-----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, ISI+pz8rS32rTQ3z8YcFeJtXUdqA6u+nJ3ObfL7/sJZG5JDVKhWSEP7glNnMcYLs gpRiHCei3LkKiERyuNpMXA== 0000950131-00-001515.txt : 20000307 0000950131-00-001515.hdr.sgml : 20000307 ACCESSION NUMBER: 0000950131-00-001515 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000301 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: 558210 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 ACORN FAMILY OF FUNDS ANNUAL REPORT 1999 Acorn Family of Funds Annual Report December 31, 1999 Managed by Wanger Asset Management, L.P. 4 [PICTURE APPEARS HERE] Kublai Khan, a portrait from a Chinese engraving The discussions in this report of portfolio companies are for illustration only and are not recommendations of individual stocks. The information is believed to be accurate, but the information and the views of the portfolio managers may change. The Acorn Family of Funds invest in the stocks of small and midsized companies that may be more volatile than the stocks of larger companies. Acorn Family of Funds Annual Report 1999 Table of Contents Squirrel Chatter: From Chain Mail to E-Mail 2 Acorn Twenty In a Nutshell 4 Performance at a Glance 5 Major Portfolio Changes 14 Statement of Investments 15 Acorn Foreign Forty In a Nutshell 6 Performance at a Glance 7 Major Portfolio Changes 16 Statement of Investments 17 Portfolio Diversification 19 Acorn USA In a Nutshell 8 Performance at a Glance 9 Major Portfolio Changes 20 Statement of Investments 21 Acorn International In a Nutshell 10 Performance at a Glance 11 Major Portfolio Changes 24 Statement of Investments 26 Portfolio Diversification 30 Acorn Fund In a Nutshell 12 Performance at a Glance 13 Major Portfolio Changes 31 Statement of Investments 33 Acorn Family of Funds Statements of Assets and Liabilities 41 Statements of Operations 42 Statements of Changes in Net Assets 44 Financial Highlights 46 Notes to Financial Statements 49 Special Notice 52
Prospectus Supplement Trustees, Officers and Contact Information >1999 Year-End Distributions The following table details the funds' year-end distributions. The record date was December 9, 1999, the ex-dividend date was December 10, 1999, and the payable date was December 15, 1999.
Acorn Fund Acorn International Acorn USA Acorn Twenty Acorn Foreign Forty - --------------------------------------------------------------------------------------------------------- Long-term Capital Gain $3.35 $1.55 $1.32 $0.00 None - --------------------------------------------------------------------------------------------------------- Short-term Capital Gain $0.00 $0.00 $0.01 $0.14 None - --------------------------------------------------------------------------------------------------------- Ordinary Income $0.06 $0.07 $0.00 $0.00 None - ---------------------------------------------------------------------------------------------------------
1 >Squirrel Chatter: From Chain Mail To E-Mail A Five-Minute History of the World [PHOTO HERE] During the early part of the last millennium, the hotbed of ideas that moved civilization forward came from the Steppes of Asia, not the Valley of Silicon. The Western Hemisphere wasn't even on the map at that point, and Europe was an insignificant, rather primitive gang of quarreling principalities at the wrong end of the Eurasian landmass. The center of power, and the center of civilization, was ruled by Genghis Khan and his children. He and his unstoppable armies created a gigantic empire that spread across Mongolia and China, and included Persia and Russia. Nobody in Europe knew the extent or power of the Mongol Empire until young Marco Polo traveled across Asia in the 1280s. Years later, he returned to his native Venice with a sack of jewels and a pack of tall tales about lands of gigantic, rich cities, an opulent and sophisticated court, and advanced technology. Most of his contemporaries thought he was kidding. Here are two examples of Marco's stories that sounded crazy in 1290, but after a few centuries, changed the world. Rocks That Burned Marco Polo wrote: It is a fact that all over the country of Cathay there is a kind of black stone existing in beds in the mountains, which they dig out and burn like firewood. If you supply the fire with them at night, and see that they are well kindled, you will find them still alight in the morning; and they make such capital fuel that no other is used throughout the country. It is true that they have plenty of wood also, but they do not burn it, because those stones burn better and cost less./1/ Modern technology is based on burning rocks. The story of the Industrial Revolution is how our lives changed when we learned how to burn coal to run ships and trains, and make electricity for motors and computers. Adopting oil and gas was also part of the story. As The Economist put it, "Coal was to power Britain's industrial revolution, and, later, as steam-powered machinery spread, the first steps in its agricultural revolution too. ... Today's oil-driven world and tomorrow's driven by who knows what owe their birth to coal."/2/ Money That Grows On Trees In Medieval Europe, coins made of gold and silver were scarce and often of questionable quality. Marco Polo reported how Kublai Khan turned tree bark into money: The Emperor's Mint then is in this same City of Cambaluc [Beijing today], and the way it is wrought is such that you might say he hath the Secret of Alchemy in perfection, and you would be right! For he makes his money after this fashion. He makes them take the bark of a certain tree, in fact the Mulberry Tree, the leaves of which are the food of the silkworms, -- these trees being so numerous that whole districts are full of them. ... ... All these pieces of paper are issued with as much solemnity and authority as if they were of pure gold or silver. And the Khan causes every year to be made such a vast quantity of this money, which costs him nothing, that it must equal in amount all the treasure of the world./3/ That's right folks, the Chinese invented the Fed. China's first version of paper money appeared in 1024. In contrast, 13th century European governments were weak, with poor communications, primitive legal systems, and no fiscal policy above the level of extortion. Europe's first attempt at paper money came 400 years later when Johan Palmstruch founded the Stockholm Banco in 1656. His was a private company that intended to issue paper money, enjoying royal privileges in return for a royal cut. After sustained lobbying and a public- relations effort that would be impressive today, an issue of bank notes followed in 1661. But the venture over-reached itself, issued too many notes and crashed disastrously in 1667. Palmstruch was disgraced and -- fickle government -- was sentenced to death./4/ Paper money has had a mixed career since, with a number of disastrous hyper-inflationary episodes. The test of a modern government's strength and sense is, like Kublai Khan's, the ability to issue credible paper money. "Strong government" has been another central theme of the last two centuries, with both beneficial and destructive results. History from Marco Polo to Alan Greenspan mainly explains how the language of the Internet turned out to be English instead of Turkish, Chinese, or Arabic./5/ Marco Polo was a 13th century primitive visiting a superior civilization. Five hundred years later, the tides reversed. Europe adopted coal, paper money, printing, gunpowder and the magnetic compass from China, and went on to 2 build technology, wealth and power. China preferred stability and stagnation. Europe had taken control of the world by the end of the 19th century. History hasn't ended yet. The European empires dissolved in the 20th century. Asia, no longer stagnant, now has many countries that fully match Western wealth and technology. Is there a message here for investors? We already know that everything changes with time. Venice, Constantinople, and Cordoba now exist as outdoor museums where tourists come to admire their 13th century glory. England was a minor province for some French kings then; no one in the 13th century would have put the English on a world power list. In the same way, stocks have had their times of leadership followed by stagnation or extinction. One hundred years ago, the best stock in the United States was the Pennsylvania Railroad. Later favorites would include GM, U.S. Steel, RCA, Sears, DuPont, Schlumberger, and IBM, all of which are still around but not what they once were. A few have had longevity: GE, Merck. Will current favorites fade? Wal-Mart without Sam and Microsoft without billg might well. Many of the new Internet companies will suffer the biggest massacre of naifs since the Children's Crusade. Will new companies become favorites? Of course. We will try to find some of them. Our small-company, global approach ought to keep working. The next seven hundred years look very promising. 1999 Scarlet A Winners I must tell you what the Great Khan did in regard to those barons who had behaved well in the battle. Him who was before captain of 100, he made captain of 1000. ... Besides that, he bestowed upon them fine jewels of gold and silver, and pearls, and precious stones; insomuch as the amount that fell to each of them was something astonishing./6/ Every year, we reward the stock market barons whose ideas won the investment battle. While we can't bestow jewels and great armies to each of them, we do bestow this recognition, our gratitude and a Scarlet A certificate. To be considered for 1999, the recommended stock had to increase more than 140% and make a profit exceeding $12 million. Three big winners came from Japan. Softbank, an Internet service provider and investment company, had a weighted return of 1,493% for Acorn Foreign Forty and was a big winner for Acorn Fund too. Trans Cosmos, an information technology services company, gained 1,257% for Acorn International. JAFCO, a venture capital fund, returned more than 600% and was another Acorn International winner. Our gratitude goes to Mahendra Singh Negi of Merrill Lynch Japan for these picks. Mahendra has the distinction of being the first Scarlet A hat-trick winner. Other international winners included NTL, a cable television operator in the UK, up more than 175% for Acorn Fund and Acorn Foreign Forty. Ron Getto of Donaldson Lufkin & Jenrette receives the Scarlet A for this pick for a second year. Star Cruises, a Singapore-based cruise line, was brought to us by Lim Kok Ann of BNP Prime Peregrine in Singapore. Star Cruises saw a 385% gain for Acorn Fund and Acorn International. Closer to home, two biotechnology companies topped the Acorn Fund list. CuraGen returned 885%. Our thanks to Richard van den Broek of Chase H&Q for that suggestion. David Stone brought Myriad Genetics to our attention, up 390%. David, formerly with SG Cowen, is now consulting with his own firm, Liberty Tree Advisors. Getty Images, up 183% in Acorn Fund, is a stock photography company. Bob East of Deutsche Bank Alex Brown gets the Scarlet A nod for this pick. And finally, Barry Ollman of Hanifen Imhoff brought UnitedGlobalCom, a manager of foreign cable television stations, to our attention. This stock gained 638% for Acorn International and nearly 200% for Acorn Fund. Thanks for sharing your inspirations. I'm sure our shareholders thank you too. We look forward to hearing your future picks and to seeing what the market has in store for all of us in 2000. /s/ Ralph Wagner Ralph Wanger Chief Investment Officer, Wanger Asset Management Lead Portfolio Manager, Acorn Fund - -------------------------------------------------------------------------------- 1 The Travels Of Marco Polo, Yule-Cordier edition, p. 442. Dover Publications, 1993, a republication of a 1903 version. 2 The Economist, December 31, 1999, p. 75. 3 The Travels Of Marco Polo, op. cit, p. 442. 4 The Economist, op. cit, p. 91. 5 If you need an Internet Service Provider (ISP) in one of these languages, Startec Global has one for you. 6 The Travels Of Marco Polo, op. cit, p. 350. 3 Acorn Twenty >In a Nutshell [PHOTO HERE] Acorn Twenty finished its first full year of operation up 29.3%, strongly outperforming the 14.7% S&P MidCap 400 return and the S&P 500's 21.0% gain for the year. At year-end, Acorn Twenty had $68.5 million in assets. Looking back on our inaugural year, we want to thank our shareholders for the integral role you played in our strong beginning. Several stocks contributed to Acorn Twenty's 1999 performance. The biggest winners were our telecommunications stocks. Telephone and Data Systems, a cellular phone and personal communication services provider, was up 183% for the year following the company's announcement of the sale of its Aerial Communications subsidiary to Voicestream Wireless. RCN, a competitive local exchange carrier (CLEC), rose 175% as investors (including Paul Allen, co- founder of Microsoft and owner of the Portland Trail Blazers) realized the value of its residential local phone, cable, and data networks. Another telecommunications stock, McLeod USA, gained 62.6% for the Fund. McLeod, like RCN, is a CLEC, but provides services to businesses rather than residential communities. Other strong performing stocks include Liberty Media, a long-time Acorn Fund favorite, up 147% for the year, and AES Corp, an independent power producer, up 90%. Losers came from the insurance industry, a tough area for investors despite low valuations. UICI, an insurance and specialty finance company, and Progressive, an auto insurer, both had disappointing years. We felt a recovery in this sector was imminent but we now believe there are better opportunities elsewhere. Acorn Twenty celebrated its one-year anniversary on November 23, 1999. Its success is due to the collaborative efforts of the Acorn research team. Our sincere thanks go to Ralph Wanger, Chuck McQuaid, Rob Mohn, Laura McKenna, Jason Selch, and Ben Andrews. Acorn Twenty finished its first full year of operation up 29.3%, strongly outperforming the 14.7% S&P MidCap 400 return and the S&P 500's 21.0% gain for the year. At year-end, Acorn Twenty had $68.5 million in assets. Electrons Everyone! AES contributed a whopping 90% to Acorn Twenty last year -- high-voltage performance from a long-time Acorn Fund favorite. AES owns and operates power plants and electric utilities in 16 countries including the United States, Brazil, Pakistan, Australia, India, Hungary, China and the United Kingdom. Founded in 1981, AES started with a simple vision of delivering low-cost electricity to U.S. utilities that were short of power. Soon, AES realized that there were many opportunities outside the United States to build or acquire utility assets from governments looking to privatize/deregulate their power industries. Today, AES is the preeminent, independent global power company with a history of 30% annual earnings gains. We believe the recent $3 billion acquisition of Drax Power in the United Kingdom could keep AES growing brightly for years to come. /s/ John H. Park /s/ Mark H. Yost John H. Park Mark H. Yost Co-Portfolio Manager Co-Portfolio Manager 4 >Performance at a Glance
Acorn Twenty - -------------------------------------------------------------------------------- Information Ticker Symbol: ACTWX Minimum Initial Investment: $1,000 $1,000 for an IRA Minimum Subsequent Investment: $100 Exchange Fee: None Management Fee*: 0.90% 12b-1 Fee: None Other Expenses: 0.49% Less Expense Reimbursement: 0.04% Total Net Expense Ratio*: 1.35%
*Fees and expenses are calculated for the fiscal year ended December 31, 1999. Wanger Asset Management has undertaken to reimburse the Fund for any ordinary operating expenses exceeding 1.35% of its average annual net assets. This expense limitation is voluntary and is terminable by either the Fund or Wanger Asset Management on 30 days' notice to the other. Fund Net Assets as of 12/31/99: $68.5 million - --------------------------------------------------------------------------------
>Acorn Twenty Top 10 Holdings First Health 7.3% PPO Network AmeriCredit 6.9% Auto Lending Liberty Media Group, AT&T 6.8% Cable & Satellite Programming AES Corporation 6.1% Power Plants McLeod USA 5.8% Metro Market CLEC: Local, Long Distance & Internet Services RCN 5.8% Metro Market CLEC: Voice, Video & Internet Services Telephone and Data Systems 5.5% Cellular & Telephone Services SEI Investments 5.5% Mutual Fund Administration MidAmerican Energy 4.7% Growth Utility H&R Block 4.7% Tax Preparation
The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings.
Acorn Twenty Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of 12/31/99 [PIE CHART APPEARS HERE] Other* 7.2% Consumer Goods/Services 14.8% Information 34.5% Health Care 11.1% Industrial Goods/Services 4.0% Finance 17.6% Energy/Minerals 10.8%
*Cash, short-term obligations and other assets less liabilities.
