Oil & Gas Producer 900,000 Tipperary (b) 2,925 Coal Seam Gas Producer - ----------------------------------------------------------------- 276,438 >Distribution/Marketing/Refining: 3.7% 1,456,000 Dynegy $ 81,627 Natural Gas & Electric Processing, Production & Marketing 750,000 Equitable Resources 50,063 Natural Gas Utility & Producer 700,000 Atmos Energy 17,062 Natural Gas Utility - ----------------------------------------------------------------- 148,752 >Mining: 0.2% 882,000 US Aggregates (c) 6,780 Aggregates, Ready Mix & Asphalt >Oil Services: 2.6% 2,990,000 Newpark Resources (b) 28,592 Oilfield Fluid Management & Equipment Rental 1,100,000 Maverick Tube (b) (c) 24,888 Steel Pipes for Oil & Gas Wells 3,310,000 Saipem (Italy) 18,119 Offshore Construction & Drilling 429,000 Carbo Ceramics 16,061 Manufacturer of Ceramic Pellets for Gas Wells 450,000 Chiles Offshore (b) 11,250 Offshore Drilling Rigs 327,000 Enerflex Systems (Canada) 6,763 Natural Gas Compressor Manufacturer - ----------------------------------------------------------------- 105,673 -------- Energy/Minerals: Total 560,917 - ----------------------------------------------------------------- Other Industries: 8.4% >Real Estate: 6.4% 1,000,000 The Rouse Company 25,500 Regional Shopping Malls 675,000 First Industrial Realty Trust 22,950 Industrial Properties 775,000 SL Green Realty 21,700 New York Office Buildings 700,000 Manufactured Home Communities 20,300 Manufactured Home Communities 466,000 Forest City Enterprises, Cl. B 18,850 Shopping Malls 903,125 Security Capital European Realty (b) 18,063 Strategic Real Estate Investments 1,099,000 LaSalle Hotel Properties (c) 16,691 Upscale/Full Service Hotels 700,000 Vail Resorts (b) 16,406 Great Ski Resorts 650,000 Amli Residential 16,047 Midwestern Apartments 400,000 General Growth Properties 14,475 Regional Shopping Malls 450,000 BRE Properties 14,259 Apartments 520,000 Summit Properties 13,520 Southeastern Apartments 625,000 Macerich Company 11,992 Regional Shopping Malls 385,000 First Washington Realty Trust (c) 9,938 240,000 First Washington Realty Trust, Cv. Pfd. 7,890 Community Shopping Centers 22 - -------------------------------------------------------------------------------- A - -------------------------------------------------------------------------------- Number of Shares Value (000) - ----------------------------------------------------------------- 456,000 IRSA (Argentina) $ 7,524 Real Estate Management & Development 190,000 Consolidated Tomoka 2,256 16,000 Acres of Florida Land 135,000 Regus (United Kingdom) (b) 733 Rental of Office Space in Full Service Business Centers - ----------------------------------------------------------------- 259,094 >Waste Management: 0.2% 262,000 Stericycle (b) 9,989 Medical Waste Disposal >Regulated Utilities: 1.8% 800,000 Utilicorp United 24,800 Global Utility Holding Company 700,000 Conectiv 14,044 Electric Utility in New Jersey, Delaware & Maryland 665,000 Unisource Energy 12,510 Electric Utility in Arizona 1,345,000 Azurix (b) 11,012 Global Water Utility 200,000 CH Energy 8,950 Electric Utility in New York - ----------------------------------------------------------------- 71,316 -------- Other Industries: Total 340,399 Principal Amount Value (000) - ----------------------------------------------------------------- Total Common Stocks and Other --------- Equity-Like Securities: 94.4% 3,802,751 (Cost: $2,423,963) Short-Term Obligations: 5.5% Yield 6.11% - 6.58% Due 1/02 - 1/11/01 $67,690 Deere $ 67,634 32,395 AON 32,389 29,442 Citicorp 29,405 28,447 Textron Financial 28,407 28,042 Hertz 28,022 23,074 Verizon Network Funding 23,066 12,000 US Treasury Bills 11,979 ---------- (Amortized Cost: $220,902) 220,902 ---------- Total Investments: 99.9% 4,023,653 (Cost: $2,644,865) (a) Cash and Other Assets Less Liabilities: 0.1% 2,475 ---------- Total Net Assets: 100% $4,026,128 ================================================================= - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At December 31, 2000, for federal income tax purposes cost of investments was $2,647,518 and net unrealized appreciation was $1,376,135, consisting of gross unrealized appreciation of $1,704,558 and gross unrealized depreciation of $328,423. (b) Non-income producing security. (c) On December 31, 2000, the Fund held the following percentages of the outstanding voting shares of the companies listed below: Hub Group 9.85% World Acceptance 9.70% Gadzooks 9.46% RCM Technologies 8.68% MAPICS 8.23% Helen of Troy 8.03% Commonwealth Bancorp 7.53% International Total Services 7.51% Microcide Pharmaceuticals 7.25% COMARCO 7.12% Clicksoftware Technologies 6.91% Phoenix Investment Partners 6.76% Gibraltar Steel 6.61% Aztec Technology Partners 6.57% Bigfoot International 6.53% Labor Ready 6.53% LaSalle Hotel Properties 6.46% Airnet Systems 6.37% Ace Cash Express 6.30% First Years 6.18% Maverick Tube 6.15% Kronos 5.97% US Aggregates 5.80% Philadelphia Consolidated Holding 5.73% Monarch Casino & Resort 5.64% Micros Systems 5.62% Bally Total Fitness 5.56% National Data 5.51% Atchison Casting 5.48% Cross Timbers Oil 5.25% Startech Global Communications 5.08% Classic Communications 5.08% Navigant Consulting 5.08% Tesoro Petroleum 5.07% DVI Health Services 5.05% First Washington Realty Trust 5.02% AmeriCredit 5.01% Pennaco Energy 5.00% The aggregate cost and value of these companies at December 31, 2000, was $619,748,000 and $739,073,000, respectively. Investments in affiliate companies represent 18.4% of total net assets at December 31, 2000. Investment activity and income amounts relating to affiliates during the year ended December 31, 2000 were as follows: Dividend income $4,835,000 Net realized gain or loss $35,625,000 Change in unrealized gain or loss $42,941,000 Purchases $161,337,000 Proceeds from sales $96,874,000 In addition, additional purchases of existing portfolio holdings that were not considered affiliates in prior years, resulted in the Fund owning more than 5% of the outstanding shares of certain issuers at December 31, 2000. Therefore, the ending cost and market value affiliate disclosure amounts include both acquisitions of new investments in affiliates during the year, as well as prior year investment holdings that became affiliates during the current year. (d) On December 31, 2000, the market value of foreign securities represents 9.03% of total net assets. The Fund's foreign portfolio was diversified as follows: Canada $96,359 2.39% United Kingdom 80,748 2.01% Italy 47,985 1.19% Netherlands 35,273 0.88% Singapore 27,996 0.70% Australia 18,048 0.45% Japan 14,912 0.37% Sweden 12,026 0.30% France 11,702 0.29% Argentina 7,524 0.19% Germany 4,011 0.10% Israel 2,450 0.06% Mexico 2,299 0.05% Greece 1,179 0.03% China 1,014 0.02% -------- ------- Total $363,526 9.03% ======== ======= 23 - -------------------------------------------------------------------------------- I - -------------------------------------------------------------------------------- Liberty Acorn International >Major Portfolio Changes in the Fourth Quarter Number of Shares ------------------------ 9/30/00 12/31/00 Additions - ----------------------------------------------------------------- Europe >Germany/Austria Dialog Semiconductor 382,000 400,000 Henkel 125,000 200,000 Pfeiffer Vacuum Technologies 200,000 250,000 Stinnes 900,000 1,000,000 Takkt 750,000 900,000 >Denmark ISS International Service Systems 200,000 250,000 >Finland Jaakko Poyry 0 300,000 >Sweden Cell Network 1,200,000 1,600,000 Poolia 100,000 181,000 >France/Belgium Essilor International 0 11,000 Gemplus International 0 238,000 NRJ 775,000 800,000 RTL Group (Belgium) 250,000 300,000 Technip 0 11,400 >United Kingdom/Ireland Enterprise Oil 0 750,000 Exel 0 1,200,000 Hays 4,000,000 6,000,000 Holmes Place 2,000,000 3,075,000 Incepta 6,500,000 7,500,000 Informa Group 760,000 1,200,000 Irish Life & Permanent (Ireland) 2,500,000 3,000,000 Ncipher 0 535,000 Regus 0 975,000 Smith & Nephew 3,500,000 5,000,000 SSL International 2,500,000 3,000,000 >Switzerland Givaudan 35,000 60,000 Julius Baer 6,000 6,250 Kuoni Reisen 35,000 40,000 Pargesa 5,000 5,250 Phoenix Mecano 18,450 20,000 >Italy Autogrill 4,000,000 4,500,000 Saipem 2,500,000 3,500,000 >Spain Abengoa 0 32,000 Aguas de Barcelona 750,000 991,500 NH Hoteles 0 400,000 Zardoya Otis 0 360,000 >Netherlands Buhrmann 250,000 600,000 Hunter Douglas 400,000 600,000 OCE 0 300,000 - ----------------------------------------------------------------- Asia >Hong Kong Li & Fung 40,180,000 43,000,000 TVB 5,000,000 6,000,000 >Japan Funai Electric 0 26,100 Olympus Optical 600,000 700,000 Orix 325,000 350,000 >Taiwan Advantech 3,500,000 3,750,000 >South Korea S1 Corporation 1,400,000 1,500,000 Cheil Communications 100,000 140,000 >Singapore Sembcorp Logistics 0 455,000 Star Cruises 45,610,000 49,300,000 Venture Manufacturing 6,000,000 7,200,000 - ----------------------------------------------------------------- Latin America >Mexico Corp Interamericana de Entretenimiento 5,000,000 5,500,000 Wal-Mart De Mexico 7,000,000 10,000,000 - ----------------------------------------------------------------- Other Countries >Australia Computershare 6,500,000 7,000,000 Perpetual Trustees 175,000 500,000 >Canada Intrawest 0 60,000 Precision Drilling 0 500,000 Power Financial 1,000,000 1,150,000 >Israel DSP Group 500,000 600,000 24 - -------------------------------------------------------------------------------- I - -------------------------------------------------------------------------------- Number of Shares ------------------------ 9/30/00 12/31/00 Sales - ----------------------------------------------------------------- Europe >GermanyAustria Evotec Biosystems 290,862 0 MobilCom 175,000 0 >Finland Elisa Communications 400,000 0 Perlos 450,000 40,000 >Sweden Micronic Laser Systems 300,000 150,000 Modern Times Group 525,000 250,000 NetCom 100,000 0 WM-Data Nordic 3,000,000 2,500,000 >France/Belgium Atos 100,000 0 Ubizen (Belgium) 100,000 0 >United Kingdom Baltimore Technologies 2,000,000 1,000,000 Chloride Group 6,100,000 5,000,000 Capita Group 6,300,000 5,000,000 Dimension Data 6,000,000 3,000,000 ITNET 1,500,000 0 Photobition Group 4,065,000 2,290,000 Serco Group 11,000,000 7,800,000 >Switzerland Cie Fin Richemont 15,000 14,500 >Italy Banca Fideuram 4,000,000 2,500,000 Editoriale L'Espresso 2,500,000 0 Mediolanum 1,500,000 1,000,000 >Netherlands ASR Verzekeringsgroep 200,000 0 >Hungary Matav 1,200,000 0 Matav ADR 70,000 0 - ----------------------------------------------------------------- Asia >Japan OBIC 10,000 0 Trans Cosmos 55,000 0 >Tawain Phoenixtec Power 6,707,000 0 >South Korea SK Corporation 500,000 0 >Singapore Datacraft Asia 4,000,000 2,000,000 - ----------------------------------------------------------------- Latin America >Brazil Embratel 1,000,000 0 Itau Banco 65,000,000 0 - ----------------------------------------------------------------- Other Countries >Australia Uecomm 2,500,000 0 >Canada Bracknell 1,500,000 812,000 Canadian Natural Resources 720,000 400,000 Celestica 900,000 600,000 Mackenzie Financial 500,000 0 Mosaic 2,500,000 2,000,000 >Israel Amdocs 975,000 750,000 Comverse Tech 400,000 300,000 25 - -------------------------------------------------------------------------------- I - -------------------------------------------------------------------------------- Liberty Acorn International >Statement of Investments December 31, 2000 Number of Shares Value (000) - ----------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 88.0% - ----------------------------------------------------------------- Europe: 51.5% >Germany/Austria: 7.3% 600,000 Rhoen Klinikum Pfd. $ 31,147 500,000 Rhoen Klinikum 28,170 Hospital Management 1,000,000 Stinnes 21,575 Logistics 75,000 Fresenius, Pfd. 20,138 Dialysis Equipment & Solutions 200,000 Henkel (b) 13,190 Chemicals, Detergents & Non-Food Consumer Brands 350,000 Teleplan International 11,706 After-Sale Warranty Repair Services 300,000 Flughafen Wien (Austria) 11,391 Vienna Airport Authority 250,000 Pfeiffer Vacuum Technologies 10,646 Vacuum Pump Manufacturer 100,000 Lion Bioscience 8,102 Bioinformatics 900,000 Takkt 8,055 Mail Order Retailer of Office & Warehouse Durables 550,000 United GlobalCom (Austria) (b) 7,494 Voice, Video & Data Services 200,000 Austria Technologies & Systemtechnik 5,841 Printed Circuit Board Manufacturer 400,000 Dialog Semiconductor 3,844 Custom Semiconductors for Cell Phones - ----------------------------------------------------------------- 181,299 >Denmark: 0.7% 250,000 ISS International Service Systems (b) 17,088 Cleaning Services >Finland: 1.8% 800,000 TietoEnator 22,838 Computer Services/Consulting 1,500,000 Talentum (c) 9,257 Trade Journals & Internet Services 300,000 Jaakko Poyry 5,088 Engineering Consultants to Forestry, Energy & Telecom Industries 625,000 Fiskars, Series A 4,357 Scissors & Gardening Tools 89,000 Spar Finland 1,845 Grocery/Convenience Stores 40,000 Perlos 829 Plastic Cell Phone Cases - ----------------------------------------------------------------- 44,214 >Sweden: 3.1% 1,000,000 Sigma $ 23,627 Technical Consulting 2,500,000 WM Data Nordic 12,026 Computer Services/Consulting 181,000 Poolia 8,745 Temporary Employment Agency 500,000 Autoliv 7,969 Seatbelts & Airbags 250,000 Modern Times Group (b) 6,637 TV, Newspapers and Electronic Commerce 1,500,000 Adcore 4,587 Internet Consulting 150,000 Micronic Laser Systems (b) 4,444 Video Display Manufacturing Equipment 370,000 Metro International, Series B (b) 3,379 160,000 Metro International, Series A (b) 1,206 Free Subway Newspapers 1,600,000 Cell Network 2,973 Computer & Internet Consulting - ----------------------------------------------------------------- 75,593 >France/Belgium: 4.0% 300,000 RTL Group (Belgium) 24,731 TV & Radio Broadcaster 800,000 NRJ (b) 22,943 Radio Network 500,000 Fininfo 18,843 Data Feeds for French Banks & Brokers 200,000 Penauille Polyservice 12,644 Industrial Cleaning/Airport Services 750,000 Telindus Group (Belgium) 12,542 Network Integration Services 11,000 Essilor International 3,601 Eyeglass Lenses 238,000 Gemplus International 2,130 Smart Card Products & Solutions 11,400 Technip 1,660 Engineering & Construction Services for Energy, Water, Chemical & Power Plants - ----------------------------------------------------------------- 99,094 >United Kingdom/Ireland: 16.0% 7,800,000 Serco Group 62,391 Facilities Management 5,000,000 Capita Group 37,378 Outsourcing Services 3,000,000 Irish Life & Permanent (Ireland) 37,309 Savings Products 6,000,000 Hays 34,627 Outsourcing Services Conglomerate 5,000,000 Smith & Nephew 23,174 Medical Equipment & Supplies 3,000,000 SSL International 22,427 Medical & Footcare Products 3,000,000 Dimension Data (b) 20,632 Networks & Computer Services 26 - -------------------------------------------------------------------------------- I - -------------------------------------------------------------------------------- Number of Shares Value (000) - ----------------------------------------------------------------- 5,000,000 Taylor Nelson $ 18,614 Market Research Services 1,200,000 Exel 17,044 Freight Forwarding & Logistics 1,600,000 Euro Money Publications 13,276 Financial Publications 4,000,000 FKI 13,157 Materials Handling Equipment 7,500,000 Incepta 12,391 Business Information & Marketing Services 5,000,000 Chloride Group 12,185 Electrical Equipment Manufacturer/Retailer 500,000 NTL (b) 11,969 Voice, Video & Data Services Via Cable Networks 1,200,000 Informa Group 10,765 Trade Shows & Magazines 3,075,000 Holmes Place 9,333 Health Clubs 1,000,000 Fairey Group 8,417 Electronic Products 750,000 Enterprise Oil 6,358 Oil & Gas Producers 1,000,000 Expro International 6,055 Offshore Oil Field Services 975,000 Regus (b) 5,294 Rental of Office Space in Full Service Business Centers 1,000,000 Baltimore Technologies (b) 5,022 Security Software 2,289,235 Photobition Group 3,327 Production of Graphics for Exhibits 800,000 Orchestream Holdings (b) 3,265 Network Management Software 535,000 Ncipher (b) 2,192 Security Software - ----------------------------------------------------------------- 396,602 >Switzerland: 8.1% 14,500 Cie Fin Richemont 38,981 Luxury Goods 6,250 Julius Baer 34,380 Private Banking, Brokerage & Mutual Funds 100,000 Selecta Group 24,496 Vending Machine Owner/Operator 6,500 Sarasin & Cie Bank 20,961 Private Banking 40,000 Kuoni Reisen 17,364 Tour Operator 10,000 Bachem 17,309 Peptides 60,000 Givaudan (b) 15,944 Industrial Fragrances & Flavors 20,000 Phoenix Mecano 13,333 Electrical Components Manufacturer 5,250 Pargesa 10,744 Industrial & Media Conglomerate 15,000 Bon Appetit 9,023 Wholesale Food Distributor and Specialty Restaurant/Retailer - ----------------------------------------------------------------- 202,535 >Italy: 5.8% 4,500,000 Autogrill $ 55,540 Restaurants & Catering for Travelers 2,500,000 Banca Fideuram 34,624 Life Insurance & Mutual Funds 3,500,000 Saipem 19,159 Offshore Construction & Drilling 1,000,000 Mediolanum 12,785 Life Insurance & Mutual Funds 900,000 Gruppo Coin (b) 11,871 Food & Clothing Retailer 850,000 Class Editori 9,610 Newspapers & On-Line Financial Data - ----------------------------------------------------------------- 143,589 >Spain: 2.1% 1,500,000 Red Electrica 14,203 Spanish Power Grid 991,500 Aguas de Barcelona 12,153 8,500 Aguas de Barcelona, New Shares 104 Water Utility 750,000 Prosegur 8,479 Security Guards 500,000 Cortefiel 8,338 Apparel Retailer 400,000 NH Hoteles (b) 4,937 Business Hotel 360,000 Zardoya Otis 3,171 Elevator Manufacturer & Service Provider 32,000 Abengoa 1,025 Engineering & Construction Services for Infrastructure Projects & Recycling - ----------------------------------------------------------------- 52,410 >Netherlands: 2.6% 500,000 Kempen 27,558 Stock Brokerage/Investment Management 600,000 Hunter Douglas 16,506 Decorative Window Coverings 600,000 Buhrmann (b) 16,139 Office Supplies 300,000 OCE 4,805 Manufacturer of High Speed Copiers - ----------------------------------------------------------------- 65,008 --------- Europe: Total 1,277,432 - ----------------------------------------------------------------- Asia: 17.9% >Hong Kong: 4.4% 43,000,000 Li & Fung 78,285 Sourcing of Consumer Goods 6,000,000 TVB 31,540 Television Broadcasting - ----------------------------------------------------------------- 109,825 27 - -------------------------------------------------------------------------------- I - -------------------------------------------------------------------------------- Liberty Acorn International >Statement of Investments, continued Number of Shares Value (000) - ----------------------------------------------------------------- >Japan: 7.1% 350,000 Orix $ 35,037 Finance Leasing 200,000 Nintendo 31,429 Video Game Software & Hardware 40,000 Bellsystem24 16,073 Call Centers 200,000 Konami 14,972 Video Game Software Developer 700,000 Olympus Optical 12,076 Medical Equipment & Cameras 125,000 Hirose Electric 12,011 Electrical Connectors 300,000 Ryohin Keikaku 11,478 Own Brand Specialty Retailer 50,000 Rohm 9,478 Semiconductor Design & Manufacturing 150,000 Otsuka Kagu 8,779 Furniture Retailer 125,000 Aeon Credit Service 7,174 Credit Card Issuer 110,000 Misumi 6,342 Distributor of Capital Goods Components 250,000 Banyu Pharmaceutical 5,645 Ethical Drug Producer 200,000 Wilson Learning 4,193 Corporate Training 26,100 Funai Electric 1,940 Consumer Electronics - ----------------------------------------------------------------- 176,627 >Taiwan: 1.0% 3,750,000 Advantech 11,889 Computer Based Industrial Automation 5,000,000 Systex (b) 6,159 Systems Integrator & Internet Services 5,000,000 Chroma Ate 3,548 Test & Measurement Instruments 4,000,000 Hitron Technology 3,237 Network Integration & Internet Services - ----------------------------------------------------------------- 24,833 >South Korea: 1.6% 1,500,000 S1 Corporation 11,995 Security Services 2,250,000 Samsung 9,175 Trading Company 140,000 Cheil Communications 6,873 Advertising 250,000 Cheil Jedang 6,037 Consumer Staples 2,500,000 Korea Technology Investments 4,790 Venture Capital - ----------------------------------------------------------------- 38,870 >Singapore: 3.8% 7,200,000 Venture Manufacturing $ 48,180 Electronic Manufacturing Services 49,300,000 Star Cruises (b) 34,510 Cruise Line 2,000,000 Datacraft Asia 9,440 Network Integrator 455,000 Sembcorp Logistics 2,520 Logistic Services for Marine Transport - ----------------------------------------------------------------- 94,650 -------- Asia: Total 444,805 - ----------------------------------------------------------------- Latin America: 3.2% >Mexico: 2.9% 5,500,000 Corp Interamericana de Entretenimiento (b) 22,583 Special Events & Live Entertainment 10,000,000 Wal-Mart de Mexico (b) 19,854 Discount Stores 350,000 Grupo Televisa (b) 15,728 TV, Radio & Publishing 9,000,000 Grupo Industrial Bimbo 12,630 Bread, Baked Goods & Snacks - ----------------------------------------------------------------- 70,795 >Argentina: 0.3% 443,000 IRSA GDS 7,310 Real Estate Management & Development -------- Latin America: Total 78,105 - ----------------------------------------------------------------- Other Countries: 15.4% >Australia: 3.7% 7,000,000 Computershare 33,740 180,000 Computershare Warrants 121 Financial Software/Services 21,100,100 ERG 32,133 Smart Card Systems for Public Transportation 2,500,000 KeyCorp (b) 12,931 Smart Card Technology 500,000 Perpetual Trustees 9,517 Investment Management 1,400,000 Securenet (b) 3,760 IT Security Provider - ----------------------------------------------------------------- 92,202 28 - -------------------------------------------------------------------------------- I - -------------------------------------------------------------------------------- Principal Amount or Number of Shares Value (000) - ----------------------------------------------------------------- >Canada: 7.1% 600,000 Celestica (b) $ 32,424 Electronic Manufacturing Services 1,150,000 Power Financial 26,738 Life Insurance & Mutual Funds 1,000,000 Corus Entertainment (b) 26,019 CATV Programming & Radio Stations 500,000 Precision Drilling (b) 18,764 Oil & Gas Well Driller 400,000 Talisman Energy (b) 14,851 Oil & Gas Producer 500,000 Canadian Hunter (b) 13,710 Natural Gas Producer 2,000,000 Mosaic (b) 12,943 Outsourcing Market Services 500,000 Penn West Petroleum (b) 12,476 Oil & Gas Producer 400,000 Canadian Natural Resources (b) 11,075 Oil & Gas Producer 812,000 Bracknell (b) 4,551 Electrical Contractor & Facilities Management 500,000 Cinar (b) 2,031 Children's TV Programming 60,000 Intrawest 1,191 Owner/Operator of Ski Resorts - ----------------------------------------------------------------- 176,773 >Israel: 4.1% 750,000 Amdocs (b) 49,688 Telecommunications Billing & Customer Care Software 300,000 Comverse Technology (b) 32,588 Voicemail & Related Systems 600,000 DSP Group (b) 12,628 DSP Based Semiconductors & Intellectual Property 250,000 Gilat Satellite Network (b) 6,375 Satellite Communications Equipment - ----------------------------------------------------------------- 101,279 >Russia: 0.2% 11,416 Khanty Mansiysk (b) 4,244 $1,500,000 Khanty Mansiysk 10% Notes Due 10/14/02 1,500 Oil Production in Russia - ----------------------------------------------------------------- 5,744 >United States: 0.3% 500,000 MIH (b) 6,500 Pay-TV & Interactive TV Technology - ----------------------------------------------------------------- Other: Total 382,498 Total Common Stocks and Other ---------- Equity-Like Securities: 88.0% 2,182,840 (Cost: $1,741,532) Short-Term Obligations: 11.3% >Commercial Paper: 6.3% Yield 6.25% - 6.54% Due 1/02 - 1/08/01 $37,755 Texaco 37,729 36,418 Ford Motor Credit 36,412 28,966 Verizon Network Funding 28,929 26,945 Cargill 26,935 26,223 Nestles 26,209 - ----------------------------------------------------------------- 156,214 >Foreign Time Deposits: 5.0% Yield 4.00% - 4.78% Due 1/02/01 107,085 EUR State Street Bank 107,085 15,540 GBP State Street Bank 15,540 - ----------------------------------------------------------------- 122,625 ---------- Total Short-Term Obligations 278,839 (Cost: $278,839) Total Investments: 99.3% 2,461,679 (Cost: $2,020,371) (a) Cash and Other Assets Less Liabilities: 0.7% 17,433 ---------- Total Net Assets: 100% $2,479,112 ================================================================= - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At December 31, 2000, for federal income tax purposes cost of investments was $2,030,460 and net unrealized appreciation was $431,219 consisting of gross unrealized appreciation of $744,326 and gross unrealized depreciation of $313,107. (b) Non-income producing security. (c) On December 31, 2000, the Fund held the following percentages of the outstanding voting shares of the affiliated companies (ownership of at least 5%) listed below: Talentum (Finland) ...................................... 