Relative Performance - -------------------------------------------------------------------------------- 4th quarter Last 12 mos. 1999 Acorn Twenty 14.4% 29.3% S&P MidCap 400 17.2% 14.7% Lipper Mid Cap Fund Average 28.6% 39.2% Russell 2000 18.4% 21.3% S&P 500 14.9% 21.0%
Net Asset Value Per Share 12/31/99: $13.70 - ------------------------------------------ The Value of a $10,000 Investment in Acorn Twenty - -------------------------------------------------------------------------------- >November 23, 1998 through December 31, 1999
Average Annual Total Return --------------------------- 1 year Life of Fund 29.30% 34.44%
[Edgar Representation of Line Graph] - --------------------------------------------------------------------- ACORN Twenty MidCap 400 - --------------------------------------------------------------------- 11/23/98 10000 10000 - --------------------------------------------------------------------- 12/31/98 10710 11109 - --------------------------------------------------------------------- 1/31/99 11000 10676 - --------------------------------------------------------------------- 2/28/99 10710 10117 - --------------------------------------------------------------------- 3/31/99 11480 10400 - --------------------------------------------------------------------- 4/30/99 12710 11220 - --------------------------------------------------------------------- 5/31/99 12730 11270 - --------------------------------------------------------------------- 6/30/99 13040 11872 - --------------------------------------------------------------------- 7/30/99 13190 11620 - --------------------------------------------------------------------- 8/30/99 12060 11222 - ----------------------------------------------------------------------- 9/30/99 12110 10875 - --------------------------------------------------------------------- 12/31/99 13850 12745 - ---------------------------------------------------------------------
This graph compares the results of $10,000 invested in Acorn Twenty on November 23, 1998 (the date Fund shares were first offered to the public), with all dividends and capital gains reinvested, to the S&P MidCap 400. The S&P MidCap 400 is a market value-weighted index of 400 stocks that are in the next tier down from the S&P 500. The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The Lipper Mid Cap Fund Average, which includes Acorn Twenty, measures the performance of all U.S. mid-cap funds tracked by Lipper. The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then eliminating the largest 1,000, leaving a market capitalization-weighted index of 2,000 small companies. All indexes are unmanaged and returns include reinvested dividends. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. 5 Acorn Foreign Forty >In a Nutshell [PHOTO HERE] At the end of 1999, Acorn Foreign Forty was up 81.6% for the year, more than double the returns of the Salomon Smith Barney Cap Range $2-10 Billion Index (+23.5%), the EAFE (+ 27.0%) and the Lipper International Funds Average (+40.8%). We are pleased with our strong beginning and we hope that you are too. Much of Acorn Foreign Forty's gain for the year came in the fourth quarter as the Fund advanced 46.7% on the strength of our information technology (IT) stocks. There was no slowing of the Fund's largest position, Softbank, up 151.5% for the quarter and a staggering 1,493% for the year. This Japanese Internet company was an obvious winner for the portfolio. Finland's Comptel, a producer of telephone-billing software, was up 273% in 1999 and was also among the Fund's top performers. Benefiting from Internet-related services, two Italian publishing names -- Editoriale L'Espresso (+375.9) and SEAT Pagine Gialle (+211%) -- posted strong annual gains. On the downside, Mapfre Vida, a Spanish life insurance company, fell out of favor with investors. We view this as a solid business with strong prospects, a stance that its parent company seems to agree with. As of the writing of this report, the parent has announced plans to buy out minority shareholders at a premium price. Looking forward, we believe we are well positioned in areas where mid-caps have the right balance of scale, financial strength, and entrepreneurial spirit, to be leaders. These industry groups include emerging telecommunication services, IT services, outsourcing services and media. In addition, the valuation gap between large- and mid-cap stocks is working in our favor, allowing us to pick up high-quality names at good prices. Much of Acorn Foreign Forty's gain for the year came in the fourth quarter as the Fund advanced 46.7% on the strength of our information technology (IT) stocks. There was no slowing of the Fund's largest position, Softbank, up 151.5% for the quarter and a staggering 1,493% for the year. Internet Advertising Is Music For M6 Ever wonder what those Internet IPO's do with their newly minted millions? M6 Metropole TV in France can tell you. They advertise. Most Internet start-ups have only two assets: a business plan and a brand name that is built using advertising, and lots of it. M6 is the fastest growing TV station in France and, with a format similar to MTV, appeals to the tech-savvy generation these start- ups are anxious to reach. In addition, previously regulated European companies focusing on branding for the first time, are turning to television advertising, putting even more money in M6 coffers. /s/ Marcel P. Houtzager /s/ Roger Edgley Marcel P. Houtzager Roger Edgley Co-Portfolio Manager Co-Portfolio Manager 6 >Performance at a Glance Acorn Foreign Forty - -------------------------------------------------------------------------------- Information Ticker Symbol: ACFFX Minimum Initial Investment: $1,000 $1,000 for an IRA Minimum Subsequent Investment: $100 Exchange Fee: None Management Fee*: 0.95% 12b-1 Fee: None Other Expenses: 0.59% Less Expense Reimbursement: 0.09% Total Net Expense Ratio*: 1.45% *Fees and expenses are calculated for the fiscal year ended December 31, 1999. Wanger Asset Management has undertaken to reimburse the Fund for any ordinary operating expenses exceeding 1.45% of its average annual net assets. This expense limitation is voluntary and is terminable by either the Fund or Wanger Asset Management on 30 days' notice to the other. Fund Net Assets as of 12/31/99: $107.4 million - -------------------------------------------------------------------------------- >Acorn Foreign Forty Top 10 Holdings Softbank Japan 6.2% Internet Services/Investment Holdings Celestica Canada 4.7% Electronic Manufacturing Services NetCom Sweden 3.9% Telecommunication Services Star Cruises Singapore 3.8% Cruise Line Energis United Kingdom 3.7% Telecommunication Services Logica United Kingdom 3.6% Computer Software & Services Venture Manufacturing Singapore 3.5% Electronic Manufacturing Services Banca Fideuram Italy 3.3% Life Insurance & Mutual Funds M6 Metropole TV France 3.2% Television Broadcaster Global TeleSystems United States 3.2% Telecommunication Services The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. Acorn Foreign Forty Portfolio Diversification - -------------------------------------------------------------------------------- >as a % of net assets, as of 12/31/99 [PIE CHART APPEARS HERE] Energy/Minerals 2.6% Health Care 2.1% Other* 6.9% Consumer Goods/Services 8.5% Information 58.5% Industrial Goods/Services 9.1% Finance 12.3% *Other includes cash, short-term obligations and other assets less liabilities of 5.0%. Relative Performance - -------------------------------------------------------------------------------- 4th quarter Last 12 mos. 1999 Acorn Foreign Forty 46.7% 81.6% EAFE 17.0% 27.0% SSB Cap Range $2-10B 10.8% 23.5% Lipper Int'l Funds Average 25.7% 40.8% Net Asset Value Per Share 12/31/99: $19.93 - ------------------------------------------ The Value of a $10,000 Investment in Acorn Foreign Forty - -------------------------------------------------------- >November 23, 1998 through December 31, 1999 Average Acorn Total Return - -------------------------- 1 year Life of Fund 81.60% 87.58% [EDGAR Representation of Line Graph] - --------------------------------------------------- ACORN foreign EAFE - --------------------------------------------------- 11/23/98 10000 10000 12/31/98 11000 10411 1/31/99 11790 10381 2/28/99 11590 10133 3/31/99 11980 10556 4/30/99 12240 10980 5/30/99 12170 10418 6/30/99 13110 10825 7/31/99 13511 11146 8/30/99 13771 11186 9/30/99 13621 11300 12/31/99 19975 13218 This graph compares the results of $10,000 invested in Acorn Foreign Forty on November 23, 1998 (the date Fund shares were first offered to the public), with all dividends and capital gains reinvested, with EAFE. EAFE is Morgan Stanley's Europe, Australasia and Far East Index, an unmanaged, widely recognized international benchmark that comprises 20 major markets in Europe, Australia, and the Far East. The SSB Cap Range $2-10B is Salomon Smith Barney's 2 to 10 billion U.S. dollar security market capitalization subset of its Broad Market Index. It represents a mid-cap developed market index, excluding the U.S. The Lipper International Funds Average, which includes Acorn Foreign Forty, measures the performance of all non-U.S. funds tracked by Lipper, excluding the International Small-Cap Funds group. This group consisted of 658 funds for the fourth quarter and 618 funds for the year ended December 31, 1999. All indexes are unmanaged and returns include reinvested dividends. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. 7 Acorn USA >In a Nutshell [PHOTO HERE] Your Fund outperformed the stock market indexes both large and small in 1999. Acorn USA returned 23.0% last year, beating the small-cap Russell 2000's 21.3% and the large-cap S&P 500's 21.0% return. Most of our performance came in the final quarter of the year, when Acorn USA gained 18.9%, the Russell 2000 gained 18.4%, and the S&P 500 was up 14.9%. Technology and telephones were our biggest winners. Tech stocks roared all year, ending 1999 with a deafening crescendo. Our top holding, Micros Systems (a management systems company for restaurants and hotels), more than doubled in price to become the largest position in the Fund. Aspect, a call-center technology provider, was another tech winner. Internet stocks continued to climb as concept stocks, ignoring fusty ideas such as profitability. Our Internet plays included RCN (rcn.com), up 170%, TV Guide (TV web portal), up 265%, and Project Software (mro.com), up 170%. Some Internet magic also rubbed off on our wireless telephone stocks (Telephone and Data Systems and Price Communications), as investors realized cellular phones would be the newest way to surf the Web. Our insurance stocks were disappointing. Our two worst-performing stocks were UICI and Acceptance Insurance, both caught with their reserves down in the fourth quarter. Both stocks overshot to the downside and currently trade at prices that we believe offer favorable risk/reward tradeoffs. The investing world has recently fixated on growth vs. value stocks, forgetting the small-cap, large-cap feud. We are pleased that small caps have been outperforming large caps since last April. We are optimistic that small caps will continue their good showing in the year 2000. After all, why do you think they call the small-cap index the Russell 2000? We are pleased that small caps have been outperforming large caps since last April. We are optimistic that small caps will continue their good showing in the year 2000. After all, why do you think they call the small-cap index the Russell 2000? Aspect Communication's Rebirth Aspect Communications sells telephone call center technology. Aspect's stock declined last January after announcing poor sales of its call center software/hardware systems. Rather than hoping the business would correct itself with some relatively minor tweaking (the usual business reflex when faced with crisis), management opted for a dramatic gesture. They slashed their hardware switch business from 60% to 30% of their revenue base and emerged as a software company. Our technology analyst, Todd Narter, assessed the quality of Aspect's new products (high) and new management team (higher) and advocated holding the stock. Good decision. Aspect has increased six-fold since, as demand for its new software exploded. /s/ Robert A. Mohn Robert A. Mohn Portfolio Manager 8 >Performance at a Glance Acorn USA Information Ticker Symbol: AUSAX Minimum Initial Investment $1,000 $1,000 for an IRA Minimum Subsequent Investment: $100 Exchange Fee: None Management Fee*: 0.93% 12b-1 Fee: None Other Expenses: 0.22% Total net Expense Ratio*: 1.15% *Fees and expenses are for the fiscal year ended December 31, 1999. Fund Net Assets as of 12/31/99: $371.4 million - ---------------------------------------------- >Acorn USA Top 10 Holdings Micros Systems 10.5% Information Systems for Restaurants & Hotels MidAmerican Energy 7.8% Growth Utility Telephone and Data Systems 6.3% Cellular & Telephone Services Sykes Enterprises 3.7% Call Center Services Lincare Holdings 3.2% Home Health Care Services AmeriCredit 3.2% Auto Lending First Health 2.8% PPO Network National Data 2.7% Credit Card & Health Claims Processor RCN 2.7% Metro Market CLEC: Voice, Video & Internet Services Aspect Communications 2.7% Call Center Software The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. Acorn USA Portfolio Diversification - ------------------------------------------------ >as a % of net assets, as of 12/31/99 [PIE CHART APPEARS HERE] Consumer Goods/Services 3.2% Real Estate 0.2% Industrial Goods/Services 6.4% Health Care 8.8% Information 48.1% Other* 9.8% Finance 10.4% Energy/Minerals 13.1% * Cash, short-term obligations and other assets less liabilities. Relative Performance - ------------------------------------------------------ 4th quarter Last 12 mos. 1999 Acorn USA 18.9% 23.0% Russell 2000 18.4% 21.3% Lipper Small-Cap Funds Avg. 24.1% 33.4% S&P MidCap 400 17.2% 14.7% S&P 500 14.9% 21.0% Net Asset Value Per Share 12/31/99: $16.75 - ------------------------------------------ The Value of a $10,000 Investment in Acorn USA - ------------------------------------------------- >September 4, 1996 through December 31, 1999 Average Annual Total Return - ------------------------------- 1 Year 3 Year Life of Fund 23.02% 19.86% 23.33% [Edgar Representation of Line Graph] - -------------------------------------------------------------------- Date Acorn USA Russell 2000 - -------------------------------------------------------------------- 9/4/96 10,000 10,000 - -------------------------------------------------------------------- 9/96 10,720 10,360 - -------------------------------------------------------------------- 12/96 11,650 10,899 - -------------------------------------------------------------------- 3/97 11,480 10,335 - -------------------------------------------------------------------- 6/97 13,320 12,011 - -------------------------------------------------------------------- 9/97 15,340 13,798 - -------------------------------------------------------------------- 12/97 15,413 13,335 - -------------------------------------------------------------------- 3/98 17,401 14,678 - -------------------------------------------------------------------- 6/98 17,525 13,993 - -------------------------------------------------------------------- 9/98 14,151 11,174 - -------------------------------------------------------------------- 12/98 16,305 12,997 - -------------------------------------------------------------------- 3/99 15,016 12,292 - -------------------------------------------------------------------- 6/99 17,650 14,203 - -------------------------------------------------------------------- 9/99 16,866 13,305 - -------------------------------------------------------------------- 12/99 20,059 15,759 - --------------------------------------------------------------------- This graph compares the results of $10,000 invested in Acorn USA on September 4, 1996 (the date Fund shares were first offered to the public), with all dividends and capital gains reinvested, to the Russell 2000 Index. The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then eliminating the largest 1,000, leaving a market capitalization-weighted index of 2,000 small companies. The Lipper Small-Cap Funds Average, which includes Acorn USA, is an average of all U.S. small-cap funds tracked by Lipper and consisted of 820 funds for the fourth quarter and 757 funds for the 12-month period. The S&P MidCap 400 is a market value-weighted index of 400 stocks that are in the next tier down from the S&P 500. The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. All indexes are unmanaged and returns include reinvested dividends. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. 9 Acorn International >In a Nutshell [PHOTO APPEARS HERE] The champagne corks popped on New Year's Eve across the world without a Y2K crisis, and global equities celebrated the turn of the millennium with a powerful rally. Acorn International fully participated in the festivities. For 1999 as a whole, Acorn International soared 79%, beating all of its relevant benchmarks. The Fund rose 42% over the three months ended December 31, as compared to 9% for the EMI Index, 17% for EAFE, and 28% for the peer group. These results remind us, once again, that market timing is a difficult game. Investors who stayed on the sidelines in the fourth quarter to be `safe' paid dearly for their insurance, while those who followed a strategy of being invested for the long-term were handsomely rewarded for their discipline. A year ago we predicted that the environment for international investing was on the upswing. Today, our opinion is in the direction of greater positive conviction. To generate big returns you need big winners. Our star performer of the year was Star Cruises, which rose 385% for a gain of $77 million. In terms of themes that worked well, Celestica (+352%) and Venture Manufacturing (+201%) earned shareholders $108 million on the growth in outsourced production of electronic goods, while NTL (+176%) and UnitedGlobalCom (+638%) together made us $71 million on the premise that the European cable industry would consolidate. We had few pure Internet plays. Rather, our stocks are considered Internet beneficiaries. They include Editoriale L'Espresso (+369% =$58 million), Datacraft Asia (+369%=$57 million), JAFCO (+600%=$46 million) and Trans Cosmos (+1257%=$40 million). Of our long-term core holdings, Hong Kong trading firm Li & Fung gained 150% to post $45 million in profits, while newcomers Baltimore Technologies and ERG rose 575% and 293% respectively, to earn shareholders $67 million combined. By comparison, the most lost by any one stock in the portfolio in the last twelve months was $5.8 million. Although we do not pay a lot of attention to country weightings in managing the Fund, being in Asia did matter in 1999. We made $250 million in Japan and $212 million in Singapore, on holdings that appreciated around 265% each. Italy was our best European market, with a $120 million gain, followed by Sweden at $66 million and France at $62 million (along with Canada and Hong Kong). Only Spain, Denmark and Peru finished the year in the red, albeit in single digits. A year ago we predicted that the environment for international investing was on the upswing. Today, our opinion is in the direction of greater positive conviction. Without making any predictions, we remain steadfast optimists. From the entire international team to all of you, Happy New Year! /s/ Leah Joy Zell /s/ Margaret May Forster Leah Joy Zell Margaret M. Forster Lead Portfolio Manager Co-Portfolio Manager A Star Is Born Few investors have heard of Star Cruises. That's because its owner, the Lim family, holds most of the shares. But the Singapore-based company is already Asia's largest cruise ship operator. After the pending takeover of Norwegian Cruise Lines, it will have a fleet of 23 vessels and rank third in the world, behind Carnival and Royal Caribbean. Asia's cruise market is projected to grow 25% this year to one million passengers. Star intends to develop the market further by offering service to and from Japan beginning in March. Given that under one percent of Japanese tourists go on cruises each year, we believe that the company's growth prospects are nothing short of stellar. 10 >Performance at a Glance Acorn International Information Ticker Symbol: ACINX Minimum Initial Investment: $1,000 $1,000 for an IRA Minimum Subsequent Investment: $100 Exchange Fee: None Management Fee*: 0.81% 12b-1 Fee: None Other Expenses: 0.30% Total Net Expense Ratio*: 1.11% *Fees and expenses are for the fiscal year ended December 31, 1999. Fund Net Assets as of 12/31/99: $2,868.2 million - ------------------------------------------------------------------------------ >Acorn International Top 10 Holdings Star Cruises Singapore 3.4% Cruise Line Li & Fung Hong Kong 2.6% Sourcing of Consumer Goods TietoEnator Finland 2.6% Computer Services/Consulting Venture Manufacturing Singapore 2.6% Electronic Manufacturing Services Editoriale L'Espresso Italy 2.4% Newspaper & Magazine Publisher Celestica Canada 2.3% Electronic Manufacturing Services Datacraft Asia Singapore 2.3% Network Integrator Atos France 2.2% Computer Services/Transaction Processing Serco Group United Kingdom 2.2% Facilities Management WMData Nordic Sweden 2.0% Computer Services/Consulting The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. Acorn International Portfolio Diversification - ------------------------------------------------------------------------------ >as a % of net assets, as of 12/31/99 [PIE CHART APPEARS HERE] Health Care 3.2% Finance 8.3% Other* 7.3% Information 49.6% Industrial Goods/Services 13.7% Consumer Goods/Services 17.9% *Other includes cash, short-term obligations and other assets less liabilities of 3.3%. Relative Performance - ------------------------------------------------------------------- 4th quarter Last 12 mos. 1999 Acorn International 41.6% 79.2% EMI (World ex-U.S.) 9.1% 23.5% EAFE 17.0% 27.0% IFCI Composite 25.3% 66.6% Lipper Int'l Small-Cap Funds Index 28.3% 62.9% Lipper Int'l Funds Index 24.7% 37.8% Net Asset Value Per Share 12/31/99: $35.33 - ------------------------------------------ The Value of a $10,000 Investment in Acorn International - ------------------------------------------------------------ >September 23, 1992 through December 31, 1999 Average Annual Total Return - ------------------------------- 1 Year 3 Year Life of Fund 79.19% 22.19% 21.73% [Edgar Representation of Line Graph] - -------------------------------------------------------- ACORN INT'L EMI-EX US - -------------------------------------------------------- Sep-1992 10000 10000 - -------------------------------------------------------- Dec-1992 10679 9590.49 - -------------------------------------------------------- Dec-1993 15924 12573.13 - -------------------------------------------------------- Dec-1994 15319 13639.59 - -------------------------------------------------------- Dec-1995 16686 14355.04 - -------------------------------------------------------- Dec-1996 20170 15392.73 - -------------------------------------------------------- Dec-1997 20190 13946.49 - -------------------------------------------------------- Dec-1998 23305 15641.12 - -------------------------------------------------------- Jun-1999 27222 16839 - -------------------------------------------------------- Sep-1999 29486 17694 - -------------------------------------------------------- Dec-1999 41761 $19,312 - -------------------------------------------------------- This graph compares the results of $10,000 invested in Acorn International on September 23, 1992 (the date Fund shares were first offered to the public), with all dividends and capital gains reinvested, with the EMI (World ex-U.S.). EMI World ex-U.S. is Salomon Smith Barney's index of the bottom 20% of institutionally investable capital of countries, as selected by Salomon, excluding 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 Europe, Australia, and the Far East. The IFCI Composite is the International Finance Corporation's index of 31 emerging markets, which weights securities according to their market capitalization after adjusting for shares held by other constituents in the index. The Lipper International Small-Cap Funds Index measures the performance of the 10 largest international small-cap funds tracked by Lipper, which includes Acorn International. The Lipper International Funds Index measures the performance of the 30 largest non-U.S. mid and large cap funds tracked by Lipper. All indexes are unmanaged and returns include reinvested dividends. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. 11 Acorn Fund >In a Nutshell [PHOTO HERE] 1999 was an excellent year for the Acorn Fund. We no longer had to swim upstream--small-cap stocks matched large caps, ending four years of relative underperformance. Our foreign stocks jumped 139%! Acorn Fund rose 33.4% in the year and 21.9% in the quarter, outpacing the unmanaged small-cap and large-cap indexes for both time periods. Acorn's biggest winner for the year -- and likely for all time -- was Softbank, a Japanese stock. This Internet company was up nearly fifteen-fold for the year and is now the Fund's largest position. Not only did the stock soar, we called the shot, featuring it a year ago in the 1998 Annual Report. Our other blockbuster foreign stock was Star Cruises, up 385% for the period. Telecommuncations was our best sector during the year. Cable and telephone providers NTL and UnitedGlobalCom in Europe, plus RCN in the United States, each wired home gains over 170%. Telephone and Data Systems, a cellular and land-line phone company, jumped 180%. Media stocks continued their star performances. Our stalwart, long-term holding Liberty Media jumped nearly 150% while TV Guide doubled. We swapped out of much of Liberty as we found better values in smaller names. We sold our remaining TV Guide after it ran up following the announcement of merger plans with Gemstar. We made good money in a number of technology stocks. Contract manufacturer Solectron assembled a 104% profit, while connector and laser firm Oak Industries tripled on a sellout to Corning. Electronic time-clock company Kronos clocked a double while hospitality computer systems company Micros Systems served up a 125% gain. We believe Acorn Fund has delivered excellent returns this year although we underweighted the highly speculative technology stocks that are currently the rage. As stock-pickers--not stock-traders--we buy names that we believe have the potential to perform for the long-term, avoiding the risk and over-valuations that often come with buying the "flavor of the month." /s/ Ralph Wanger /s/ Charles P. McQuaid Ralph Wanger Charles P. McQuaid Lead Portfolio Manager Co-Portfolio Manager 1999 was an excellent year for the Acorn Fund. We no longer had to swim upstream--small-cap stocks matched large caps, ending four years of relative underperformance. We got the Picture We remain biased toward companies that benefit from technology. Getty Images licenses rights to photographs and moving images to advertisers, publishers, the news media, and others. Getty's collection spans from the Hindenberg disaster to the Lewinsky hug. The Internet has boosted demand and cut Getty's costs. Sales via the Internet recently grew 164% year-to-year and accounted for 32% of company revenues. Pricing on the Internet is firm, while salesforce productivity is up fifty-fold! Getty's stock price, while up over 180% this year, remains reasonable compared to other Internet companies. 12 >Performance at a Glance Acorn Fund Information Ticker Symbol: ACRNX Minimum Initial Investment: $1,000 $1,000 for an IRA Minimum Subsequent Investment: $ 100 Exchange Fee: None Management Fee*: 0.69% 12b-1 Fee: None Other Expenses: 0.16% Total Net Expense Ratio*: 0.85% *Fees and expenses are for the fiscal year ended December 31, 1999. Fund Net Assets as 12/31/99: $3,920.8 million - ------------------------------------------------ >Acorn Fund Top 10 Holdings Softbank 5.7% Internet Services/Investment Holdings AES Corporation 2.2% Power Plants Liberty Media Group, AT&T 2.2% Cable & Satellite Programming Star Cruises 2.1% Cruising/Casino Operations Telephone and Data Systems 1.9% Cellular & Telephone Services AmeriCredit 1.8% Auto Lending Lincare Holdings 1.8% Home Health Care Services SEI Investments 1.7% Mutual Fund Administration Harley-Davidson 1.6% Motorcycles & Related Merchandise National Data 1.6% Credit Card & Health Claims Processor The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. Acorn Fund Portfolio Diversification - -------------------------------------------- >as a % of net assets, as of 12/31/99 [PIE CHART APPEARS HERE] *Other 8.9% Real Estate 4.2% Energy/Minerals 7.1% Industrial Goods/ Services 8.1% Health Care 7.7% Information 38.4% Finance 13.8% Consumer Goods/Services 11.8% *Other includes cash, short-term obligations and other assets less liabilities of 7.8%. Relative Performance - --------------------------------------------------------------------- 4th quarter Last 12 mos. 1999 Acorn Fund 21.9% 33.4% S&P 500 14.9% 21.0% Russell 2000 18.4% 21.3% Lipper Small-Cap Funds Index 32.3% 41.5% S&P MidCap 400 17.2% 14.7% Acorn Fund NAV as of 12/31/99: $18.53 - ----------------------------------------- The Value of a $10,000 Investment in Acorn Fund - -------------------------------------------------- >June 10, 1970 through December 31, 1999 Average Annual Total Return - --------------------------------------- 1 Year 5 Years 10 Years Life of Fund 33.38% 21.21% 17.06% 17.14% [EDGAR Representation of Line Graph] - ------------------------------------------------------------ ACORN Fund S & P - ------------------------------------------------------------ 6/10/70 10000 10000 - ------------------------------------------------------------ 70 13587 12676 - ------------------------------------------------------------ 71 17828 14490 - ------------------------------------------------------------ 72 19368 17242 - ------------------------------------------------------------ 73 14765 14709 - ------------------------------------------------------------ 74 10691 10816 - ------------------------------------------------------------ 75 13945 14842 - ------------------------------------------------------------ 76 23045 18394 - ------------------------------------------------------------ 77 27168 17077 - ------------------------------------------------------------ 78 31777 18200 - ------------------------------------------------------------ 79 47790 21586 - ------------------------------------------------------------ 80 62594 28602 - ------------------------------------------------------------ 81 58005 27195 - ------------------------------------------------------------ 82 68208 33054 - ------------------------------------------------------------ 83 85389 40510 - ------------------------------------------------------------ 84 89045 43051 - ------------------------------------------------------------ 85 117142 56710 - ------------------------------------------------------------ 86 136843 67295 - ------------------------------------------------------------ 87 142923 70828 - ------------------------------------------------------------ 88 178370 82591 - ------------------------------------------------------------ 89 222681 108761 - ------------------------------------------------------------ 90 183674 105386 - ------------------------------------------------------------ 91 270641 137492 - ------------------------------------------------------------ 92 336210 147928 - ------------------------------------------------------------ 93 444889 162882 - ------------------------------------------------------------ 94 411750 165032 - ------------------------------------------------------------ 95 497407 227047 - ------------------------------------------------------------ 96 609569 279177 - ------------------------------------------------------------ 97 761852 478724 - ------------------------------------------------------------ 98 807685 478724 - ------------------------------------------------------------ 6/30/99 901844 537999 - ------------------------------------------------------------ 9/30/99 883409 504404 - ------------------------------------------------------------ 12/31/99 1077255 579455 - ------------------------------------------------------------ This graph compares the results of $10,000 invested in the Acorn Fund on June 10, 1970 (the date the Fund shares were first offered to the public), with dividends and capital gains reinvested, to the S&P 500 Stock Index. The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then eliminating the largest 1,000, leaving a market capitalization-weighted index of 2,000 small companies. The Lipper Small-Cap Funds Index, which includes Acorn Fund, measures the performance of the 30 largest U.S. small-cap funds tracked by Lipper. The S&P MidCap 400 is a market value-weighted index of 400 stocks that are in the next tier down from the S&P 500. All indexes are unmanaged and returns include reinvested dividends. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. 13 Acorn Twenty Fund >Major Portfolio Changes in the Fourth Quarter
Number of Shares Held ----------------------- 9/30/99 12/31/99 Additions - -------------------------------------------------------------------------------- Information Tektronix 0 41,000 - -------------------------------------------------------------------------------- Health Care First Health 60,000 185,000 Lincare Holdings 52,000 75,000 - -------------------------------------------------------------------------------- Consumer Goods/Services Harrah's Entertainment 0 105,000 - -------------------------------------------------------------------------------- Finance Progressive 14,100 28,000 Number of Shares Held ----------------------- 9/30/99 12/31/99 Sales - -------------------------------------------------------------------------------- Information Telephone and Data Systems 60,000 30,000 - -------------------------------------------------------------------------------- Health Care St. Jude Medical 45,000 0 - -------------------------------------------------------------------------------- Consumer Goods/Services Costco 21,000 0 Royal Caribbean Cruises 60,400 45,000 - -------------------------------------------------------------------------------- Energy/Minerals MidAmerican Energy 118,000 95,000 - -------------------------------------------------------------------------------- Real Estate The Rouse Company 21,400 0
14 Acorn Twenty >Statement of Investments December 31, 1999
Number of Shares Value (000) - ---------------------------------------------------------------------------------------------- Common Stocks: 92.8% - ---------------------------------------------------------------------------------------------- Information: 34.5% >Television Programming: 6.8% 82,000 Liberty Media Group, AT&T (b) $ 4,653 Cable & Satellite Programming >Telecommunications/Wireline Communications: 11.6% 68,000 McLeod USA (b) 4,003 Super Regional CLEC: Local, Long Distance & Internet Services 82,000 RCN (b) Metro Market CLEC: Voice, Video & 3,977 Internet Services - ---------------------------------------------------------------------------------------------- 7,980 >Instrumentation: 2.3% 41,000 Tektronix Analytical Instruments 1,594 >Mobile Communications: 5.5% 30,000 Telephone and Data Systems Cellular & Telephone Services 3,780 >Transaction Processors: 3.6% 72,000 National Data Credit Card & Health Claims Processor 2,444 >Business Information: 4.7% 73,000 H&R Block Tax Preparation 3,194 ------ Information: Total 23,645 - ---------------------------------------------------------------------------------------------- Health Care: 11.1% >Services: 11.1% 185,000 First Health (b) 4,972 PPO Network 75,000 Lincare Holdings (b) 2,602 Home Health Care Services ------ Health Care: Total 7,574 - ---------------------------------------------------------------------------------------------- Consumer Goods/Services: 14.8% >Cruise Lines: 3.2% 45,000 Royal Caribbean Cruises 2,219 Cruises to Caribbean & Alaska >Casinos: 4.1% 105,000 Harrah's Entertainment (b) 2,776 Casinos & Riverboats >Furniture & Manufacturers: 7.5% 95,000 Jones Apparel (b) 2,577 Women's Apparel 110,000 Herman Miller 2,530 Office Furniture - ---------------------------------------------------------------------------------------------- 5,107 ------ Consumer Goods/Services: Total 10,102 - ---------------------------------------------------------------------------------------------- Principal Amount or Number of Shares Value (000) - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- Finance: 17.6% >Finance Companies: 6.9% 255,000 AmeriCredit (b) $ 4,718 Auto Lending >Money Management: 5.5% 31,500 SEI Investments 3,749 Mutual Fund Administration >Insurance: 5.2% 28,000 Progressive 2,048 Auto Insurance 143,000 UICI (b) 1,510 Insurance/Specialty Finance - ---------------------------------------------------------------------------------------------- 3,558 ------- Finance: Total 12,025 - ---------------------------------------------------------------------------------------------- Industrial Goods/Services: 4.0% >Other Industrial Services: 4.0% 225,000 ServiceMaster 2,770 Facilities Management ------- Industrial Goods/Services: Total 2,770 - ---------------------------------------------------------------------------------------------- Energy/Minerals: 10.8% >Independent Power: 10.8% 56,000 AES Corporation (b) 4,186 Power Plants 95,000 MidAmerican Energy 3,200 Growth Utility ------- Energy/Minerals: Total 7,386 ------- Total Common Stocks: 92.8% 63,502 (Cost: $52,064) Short-Term Obligation: 3.3% $ 2,281 Associates First Capital 4.00% Due 1/03/00 2,280 ------- (Amortized Cost: $ 2,280) Total Investments: 96.1% 65,782 (Cost: $54,344) Cash and Other Assets less Liabilities: 3.9% 2,688 ------- Total Net Assets: 100% $68,470 ==============================================================================================
- -------------------------------------------------------------------------------- >Notes to Statement of Investments: (a) At December 31, 1999, for federal income tax purposes, cost of investments was $54,461,000 and net unrealized appreciation was $11,321,000, consisting of gross unrealized appreciation of $16,536,000 and gross unrealized depreciation of $5,215,000. (b) Non-income producing security. 15 Acorn Foreign Forty >Major Portfolio Changes in the Fourth Quarter
Number of Shares ----------------------------- 9/30/99 12/31/99 Additions - ------------------------------------------------------------- Europe >Finland Comptel 0 21,200 >France/Belgium Audiofina (Belgium) 32,000 40,000 M6 Metropole TV 0 7,000 >Sweden NetCom 40,000 60,000 >United Kingdom/Ireland Airtours 79,000 85,000 Carlton Communications 85,000 250,000 Capita Group 80,000 100,000 Hays 100,000 120,000 Irish Life Permanent (Ireland) 0 170,000 NTL 15,000 18,000 St. James Capital 250,000 660,000 Thus 0 220,000 >Italy Editoriale L'Espresso 42,000 208,000 SEAT Pagine Gialle 600,000 800,000 Saipem 250,000 300,000 >Netherlands Fox Kids Europe 0 5,000 - ------------------------------------------------------------- Asia >Japan Shohkoh Fund 0 4,000 >Singapore Star Cruises 0 400,000 Venture Manufacturing 200,000 325,000 - ------------------------------------------------------------- Other Countries >Israel Amdocs 65,000 90,000 >United States Azurix 32,400 100,000 Global Telesystems 0 2,568,000 Sales - ------------------------------------------------------------- Europe >Germany GFK 1,400 0 >United Kingdom Bodycote 225,000 0 >Spain Aguas de Barcelona 45,000 0 Mapfre Vida 60,000 43,000 >Netherlands ASR Verzekeringsgrp 6,501 0 - ------------------------------------------------------------- Asia >Japan Olympus Optical 60,000 0 Takefuji 6,000 0 - ------------------------------------------------------------- Other Countries >United States MIH 32,600 0
16 Acorn Foreign Fund >Statement of Investments December 31, 1999
Number of Shares Value (000) - ---------------------------------------------------------------- Common Stocks: 95.0% - ---------------------------------------------------------------- Europe: 62.7% >Germany: 1.0% 30,000 Rhoen Klinikum $1,102 Hospital Management >Finland: 1.4% 21,200 Comptel (b) 1,490 Telephone Billing Software >Sweden: 3.9% 60,000 Netcom (b) 4,216 Telecommunication Services >France/Belgium: 8.8% 7,000 M6 Metropole TV 3,466 Television Broadcaster 40,000 Audiofina (Belgium) 3,019 Television Broadcaster 18,000 Atos (b) 2,982 Computer Services/Transaction Processing - ---------------------------------------------------------------- 9,467 >United Kingdom/Ireland: 28.2% 82,000 Energis (b) 3,940 Telecommunication Services 150,000 Logica 3,870 Computer Software & Services 170,000 WPP Group 2,694 Advertising 250,000 Carlton Communications 2,435 Television Broadcaster 660,000 St. James Capital 2,356 Life Insurance 18,000 NTL (b) 2,246 Voice, Video & Data Services 120,000 Sema Group 2,160 Computer Software & Services 120,000 Hays 1,911 Outsourcing Services 100,000 Capita Group 1,825 Outsourcing Services 170,000 Irish Life & Permanent (Ireland) 1,608 Life Insurance 220,000 Thus (b) 1,379 Telecommunication Services 300,000 NFC 1,187 Logistics & Moving Services 90,000 SSL International 1,139 Medical & Footcare Products 30,000 Serco Group 941 Facilities Management 85,000 Airtours 522 Packaged Tour Vacations - ---------------------------------------------------------------- 30,213 >Switzerland: 2.1% 800 Pargesa Holdings $ 1,308 Industrial & Media Conglomerate 390 Cie Fin Richemont 932 Luxury Goods, Tobacco & Pay TV - ---------------------------------------------------------------- 2,240 >Italy: 9.9% 300,000 Banca Fideuram 3,550 Life Insurance & Mutual Funds 800,000 SEAT Pagine Gialle 2,625 Yellow Pages Publishers 208,000 Editoriale L'Espresso 2,405 Newspapers & Magazines 300,000 Saipem 1,084 Offshore Construction 70,000 Mediolanum 964 Life Insurance & Mutual Funds - ---------------------------------------------------------------- 10,628 >Spain: 2.9% 110,000 Indra Sistemas 2,065 Computer Services 43,000 Mapfre Vida 991 Life Insurance & Mutual Funds - ---------------------------------------------------------------- 3,056 >Netherlands: 4.5% 40,000 Getronics 3,188 Computer Services 60,000 Hunter Douglas 1,630 Decorative Window Coverings 5,000 Fox Kids Europe (b) 64 Programming/Cartoons - ---------------------------------------------------------------- 4,882 ------ Europe: Total 67,294 - ---------------------------------------------------------------- Asia: 18.3% >Hong Kong: 1.4% 324,900 SmarTone Telecom 1,567 Mobile Telecommunications >Japan: 9.6% 7,000 Softbank 6,697 Internet Services/Investment Holdings 12,000 Nintendo 1,993 Video Games 4,000 Shohkoh Fund 1,583 Commercial Lender - ---------------------------------------------------------------- 10,273 >Singapore: 7.3% 400,000 Star Cruises 4,080 Cruise Line 325,000 Venture Manufacturing 3,727 Electronic Manufacturing Services - ---------------------------------------------------------------- 7,807 ------ Asia: Total 19,647
17 Acorn Foreign Forty >Statement of Investments, continued
Number of Shares Value(000) - ---------------------------------------------------------------------------- Other Countries: 14.0% >Canada: 7.1% 90,000 Celestica (b) $ 5,028 Electronic Manufacturing Services 70,000 Canadian Natural Resources (b) 1,706 Oil & Gas Producer 50,000 Power Financial 830 Financial Services Holding Company - ---------------------------------------------------------------------------- 7,564 >Israel: 2.9% 90,000 Amdocs (b) 3,105 Telecommunications Billing & Customer Care Software >United States: 4.0% 2,568,000 Global TeleSystems 3,431 Telecommunication Services Principal Amount or Number of Shares Value(000) - ---------------------------------------------------------------------------- 100,000 Azurix (b) $ 894 Owner/Operator of Water Utilities - ---------------------------------------------------------------------------- 4,325 ---------- Other: Total 14,994 ---------- Total Common Stocks: 95.0% $ 101,935 (Cost:$63,840) Short-Term Obligation: 4.2% $4,573 Associates First Capital 4.00% Due 1/03/00 4,572 (Amortized Cost:$4,572) ---------- Total Investments: 99.2% 106,507 (Cost:$68,412) Cash and Other Assets Less Liabilities: 0.8% 844 ---------- Total Net Assets: 100% $ 107,351 - ----------------------------------------------------------------------------
________________________________________________________________________________ >Notes to Statement of Investments: (a) At December 31, 1999, for federal income tax purposes, cost of investments was $64,145,000 and net unrealized appreciation was $37,790,000, consisting of gross unrealized appreciation of $39,336,000 and gross unrealized depreciation of $1,546,000. (b) Non-income producing security. (c) At December 31, 1999, $32,233,000 or 30.0% of the Fund's net assets was denominated in the Euro currency. 18 Acorn Foreign Forty >Portfolio Diversification At December 31, 1999, the Fund's portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent - ---------------------------------------------------------------- >Information Telephone Services $17,158 16.0% Computer Services 12,200 11.4 Publishing 9,102 8.5 Broadcasting 8,984 8.4 Business Software 4,595 4.3 Contract Manufacturing 3,727 3.5 Advertising 2,694 2.4 CATV 2,246 2.1 Business Information 2,065 1.9 - ---------------------------------------------------------------- 62,771 58.5 >Health Care Health Services 1,139 1.1 Hospital Management 1,102 1.0 - ---------------------------------------------------------------- 2,241 2.1 >Consumer Goods/Services Cruises 4,080 3.8 Consumer Software 1,993 1.9 Durable Goods 1,630 1.5 Entertainment 932 0.8 Travel 522 0.5 - ---------------------------------------------------------------- 9,157 8.5 >Finance Money Management 4,514 4.2 Insurance 4,177 3.9 Savings & Loans 1,608 1.5 Finance Companies 1,583 1.5 Closed-End Funds 1,308 1.2 - ---------------------------------------------------------------- 13,190 12.3 >Industrial Goods/Services Electrical Components $ 5,028 4.7% Outsourcing Services 4,677 4.4 - ---------------------------------------------------------------- 9,705 9.1 >Energy/Minerals Oil/Gas Producers 1,706 1.6 Oil Services 1,084 1.0 - ---------------------------------------------------------------- 2,790 2.6 >Other Industries Transportation 1,187 1.1 Regulated Utilities 894 0.8 - ---------------------------------------------------------------- 2,081 1.9 ---------------------- Total Common Stocks: 101,935 95.0 Short-Term Obligation: 4,572 4.2 ---------------------- Total Investments: 106,507 99.2 Cash and Other Assets less Liabilities: 844 0.8 --------------------- Net Assets: $107,351 100.0% - ----------------------------------------------------------------
19 Acorn USA >Major Portfolio Changes in the Fourth Quarter