9.19% The aggregate cost and value of these companies at December 31, 2000, was $11,500,000 and $9,257,000, respectively. Investments in affiliate companies represent 0.4% of total net assets at December 31, 2000. Investment activity and income amounts relating to affiliates during the year ended December 31, 2000 were as follows: Dividend income -- Net realized gain or loss $27,934,000 Change in unrealized gain or loss ($34,422,000) Purchases $2,943,000 Proceeds from sales $32,963,000 In addition, additional purchases of existing portfolio holdings that were not considered affiliates in prior years, resulted in the Fund owning more than 5% of the outstanding shares of certain issuers at December 31, 2000. Therefore, the ending cost and market value affiliate disclosure amounts include both acquisitions of new investments in affiliates during the year, as well as prior year investment holdings that became affiliates during the current year. (d) On December 31, 2000, $730,008 or 29.4% of the Fund's net assets was denominated in the Euro currency. 29 - -------------------------------------------------------------------------------- I - -------------------------------------------------------------------------------- Liberty Acorn International >Portfolio Diversifcation At December 31, 2000, the Fund's portfolio of investments as a percent of net assets was diversified as follows: Value (000) Percent - ----------------------------------------------------------------- >Computer Hardware Semiconductors $ 30,394 1.2% Telephone Equipment 24,227 1.0 PCs and Peripherals 12,931 0.5 - ----------------------------------------------------------------- 67,552 2.7 >Computer Software Telephone Related 82,275 3.3 Internet 14,238 0.6 - ----------------------------------------------------------------- 96,513 3.9 >Technology Services Network/SI 39,469 1.6 Full Service 37,684 1.5 Embedded Systems 23,627 0.9 Internet/ Web Consulting 13,844 0.6 - ----------------------------------------------------------------- 114,624 4.6 >Telecommunications Cable 19,463 0.8 Alternative Provider 12,542 0.5 Internet Service Providers (ISP) 6,500 0.3 - ----------------------------------------------------------------- 38,505 1.6 >Broadcasting & Media Content Radio & TV Broadcasting 94,942 3.8 Media Content Providers 85,216 3.4 Hybrid Internet 52,952 2.1 Market Research 18,614 0.8 - ----------------------------------------------------------------- 251,724 10.1 >Health Care Devices & Consumables 71,384 2.9 Services 59,318 2.4 Biotechnology 25,411 1.0 - ----------------------------------------------------------------- 156,113 6.3 >Business Services Business Services 252,582 10.2 Business Process Outsourcing 181,988 7.3 Logistics 50,326 2.0 Consumer Services 4,193 0.2 - ----------------------------------------------------------------- 489,089 19.7 >Financials Asset Management 139,825 5.6 Insurance 64,048 2.6 Lending Institutions 42,210 1.7 Venture Capital 4,790 0.2 - ----------------------------------------------------------------- 250,873 10.1 >Consumer Goods & Services Retail Outlets 126,728 5.1 Branded Goods 97,742 4.0 Leisure 83,790 3.4 Distribution/E-Commerce 8,055 0.3 - ----------------------------------------------------------------- 316,315 12.8 >Industrials Electronic Manufacturing Services 81,433 3.3 Goods 61,049 2.5 R&D Design Firms 20,602 0.8 Electronic Manufacturing 15,436 0.6 Distribution 6,342 0.3 - ----------------------------------------------------------------- 184,862 7.5 >Other Industries Energy 101,833 4.1 Miscellaneous 38,426 1.6 Utilities 37,851 1.5 Conglomerate 25,956 1.0 Real Estate 12,604 0.5 - ----------------------------------------------------------------- 216,670 8.7 Total Common Stocks and -------------------------- Other Equity-Like Securities: 2,182,840 88.0 Short-term Obligations: 278,839 11.3 -------------------------- Total Investments: 2,461,679 99.3 Cash and Other Assets less Liabilities: 17,433 0.7 -------------------------- Net Assets: $2,479,112 100.0% ================================================================= 30 - -------------------------------------------------------------------------------- U - -------------------------------------------------------------------------------- Liberty Acorn USA >Major Portfolio Changes in the Fourth Quarter Number of Shares ------------------------- 9/30/00 12/31/00 Additions - ----------------------------------------------------------------- Health Care Edwards Lifesciences 0 345,000 Serologicals 0 102,400 Steris 0 100,000 Syncor International 0 65,000 - ----------------------------------------------------------------- Consumer Goods/Services Borders Group 0 65,000 ITT Educational Services 245,000 303,000 Sales - ----------------------------------------------------------------- Information Aztec Technology Partners 635,000 0 Concord EFS 153,500 0 Ezenia 168,400 0 Perkin Elmer 19,000 0 PRIMEDIA 169,000 95,000 Tektronix 133,000 213,000 (Includes effect of a 2 for 1 stock split) West Teleservices 89,000 0 - ----------------------------------------------------------------- Health Care First Health Group 343,000 140,000 Lincare Holdings 285,400 169,400 - ----------------------------------------------------------------- Finance Acceptance Insurance 332,100 0 Leucadia National 93,000 49,000 Neuberger Berman 74,700 0 TCF Financial 79,000 10,000 UICI 637,700 0 - ----------------------------------------------------------------- Energy/Minerals Dynegy 213,400 128,400 31 - -------------------------------------------------------------------------------- U - -------------------------------------------------------------------------------- Liberty Acorn USA >Statement of Investments December 31, 2000 Number of Shares Value (000) - ----------------------------------------------------------------- Common Stocks: 92.8% - ----------------------------------------------------------------- Information: 35.6% >Broadcasting: 2.2% 333,100 Salem Communications (b) $ 4,976 Radio Stations for Religious Programming >Television Programming: 2.2% 285,000 Mediacom Communications (b) 4,898 Cable Television Franchises >Telecommunications/Wireline Communications: 1.0% 66,000 Commonwealth Telephone (b) 2,310 Rural Phone Franchises & CLEC >Mobile Communications: 8.1% 174,000 Telephone and Data Systems 15,660 Cellular & Telephone Services 182,700 Comarco 2,466 Wireless Network Testing - ----------------------------------------------------------------- 18,126 >Telecommunications Equipment: 0.3% 97,200 Aspect Communications (b) 782 Call Center Software >Computer Services: 1.5% 155,000 Pomeroy Computer Resources (b) 2,364 Network Integration Services 301,000 RCM Technologies (b) 1,091 Technology Staffing Services - ----------------------------------------------------------------- 3,455 >Business Software: 4.0% 578,000 JDA Software (b) 7,550 Applications/Software & Services for Retailers 132,000 Project Software (b) 1,417 Enterprise Maintenance Software - ----------------------------------------------------------------- 8,967 >Transaction Processors: 4.4% 268,300 National Data 9,827 Credit Card & Health Claims Processor >Internet: 0.2% 170,000 Online Resources (b) 340 Internet Banking Technology >Business Information/Marketing Services: 3.5% 144,700 CACI International (b) 3,330 Technology Services for Government 102,800 Getty Images (b) 3,290 Photographs for Publications & Electronic Media 95,000 PRIMEDIA (b) 1,134 Specialty Magazines & Other Publications - ----------------------------------------------------------------- 7,754 >Instrumentation: 3.2% 213,000 Tektronix 7,175 Analytical Instruments >Semiconductors/Related Equipment: 0.7% 76,100 DSP Group (b) 1,602 Telecom Semiconductors >Computer Hardware/Related Systems: 4.3% 527,600 Micros Systems (b) 9,629 Information Systems for Restaurants & Hotels ------- Information: Total 79,841 - ----------------------------------------------------------------- Health Care: 15.0% >Biotechnology/Drug Delivery: 0.9% 363,636 Metabolex, Series F (b) 2,000 Drugs for Diabetes >Medical Equipment: 3.4% 345,000 Edwards Lifesciences (b) 6,124 Heart Valves 100,000 Steris (b) 1,613 Sterilization Devices - ----------------------------------------------------------------- 7,737 >Services: 10.7% 169,400 Lincare Holdings (b) 9,666 Home Health Care Services 140,000 First Health Group (b) 6,519 PPO Network 856,100 Magellan Health Services (b) 3,799 Mental Health Services 65,000 Syncor International 2,364 Nuclear Pharmacy for Radiopharmaceuticals 102,400 Serologicals (b) 1,542 Blood Collection & Antibody Production - ----------------------------------------------------------------- 23,890 ------- Health Care: Total 33,627 - ----------------------------------------------------------------- Consumer Goods/Services: 8.0% >Consumer Services: 3.6% 303,000 ITT Educational Services (b) 6,666 Technology Oriented Postsecondary Degree Programs 43,000 Bally Total Fitness (b) 1,456 National Chain of Fitness Centers - ----------------------------------------------------------------- 8,122 >Retail: 4.4% 395,000 Gadzooks (b) 5,826 Teen Apparel Retailer 52,500 Whole Foods Market (b) 3,209 Natural Food Supermarkets 65,000 Borders Group (b) 760 Bookstores - ----------------------------------------------------------------- 9,795 ------- Consumer Goods/Services: Total 17,917 32 - -------------------------------------------------------------------------------- U - -------------------------------------------------------------------------------- Liberty Acorn USA >Statement of Investments, continued Number of Shares Value (000) - ---------------------------------------------------------------------------- Finance: 12.6% >Banks: 2.0% 126,500 Chittenden $ 3,835 Vermont & West Massachusetts Bank 10,000 TCF Financial 446 Great Lakes Bank 2,750 Texas Regional Bancshares 89 TexMex Bank - ---------------------------------------------------------------------------- 4,370 >Finance Companies: 8.7% 600,500 AmeriCredit (b) 16,364 Auto Lending 590,000 World Acceptance (b) 3,245 Personal Loans - ---------------------------------------------------------------------------- 19,609 >Money Management: 1.1% 163,000 Phoenix Investment Partners 2,557 Mutual Fund & Pension Manager >Insurance: 0.8% 49,000 Leucadia National 1,736 Insurance Holding Company -------- Finance: Total 28,272 - ---------------------------------------------------------------------------- Industrial Goods/Services: 4.5% >Industrial Goods: 0.3% 111,400 Advanced Lighting Technologies (b) 738 Metal Halide Lighting >Industrial Services: 4.2% 422,500 Wackenhut, Cl. B (b) 3,644 Prison Management 346,000 Hub Group (b) 3,114 Truck & Rail Freight Forwarder 206,900 Insurance Auto Auctions (b) 2,483 Auto Salvage Services - ---------------------------------------------------------------------------- 9,241 -------- Industrial Goods/Services: Total 9,979 - ---------------------------------------------------------------------------- Energy/Minerals: 11.9% >Oil Services: 1.6% 371,000 Newpark Resources (b) 3,548 Oilfield Fluid Managment >Oil/Gas Producers: 2.5% 485,800 Tesoro Petroleum (b) 5,647 Oil Refinery/Gas Reserves >Distribution/Marketing/Refining: 7.8% 128,400 Dynegy 7,198 Natural Gas & Electric Processing, Production & Marketing 83,300 Equitable Resources 5,560 Natural Gas Utility & Producer 193,000 Atmos Energy 4,704 Natural Gas Utility - ---------------------------------------------------------------------------- 17,462 -------- Energy/Minerals: Total 26,657 - ---------------------------------------------------------------------------- Other Industries: 5.2% >Real Estate: 0.5% 47,000 The Rouse Company 1,199 Regional Shopping Malls >Regulated Utilities: 4.7% 523,000 Conectiv 10,493 Electric Utility in New Jersey, Delaware & Maryland -------- Other Industries: Total 11,692 -------- Total Common Stocks: 92.8% 207,985 (Cost: $197,735) Short-Term Obligations: 1.1% Yield 6.50% Due 1/02/01 $2,552 American General 2,552 (Amortized Cost: $2,552) -------- Total Investments: 93.9% 210,537 (Cost: $200,287) (a) Cash and Other Assets Less Liabilities: 6.1% 13,711 -------- Total Net Assets: 100% $224,248 ============================================================================ - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At December 31, 2000, for federal income tax purposes cost of investments was $200,499 and net unrealized appreciation was $10,038, consisting of gross unrealized appreciation of $49,280 and gross unrealized depreciation of $39,242. (b) Non-income producing security. 33 - -------------------------------------------------------------------------------- F40 - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty >Major Portfolio Changes in the Fourth Quarter Number of Shares ---------------------------- 9/30/00 12/31/00 Additions - --------------------------------------------------------------------------- Europe >Germany Henkel 8,000 20,000 Rhoen-Klinikum 50,000 70,000 >France/Belgium Gemplus International 0 246,200 M6 Metropole TV 70,000 86,000 >United Kingdom BG Group 160,000 500,000 Capita Group 450,000 506,000 Dimension Data 400,000 520,000 Enterprise Oil 0 225,000 Exel 0 40,000 Hays 600,000 900,000 >Switzerland Synthes-Stratec 0 2,600 >Italy Saipem 450,000 700,000 >Netherlands Fortis 0 270,030 - --------------------------------------------------------------------------- Asia >Hong Kong Li & Fung 0 1,209,000 >Japan Sky Perfect Communications 0 1,007 >Singapore Venture Manufacturing 560,000 643,320 - --------------------------------------------------------------------------- Other Countries >Australia Computershare 686,000 1,200,000 >Canada Celestica 85,000 103,200 Talisman Energy 100,000 147,500 Sales - --------------------------------------------------------------------------- Europe >Germany MobilCom 19,600 0 >Sweden Modern Times Group 65,000 30,000 >United Kingdom Energis 450,000 200,000 NTL 27,500 0 Sema Group 250,000 10,000 WPP Group 170,000 0 >Switzerland Julius Baer 1,000 800 >Netherlands ASR Verzekeringsgroep 81,010 0 - --------------------------------------------------------------------------- Other Countries >Israel Comverse Technology 65,000 49,000 Amdocs 85,000 68,000 34 - -------------------------------------------------------------------------------- F40 - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty >Statement of Investments December 31, 2000 Number of Shares Value (000) - ---------------------------------------------------------------------------- Common Stocks: 96.5% - ---------------------------------------------------------------------------- Europe: 61.5% >Germany: 3.8% 70,000 Rhoen Klinikum $ 3,944 Hospital Management 20,000 Henkel (b) 1,319 Chemicals, Detergents & Non-Food Consumer Brands - ---------------------------------------------------------------------------- 5,263 >Finland: 2.9% 273,650 Comptel 3,957 Telephone Billing Software >Sweden: 3.5% 95,200 Netcom (b) 3,963 Telecommunication Services 30,000 Modern Times Group (b) 796 TV, Newspapers and Electronic Commerce - ---------------------------------------------------------------------------- 4,759 >France/Belgium: 6.4% 40,000 RTL Group (Belgium) 3,297 TV & Radio Broadcaster 86,000 M6 Metropole TV 3,237 Television Broadcaster 246,200 Gemplus International 2,204 Smart Cards Products & Solutions - ---------------------------------------------------------------------------- 8,738 >United Kingdom/Ireland: 24.6% 550,000 Irish Life & Permanent (Ireland) 6,840 Life Insurance 900,000 Hays 5,194 Outsourcing Services 150,000 Logica 3,856 Computer Software & Services 506,000 Capita Group 3,783 Outsourcing Services 520,000 Dimension Data (b) 3,576 Networks & Computer Services 405,000 Serco Group 3,239 Facilities Management 500,000 BG Group 2,041 Natural Gas Producer & Distributor 225,000 Enterprise Oil 1,907 Oil & Gas Producers 200,000 SSL International 1,495 Medical & Footcare Products 200,000 Energis (b) 1,334 Telecommunication Services 40,000 Exel 568 Freight Forwarding Logistics 10,000 Sema Group 44 Computer Software & Services - ---------------------------------------------------------------------------- 33,877 >Switzerland: 7.3% 800 Julius Baer Holding 4,401 Private Banking, Brokerage & Mutual Funds 800 Cie Fin Richemont 2,151 Luxury Goods, Tobacco & Pay TV 2,600 Synthes-Stratec 1,930 Products for Orthopedic Surgery 800 Pargesa Holdings 1,563 Industrial & Media Conglomerate - ---------------------------------------------------------------------------- 10,045 >Italy: 6.6% 700,000 Saipem 3,832 Offshore Construction & Drilling 269,000 Banca Fideuram 3,725 Life Insurance & Mutual Funds 180,000 Editoriale L'Espresso 1,564 Newspapers & Magazines Publisher - ---------------------------------------------------------------------------- 9,121 >Netherlands: 6.4% 270,030 Fortis (b) 8,803 Financial Services Conglomerate -------- Europe: Total 84,563 - ---------------------------------------------------------------------------- Asia: 12.6% >Hong Kong: 1.6% 1,209,000 Li & Fung 2,201 Sourcing of Consumer Goods >Japan: 4.5% 28,200 Orix 2,823 Finance Leasing 31,700 Oriental Land 2,118 Disney Theme Park Operator 1,007 Sky Perfect Communications (b) 1,319 Satellite TV Subscriptions - ---------------------------------------------------------------------------- 6,260 >Taiwan: 0.9% 150,000 United Microelectronics (b) 1,238 Semiconductor Foundry >Singapore: 5.6% 643,320 Venture Manufacturing 4,305 Electronic Manufacturing Services 4,800,000 Star Cruises (b) 3,360 Cruise Line - ---------------------------------------------------------------------------- 7,665 -------- Asia: Total 17,364 35 - -------------------------------------------------------------------------------- F40 - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty >Statement of Investments, continued Number of Shares Value (000) - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- Other Countries: 22.4% >Australia: 7.2% 1,200,000 Computershare 5,784 55,000 Computershare Warrants 37 Financial Software/Services 2,700,000 ERG 4,131 Smart Card Systems for Public Transportation - ---------------------------------------------------------------------------- 9,952 >Canada: 8.0% 103,200 Celestica (b) 5,577 Electronic Manufacturing Services 147,500 Talisman Energy (b) 5,476 Oil & Gas Producer - ---------------------------------------------------------------------------- 11,053 >Israel: 7.2% 49,000 Comverse Technology (b) 5,323 Voicemail & Related Systems 68,000 Amdocs (b) 4,505 Telecommunications Billing & Customer Care Software - ---------------------------------------------------------------------------- 9,828 -------- Other: Total 30,833 -------- Total Common Stocks: 96.5% 132,760 (Cost: $124,881) Principal Amount Value (000) - ---------------------------------------------------------------------------- Short-Term Obligations: 5.3% Yield 6.40% - 6.50% Due 1/2/01 $5,502 American General 5,501 1,813 General Electric 1,813 - ---------------------------------------------------------------------------- (Amortized Cost: $7,314) 7,314 -------- Total Investments: 101.8% 140,074 (Cost: $132,195) (a) Cash and Other Assets Less Liabilities: (1.8%) (2,428) -------- Total Net Assets - 100% $137,646 ============================================================================ - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At December 31, 2000, for federal income tax purposes cost of investments was $132,915 and net unrealized appreciation was $7,159, consisting of gross unrealized appreciation of $24,730 and gross unrealized depreciation of $17,571. (b) Non-income producing security. (c) At December 31, 2000, $42,722 or 31.0% of the Fund's net assets was denominated in Euro currency. 36 - -------------------------------------------------------------------------------- F40 - -------------------------------------------------------------------------------- Liberty Acorn Foreign Forty >Portfolio Diversification At December 31, 2000, the Fund's portfolio of investments as a percent of net assets was diversified as follows: Value (000) Percent - -------------------------------------------------------------------------- >Computer Related Hardware Contract Manufacturing $9,882 7.2% Computer Hardware and Related Equipment 2,204 1.6 Semiconductors and Related Equipment 1,237 0.9 - -------------------------------------------------------------------------- 13,323 9.7 >Software &Services Business Software 12,318 9.0 Transaction Processor 9,952 7.2 Computer Services 3,620 2.6 Publishing 1,564 1.1 - -------------------------------------------------------------------------- 27,454 19.9 >Media TV Broadcasting 7,331 5.3 Satellite Broadcasting and Services 1,319 1.0 - -------------------------------------------------------------------------- 8,650 6.3 >Telecommunications Telecommunications Equipment 5,323 3.9 Telephone Services 5,297 3.8 - -------------------------------------------------------------------------- 10,620 7.7 >Health Care Hospital Management 3,944 2.9 Medical Equipment 1,930 1.4 Pharmaceuticals 1,495 1.1 - -------------------------------------------------------------------------- 7,369 5.4 >Industrial Goods Outsourcing Services 14,417 10.5 - -------------------------------------------------------------------------- 14,417 10.5 >Consumer Goods & Services Nondurables 3,470 2.5 Cruise Lines 3,360 2.5 Entertainment 2,118 1.5 - -------------------------------------------------------------------------- 8,948 6.5 >Energy & Minerals Oil & Gas Producers 9,424 6.8 Oil Services 3,832 2.8 - -------------------------------------------------------------------------- 13,256 9.6 >Finance Insurance 15,643 11.4 Money Management 8,126 5.9 Other Finance Companies 2,823 2.1 Closed End Funds 1,563 1.1 - -------------------------------------------------------------------------- 28,155 20.5 >Other Transportation 568 0.4 - -------------------------------------------------------------------------- 568 0.4 -------------------------- Total Common Stocks: 132,760 96.5 Short-term Obligations: 7,314 5.3 -------------------------- Total Investments: 140,074 101.8 Cash and Other Assets less Liabilities: (2,428) (1.8) -------------------------- Net Assets: $137,646 100% ========================================================================== 37 - -------------------------------------------------------------------------------- 20 - -------------------------------------------------------------------------------- Liberty Acorn Twenty >Major Portfolio Changes in the Fourth Quarter Number of Shares ----------------------------- 9/30/00 12/31/00 Additions - ---------------------------------------------------------------------------- Information Getty Images 65,000 83,000 Jabil Circuit 60,000 80,000 Liberty Media Group, AT&T 90,000 150,000 Telephone and Data Systems 18,000 38,000 Tribune 0 55,000 - ---------------------------------------------------------------------------- Health Care Boston Scientific 120,000 265,000 - ---------------------------------------------------------------------------- Consumer Goods/Services Callaway Golf 0 100,000 Sales - ---------------------------------------------------------------------------- Information Reynolds & Reynolds 132,600 0 38 - -------------------------------------------------------------------------------- 20 - -------------------------------------------------------------------------------- Liberty Acorn Twenty >Statement of Investments