Number of Shares ----------------------------- 9/30/99 12/31/99 Additions - ------------------------------------------------------------------- Information American Power Conversion 0 129,000 Aztec Technology Partners 434,700 820,000 Classic Communications 0 37,100 Diversinet 0 73,000 Galileo Technology 0 232,000 Getty Images 0 56,800 JDA Software 214,000 486,300 Meta Group 0 16,700 Micros Systems 491,500 526,000 Navidec 0 125,000 Online Resources 0 121,000 Salem Communications 0 36,300 - ------------------------------------------------------------------- Health Care Genome Therapeutics 0 44,900 Genset 0 31,000 Genzyme Molecular Oncology Division 0 32,500 Maxygen 0 33,070 Myriad Genetics 0 26,700 - ------------------------------------------------------------------- Consumer Goods/Services ITT Educational Services 0 112,000 Telespectrum 0 122,500 - ------------------------------------------------------------------- Finance People's Bank Bridgeport 0 38,000 Terra Nova Bermuda 0 30,000 - ------------------------------------------------------------------- Industrial Goods/Services Advanced Lighting Technologies 0 140,000 - ------------------------------------------------------------------- Energy/Minerals Dynegy 208,400 253,400 Sales - ------------------------------------------------------------------- Information Aspect Communications 354,100 257,100 IMR Global 63,000 0 IntelliQuest Information 483,100 0 Kronos 45,100 0 Project Software 65,500 119,000 (includes effect of 2 for 1 stock split) Sykes Enterprises 340,500 312,500 Systems & Computer Technology 73,400 0 Telephone and Data Systems 204,000 186,000 TV Guide 187,000 68,000 (includes effect of 2 for 1 stock split) - ------------------------------------------------------------------- Health Care Synaptic Pharmaceuticals 78,000 0 - ------------------------------------------------------------------- Industrial Goods/Services Farr 45,700 0 Vallen 70,000 0 - ------------------------------------------------------------------- Energy/Minerals Devon Energy 9,000 0 - ------------------------------------------------------------------- Real Estate Gaylord Entertainment 18,100 0
20 Acorn USA >Statement of Investments December 31, 1999
Number of Shares Value (000) - -------------------------------------------------------------------------- Common Stocks: 90.2% - -------------------------------------------------------------------------- Information: 48.1% >Broadcasting: 1.7% 209,100 Data Transmission Network (b) $ 3,607 Data Services for Farmers 39,500 Young Broadcasting (b) 2,015 Television Stations 36,300 Salem Communications (b) 821 Radio Stations for Religious Programming - -------------------------------------------------------------------------- 6,443 >Television Programming: 0.8% 68,000 TV Guide 2,924 TV Program Guides & Programming >Telecommunications/Wireline Communications: 3.1% 207,800 RCN (b) 10,078 Metro Market CLEC: Voice, Video & Internet Services 37,100 Classic Communications (b) 1,356 Cable Television in Rural Areas - -------------------------------------------------------------------------- 11,434 >Mobile Communications: 8.5% 186,000 Telephone and Data Systems 23,436 Cellular & Telephone Services 131,400 Price Communications (b) 3,655 Cellular Telephone Services 121,800 Comarco (b) 2,862 Wireless Network Testing 73,000 Diversinet (b) 1,606 Wireless PKI Security - -------------------------------------------------------------------------- 31,559 >Telecommunications Equipment: 2.7% 257,100 Aspect Communications (b) 10,059 Call Center Software >Gaming Equipment: 0.8% 146,000 International Game Technology 2,966 Slot Machines & Progressive Jackpots >Computer Services: 5.4% 312,500 Sykes Enterprises (b) 13,711 Call Center Services 820,000 Aztec Technology Partners (b) 3,741 Technology Staffing Services 151,700 Computer Task Group 2,247 Application Development & Staffing Services 16,700 Meta Group (b) 317 IT Publications & Consulting Services - -------------------------------------------------------------------------- 20,016 >Consumer Software: 0.1% 15,500 Activision (b) 237 Entertainment Software >Business Software: 3.9% 486,300 JDA Software (b) 7,963 Applications/Software & Services for Retailers 119,000 Project Software (b) 6,604 Enterprise Maintenance Software - -------------------------------------------------------------------------- 14,567 >Transaction Processors: 2.7% 298,300 National Data $10,124 Credit Card & Health Claims Processor >Internet: 1.0% 121,000 Online Resources (b) 2,012 Internet Banking Technology 125,000 Navidec (b) 1,500 Internet Computer Services - -------------------------------------------------------------------------- 3,512 >Business Information/ Marketing Services: 3.6% 206,000 CACI International (b) 4,661 Technology Services for Government 130,000 West TeleServices (b) 3,177 Customer Care & Sales Support 169,000 PRIMEDIA (b) 2,788 Specialty Magazines & Other Publications 56,800 Getty Images (b) 2,776 Photographs for Publications & Electronic Media - -------------------------------------------------------------------------- 13,402 >Contract Manufacturing: 0.9% 92,000 Applied Power 3,381 Electronic Enclosures & Industrial Products >Semiconductors/Related Equipment: 1.5% 232,000 Galileo Technology (b) 5,597 Semiconductors for Networking Equipment >Computer Hardware/ Related Systems: 11.4% 526,000 Micros Systems (b) 38,924 Information Systems for Restaurants & Hotels 129,000 American Power Conversion (b) 3,402 Uninterruptable Power Systems - -------------------------------------------------------------------------- 42,326 ------- Information: Total 178,547 - -------------------------------------------------------------------------- Health Care: 8.8% >Biotechnology/Drug Delivery: 1.4% 33,070 Maxygen (b) 2,348 Molecular Breeding 26,700 Myriad Genetics (b) 1,228 Gene Discovery & Diagnostic Products 44,900 Genome Therapeutics (b) 724 Gene Discovery Services 31,000 Genset (b) 591 Genomics 32,500 Genzyme Molecular Oncology Division (b) 227 Gene Expression Technology & Cancer Drugs 5,118
21
Number of Shares Value (000) - ---------------------------------------------------------------------------------- >Services: 7.4% 341,400 Lincare Holdings (b) $ 11,842 Home Health Care Services 390,000 First Health (b) 10,481 PPO Network 816,100 Magellan Health Services (b) 5,152 Mental Health Services - --------------------------------------------------------------------------------- 27,475 -------- Health Care: Total 32,593 - --------------------------------------------------------------------------------- Consumer Goods/Services: 3.2% >Consumer Services: 1.5% 112,000 ITT Educational Services (b) 1,729 Technology Oriented Postsecondary Degree Programs 55,000 Bally Total Fitness (b) 1,468 Fitness Centers 157,600 NuSkin Enterprises (b) 1,428 Personal Care/Herbal Products 122,500 Telespectrum (b) 873 Call Center Services - --------------------------------------------------------------------------------- 5,498 >Retail: 1.7% 375,000 Gadzooks (b) 3,680 Teen Apparel Retailer 58,500 Whole Foods Market (b) 2,713 Natural Food Supermarkets - --------------------------------------------------------------------------------- 6,393 -------- Consumer Goods/Services: Total 11,891 - --------------------------------------------------------------------------------- Finance: 10.4% >Banks: 1.5% 93,500 Chittenden (b) 2,770 Vermont & West Massachusetts Bank 44,000 TCF Financial 1,095 Great Lakes Bank 34,000 Texas Regional Bancshares 986 TexMex Bank 38,000 Peoples Bank Bridgeport 803 Connecticut Savings & Loan - --------------------------------------------------------------------------------- 5,654 >Finance Companies: 3.9% 633,500 AmeriCredit (b) 11,720 Auto Lending 590,000 World Acceptance (b) 2,839 Personal Loans - --------------------------------------------------------------------------------- 14,559 >Money Management: 0.6% 163,000 Phoenix Investment Partners 1,324 Mutual Fund & Pension Manager 52,800 Pioneer Group (b) 832 Equity Mutual Funds - --------------------------------------------------------------------------------- 2,156 Number of Shares Value (000) - --------------------------------------------------------------------------------- >Insurance: 4.4% 637,700 UICI (b) $ 6,736 Insurance/Specialty Finance 392,100 Acceptance Insurance (b) 2,279 Crop Insurance 93,000 Leucadia National 2,151 Insurance Holding Company 13,800 Markel (b) 2,139 Specialty Insurance 66,000 Protective Life 2,100 Life/Dental Insurance 30,000 Terra Nova Bermuda 900 Specialty Re-Insurance - --------------------------------------------------------------------------------- 16,305 -------- Finance: Total 38,674 - --------------------------------------------------------------------------------- Industrial Goods/Services: 6.4% >Steel: 0.2% 79,000 Atchison Casting (b) 721 Steel Foundries >Industrial Goods: 0.2% 140,000 Advanced Lighting Technologies (b) 805 Metal Halide Lighting >Specialty Chemicals: 0.8% 225,600 Lilly Industries, Cl. A 3,031 Industrial Coatings >Other Industrial Services: 5.2% 346,000 Hub Group (b) 6,920 Truck & Rail Freight Forwarder 347,400 Insurance Auto Auctions (b) 5,472 Auto Salvage Services 422,500 Wackenhut, Cl. B 4,357 Prison Management 210,000 Labor Ready (b) 2,546 Temporary Manual Labor - --------------------------------------------------------------------------------- 19,295 -------- Industrial Goods/Services: Total 23,852 - --------------------------------------------------------------------------------- Energy/Minerals: 13.1% >Independent Power: 7.8% 855,400 MidAmerican Energy 28,816 Growth Utility >Oil/Gas Producers: 1.5% 473,800 Tesoro Petroleum (b) 5,478 Oil Refinery/Gas Reserves
22
Number of Shares Value (000) - ---------------------------------------------------------------------------------------------- >Distribution/Marketing/Refining: 3.8% 253,400 Dynegy $ 6,161 Natural Gas & Electric Processing & Marketing 248,000 Atmos Energy 5,068 Natural Gas Utility 92,300 Equitable Resources 3,081 Natural Gas Utility & Producer - ---------------------------------------------------------------------------------------------- 14,310 -------- Energy/Minerals: Total 48,604 - ---------------------------------------------------------------------------------------------- Real Estate: 0.2% 47,000 The Rouse Company 999 Regional Shopping Malls -------- Real Estate: Total 999 Principal Amount Value (000) - ---------------------------------------------------------------------------------------------- Total Common Stocks: 90.2% $335,160 (Cost: $287,478) Short-Term Obligations: 10.5% Yield 4.00% - 4.05% Due 1/03- 1/06/00 $ 17,297 Associates First Capital 17,293 11,260 Motorola Credit 11,254 10,287 Citicorp 10,283 - ---------------------------------------------------------------------------------------------- (Amortized Cost: $38,830) 38,830 -------- Total Investments: 100.7% 373,990 - ---------------------------------------------------------------------------------------------- (Cost: $326,308) Cash and Other Assets Less Liabilities: (0.7%) (2,562) -------- Total Net Assets: 100% $371,428 ==============================================================================================
- -------------------------------------------------------------------------------- >Notes to Statement of Investments: (a) At December 31, 1999, for federal income tax purposes, cost of investments was $326,698,000 and net unrealized appreciation was $47,292,000, consisting of gross unrealized appreciation of $93,617,000 and gross unrealized depreciation of $46,325,000. (b) Non-income producing security. 23 Acorn International >Major Portfolio Changes in the Fourth Quarter
Number of Shares ---------------------- 9/30/99 12/31/99 Additions - -------------------------------------------------------------------------------------------- Europe >Germany Dialog Semiconductor 0 100,000 Pfeiffer Vacuum Technologies 0 150,000 Pixelpark 0 28,000 Rhoen Klinikum 160,000 500,000 >Finland Data Fellows 0 100,000 Helsinki Telephone 0 120,000 >Norway Enitel 0 160,000 >Sweden Mandator 1,200,000 1,350,000 Modern Times Group 350,000 400,000 Sigma 250,000 1,085,000 >United Kingdom/Ireland Bodycote 2,000,000 2,250,000 Chloride Group 0 3,206,400 FKI 0 128,000 Flextech 450,000 500,000 Irish Life & Permanent (Ireland) 0 750,000 ITNET 1,250,000 1,350,000 NFC 2,500,000 3,500,000 Photobition Group 2,000,000 2,125,000 Smith & Nephew 2,500,000 3,000,000 SSL International 1,250,000 1,500,000 St. James Capital 500,000 2,840,000 Thus 0 1,000,000 >Switzerland Bachem 0 5,000 Julius Baer 0 1,600 Selecta Group 65,000 80,000 >Italy Autogrill 2,900,000 3,000,000 Banca Fideuram 3,500,000 4,000,000 Gruppo Coin 0 650,000 Mediolanum 1,400,000 1,500,000 >Spain/Portugal Indra Sistemas 0 500,000 PT Multimedia (Portugal) 0 100,000 >Netherlands Fox Kids Europe 0 65,000 Versatel 0 27,000 >Hungary Matav ADR 0 47,000 - -------------------------------------------------------------------------------------------- Asia >Hong Kong Li & Fung 14,999,000 30,000,000 TVB 2,000,000 3,500,000 >Japan C Two-Network 0 35,000 Densei Lambda 0 300,000 Kokuyo 0 400,000 Misumi 0 75,000 Nichiei 0 175,000 Nintendo 150,000 160,000 Otsuka Kagu 30,000 40,000 Wilson Learning 0 24,400 Yamaha 0 800,000 >Taiwan Hitron Technology 2,000,000 3,000,000 Phoenixtec Power 2,000,000 4,000,000 Systex 2,000,000 3,000,000 >South Korea Cheil Jedang 0 100,000 Korea Technology Investments 0 1,000,000 (includes effect of 42% stock dividend) S1 Corporation 65,000 1,000,000 (includes effect of a 10 for 1 stock split) >Singapore Natsteel Electronics 6,500,000 7,500,000 - -------------------------------------------------------------------------------------------- Latin America >Mexico Cifra SA Series V 0 5,450,000 Grupo Industrial Bimbo 7,000,000 9,000,000 Grupo Continental 4,600,000 5,000,000 >Argentina El Sitio 0 30,000 - -------------------------------------------------------------------------------------------- Other Countries >Australia Computershare 1,000,000 4,500,000 (includes effect of 4 for 1 stock split) >Canada Cinar 0 500,000 Corus Entertainment 0 500,000 Mosaic 0 110,000 Power Financial 600,000 750,000 >Israel Amdocs 750,000 800,000 ECI Telecom 300,000 350,000 Galileo Technology 550,000 650,000 Radware 0 75,000 >United States Azurix Corp 190,000 500,000 Global TeleSystems 0 475,000 MIH 375,000 400,000
24