December 31, 2000 Number of Shares Value (000) - ---------------------------------------------------------------------------- Common Stocks: 94.1% - ---------------------------------------------------------------------------- Information: 36.6% >Television Programming: 2.7% 150,000 Liberty Media Group, AT&T (b) $ 2,034 Cable & Satellite Programming >Telecommunications/Wireline Communications: 1.6% 84,000 McLeod USA 1,187 Super Regional CLEC: Local, Long Distance & Internet Services >Instrumentation: 12.6% 130,000 Tektronix 4,379 Analytical Instruments 25,000 Perkin Elmer 2,625 Analytical Instruments for Biotech, Telecom 30,000 Waters (b) 2,505 Chromatography, Mass Spectrometry, Thermal Analysis - ---------------------------------------------------------------------------- 9,509 >Mobile Communications: 4.6% 38,000 Telephone and Data Systems 3,420 Cellular & Telephone Services >Contract Manufacturing: 2.7% 80,000 Jabil Circuit (b) 2,030 Electronic Manufacturing Services >Business Software: 1.8% 75,000 JD Edwards (b) 1,336 Mid Market ERP Software >Publishing: 3.1% 55,000 Tribune 2,324 Publishing & Media >Business Information: 7.5% 73,000 H&R Block 3,020 Tax Preparation 83,000 Getty Images (b) 2,656 Photographs for Publications & Electronic Media - ---------------------------------------------------------------------------- 5,676 -------- Information: Total 27,516 - ---------------------------------------------------------------------------- Health Care: 15.0% >Medical Equipment: 4.8% 265,000 Boston Scientific (b) 3,627 Stents & Catheters >Hospital/Laboratory Supplies: 4.0% 82,200 Techne (b) 2,964 Cytokines, Antibodies, Other Reagents for Life Sciences >Services: 6.2% 100,000 First Health Group (b) 4,656 PPO Network -------- Health Care: Total 11,247 - ---------------------------------------------------------------------------- Consumer Goods/Services: 15.7% >Leisure Vehicles: 3.9% 74,000 Harley-Davidson 2,942 Motorcycles & Related Merchandise >Retail: 2.5% 100,000 Callaway Golf 1,863 Premium Golf Clubs & Balls >Furniture & Manufacturers: 9.3% 125,000 Herman Miller 3,594 Office Furniture 105,000 Jones Apparel (b) 3,380 Women's Apparel - ---------------------------------------------------------------------------- 6,974 -------- Consumer Goods/Services: Total 11,779 - ---------------------------------------------------------------------------- Finance: 14.6% >Banks: 4.2% 70,000 TCF Financial 3,119 Great Lakes Bank >Money Management: 10.4% 70,000 SEI Investments 7,840 Mutual Fund Administration & Investment Management -------- Finance: Total 10,959 - ---------------------------------------------------------------------------- Industrial Goods/Services: 3.2% >Logistics: 3.2% 45,000 Expeditors International of Washington 2,416 International Freight Forwarder -------- Industrial Goods/Services: Total 2,416 39 - -------------------------------------------------------------------------------- 20 - -------------------------------------------------------------------------------- Liberty Acorn Twenty >Statement of Investments, continued Number of Shares Value (000) - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- Energy/Minerals: 8.8% >Oil Refining/Marketing/Distribution: 6.0% 80,000 Dynegy $ 4,485 Natural Gas & Electric Processing, Production & Marketing >Oil & Gas Producers: 2.8% 35,000 Devon Energy 2,134 Oil & Gas Producer -------- Energy/Minerals: Total 6,619 -------- Total Common Stocks: 93.9% 70,536 (Cost: $53,600) Short-Term Obligations: 5.3% Yield 6.25% - 6.40% Due 1/02 - 1/03/01 2,008 American General 2,007 2,007 General Electric 2,007 - ---------------------------------------------------------------------------- (Amortized Cost: $4,014) 4,014 -------- Total Investments: 99.2% 74,550 (Cost: $57,614) (a) Cash and Other Assets Less Liabilities: 0.8% 586 -------- Total Net Assets: 100% $ 75,136 ============================================================================ - -------------------------------------------------------------------------------- >Notes to Statement of Investments (a) At December 31, 2000, for federal income tax purposes cost of investments was $57,614 and net unrealized appreciation was $16,936, consisting of gross unrealized appreciation of $19,740 and gross unrealized depreciation of $2,804. (b) Non-income producing security. 40 Acorn Family of Funds >Statements of Assets and Liabilitiesv
Acorn Acorn Acorn (in thousands) Fund International USA - ---------------------------------------------------------------------------------------------------------------- 12/31/00 Assets Investments, at value (cost: Acorn Fund $2,644,865; Acorn International $2,020,371; Acorn USA $200,287; Acorn Foreign Forty $132,195; Acorn Twenty $57,614) $4,023,653 $2,461,679 $210,537 Foreign currency (cost: Acorn Fund $2,831; Acorn International $69,976; Acorn Foreign Forty $3,828) 2,873 69,508 -- Cash 1 -- 1 Net unrealized appreciation on foreign forward currency contracts -- 1,038 -- Receivable for: Securities sold 2,931 12,968 24,225 Fund shares sold 8,493 8,444 314 Dividends and interest 2,455 1,945 -- Other assets 491 4,372 75 - ---------------------------------------------------------------------------------------------------------------- Total assets 4,040,897 2,559,954 235,152 Liabilities and Net Assets Foreign currency (cost: Acorn Fund $10; Acorn International Fund $21,367) 10 22,209 -- Payable for: Securities purchased 7,051 44,328 10,510 Fund shares redeemed 6,144 12,910 166 Accrued: Management fee -- -- -- Administration fee 1 -- -- 12b-1 service & distribution fee 2 1 -- Transfer agent fee 292 327 47 Other 1,269 1,067 181 - ---------------------------------------------------------------------------------------------------------------- Total liabilities 14,769 80,842 10,904 - ---------------------------------------------------------------------------------------------------------------- Net assets $4,026,128 $2,479,112 $224,248 ================================================================================================================ Pricing of Shares Net asset value and redemption price per share - Class A (a) $17.19 $23.84 $14.88 ($18,252/1,062) ($10,323/433) ($798/54) Maximum offering price per share - Class A (b) $18.24 $25.29 $15.79 ($17.19/.9425) ($23.84/.9425) ($14.88/.9425) Net asset value and offering price per share - Class B (a) $17.17 $23.81 $14.87 ($15,951/929) ($5,675/238) ($685/46) Net asset value and offering price per share - Class C (a) $17.17 $23.81 $14.87 ($8,510/496) ($3,965/167) ($347/23) Net asset value, offering price and redemption price per share - Class Z $17.21 $23.85 $14.90 ($3,983,415/231,423) ($2,459,149/103,112) ($222,418/14,930) ================================================================================================================ Analysis of Net Assets Paid-in capital $2,583,620 $2,010,623 $217,298 Accumulated net realized gain (loss) on sales of investments, futures and foreign currency transactions 63,708 36,030 (3,258) Net unrealized appreciation of investments and other assets (net of unrealized PFIC gains of $8,026 for Acorn International and $385 for Acorn Foreign Forty) 1,378,800 432,791 10,250 Undistributed net investment income (loss) -- (332) (42) - ---------------------------------------------------------------------------------------------------------------- Net assets applicable to Fund shares outstanding $4,026,128 $2,479,112 $224,248 ================================================================================================================ Acorn Acorn (in thousands) Foreign Forty Twenty - ------------------------------------------------------------------------------------------- 12/31/00 Assets Investments, at value (cost: Acorn Fund $2,644,865; Acorn International $2,020,371; Acorn USA $200,287; Acorn Foreign Forty $132,195; Acorn Twenty $57,614) $140,074 $74,550 Foreign currency (cost: Acorn Fund $2,831; Acorn International $69,976; Acorn Foreign Forty $3,828) 3,789 -- Cash 1 -- Net unrealized appreciation on foreign forward currency contracts -- -- Receivable for: Securities sold -- -- Fund shares sold 1,224 1,576 Dividends and interest 56 26 Other assets -- 357 - ------------------------------------------------------------------------------------------- Total assets 145,144 76,509 Liabilities and Net Assets Foreign currency (cost: Acorn Fund $10; Acorn International Fund $21,367) -- -- Payable for: Securities purchased 6,951 -- Fund shares redeemed 450 1,291 Accrued: Management fee 1 -- Administration fee -- -- 12b-1 service & distribution fee -- -- Transfer agent fee 20 28 Other 76 54 - ------------------------------------------------------------------------------------------- Total liabilities 7,498 1,373 - ------------------------------------------------------------------------------------------- Net assets $137,646 $75,136 =========================================================================================== Pricing of Shares Net asset value and redemption price per share - Class A (a) $17.15 $14.12 ($3,172/185) ($3,267/231) Maximum offering price per share - Class A (b) $18.20 $14.98 ($17.15/.9425) ($14.12/.9425) Net asset value and offering price per share - Class B (a) $17.13 $14.10 ($1,551/91) ($4,249/301) Net asset value and offering price per share - Class C (a) $17.14 $14.10 ($3,399/198) ($1,070/76) Net asset value, offering price and redemption price per share - Class Z $17.15 $14.13 ($129,524/7,552) ($66,550/4,710) =========================================================================================== Analysis of Net Assets Paid-in capital $129,806 $58,208 Accumulated net realized gain (loss) on sales of investments, futures and foreign currency transactions 145 (2) Net unrealized appreciation of investments and other assets (net of unrealized PFIC gains of $8,026 for Acorn International and $385 for Acorn Foreign Forty) 7,619 16,936 Undistributed net investment income (loss) 76 (6) - ------------------------------------------------------------------------------------------- Net assets applicable to Fund shares outstanding $137,646 $75,136 ===========================================================================================
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See accompanying notes to financial statements 41 Acorn Family of Funds >Statements of Operations