Number of Shares ---------------------- 9/30/99 12/31/99 Sales - -------------------------------------------------------------------------------------------- Europe >Germany/Austria GFK 30,000 0 UnitedGlobalCom (Austria) 140,000 250,000 (includes effect of a 2 for 1 stock split) >Denmark ISS International System 75,000 0 >Finland TietoEnator 1,250,000 1,200,000 >Norway Atex Media Solutions 654,750 0 >Sweden WM Data Nordic 1,500,000 950,000 >France Atos 400,000 375,000 Fininfo 60,000 50,000 >United Kingdom/Ireland Atkins 1,000,000 0 Electronics Boutique 13,000,000 0 Esat Telecom (Ireland) 225,000 150,000 Logica 600,000 500,000 NTL 500,000 450,000 (includes effect of a 5 for 4 stock split) Oriflame International 2,000,000 0 >Switzerland Cie Fin Richemont 12,500 10,000 Societe Generale d'Affichage 12,000 5,000 >Italy/Greece Attica Enterprises (Greece) 700,000 0 Editoriale L'Expresso 1,800,000 6,000,000 (includes effect of a 3.5 to 1 stock split) >Netherlands Scala Business Solutions 950,000 0 Sales - -------------------------------------------------------------------------------------------- Asia >Hong Kong Pacific Century 7,500,000 0 Varitronix International 1,645,000 0 >Japan Aiful 120,000 50,000 Bellsystem24 20,000 15,000 JAFCO 140,000 130,000 Kadokawa Shoten 30,000 0 NuSkin Enterprises 385,000 0 OBIC 36,000 30,000 Trans Cosmos 110,000 85,000 >Philippines Int'l Container Terminal 75,000,000 36,918,000 Services >South Korea Datacraft Asia 8,500,000 8,000,000 - -------------------------------------------------------------------------------------------- Latin America >Brazil TeleSudeste Celular 400,000 340,000 - -------------------------------------------------------------------------------------------- Other Countries >Canada Celestica 650,000 1,200,000 (includes effect of a 2 for 1 stock split) >United States AES Corporation 325,000 300,000
25 Acorn International >Statement of Investments December 31, 1999
Number of Shares Value (000) - --------------------------------------------------------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 96.7% - --------------------------------------------------------------------------------------------------------------------- Europe: 48.7% >Germany/Austria: 3.6% 600,000 Rhoen Klinikum Pfd. $ 21,374 500,000 Rhoen Klinikum 18,366 Hospital Management 250,000 UnitedGlobalCom (Austria) (b) 17,656 Cable Television for Europe, Israel & Australia 240,000 EM.TV & Merchandising 15,458 Children's Media Production, Merchandising & Distribution 50,000 Fresenius, Pfd. 9,158 Dialysis Equipment & Solutions 100,000 Dialog Semiconductor (b) 7,397 Custom Semiconductors for Cell Phones 165,000 Flughafen Wien (Austria) 5,730 Vienna Airport Authority 150,000 Pfeiffer Vacuum Technologies 3,849 Vacuum Pump Manufacturer 28,000 Pixelpark (b) 3,184 Internet Consulting - --------------------------------------------------------------------------------------------------------------------- 102,172 >Finland: 4.7% 1,200,000 TietoEnator 74,872 Computer Services/Consulting 1,500,000 Talentum (c) 36,380 Trade Journals & Internet Services 120,000 Helsinki Telephone 9,987 Telecommunications Provider 625,000 Fiskars, Series A 8,177 Scissors & Gardening Tools 95,400 Spar Finland (c) 3,341 Grocery/Convenience Stores 100,000 F-Secure (b) 2,918 Security Software - --------------------------------------------------------------------------------------------------------------------- 135,675 >Norway: 0.2% 160,000 Enitel (b) 4,779 Telecommunications Provider >Sweden: 5.2% 950,000 WM Data Nordic 58,716 Computer Services/Consulting 160,000 Information Highway (b) 26,508 Internet Consulting 1,085,000 Sigma 23,203 Technical Consulting 1,350,000 Mandator 20,146 Computer Services/Consulting 400,000 Modern Times Group (b) 19,834 TV, Newspapers and Electronic Commerce - --------------------------------------------------------------------------------------------------------------------- 148,407 >France: 4.4% 375,000 Atos (b) $ 62,117 Computer Services/Transaction Processing 62,000 NRJ 42,646 Radio Network 50,000 Fininfo 12,579 Data Feeds for French Banks & Brokers 20,000 Penauille Polyservice 8,011 Industrial Cleaning/Airport Services - --------------------------------------------------------------------------------------------------------------------- 125,353 >United Kingdom/Ireland: 14.2% 2,000,000 Serco Group 62,762 Facilities Management 450,000 NTL (b) 56,138 Voice, Video & Data Services Via Cable Networks 500,000 Baltimore Technologies 41,397 Security Software 2,000,000 Capita Group 36,510 Outsourcing Services 1,500,000 SSL International 18,986 Medical & Footcare Products 500,000 Euro Money Publications 18,174 Financial Publications 3,500,000 Taylor Nelson 15,464 Market Research Services 1,350,000 ITNET 14,885 Outsourcing Services 3,500,000 NFC 13,853 Logistics 150,000 Esat Telecom (Ireland) (b) 13,725 Telecommunications Provider 500,000 Logica 12,900 Computer Services/Consulting 2,125,000 Photobition Group 11,312 Production of Graphics for Exhibits 2,250,000 Bodycote 10,868 Materials Technology & Metal Processing 2,840,000 St. James Capital 10,140 Life Insurance 3,000,000 Smith & Nephew 10,081 Medical Equipment & Supplies 500,000 Flextech (b) 9,289 Cable Channels 1,700,000 Rotork 8,582 Valve Actuators for Oil & Water Pipelines 750,000 Irish Life & Permanent (Ireland) (b) 7,095 Savings Products 3,400,000 HALMA 6,509 Fire, Burglary & Flooding Detection Devices 1,000,000 Thus (b) 6,268 Telecommunications Provider 1,500,000 Hogg Robinson 5,876 Corporate Travel Management 715,000 Fairey Group 5,833 Electronic Products
26
Number of Shares Value (000) - --------------------------------------------------------------------------------------------------------------------- 290,000 Ocean Group $ 5,411 Freight Forwarder 3,206,400 Chloride Group 5,050 Electrical Equipment Manufacturer/Retailer 128,000 FKI (b) 496 Autonomous Manufacturer - --------------------------------------------------------------------------------------------------------------------- 407,604 >Switzerland: 3.7% 80,000 Selecta Group 25,152 Vending Machine Owner/Operator 10,000 Cie Fin Richemont 23,895 Luxury Goods 30,000 Phoenix Mecano 15,091 Electrical Components Manufacturer 15,000 Bon Appetit 14,856 Wholesale Food Distributor and Speciality Restaurant/Retailer 6,500 Sarasin & Cie Bank 13,202 Private Banking 5,000 Bachem 8,017 Peptides 1,600 Julius Baer 4,839 Private Banking 5,000 Societe Generale d'Affichage (b) 2,578 Billboard Advertising - --------------------------------------------------------------------------------------------------------------------- 107,630 >Italy: 8.2% 6,000,000 Editoriale L'Espresso (b) 69,378 Newspaper & Magazine Publisher 4,000,000 Banca Fideuram 47,339 Life Insurance & Mutual Funds 3,000,000 Autogrill 37,738 Restaurants and Catering for Travelers 1,500,000 Class Editori 26,115 Newspapers & On-Line Financial Data 1,500,000 Mediolanum 20,665 Life Insurance & Mutual Funds 4,000,000 SEAT Pagine Gialle 13,123 Yellow Pages Publisher 1,400,000 Aeroporti di Roma 9,130 Airport Management 650,000 Gruppo Coin (b) 7,588 Food & Clothing Retailer 1,250,000 Saipem 4,516 Offshore Oil Services - --------------------------------------------------------------------------------------------------------------------- 235,592 >Spain/Portugal: 1.9% 450,000 Cortefiel 11,774 Apparel Retailer 500,000 Indra Sistemas 9,384 Computer Services/Consulting 400,000 Mapfre Vida 9,218 Life Insurance & Mutual Funds 425,000 Filmes Lusomundo (Portugal) (b)(c) 5,988 Newspapers, Radio, Video, Film Distribution 400,000 Aguas de Barcelona $ 5,853 Water Utility 650,000 Prosegur 5,815 Security Guards 100,000 PT Multimedia (Portugal) (b) 5,683 Cable TV, Satellite Operator & Internet Service Provider - --------------------------------------------------------------------------------------------------------------------- 53,715 >Netherlands: 2.0% 500,000 Getronics 39,851 Computer Services/Consulting 420,000 Kempen 16,695 Stock Brokerage/Investment Management 27,000 Versatel (b) 951 Telecommunications Provider 65,000 Fox Kids Europe (b) 831 Cartoons - --------------------------------------------------------------------------------------------------------------------- 58,328 >Hungary: 0.6% 1,200,000 Matav 8,402 47,000 Matav ADR 1,692 Telecommunications Provider 100,000 Gedeon Richter 6,574 Pharmaceuticals - --------------------------------------------------------------------------------------------------------------------- 16,668 ---------- Europe: Total 1,395,923 - --------------------------------------------------------------------------------------------------------------------- Asia: 28.9% >Hong Kong: 4.0% 30,000,000 Li & Fung 75,256 Sourcing of Consumer Goods 3,500,000 TVB (b) 23,863 Television Broadcasting 3,000,000 SmarTone Telecom 14,472 Mobile Telecommunications Provider - --------------------------------------------------------------------------------------------------------------------- 113,591 >India: 0.0% 1,998,000 Zurich India Quantum (b) 533 Closed-End Fund >Japan: 11.6% 130,000 JAFCO 46,415 Venture Capital Fund 175,000 Orix 39,406 Finance Leasing 85,000 Trans Cosmos 36,252 Information Technology Services & Investments 180,000 Ryohin Keikaku 36,113 Own Brand Specialty Retailer 160,000 Nintendo 26,575 Video Games 75,000 Nidec 21,642 Spindle Motor Manufacturer
27 Acorn International >Statement of Investments, continued Number of Shares Value(000) - ---------------------------------------------------------------------------- 30,000 OBIC $ 21,246 Computer Integrator 15,000 Bellsystem24 16,434 Telemarketing 180,000 Fuji Software ABC 14,086 Computer Services/Consulting 40,000 Otsuka Kagu 10,760 Furniture Retailer 40,000 Benesse 9,625 Correspondence Courses 300,000 Densei Lambda 9,391 Power Supplies 77,000 Taiyo Ink 9,038 Speciality Chemicals 35,000 C Two-Network 7,909 Discount Food Retailer 50,000 Aiful 6,114 Consumer Lending 75,000 Misumi 5,906 Distributor of Capital Goods Components 400,000 Kokuyo 5,321 Office Product Manufacturer & Retailer 800,000 Yamaha 5,196 Musical Instruments Manufacturer 175,000 Nichiei 3,800 Commercial Lender 24,400 Wilson Learning 1,193 Corporate Training - ---------------------------------------------------------------------------- 332,422 >Taiwan: 1.9% 3,000,000 Systex 20,456 Systems Integrator & Internet Services 3,000,000 Hitron Technology (b) 17,970 Network Integration & Internet Services 2,999,500 Chroma Ate (b) 8,793 Test & Measurement Instruments 4,000,000 Phoenixtec Power 7,711 Uninterruptable Power Supply Manufacturer - ---------------------------------------------------------------------------- 54,930 >Malaysia: 0.4% 2,000,000 Unisem 12,842 Semiconductor Assembly >Philippines: 0.1% 36,918,000 Int'l Container Terminal Services (b) 3,344 Container Handling Terminals & Port Management >South Korea: 1.2% 1,000,000 S1 Corporation 17,261 Security Services 100,000 Cheil Jedang 11,537 Consumer Staples 1,000,000 Korea Technology Investments (b) 6,103 Venture Capital - ---------------------------------------------------------------------------- 34,901 >Singapore: 9.7% 9,500,000 Star Cruises $ 96,900 Cruise Line 6,500,000 Venture Manufacturing 74,542 Electronic Manufacturing Services 8,000,000 Datacraft Asia 66,400 Network Integrator 7,500,000 Natsteel Electronics 39,628 Electronic Manufacturing Services - ---------------------------------------------------------------------------- 277,470 --------- Asia: Total 830,033 - ---------------------------------------------------------------------------- Latin America: 4.3% >Mexico: 2.5% 9,000,000 Grupo Industrial Bimbo 20,090 Bread, Baked Goods & Snacks 5,000,000 Corp Interamericana de 19,974 Entretenimiento (b) Special Events & Live Entertainment 3,500,000 Kimberly Clark de Mexico 13,575 Paper Products 5,450,000 Cifra SA Series V (b) 10,940 Discount Stores 5,000,000 Grupo Continental 7,282 Beverages - ---------------------------------------------------------------------------- 71,861 >Brazil: 1.2% 750,000 Embratel 20,438 Long Distance Telecommunications Provider 340,000 TeleSudeste Celular 13,196 Cellular Telecommunications Provider - ---------------------------------------------------------------------------- 33,634 >Argentina: 0.5% 400,000 IRSA GDS 12,938 Real Estate Management & Development 30,000 El Sitio (b) 1,102 Internet Network for Spanish & Portuguese - ---------------------------------------------------------------------------- 14,040 >Peru: 0.1% 7,000,000 Enrique Ferreyros 3,791 Heavy Machinery Dealer --------- Latin America: Total 123,326 - ---------------------------------------------------------------------------- Other Countries: 14.8% >Australia: 3.2% 7,500,000 ERG 42,130 Smart Card Systems for Public Transportation 4,500,000 Computershare 22,174 Financial Software/Services 5,000,000 AAPT (b) 17,115 Telecommunications Provider 2,000,000 KeyCorp (b)(c) 10,762 Smart Card Technology - ---------------------------------------------------------------------------- 92,181 28 Number of Shares Value (000) - -------------------------------------------------------------------------------- >Canada: 5.2% 1,200,000 Celestica (b) $ 67,035 Electronic Manufacturing Services 720,000 Canadian Natural Resources (b) 17,547 Oil & Gas Producer 750,000 Power Financial 12,445 Financial Services Holding Company 500,000 Cinar (b) 12,250 Children's TV Programming 500,000 Corus Entertainment (b) 10,198 CATV Programming & Radio Stations 500,000 Penn West Petroleum (b) 9,766 Oil & Gas Producer 1,200,000 Bracknell (b) 5,393 Electrical Contractor & Facilities Management 400,000 Leitch Technology (b) 4,923 Television Production Equipment 600,000 LGS Group (b) 4,853 Computer Systems Integrator 4,000,000 Dundee Realty (b) 4,038 Real Estate 110,000 Mosaic (b) 852 Outsourcing Market Services - -------------------------------------------------------------------------------- 149,300 >Israel: 2.7% 800,000 Amdocs (b) 27,600 Telecommunications Billing & Customer Care Software 170,000 Gilat Satellite Network (b) 20,188 Satellite Communications Equipment 650,000 Galileo Technology (b) 15,681 Communications Semiconductors 350,000 ECI Telecom 11,069 Telecommunications Equipment 75,000 Radware (b) 3,234 Internet Infrastructure & Internet Traffic - -------------------------------------------------------------------------------- 77,772 Principal Amount of Number of Shares Value(000) - -------------------------------------------------------------------------------- >South Africa: 1.3% 6,000,000 Dimension Data (b) $ 37,674 Networks & Computer Services >Russia: 0.0% $1,500,000 Khanty Mansiysk 10% Notes Due 10/14/02 (b) 750 4,001 Khanty Mansiysk (b) 150 Oil Production in Russia - -------------------------------------------------------------------------------- 900 >United States: 2.4% 400,000 MIH (b) 23,600 Pay-TV 300,000 AES Corporation (b) 22,425 Power Plants 475,000 Global TeleSystems 16,447 Telecommunications Provider 500,000 Azurix (b) 4,469 Owner & Operator of Water Utilities - -------------------------------------------------------------------------------- 66,941 ------------ Other: Total 424,768 Total Common Stocks and Other Equity-Like Securities: 96.7% ------------ 2,774,050 (Cost: $1,188,760) Short-Term Obligations: 3.1% Yield 4.00% Due 1/03 - 1/06/00 $64,438 Associates First Capital 64,424 25,000 Bell Atlantic Financial 24,986 ------------ (Amortized Cost: $89,410) 89,410 ------------ Total Investments: 99.8% 2,863,460 (Cost: $1,278,170) Cash and Other Assets less Liabilities: 0.2% 4,743 ------------ Total Net Assets: 100% $2,868,203 ================================================================================ - -------------------------------------------------------------------------------- >Notes to Statement of Investments: (a) At December 31, 1999, for federal income tax purposes, cost of investments was $1,344,131,000 and net unrealized appreciation was $1,519,329,000, consisting of gross unrealized appreciation of $1,570,379,000 and gross unrealized depreciation of $51,050,000. (b) Non-income producing security. (c) On December 31, 1999, 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% KeyCorp (Australia)............ 6.40% Filmes Lusomundo (Portugal)....... 7.08% The aggregate cost and value of investments in these companies at December 31, 1999, was $20,950,000 and $53,129,000, respectively. The market value of these securities represents 1.85% of the total net assets at December 31, 1999. During the period ended December 31, 1999, the cost of purchases and proceeds from sales in affiliated companies was $13,398,000 and $12,962,000 respectively. Net dividends received from these companies amounted to $381,000 and net realized loss on sales on investments in such companies amounted to $15,750,000. (d) At December 31, 1999, $741,228,000 or 25.8% of the Fund's net assets was denominated in the Euro currency. 29 Acorn International >Portfolio Diversification At December 31, 1999, the Fund's portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent - -------------------------------------------------------------------------- >Information Computer Services $ 458,867 16.0% Telephone Services 178,031 6.2 Publishing 169,158 5.9 CATV 106,683 3.7 Transaction Processors 75,066 2.6 Business Software 71,915 2.5 Programming 58,571 2.0 Radio 42,646 1.5 Contract Manufacturing 39,628 1.4 Semiconductors 35,920 1.3 Computer Hardware 34,403 1.2 Instrumentation 32,909 1.1 Broadcasting 28,786 1.0 Business Information 25,084 0.9 Telephone Equipment 20,188 0.7 Marketing 15,464 0.5 Internet 13,203 0.5 Mobile Communications 13,196 0.5 Advertising 3,430 0.1 - -------------------------------------------------------------------------- 1,423,148 49.6 >Health Care Hospital Management 39,740 1.4 Services 18,986 0.7 Pharmaceuticals 14,591 0.5 Hospital/Laboratory Supplies 10,081 0.3 Medical Equipment 9,158 0.3 - -------------------------------------------------------------------------- 92,556 3.2 >Consumer Goods/Services Travel 102,776 3.6 Consumer Services 91,952 3.2 Entertainment 90,295 3.1 Retail 73,310 2.6 Restaurants 37,738 1.3 Food 34,946 1.2 Nondurables 33,289 1.2 Consumer Software 26,575 0.9 Beverages 7,282 0.3 Durable Goods 5,321 0.2 Manufacturers 5,196 0.2 Consumer Goods Distribution 3,341 0.1 - -------------------------------------------------------------------------- 512,021 17.9 >Finance Finance Companies $ 89,621 3.1% Money Management 78,946 2.7 Insurance 38,898 1.4 Brokerage 16,695 0.6 Banks 13,202 0.5 Closed-End Funds 533 0.0 - -------------------------------------------------------------------------- 237,895 8.3 >Industrial Goods/Services Outsourcing Services 174,528 6.1 Electrical Components 166,059 5.8 Machinery Processing 16,718 0.6 Industrial Services 16,710 0.6 Industrial Materials 10,868 0.3 Specialty Chemicals 9,038 0.3 - -------------------------------------------------------------------------- 393,921 13.7 >Energy/Minerals Oil/Gas Producers 28,213 1.0 Independent Power 22,425 0.7 Oil Services 4,516 0.2 - -------------------------------------------------------------------------- 55,154 1.9 >Other Industries Transportation 32,057 1.1 Real Estate 16,976 0.6 Regulated Utilities 10,322 0.4 - -------------------------------------------------------------------------- 59,355 2.1 Total Common Stocks and ---------------------------------------- Other Equity-Like Securities: 2,774,050 96.7 Short-Term Obligations: 89,410 3.1 ---------------------------------------- Total Investments: 2,863,460 99.8 Cash and Other Assets less Liabilities: 4,743 0.2 ---------------------------------------- Net Assets: $ 2,868,203 100.0% ==========================================================================
30 ACORN FUND >Major Portfolio Changes in the Fourth Quarter
Number of Shares ---------------------- 9/30/99 12/31/99 Additions - -------------------------------------------------------------------------- Information American Management Systems 0 250,000 American Power Conversion 350,000 550,000 Aztec Technology Partners 987,000 1,616,000 Bigfoot 0 263,158 Cambridge Technology 0 500,000 Cinar (Canada) 0 300,000 Classic Communications 0 200,000 Corus Entertainment (Canada) 219,500 500,000 Dionex 0 98,000 Hyperion Solutions 0 200,000 Indus International 0 300,000 Internet Commerce 0 197,725 MAPICS 0 280,000 Meta Group 0 104,000 Micros Systems 700,000 765,000 Navidec 0 61,000 Online Resources 310,000 470,000 Pioneer-Standard Electronics 790,000 890,000 Playboy Enterprises 345,000 550,000 Plexus 0 35,000 Salem Communications 0 137,000 Varian 0 520,000 Young Broadcasting 695,000 785,000 - -------------------------------------------------------------------------- Health Care Genzyme Molecular Oncology Division 0 190,000 Techne 0 27,000 - -------------------------------------------------------------------------- Consumer Goods/Services Bally Total Fitness 540,000 1,250,000 Calloway Golf 0 100,000 Education Management 0 234,000 Gaiam 0 160,000 Helen of Troy 0 460,000 Hollywood Park 300,000 360,000 Isle of Capri Casino 0 650,000 ITT Educational Services 319,000 600,000 MotherNature.com 0 130,000 Nautica Enterprises 590,000 725,000 Quiksilver 0 200,000 Station Casinos 400,000 1,080,000 Steiner Leisure 75,000 270,000 - -------------------------------------------------------------------------- Finance Ace Cash Express 390,000 570,000 AmeriCredit 3,632,000 3,912,000 CCB Financial 0 180,000 Commonwealth Bancorp 622,000 702,000 Creditrust 525,000 700,000 DVI Health Services 600,000 750,000 HCC Insurance Holdings 320,000 820,000 Neuberger Berman 0 650,000 People's Bank Bridgeport 1,602,000 1,842,000 Philadelphia Consolidated Holding 0 675,000 Phoenix Investment Partners 2,679,000 3,019,000 RLI 0 300,000 SEI Investments 539,000 555,000 Terra Nova Bermuda 252,000 322,000 Texas Regional Bancshares 612,000 672,000 UICI 1,155,000 1,291,000 - -------------------------------------------------------------------------- Industrial Goods/Services AK Steel 450,000 650,000 Labor Ready 2,220,000 2,500,000 Mobile Mini 294,000 520,000 Wackenhut, Cl. B 1,326,000 1,526,000 - -------------------------------------------------------------------------- Energy/Minerals Basin Exploration 175,000 350,000 Cross Timbers Oil 1,400,000 1,615,000 Hanover Compressor 125,000 205,000 Newpark Resources 0 1,120,000 Precision Drilling (Canada) 139,100 530,000 Ulster Petroleums (Canada) 200,000 400,000 US Aggregates 0 283,000 - -------------------------------------------------------------------------- Other Industries Amli Residential 0 250,000 Azurix 283,000 1,300,000 BRE Properties 0 250,000 Conectiv 0 600,000 First Washington Realty Trust, Cv. Pfd. 120,000 240,000 Manufactured Home Communities 0 400,000 Security Capital European Realty 823,437 903,125 SL Green Realty 0 500,000 Stericycle 152,000 287,000 Summit Properties 0 250,000 Unisource Energy 700,000 865,000
31 ACORN FUND >Major Portfolio Changes in the Fourth Quarter, continued
Number of Shares ---------------------- 9/30/99 12/31/99 Sales - -------------------------------------------------------------------------- Information AppNet Systems 135,000 0 Aspect Communications 284,000 0 Berjaya Sports Toto (Malaysia) 590,000 0 BISYS 141,000 95,000 Concord EFS 450,000 380,000 Cumulus Media 150,000 100,000 Electronic Arts 200,000 0 Granite Broadcasting 558,000 250,000 IMR Global 400,000 0 Intermet 260,000 0 Jabil Circuit 300,000 200,000 Keane 75,000 0 Kronos 903,000 713,000 Liberty Media Group, AT&T 2,300,000 1,500,000 NTL (United Kingdom) 644,000 250,000 (includes effect of 5 for 4 stock split) Oak Industries 450,000 200,000 Pinnacle Holdings 500,000 355,000 Project Software 54,000 0 RCN 1,484,000 584,000 REMEC 262,000 0 RSA Security 200,000 100,000 Sanmina 150,000 0 Solectron 800,000 400,000 Sterling Commerce 280,000 0 Sykes Enterprises 724,000 650,000 Tele Celular Sul (Brazil) 50,000 0 THQ 200,000 245,000 (includes effect of 3 for 2 stock split) TV Guide 366,000 0 Varitronix International (Hong Kong) 1,795,000 0 World Color Press 140,000 0 - -------------------------------------------------------------------------- Health Care Lincare Holdings 2,374,000 2,038,000 Olympus Optical (Japan) 300,000 0 Respironics 541,000 0 - -------------------------------------------------------------------------- Consumer Goods/Services Carnival 1,500,000 1,100,000 Harley-Davidson 1,260,000 1,000,000 Resorts World Berhad (Malaysia) 750,000 0 Royal Caribbean Curises 120,000 0 - -------------------------------------------------------------------------- Finance Foremost 77,000 0 FPIC Insurance 340,000 0 Peoples Heritage Financial 138,000 0 Washington Federal 782,000 0 - -------------------------------------------------------------------------- Industrial Goods/Services C H Robinson 426,000 350,000 Cambrex 300,000 0 Expeditors International of Washington 1,500,000 1,411,000 Flughafen Wien (Austria) 180,000 0 HA LO Industries 626,000 0 - -------------------------------------------------------------------------- Energy/Minerals Atmos Energy 800,000 600,000 Canadian Natural Resources (Canada) 585,000 385,000 Devon Energy 630,000 600,000 MidAmerican Energy 1,500,000 0 - -------------------------------------------------------------------------- Other Industries Equity Residential 260,000 0
32 Acorn Fund >Statement of Investments December 31, 1999
Number of Shares Value (000) - --------------------------------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 92.2% - --------------------------------------------------------------------------------------------- Information: 38.4% Media >Broadcasting: 1.7% 785,000 Young Broadcasting (b) $ 40,035 Television Stations 819,000 Data Transmission Network (b) (c) 14,128 Data Services for Farmers 100,000 Cumulus Media (b) 5,075 Radio Stations in Small Cities 137,000 Salem Communications (b) 3,100 Radio Stations for Religious Programming 300,000 Shop at Home (b) 2,981 Television Home Shopping Network 250,000 Granite Broadcasting (b) 2,531 Television Stations - --------------------------------------------------------------------------------------- 67,850 >Television Programming CATV: 2.9% 1,500,000 Liberty Media Group, AT&T (b) 85,125 Cable & Satellite Programming 550,000 Playboy Enterprises (b) 13,372 CATV & Satellite Programming, Publishing 500,000 Corus Entertainment (Canada) (b) 10,198 CATV Programming & Radio Stations 300,000 Cinar (Canada) (b) 7,350 Children's TV Programming 9,000 Fox Kids Europe (Netherlands) (b) 115 Cartoons - --------------------------------------------------------------------------------------- 116,160 Telecommunications >Telecommunications/Wireline Communications: 2.3% 250,000 NTL (United Kingdom) (b) 31,188 Voice, Video & Data Services 584,000 RCN (b) 28,324 Metro Market CLEC: Voice, Video & Internet Services 354,000 Commonwealth Telephone (b) 18,718 Rural Market CLEC: Local, Long Distance & Internet Services 200,000 Classic Communications (b) 7,312 Cable Television in Rural Areas 230,000 Startec Global Communications (b) 4,834 International Telecommunications 36,000 Thus (United Kingdom) (b) 226 Emerging Telecommunications - --------------------------------------------------------------------------------------- 90,602 >Mobile Communications: 2.8% 580,000 Telephone and Data Systems 73,080 Cellular & Telephone Services 355,000 Pinnacle Holdings (b) 15,043 Towers for Cellular, PCs & Paging 420,000 Price Communications (b) 11,681 Cellular Telephone Services 355,000 COMARCO (b) (c) 8,342 Wireless Network Testing - --------------------------------------------------------------------------------------- 108,146 Principal Amount or Number of Shares Value (000) - --------------------------------------------------------------------------------------- >Telecommunications Equipment: 0.1% 36,000 Comverse Technology (b) 5,211 Voicemail & Other Enhanced Services Equipment Computer Related Hardware >Computer Hardware/ Related Systems: 2.9% 765,000 Micros Systems (b) 56,610 Information System for Restaurants & Hotels 713,000 Kronos (b) (c) 42,780 Labor Management Solutions 550,000 American Power Conversion (b) 14,506 Uninterruptable Power Systems - --------------------------------------------------------------------------------------- >Semiconductors 113,896 Related Equipment: 0.5% 200,000 Oak Industries (b) 21,225 Communications Components >Gaming Equipment: 2.1% 2,342,000 International Game Technology 47,572 Slot Machines & Progressive Jackpots 450,000 Anchor Gaming (b) 19,547 Slot Machines & Casinos 1,000,000 Aristocrat Leisure (Australia) 14,388 Slot Machines - --------------------------------------------------------------------------------------- 81,507 >Contract Manufacturing: 2.0% 400,000 Solectron (b) 38,050 Electronic Manufacturing Services 200,000 Jabil Circuit (b) 14,600 Electronic Manufacturing Services 350,000 Applied Power 12,862 Electronic Enclosures & Industrial Products 2,000,000 Natsteel Electronics (Singapore) 10,567 Electronic Manufacturing Services 35,000 Plexus (b) 1,540 Electronic Manufacturing Services - --------------------------------------------------------------------------------------- 77,619 >Instrumentation: 1.4% 480,000 Mettler Toledo (b) 18,330 Laboratory Products 520,000 Varian (b) 11,700 Analytical Instruments 613,000 Thermoquest (b) 6,322 $ 1,500,000 Thermoquest, 5% Note Due 8/15/00 1,470 Mass Spectrometry & Chromatography $ 5,000,000 Thermo Optek, 5% Note Due 10/15/00 4,900 265,000 Thermo Optek 3,014 Elemental & Molecular Spectroscopy 98,000 Dionex (b) 4,036 Ion & Liquid Chromatography 266,000 Onix Systems (b) 1,629 Field Measurement & Sensor Equipment 232,000 Metrika Systems (b) 1,392 Gamma Ray Instrumentation - --------------------------------------------------------------------------------------- 52,793
33 Acorn Fund >Statement of Investments, continued