Acorn Fund Acorn International Year Year Year Year (in thousands) ended 12/31, ended 12/31, ended 12/31, ended 12/31, - --------------------------------------------------------------------------------------------------------------------------------- 2000 1999 2000 1999 Investment Income: Dividends $ 33,918 $ 34,159 $ 18,915 $ 20,878 Interest 20,238 11,416 15,040 4,883 - --------------------------------------------------------------------------------------------------------------------------------- 54,156 45,575 33,955 25,761 Foreign taxes withheld (222) (330) (2,145) (2,094) - --------------------------------------------------------------------------------------------------------------------------------- Total investment income 53,934 45,245 31,810 23,667 Expenses: Investment advisory 26,750 23,437 23,515 15,668 Administration 1,958 1,699 1,484 961 12b-1 Service & Distribution fees 26 -- 12 -- Custodian 1,063 875 3,648 2,321 Transfer and dividend disbursing agent 1,339 1,312 1,344 1,380 Reports to shareholders 521 448 509 446 Legal and audit 268 229 175 136 Registration and blue sky 61 64 105 58 Trustees' and other 668 683 538 399 - --------------------------------------------------------------------------------------------------------------------------------- Total expenses 32,654 28,747 31,330 21,369 Less custodian fees paid indirectly (23) -- (36) -- Less reimbursement of expenses by advisor -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Net expenses 32,631 28,747 31,294 21,369 - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) 21,303 16,498 516 2,298 Net Realized and Unrealized Gain (Loss) on Investments, Futures and Foreign Currency Transactions: Net realized gain (loss) on sales of investments 510,269 915,362 484,818 205,354 Net realized gain (loss) on foreign currency transactions (66) (110) 11,862 1,133 Net realized loss on futures (315) (6,918) -- (403) Change in net unrealized appreciation of investments and foreign currency transactions (159,291) 92,272 (1,142,570) 1,054,166 - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments, futures and foreign currency transactions 350,597 1,000,606 (645,890) 1,260,250 - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ 371,900 $ 1,017,104 $ (645,374) $ 1,262,548 ================================================================================================================================= Acorn Acorn USA Foreign Forty Acorn Twenty Year Year Year Year Year Year (in thousands) ended 12/31, ended 12/31, ended 12/31, ended 12/31, ended 12/31, ended 12/31, - ------------------------------------------------------------------------------------------------------------------------------------ 2000 1999 2000 1999 2000 1999 Investment Income: Dividends $ 1,333 $ 2,223 $ 1,035 $ 459 $ 298 $ 280 Interest 1,192 1,259 362 158 225 130 - ------------------------------------------------------------------------------------------------------------------------------------ 2,525 3,482 1,397 617 523 410 Foreign taxes withheld -- -- (120) (42) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total investment income 2,525 3,482 1,277 575 523 410 Expenses: Investment advisory 2,844 2,805 1,334 426 585 503 Administration 152 150 70 22 33 28 12b-1 Service & Distribution fees 2 -- 5 -- 6 -- Custodian 45 43 215 85 13 12 Transfer and dividend disbursing agent 189 218 113 60 123 105 Reports to shareholders 66 95 44 53 48 75 Legal and audit 53 41 32 29 28 29 Registration and blue sky 50 26 42 25 32 20 Trustees' and other 96 85 24 6 11 17 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses 3,497 3,463 1,879 706 879 789 Less custodian fees paid indirectly (4) (6) (7) (13) (12) (11) Less reimbursement of expenses by advisor -- -- -- (42) -- (23) - ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 3,493 3,457 1,872 651 867 755 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (loss) (968) 25 (595) (76) (344) (345) Net Realized and Unrealized Gain (Loss) on Investments, Futures and Foreign Currency Transactions: Net realized gain (loss) on sales of investments (2,868) 38,768 5,742 792 1,280 5,015 Net realized gain (loss) on foreign currency transactions -- -- 48 -- -- -- Net realized loss on futures -- -- -- -- -- -- Change in net unrealized appreciation of investments and foreign currency transactions (37,432) 30,941 (30,276) 36,932 5,498 8,906 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments, futures and foreign currency transactions (40,300) 69,709 (24,486) 37,724 6,778 13,921 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations $(41,268) $ 69,734 $(25,081) $ 37,648 $ 6,434 $ 13,576 ====================================================================================================================================
See accompanying notes to financial statements 42 & 43 Acorn Family of Funds >Statements of Changes in Net Assets
Acorn Fund Acorn International Year Year Year Year (in thousands) ended 12/31, ended 12/31, ended 12/31, ended 12/31, - --------------------------------------------------------------------------------------------------------------------------------- 2000 1999 2000 1999 From Operations: Net investment income (loss) $21,303 $16,498 $516 $2,298 Net realized gain (loss) on sales of investments, futures and foreign currency transactions 509,888 908,334 496,680 206,084 Change in net unrealized appreciation of investments and foreign currency transactions (159,291) 92,272 (1,142,570) 1,054,166 - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 371,900 1,017,104 (645,374) 1,262,548 Distributions to Shareholders From: Net investment income - Class A (13) -- -- -- Net realized gain - Class A (386) -- (293) -- Net investment income - Class B (16) -- -- -- Net realized gain - Class B (470) -- (212) -- Net investment income - Class C (7) -- -- -- Net realized gain - Class C (207) -- (135) -- Net investment income - Class Z (23,731) (16,501) (57,949) (16,992) Net realized gain - Class Z (604,477) (638,460) (377,896) (119,344) In excess of net investment income -- Class Z -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Total distributions to shareholders (629,307) (654,961) (436,485) (136,336) From Fund Share Transactions (a): Reinvestment of dividends and capital gain distributions - Class A 386 -- 281 -- Proceeds from other shares sold - Class A 18,736 -- 22,009 -- - --------------------------------------------------------------------------------------------------------------------------------- 19,122 -- 22,290 -- Payments for shares redeemed - Class A (1,351) -- (11,648) -- - --------------------------------------------------------------------------------------------------------------------------------- 17,771 -- 10,642 -- Reinvestment of dividends and capital gain distributions - Class B 424 -- 193 -- Proceeds from other shares sold - Class B 15,388 -- 5,846 -- - --------------------------------------------------------------------------------------------------------------------------------- 15,812 -- 6,039 -- Payments for shares redeemed - Class B (224) -- (53) -- - --------------------------------------------------------------------------------------------------------------------------------- 15,588 -- 5,986 -- Reinvestment of dividends and capital gain distributions - Class C 186 -- 105 -- Proceeds from other shares sold - Class C 8,646 -- 6,240 -- - --------------------------------------------------------------------------------------------------------------------------------- 8,832 -- 6,345 -- Payments for shares redeemed - Class C (588) -- (2,205) -- - --------------------------------------------------------------------------------------------------------------------------------- 8,244 -- 4,140 -- Reinvestment of dividends and capital gain distributions - Class Z 570,322 586,161 402,800 128,048 Proceeds from other shares sold - Class Z 679,209 346,317 1,638,922 648,562 - --------------------------------------------------------------------------------------------------------------------------------- 1,249,531 932,478 2,041,722 776,610 Payments for shares redeemed - Class Z (928,438) (923,243) (1,369,722) (760,116) - --------------------------------------------------------------------------------------------------------------------------------- 321,093 9,235 672,000 16,494 - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from Fund share transactions 362,696 9,235 692,768 16,494 - --------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 105,289 371,378 (389,091) 1,142,706 Net Assets: Beginning of period 3,920,839 3,549,461 2,868,203 1,725,497 - --------------------------------------------------------------------------------------------------------------------------------- End of period $4,026,128 $3,920,839 $2,479,112 $2,868,203 ================================================================================================================================= Undistributed Net Investment Income (Loss) -- $2,528 $(332) $54,598 ================================================================================================================================= Acorn Acorn USA Foreign Forty Year Year Year Year (in thousands) ended 12/31, ended 12/31, ended 12/31, ended 12/31, - ------------------------------------------------------------------------------------------------------------------------------ 2000 1999 2000 1999 From Operations: Net investment income (loss) $(968) $25 $(595) $(76) Net realized gain (loss) on sales of investments, futures and foreign currency transactions (2,868) 38,768 5,790 792 Change in net unrealized appreciation of investments and foreign currency transactions (37,432) 30,941 (30,276) 36,932 - ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations (41,268) 69,734 (25,081) 37,648 Distributions to Shareholders From: Net investment income - Class A -- -- -- -- Net realized gain - Class A -- -- -- -- Net investment income - Class B -- -- -- -- Net realized gain - Class B -- -- -- -- Net investment income - Class C -- -- -- -- Net realized gain - Class C -- -- -- -- Net investment income - Class Z (150) -- (221) -- Net realized gain - Class Z (7,066) (28,268) (765) (99) In excess of net investment income -- Class Z -- -- (43) -- - ------------------------------------------------------------------------------------------------------------------------------ Total distributions to shareholders (7,216) (28,268) (1,029) (99) From Fund Share Transactions (a): Reinvestment of dividends and capital gain distributions - Class A -- -- -- -- Proceeds from other shares sold - Class A 824 -- 3,394 -- - ------------------------------------------------------------------------------------------------------------------------------ 824 -- 3,394 -- Payments for shares redeemed - Class A (81) -- (142) -- - ------------------------------------------------------------------------------------------------------------------------------ 743 -- 3,252 Reinvestment of dividends and capital gain distributions - Class B -- -- -- -- Proceeds from other shares sold - Class B 1,145 -- 1,583 -- - ------------------------------------------------------------------------------------------------------------------------------ 1,145 -- 1,583 -- Payments for shares redeemed - Class B (474) -- (24) -- - ------------------------------------------------------------------------------------------------------------------------------ 671 -- 1,559 -- Reinvestment of dividends and capital gain distributions - Class C -- -- -- -- Proceeds from other shares sold - Class C 670 -- 3,545 -- - ------------------------------------------------------------------------------------------------------------------------------ 670 -- 3,545 -- Payments for shares redeemed - Class C (352) -- (201) -- - ------------------------------------------------------------------------------------------------------------------------------ 318 -- 3,344 -- Reinvestment of dividends and capital gain distributions - Class Z 7,066 25,972 971 94 Proceeds from other shares sold - Class Z 92,331 118,916 258,241 66,325 - ------------------------------------------------------------------------------------------------------------------------------ 99,397 144,888 259,212 66,419 Payments for shares redeemed - Class Z (199,825) (95,877) (210,962) (12,402) - ------------------------------------------------------------------------------------------------------------------------------ (100,428) 49,011 48,250 54,017 - ------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from Fund share transactions (98,696) 49,011 56,405 54,017 - ------------------------------------------------------------------------------------------------------------------------------ Total increase (decrease) in net assets (147,180) 90,477 30,295 91,566 Net Assets: Beginning of period 371,428 280,951 107,351 15,785 - ------------------------------------------------------------------------------------------------------------------------------ End of period $224,248 $371,428 $137,646 $107,351 ============================================================================================================================== Undistributed Net Investment Income (Loss) ($42) $25 $76 $219 ============================================================================================================================== Acorn Twenty Year Year (in thousands) ended 12/31, ended 12/31, - ---------------------------------------------------------------------------------------- 2000 1999 From Operations: Net investment income (loss) $(344) $(345) Net realized gain (loss) on sales of investments, futures and foreign currency transactions 1,280 5,015 Change in net unrealized appreciation of investments and foreign currency transactions 5,498 8,906 - ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 6,434 13,576 Distributions to Shareholders From: Net investment income - Class A -- -- Net realized gain - Class A (11) -- Net investment income - Class B -- -- Net realized gain - Class B (18) -- Net investment income - Class C -- -- Net realized gain - Class C (6) -- Net investment income - Class Z -- -- Net realized gain - Class Z (4,826) (705) In excess of net investment income -- Class Z -- -- - ---------------------------------------------------------------------------------------- Total distributions to shareholders (4,861) (705) From Fund Share Transactions (a): Reinvestment of dividends and capital gain distributions - Class A 9 -- Proceeds from other shares sold - Class A 3,774 -- - ---------------------------------------------------------------------------------------- 3,783 -- Payments for shares redeemed - Class A (585) -- - ---------------------------------------------------------------------------------------- 3,198 Reinvestment of dividends and capital gain distributions - Class B 19 -- Proceeds from other shares sold - Class B 4,172 -- - ---------------------------------------------------------------------------------------- 4,191 -- Payments for shares redeemed - Class B (16) -- - ---------------------------------------------------------------------------------------- 4,175 -- Reinvestment of dividends and capital gain distributions - Class C 5 -- Proceeds from other shares sold - Class C 1,053 -- - ---------------------------------------------------------------------------------------- 1,058 -- Payments for shares redeemed - Class C (3) -- - ---------------------------------------------------------------------------------------- 1,055 -- Reinvestment of dividends and capital gain distributions - Class Z 4,613 658 Proceeds from other shares sold - Class Z 16,851 34,563 - ---------------------------------------------------------------------------------------- 21,464 35,221 Payments for shares redeemed - Class Z (24,799) (13,346) - ---------------------------------------------------------------------------------------- (3,335) 21,875 - ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets from Fund share transactions 5,093 21,875 - ---------------------------------------------------------------------------------------- Total increase (decrease) in net assets 6,666 34,746 Net Assets: Beginning of period 68,470 33,724 - ---------------------------------------------------------------------------------------- End of period $75,136 $68,470 ======================================================================================== Undistributed Net Investment Income (Loss) ($6) $-- ========================================================================================
(a) Class A, Class B and Class C shares were initially offered on October 16, 2000. See accompanying notes to financial statements. 44 & 45 Acorn Family of Funds >Statements of Changes in Net Assets continued
Acorn Fund Acorn International Year Year Year Year (in thousands) ended 12/31, ended 12/31, ended 12/31, ended 12/31, - ----------------------------------------------------------------------------------------------------------------------------- 2000 1999 2000 1999 Number of Fund Shares (a) Shares issued in reinvestment and capital gains distributions - Class A 24 -- 11 -- Shares sold - Class A 1,120 -- 903 -- - ----------------------------------------------------------------------------------------------------------------------------- 1,144 -- 914 -- Less shares redeemed - Class A (82) -- (481) -- - ----------------------------------------------------------------------------------------------------------------------------- Net increase in shares outstanding - Class A 1,062 -- 433 -- Shares issued in reinvestment and capital gains distributions - Class B 27 -- 8 -- Shares sold - Class B 916 -- 232 -- - ----------------------------------------------------------------------------------------------------------------------------- 943 -- 240 -- Less shares redeemed - Class B (14) -- (2) -- - ----------------------------------------------------------------------------------------------------------------------------- Net increase in shares outstanding - Class B 929 -- 238 -- Shares issued in reinvestment and capital gains distributions - Class C 13 -- 5 -- Shares sold - Class C 519 -- 249 -- - ----------------------------------------------------------------------------------------------------------------------------- 532 -- 254 -- Less shares redeemed - Class C (36) -- (87) -- - ----------------------------------------------------------------------------------------------------------------------------- Net increase in shares outstanding - Class C 496 -- 167 -- Shares issued in reinvestment and capital gains distributions - Class Z 34,165 19,615 15,422 25,580 Shares sold - Class Z 37,462 33,973 49,035 4,028 - ----------------------------------------------------------------------------------------------------------------------------- 71,627 53,588 64,457 29,608 Less shares redeemed - Class Z (51,822) (52,676) (42,523) (31,304) - ----------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in shares outstanding - Class Z 19,805 912 21,934 (1,696) Acorn Acorn USA Foreign Forty Acorn Twenty Year Year Year Year Year Year (in thousands) ended 12/31, ended 12/31, ended 12/31, ended 12/31, ended 12/31, ended 12/31, - ------------------------------------------------------------------------------------------------------------------------------------ 2000 1999 2000 1999 2000 1999 Number of Fund Shares (a) Shares issued in reinvestment and capital gains distributions - Class A -- -- -- -- 1 -- Shares sold - Class A 59 -- 193 -- 272 -- - ------------------------------------------------------------------------------------------------------------------------------------ 59 -- 193 -- 273 -- Less shares redeemed - Class A (5) -- (8) -- (42) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in shares outstanding - Class A 54 -- 185 -- 231 -- Shares issued in reinvestment and capital gains distributions - Class B -- -- -- -- 1 -- Shares sold - Class B 81 -- 92 -- 301 -- - ------------------------------------------------------------------------------------------------------------------------------------ 81 -- 92 -- 302 -- Less shares redeemed - Class B (35) -- (1) -- (1) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in shares outstanding - Class B 46 -- 91 -- 301 -- Shares issued in reinvestment and capital gains distributions - Class C -- -- -- -- 1 -- Shares sold - Class C 48 -- 210 -- 76 -- - ------------------------------------------------------------------------------------------------------------------------------------ 48 -- 210 -- 77 -- Less shares redeemed - Class C (25) -- (12) -- (1) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in shares outstanding - Class C 23 -- 198 -- 76 -- Shares issued in reinvestment and capital gains distributions - Class Z 509 7,922 48 4,836 346 2,862 Shares sold - Class Z 6,133 1,645 12,956 7 1,239 51 - ------------------------------------------------------------------------------------------------------------------------------------ 6,642 9,567 13,004 4,843 1,585 2,913 Less shares redeemed - Class Z (13,882) (6,383) (10,839) (891) (1,871) (1,067) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in shares outstanding - Class Z (7,240) 3,184 2,165 3,952 (286) 1,846
(a) Class A, Class B and Class C shares were initially offered on October 16, 2000. See accompanying notes to financial statements Year 46 & 47 Acorn Family of Funds >Financial Highlights
Acorn Fund Class A Class B Class C - ----------------------------------------------------------------------------------------------------------- Selected data for a share of each class outstanding throughout each For the period ended December 31, 2000 (a) period is as follows: Net Asset Value, Beginning of Period $17.88 $17.88 $17.88 =========================================================================================================== Income from Investment Operations Net investment income (b) .01 (.01) (.01) Net realized and unrealized gain 1.22 1.22 1.22 - ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.23 1.21 1.21 - ----------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders From net investment income (.06) (.06) (.06) From net realized gains (1.86) (1.86) (1.86) - ----------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders (1.92) (1.92) (1.92) - ----------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $17.19 $17.17 $17.17 =========================================================================================================== Total Return (c) (d) 7.40% 7.27% 7.27% - ----------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Expenses (e) (f) 1.03% 1.68% 1.68% Net investment income (e) (f) .39% (.26%) (.26%) Portfolio Turnover 29% 29% 29% Net assets at end of period (000's) $18,252 $15,951 $8,510
(a) Class A, Class B and Class C shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements had no impact. (f) Annualized.
Acorn International Class A Class B Class C - ---------------------------------------------------------------------------------------------------------- Selected data for a share of each class outstanding throughout each For the period ended December 31, 2000 (a) period is as follows: Net Asset Value, Beginning of Period $28.67 $28.67 $28.67 ========================================================================================================== Income from Investment Operations Net investment income (b) .02 (.01) (.01) Net realized and unrealized gain (1.26) (1.26) (1.26) - ---------------------------------------------------------------------------------------------------------- Total from investment operations (1.24) (1.27) (1.27) - ---------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders From net investment income .00 .00 .00 From net realized gains (3.59) (3.59) (3.59) - ---------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders (3.59) (3.59) (3.59) - ---------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $23.84 $23.81 $23.81 ========================================================================================================== Total Return (c) (d) (4.85%) (4.97%) (4.97%) - ---------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Expenses (e) (f) .59% 1.24% 1.24% Net investment income (e) (f) .40% (.25%) (.25%) Portfolio Turnover 63% 63% 63% Net assets at end of period (000's) $10,323 $5,675 $3,965
(a) Class A, Class B and Class C shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements had no impact. (f) Annualized. See accompanying notes to financial statements 48 & 49
Acorn USA Class A Class B Class C - ----------------------------------------------------------------------------------------------- Selected data for a share of each class outstanding throughout each For the period ended December 31, 2000 (a) period is as follows: Net Asset Value, Beginning of Period $13.83 $13.83 $13.83 - ----------------------------------------------------------------------------------------------- Income from Investment Operations Net investment income (b) (.01) (.03) (.03) Net realized and unrealized gain 1.06 1.07 1.07 - ----------------------------------------------------------------------------------------------- Total from investment operations 1.05 1.04 1.04 - ----------------------------------------------------------------------------------------------- Net Asset Value, End of Period $14.88 $14.87 $14.87 =============================================================================================== Total Return (c) (d) 7.59% 7.52% 7.52% - ----------------------------------------------------------------------------------------------- Ratios to Average Net Assets Expenses (e) (f) 1.17% 1.82% 1.82% Net investment income (e) (f) (.49%) (1.14%) (1.14%) Portfolio Turnover 45% 45% 45% Net assets at end of period (000's) $798 $685 $347
(a) Class A, Class B and Class C shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements had no impact. (f) Annualized.
Acorn Foreign Forty Class A Class B Class C - ----------------------------------------------------------------------------------------------------- Selected data for a share of each class outstanding throughout each For the period ended December 31, 2000 (a) period is as follows: Net Asset Value, Beginning of Period $17.71 $17.71 $17.71 - ----------------------------------------------------------------------------------------------------- Income from Investment Operations Net investment income (b) (.03) (.05) (.05) Net realized and unrealized gain (.53) (.53) (.53) - ----------------------------------------------------------------------------------------------------- Total from investment operations (.56) (.58) (.58) - ----------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $17.15 $17.13 $17.14 ===================================================================================================== Total Return (c) (d) (3.16%) (3.27%) (3.22%) - ----------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Expenses (e) (f) 1.29% 1.94% 1.94% Net investment income (e) (f) (.79%) (1.44%) (1.44%) Portfolio Turnover 79% 79% 79% Net assets at end of period (000's) $3,172 $1,551 $3,399
(a) Class A, Class B and Class C shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements had no impact. (f) Annualized. See accompanying notes to financial statements 49
Acorn Twenty Class A Class B Class C - -------------------------------------------------------------------------------------------------------------- Selected data for a share of each class outstanding throughout each For the period ended December 31, 2000 (a) period is as follows: Net Asset Value, Beginning of Period $13.47 $13.47 $13.47 - -------------------------------------------------------------------------------------------------------------- Income from Investment Operations Net investment income (b) .01 (.01) (.01) Net realized and unrealized gain .84 .84 .84 - -------------------------------------------------------------------------------------------------------------- Total from investment operations .85 .83 .83 Less Distributions Declared to Shareholders From net investment income (.01) (.01) (.01) From net realized gains (.19) (.19) (.19) - -------------------------------------------------------------------------------------------------------------- Total distributions declared to shareholders (.20) (.20) (.20) - -------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $14.12 $14.10 $14.10 ============================================================================================================== Total Return (c) (d) 6.32% 6.17% 6.17% - -------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Expenses (e) (f) .76% 1.41% 1.41% Net investment income (e) (f) .23% (.42%) (.42%) Portfolio Turnover 116% 116% 116% Net assets at end of period (000's) $3,267 $4,249 $1,070
(a) Class A, Class B and Class C shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements had no impact. (f) Annualized. See accompanying notes to financial statements 50 Acorn Family of Funds >Notes to Financial Statements 1. Nature of Operations Liberty Acorn Fund (formerly Acorn Fund), Liberty Acorn International (formerly Acorn International), Liberty Acorn USA (formerly Acorn USA), Liberty Acorn Twenty (formerly Acorn Twenty) and Liberty Acorn Foreign Forty (formerly Acorn Foreign Forty) (the "Funds") are series of Liberty Acorn Investment Trust (the "Trust"), an open-end management investment company organized as a Massachusetts business trust. The investment objective of each Fund is to seek long-term growth of capital. The Funds may issue an unlimited number of shares. Effective October 16, 2000, the Funds began offering Class A, Class B and Class C shares. The Funds offer four classes of shares: Class A, Class B, Class C and Class Z. Class A shares are sold with a front-end sales charge. A contingent deferred sales charge is assessed to Class A shares purchased without an initial sales charge on redemptions made within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to an annual distribution fee and a contingent deferred sales charge. Class B shares will convert to Class A shares in three, four or eight years after purchase, depending on the program under which shares are purchased. Class C shares are subject to a contingent deferred sales charge on redemptions made within one year after purchase and an annual distribution fee. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares. The financial highlights for Class Z shares are presented in a separate annual report. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are borne pro rata on the basis of the relative net assets of all classes, except each class bears certain expenses unique to that class such as distribution services, transfer agent, and certain other class specific expenses. Differences in class expenses may result in payment of different dividend distributions for each class. All the share classes of the Trust have equal rights with respect to voting subject to class specific arrangements. 2. Significant Accounting Policies >Security valuation Investments are stated at current value. Securities traded on securities exchanges or in over-the-counter markets in which transaction prices are reported are valued at the last sales price at the time of valuation. Securities for which there are no reported sales on the valuation date are valued at the latest bid quotation. Money market instruments having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis. Securities for which quotations are not available and any other assets are valued at a fair value as determined in good faith by the Board of Trustees. >Foreign currency translations Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales of investments and dividend and interest income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The gain or loss resulting from changes in foreign exchange rates is included with net realized and unrealized gain or loss from investments, as appropriate. >Security transactions and investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the information is available to the Funds. Interest income is recorded on the accrual basis and includes amortization of discounts on money market instruments and long-term debt instruments when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. >Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. >Financial instruments Each Fund may purchase or sell exchange-traded financial futures contracts, which are contracts that obligate that Fund to make or take delivery of a financial instrument or the cash value of a securities index at a specified future date at a specified price. The Funds enter into such contracts to hedge a portion of their portfolio. Gains and losses are reflected as "Net Realized Gain (Loss) on Futures" in the Statements of Operations. Additionally, each Fund may engage in portfolio hedging with respect to changes in foreign currency exchange rates by entering into forward foreign currency contracts to purchase or sell foreign currencies. The Statements of Operations reflect gains and losses as realized for closed forward foreign currency contracts and unrealized for open contracts. The Funds bear the market risk that arises from changes in the value of financial instruments and securities indices (futures contracts) or from changes in foreign currency rates (forward foreign currency contracts) and the credit 51 Acorn Family of Funds >Notes to Financial Statements continued risk should a counterparty fail to perform under such contracts. None of the Funds had futures contracts open at December 31, 2000. Liberty Acorn International entered into forward contracts to sell foreign currency as described below: Liberty Acorn International Foreign Settlement U.S. Dollar Unrealized Amount (000) Currency Date Proceeds (000) Gain (000) - -------------------------------------------------------------------------------- 5,260,000 Japanese Yen 3/16/01 $46,522 $1,038 ====== Liberty Acorn USA, Liberty Acorn Twenty and Liberty Acorn Foreign Forty did not enter into any futures or forward foreign currency contracts during the year ended December 31, 2000. >Fund share valuation Fund shares are sold and redeemed on a continuing basis at net asset value. Net asset value per share is determined daily as of the close of trading on the New York Stock Exchange on each day the Exchange is open for trading. All income, expenses (other than the Class A, Class B and Class C 12b-1 service and distribution fees, and Class A, Class B, Class C and Class Z shares Transfer Agent fee) and realized and unrealized gains (losses) are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. >Federal income taxes, dividends and distributions to shareholders The Funds have complied with the special provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distribute all their taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required. Dividends and distributions payable to each Fund's shareholders are recorded by the respective Fund on the ex-dividend date. The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These differences primarily relate to investment securities sold at a loss, certain foreign currency and foreign security transactions. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ from distributions during such period. Accordingly, the Funds may periodically make reclassifications among certain of their capital accounts to reflect differences between financial reporting and federal income tax basis distributions. These reclassifications have no impact on the total net assets or the net asset values of the Funds. The Liberty Acorn International and Liberty Acorn Foreign Forty have elected to mark-to-market their investments in Passive Foreign Investment Companies ("PFIC's") for federal income tax purposes. Gains and losses relating to PFIC's are treated as ordinary income for federal income tax purposes. A summary of transactions relating to PFIC's is as follows (in thousands): Liberty Acorn International - ----------------------------------------------------------------------- Cumulative unrealized appreciation on PFIC's recognized in prior years at December 31, 1999 $65,710 Unrealized appreciation (depreciation) on PFIC's recognized for federal income tax purposes during 2000 (18,277) Unrealized appreciation recognized in prior years on PFIC's sold during 2000 (39,407) ---------- Cumulative unrealized appreciation on PFIC's recognized at December 31, 2000 $8,026 ---------- Liberty Acorn Foreign Forty - ----------------------------------------------------------------------- Cumulative unrealized appreciation on PFIC's recognized in prior years at December 31, 1999 $305 Unrealized appreciation (depreciation) on PFIC's recognized for federal income tax purposes during 2000 198 Unrealized appreciation recognized in prior years on PFIC's sold during 2000 (118) ---------- Cumulative unrealized appreciation on PFIC's recognized at December 31, 2000 $385 ---------- Dividends payable to shareholders are recorded by the Funds on the ex-dividend date. 3. Transactions with Affiliates The Funds' investment advisor, Liberty Wanger Asset Management, L.P. ("WAM") furnishes continuing investment supervision to the Funds and is responsible for the overall management of the Funds' business affairs. Under the Funds' investment management agreement, fees are accrued daily and paid monthly to WAM at the annual rates shown in the table below for each fund. Liberty Acorn Fund - ----------------------------------------------------------------------- Net asset value: For the first $700 million .75% Next $1.300 billion .70% Net assets in excess of $2 billion .65% 52 Liberty Acorn International - ----------------------------------------------------------------------- Net asset value: For the first $100 million 1.20% Next $400 million .95% Net assets in excess of $500 million .75% Liberty Acorn USA - ----------------------------------------------------------------------- Net asset value: For the first $200 million .95% Net assets in excess of $200 million .90% Liberty Acorn Foreign Forty - ----------------------------------------------------------------------- On average daily net assets: .95% Liberty Acorn Twenty - ----------------------------------------------------------------------- On average daily net assets: .90% WAM has also contracted to provide administrative services to each Fund at an annual rate of .05% of average daily net assets. Liberty Funds Distributor, Inc. (the Distributor), an affiliate of the Advisor, is the Fund's principal underwriter. For the period ended, December 31, 2000, Liberty Acorn Fund, Liberty Acorn International, Liberty Acorn USA, Liberty Acorn Twenty and Liberty Acorn Foreign Forty have been advised that the Distributor retained no net underwriting discounts on the sale of Class A shares and received contingent deferred sales charges of $3,486, $4,158, $249, $479 and $65, respectively, on Class A, Class B and Class C share redemptions. The Fund has adopted a 12b-1 plan which requires the payment of a monthly service fee to the Distributor equal to 0.25% annually on Class A, Class B and Class C net assets as of the 20th of each month. The plan also requires the payment of a monthly distribution fee to the Distributor equal to 0.10%, 0.75% and 0.75%, annually, of the average net assets attributable to Class A, Class B and Class C net assets, respectively. The CDSC and the fees received from the 12b-1 plan are used principally as repayment to the Distributor for amounts paid by the Distributor to dealers who sold such shares. Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of the Advisor, provides shareholder services to the Fund and receives reimbursement for certain out of pocket expenses. Transfer agent fees are comprised of 0.07% annually of the average net assets attributable to Class A, Class B and Class C shares plus charges based on the number of shareholder accounts and transactions. Certain officers and trustees of the Trust are also principals of WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with WAM. The Fund's paid trustees' fees and expenses of the following: - --------------------------------------------------------------------------- (in thousands) 2000 1999 Liberty Acorn Fund $335 $293 Liberty Acorn International 252 150 Liberty Acorn USA 30 24 Liberty Acorn Foreign Forty 12 2 Liberty Acorn Twenty 7 4 --------------------- $636 $473 ===================== WAM advanced Liberty Acorn USA $107,000 in connection with the organization and initial registration of the Fund. These costs are being amortized and reimbursed to WAM over the period September 1996 though August 2001. 4. Borrowing Arrangements The trust participates in a $250,000,000 credit facility which was entered into to facilitate portfolio liquidity. No amounts have been borrowed under this facility. 5. Investment Transactions Investment Transactions (excluding money market instruments) for each of the Fund's are as follows. Liberty Acorn Fund - --------------------------------------------------------------------------- (in thousands) 2000 1999 Investment securities Purchases $1,045,117 $1,092,137 Proceeds from sales 1,208,458 1,809,918 =========================================================================== Liberty Acorn International - --------------------------------------------------------------------------- (in thousands) 2000 1999 Investment securities Purchases $1,772,765 $846,014 Proceeds from sales 1,704,811 844,062 =========================================================================== Liberty Acorn USA - --------------------------------------------------------------------------- (in thousands) 2000 1999 Investment securities Purchases $127,624 $138,244 Proceeds from sales 214,498 135,001 =========================================================================== Liberty Acorn Foreign Forty - --------------------------------------------------------------------------- (in thousands) 2000 1999 Investment securities Purchases $160,219 $76,252 Proceeds from sales 104,921 26,238 =========================================================================== Liberty Acorn Twenty - --------------------------------------------------------------------------- (in thousands) 2000 1999 Investment securities Purchases $71,917 $71,463 Proceeds from sales 71,661 53,710 =========================================================================== 6. Capital Loss Carryforwards At December 31, 2000, capital loss carryforwards available (to the extent provided in regulations) to offset future realized gains were as follows: Year of Capital Loss Expiration Carryforward Liberty Acorn USA 2008 $528,000 53 Acorn Family of Funds >Report of Independent Auditors To the Board of Trustees and Shareholders of Acorn Investment Trust We have audited the accompanying statements of assets and liabilities, including the statements of investments of Liberty Acorn Fund (formerly Acorn Fund), Liberty Acorn International (formerly Acorn International), Liberty Acorn USA (formerly Acorn USA), Liberty Acorn Twenty (formerly Acorn Twenty) and Liberty Acorn Foreign Forty (formerly Acorn Foreign Forty), comprising the Liberty Acorn Trust, as of December 31, 2000, the related statements of operations, changes in net assets, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An auditing includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of December 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds of the Liberty Acorn Trust as of December 31, 2000, the results of their operations and changes in their net assets and financial highlights for the periods indicated therein, in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Chicago, Illinois February 23, 2001 54 Notes 55 The Liberty 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 Offcers Ralph Wanger 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 Important Information About This Report The Transfer Agent for Liberty Acorn Funds is: Liberty Funds Services, Inc. P.O. Box 1722 Boston, MA 02105-1722 800-345-6611 The Investment Advisor for Liberty Acorn Funds is: Liberty Wanger Asset Management, L.P. 227 West Monroe Street, Suite 3000 Chicago, IL 60606-5016 800-922-6769 The Funds mail one shareholder report to each shareholder address. If you would like more than one report, please call 800-426-3750 and additional reports will be sent to you. This report has been prepared for shareholders of Liberty Acorn Funds. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the Funds and with the most recent copy of the Liberty Funds Performance Update. Annual Report: Liberty Acorn Funds 56 Give me Liberty.(SM) Liberty Funds believes in financial choice At Liberty, it's our job to help you achieve your financial goals. So whether it's saving for your kids' education, building your retirement nest egg, or managing your income... we can help. We offer a diverse family of mutual funds representing a wide selection of investment styles and specialized money management. It's all designed to help you reach for financial freedom - however you define it. Liberty believes in professional advice Today's ever-changing financial markets can challenge even the most seasoned investors. That's why we recommend working with a financial advisor. With an advisor you have an experienced, knowledgeable professional looking out for your best interests. Your advisor can help you establish a plan for reaching your personal financial goals and help you stay on track over the long-term. It's a relationship that's focused on you and your needs. Liberty Acorn Funds Annual Report, December 31, 2000 ------------- PRSRT STD U.S. POSTAGE PAID Holliston, MA PERMIT NO. 20 ------------- [LOGO] L I B E R T Y ----------------- F U N D S Liberty Funds Disbributor, Inc. (C) 2001 One Financial Center, Boston, MA 02111-2621 800-426-3750 www.libertyfunds.com ACN-420E-0101 (2/01) (01/466) -----END PRIVACY-ENHANCED MESSAGE-----