Principal Amount or Number of Shares Value (000) - --------------------------------------------------------------------------------------------- >Business Software: 1.2% 1,075,000 Systems & Computer Technology (b) $ 17,469 Enterprise Software & Services 687,000 JDA Software Group (b) 11,250 Applications/Software & Services for Retailers 200,000 Hyperion Solutions (b) 8,700 Analytical Application Software 300,000 Indus International (b) 3,656 Enterprise Asset Management Software 280,000 MAPICS (b) 3,535 Mid Market ERP Systems 100,000 Entra Data (Sweden) 2,562 Business Software - --------------------------------------------------------------------------------------------- 47,172 >Consumer Software: 0.5% $ 6,500,000 Activision, 6.75% Note Due 1/1/05 6,532 400,000 Activision (b) 6,125 Entertainment Software 245,000 THQ (b) 5,681 Entertainment Software 250,000 3DO Company (b) 2,273 Entertainment Software - --------------------------------------------------------------------------------------------- 20,611 >Computer Services: 5.2% 1,000,000 WM Data Nordic (Sweden) 61,806 Computer Services/Consulting 230,000 Atos (France) (b) 38,098 Computer Services/Transaction Processing 650,000 Sykes Enterprises (b) 28,519 Call Center Services 171,084 Getronics (Netherlands) 13,636 Computer Services/Consulting 500,000 Cambridge Technology (b) 13,125 Software Implementation Services 790,000 Computer Task Group 11,702 Application Development & Staffing Services 642,000 RCM Technologies (b) (c) 11,075 Technology Staffing Services 250,000 American Management Systems (b) 7,844 Software Development Services 1,616,000 Aztec Technology Partners (b) (c) 7,373 Application Development & Maintenance Services 95,000 BISYS (b) 6,199 Processing for Banks 214,000 Analysts International 2,675 Technology Staffing Services 104,000 Meta Group (b) 1,976 IT Publications & Consulting Services - --------------------------------------------------------------------------------------------- 204,028 Software/Services >Business Information/Marketing Services/Publishing: 3.8% 800,000 Getty Images (b) 39,100 Photographs for Publications & Electronic Media 2,400,000 InfoUSA (b) 33,450 Business Data for Sales Leads Number of Shares Value (000) - --------------------------------------------------------------------------------------------- 1,100,000 PRIMEDIA (b) $ 18,150 Specialty Magazines & Other Publications 356,000 Choicepoint (b) 14,729 Fraud Protection Information 450,000 Information Holdings (b) 13,078 Scientific & Medical Publications, Patent Information 445,000 West Teleservices (b) 10,875 Customer Care & Sales Support 403,000 ACNielsen (b) 9,924 Market Research, Information & Analysis 350,000 Acxiom (b) 8,400 Database Marketing Services - --------------------------------------------------------------------------------------------- 147,706 >Internet: 6.6% 235,000 Softbank Corporation (Japan) 224,817 Internet Services/Investment Holdings 470,000 Online Resources (b) 7,814 Internet Banking Technology 100,000 RSA Security (b) 7,750 Enterprise Security Software 197,725 Internet Commerce (b) 5,046 E-Commerce Service Network 2,683 Bigfoot International (b) (c) 4,024 263,158 Bigfoot International, Series A (b) (c) 2,500 Internet Direct Marketing 511,630 NeoPlanet, Series A (b) 2,000 Web Browser 250,000 Musicmaker.com (b) 1,469 Make Your Own Music CD 61,000 Navidec (b) 732 Internet Computer Services 47,855 GIGA (b) 197 29,714 GIGA Warrants (b) 4 Data on Information Technology - --------------------------------------------------------------------------------------------- 256,353 >Electronics Distribution: 0.5% 890,000 Pioneer-Standard Electronics 12,849 Component & Computer Distribution 300,000 Kent Electronics (b) 6,825 Component Distribution & Contract Assembly - --------------------------------------------------------------------------------------------- 19,674 >Transaction Processors: 1.9% 1,874,000 National Data (c) 63,599 Credit Card & Health Claims Processor 380,000 Concord EFS (b) 9,785 Credit Card Processor - --------------------------------------------------------------------------------------------- 73,384 Information: Total 1,503,937 Health Care: 7.7% >Biotechnology/Drug Delivery: 3.7% 525,000 Myriad Genetics (b) (c) 24,150 Gene Discovery & Diagnostic Products 329,000 Protein Design Labs (b) 23,030 Computer Designed Monoclonal Antibodies 450,000 Inhale Therapeutic Systems (b) 19,153 Pulmonary Drug Delivery
34 Number of Shares Value (000) - -------------------------------------------------------------------------- 230,000 CuraGen (b) $ 16,042 Gene Based Drug Development 664,000 Genome Therapeutics (b) 10,707 Gene Discovery Services 160,000 Incyte Pharmaceutical (b) 9,600 Gene Sequencing 7,350,000 Nadro, Series L (Mexico) 9,309 Pharmaceutical Distributor 915,000 Microcide Pharmaceuticals (b) (c) 8,121 Antibiotics 1,508,000 Corvas International (b) (c) 6,692 Rational Drug Design 529,000 NPS Pharmaceuticals (b) 6,480 Small Molecule Drugs 351,000 Guilford Pharmaceuticals (b) 5,967 Drug Delivery & Neurology Drugs 768,000 Synaptic Pharmaceuticals (b) (c) 5,184 Receptor Targeted Drug Design 190,000 Genzyme Molecular Oncology Division (b) 1,330 Gene Expression Technology & Cancer Drugs - -------------------------------------------------------------------------- 145,765 >Medical Equipment: 0.6% 299,000 Wesley Jessen Vision (b) 11,325 Contact Lenses 407,000 Orthofix International (b) 5,825 Bone Fixation & Stimulation Devices 443,000 Acuson (b) 5,565 Ultrasound Devices - -------------------------------------------------------------------------- 22,715 >Hospital/Laboratory Supplies: 0.0% 27,000 Techne (b) 1,487 Cytokines, Antibodies, Other Reagents for Life Sciences >Services: 3.4% 2,038,000 Lincare Holdings (b) 70,693 Home Health Care Services 1,952,000 First Health Group (b) 52,460 PPO Network 1,280,000 Magellan Health Services (b) 8,080 Mental Health Services - -------------------------------------------------------------------------- 131,233 -------- Health Care: Total 301,200 - -------------------------------------------------------------------------- Consumer Goods/Services: 11.8% Goods >Leisure Vehicles: 2.0% 1,000,000 Harley-Davidson 64,062 Motorcycles & Related Merchandise 341,000 Thor Industries 10,379 RV's & Busses 2,200,000 Ducati Motor (Italy) (b) 5,701 Motorcycles & Related Merchandise - -------------------------------------------------------------------------- 80,142 >Furniture: 0.3% 520,000 Herman Miller 11,960 Office Furniture >Beverages: 0.1% 23,000 Binding-Brauerei (Germany) $ 4,583 Brewery >Nondurables: 0.2% 460,000 Helen of Troy (b) 3,335 Personal Care Products 401,000 First Years 3,333 Infant & Toddler Products - -------------------------------------------------------------------------- 6,668 >Durable Goods: 0.2% 312,439 Hunter Douglas (Netherlands) 8,489 Decorative Window Coverings >Textiles/Apparel: 1.0% 730,000 Jones Apparel (b) 19,801 Women's Apparel 725,000 Nautica Enterprises (b) 8,202 Men's Casual Apparel 600,000 Unifi (b) 7,388 Polyester & Nylon Fabrics 85,000 Gildan Activewear (b) 1,541 Cotton T-Shirts - -------------------------------------------------------------------------- 36,932 Services >Retail: 1.9% 1,600,000 Borders Group (b) 25,700 Bookstores 400,000 Whole Foods Market (b) 18,550 Natural Food Supermarkets 1,100,000 N. Brown Group (United Kingdom) 11,009 Mail Order Clothing in Large Sizes 729,000 Gadzooks (b) (c) 7,153 Teen Apparel Retailer 400,000 Panera Bread (b) 3,100 Bakery & Deli Restaurants 200,000 Quiksilver (b) 3,100 Gen Y Clothing 160,000 Gaiam (b) 2,540 Healthy Living Catalog & E-Commerce 100,000 Calloway Golf 1,769 Premium Golf Clubs & Balls 130,000 MotherNature.com (b) 951 Healthy Living E-Commerce - -------------------------------------------------------------------------- 73,872 >Consumer Services: 1.5% 1,250,000 Bally Total Fitness (b) 33,359 National Chain of Fitness Centers 600,000 ITT Educational Services (b) 9,263 Technology Oriented Postsecondary Degree Programs 1,322,600 Airtours (United Kingdom) 8,119 Packaged Tour Vacations 270,000 Steiner Leisure (b) 4,506 Spas & Hair/Skin Products on Cruise Ships 234,000 Education Management (b) 3,276 Postsecondary Education - -------------------------------------------------------------------------- 58,523 35 Acorn Fund >Statement of Investments, continued Number of Shares Value (000) - -------------------------------------------------------------------------- >Casinos: 1.1% 1,080,000 Station Casinos (b) $ 24,233 Casinos & Riverboats 650,000 Isle of Capri Casino (b) 8,572 Five Casinos in Secondary Markets 360,000 Hollywood Park (b) 8,078 Casinos & Card Clubs 535,000 Monarch Casino & Resort (b) (c) 2,809 Casino/Hotel in Reno 63,000 Lakes Gaming (b) 500 Hotel & Casino in Biloxi & Gulfport - -------------------------------------------------------------------------- 44,192 >Cruise Lines: 3.5% 8,130,000 Star Cruises (Singapore) 82,926 Cruising/Casino Operations 1,100,000 Carnival 52,594 Largest Cruise Line 410,000 Royal Olympic Cruise (b) 1,999 Cruises in Mediterranean - -------------------------------------------------------------------------- 137,519 -------- Consumer Goods/Services: Total 462,880 - -------------------------------------------------------------------------- Finance: 13.8% >Banks: 1.6% 799,000 TCF Financial 19,875 Great Lakes Bank 672,000 Texas Regional Bancshares 19,488 TexMex Bank 414,000 Chittenden 12,265 Vermont & West Massachusetts Bank 180,000 CCB Financial 7,841 North Carolina Bank 400,000 Eldorado Bancshares (b) 4,300 California Bank - -------------------------------------------------------------------------- 63,769 >Savings & Loans: 1.3% 1,842,000 Peoples Bank Bridgeport 38,912 Connecticut Savings & Loan 702,000 Commonwealth Bancorp (c) 11,671 Philadelphia Savings & Loan - -------------------------------------------------------------------------- 50,583 >Insurance: 3.4% 600,000 Protective Life 19,088 Life/Dental Insurance 1,291,000 UICI (b) 13,636 Insurance/Specialty Insurance 78,000 Markel (b) 12,090 Specialty Insurance 511,000 Leucadia National 11,817 Insurance Holding Company 820,000 HCC Insurance Holdings 10,814 Aviation Insurance 488,000 Baldwin & Lyons, Cl. B 10,797 Trucking Insurance 300,000 RLI 10,200 Specialty Insurance - -------------------------------------------------------------------------- 154,308 ASR Verzekeringsgroep $ 9,814 (Netherlands) Auto/Life Insurance 675,000 Philadelphia Consolidated 9,788 Holding (b) (c) Specialty Insurance 322,000 Terra Nova Bermuda 9,660 Specialty Re-Insurance 274,000 United Fire & Casualty 6,199 Property & Casualty 210,000 StanCorp Financial 5,289 Group Life, Disability & 401K 612,000 Acceptance Insurance (b) 3,557 Crop Insurance - -------------------------------------------------------------------------- 132,749 >Money Management: 4.6% 555,000 SEI Investments 66,054 Mutual Fund Administration 3,019,000 Phoenix Investment Partners (c) 24,529 Mutual Fund & Pension Manager 1,500,000 Banca Fideuram (Italy) 17,752 Life Insurance & Mutual Funds 1,034,000 Pioneer Group (b) 16,286 Equity Mutual Funds 650,000 Neuberger Berman 16,169 Major Asset Management Company 1,063,000 Baker Fentress 15,081 Closed-End Investment Company 300,000 Affiliated Managers Group (b) 12,131 Mutual Fund & Pension Manager 1,250,000 Edinburgh Fund Managers (United Kingdom) 10,723 Investment Management 200,000 The Investment Company of China (China) (b) 1,112 Closed-End Fund - -------------------------------------------------------------------------- 179,837 >Finance Companies: 2.9% 3,912,000 AmeriCredit (b) (c) 72,372 Auto Lending 750,000 DVI Health Services (b) 11,391 Leases for Big Medical Equipment 570,000 Ace Cash Express (b) (c) 10,545 Check Cashing Stores 1,820,000 World Acceptance (b) (c) 8,759 Personal Loans 1,375,000 Capital Trust (b) (c) 6,875 Mortgage Loans 700,000 Creditrust (b) (c) 5,381 Buys Defaulted Credit Card Paper - -------------------------------------------------------------------------- 115,323 -------- Finance: Total 542,261 - -------------------------------------------------------------------------- Industrial Goods/Services: 8.1% >Steel: 1.0% 820,000 Gibraltar Steel (c) 19,167 Steel Processing 36 Number of Shares Value (000) - ----------------------------------------------------------------------- 650,000 AK Steel $12,269 Carbon & Stainless Steel Producer 420,000 Atchison Casting (b) (c) 3,832 Steel Foundries 245,000 A M Castle 2,879 Steel Distribution - ----------------------------------------------------------------------- 38,147 >Industrial Goods: 0.8% 1,000,000 Clarcor 18,000 Engines, Mobile & Environmental Filtration 538,000 Applied Industrial Technologies 8,944 Industrial Components Distribution 550,000 Advanced Lighting Technologies (b) 3,162 Metal Halide Lighting - ----------------------------------------------------------------------- 30,106 >Specialty Chemicals & Industrial Materials: 0.9% 1,100,000 Lilly Industries, Cl. A 14,781 Industrial Coatings 346,121 SYMEX (b) 9,345 Combinatorial Materials 732,000 RPM 7,457 Specialty Coatings & Paint 100,000 Spartech 3,225 Plastics Distribution & Compounding 139,000 Brunswick Technologies (b) 495 Fiberglass Fabric for Composites - ----------------------------------------------------------------------- 35,303 >Outsourcing Services & Training: 0.9% 2,500,000 Labor Ready (b) (c) 30,313 Temporary Manual Labor 600,000 GP Strategies (b) (c) 3,675 Training Programs 500,000 International Total Services (b) (c) 594 Aviation Services - ----------------------------------------------------------------------- 34,582 >Logistics: 2.7% 1,411,000 Expeditors International of Washington 61,819 International Freight Forwarder 759,000 Hub Group (b) 15,180 Truck & Rail Freight Forwarder 350,000 C H Robinson 13,912 Truck Freight Forwarder 200,000 Forward Air (b) 8,675 Freight Transportation Between Airports 860,000 Airnet Systems (b) (c) 6,127 Check & Other Small Package Shipment - ----------------------------------------------------------------------- 105,713 >Other Industrial Services: 1.8% 1,200,000 Serco Group (United Kingdom) 37,657 Facilities Management 1,526,000 Wackenhut, Cl. B 15,737 31,000 Wackenhut, Cl. A 463 Prison Management 520,000 Mobile Mini (b) $11,180 Leases Portable Storage Units 1,000,000 Aeroporti di Roma (Italy) 6,521 Airport Management - ----------------------------------------------------------------------- 71,558 ------- Industrial Goods/Services: Total 315,409 - ----------------------------------------------------------------------- Energy/Minerals: 7.1% >Independent Power: 2.2% 1,164,000 AES Corporation (b) 87,009 1,852 AES Corporation Warrants (b) 231 Power Plants - ----------------------------------------------------------------------- 87,240 >Oil/Gas Producers: 2.5% 2,100,000 Tesoro Petroleum (b) (c) 24,281 Oil Refinery/Gas Producer 600,000 Devon Energy 19,725 Oil & Gas Producer 1,615,000 Cross Timbers Oil 14,636 Oil & Gas Producer 530,000 Precision Drilling (Canada) (b) 13,558 Oil & Gas Well Driller 385,000 Canadian Natural Resources (Canada) (b) 9,383 Oil & Gas Producer 350,000 Basin Exploration (b) 6,169 Oil & Gas Producer 300,000 Evergreen Resources (b) 5,925 Oil & Gas Producer 400,000 Ulster Petroleums (Canada) (b) 3,554 Oil & Gas Producer 800,000 Tipperary (b) (c) 1,100 Oil & Gas Producer - ----------------------------------------------------------------------- 98,331 >Distribution/Marketing/Refining: 1.8% 900,000 Equitable Resources 30,037 Natural Gas Utility & Producer 1,200,000 Dynegy 29,175 Natural Gas & Electric Processing, Production & Marketing 600,000 Atmos Energy 12,262 Natural Gas Utility - ----------------------------------------------------------------------- 71,474 >Mining: 0.1% 283,000 US Aggregates (b) 3,396 Aggregrates, Ready Mix & Asphalt >Oil Services: 0.5% 205,000 Hanover Compressor (b) 7,739 Natural Gas Compressor Rental 1,120,000 Newpark Resources (b) 6,860 Oilfield Fluid Management & Equipment Rental 1,250,000 Saipem (Italy) 4,516 Offshore Construction - ----------------------------------------------------------------------- 19,115 ------- Energy/Minerals: Total 279,556 37 Acorn Fund >Statement of Investments, continued Number of Shares Value (000) - ----------------------------------------------------------------------- Other Industries: 5.3% >Real Estate: 4.2% 968,000 The Rouse Company $20,570 Regional Shopping Malls 903,125 Security Capital European Realty (b) 18,063 Strategic Real Estate Investments 466,000 Forest City Enterprises, Cl. B 14,475 Shopping Malls 500,000 First Industrial Realty Trust 13,719 Industrial Properties 412,000 IRSA (Argentina) 13,326 Real Estate Management & Development 820,000 Cornerstone Properties 11,992 Downtown Office Buildings 500,000 SL Green Realty 10,875 Downtown Office Buildings 400,000 Manufactured Home Communities 9,725 Manufactured Home Communities 400,000 Macerich Company 8,325 Regional Shopping Malls 699,000 LaSalle Hotel Properties 8,170 Upscale/Full Service Hotels 385,000 First Washington Realty Trust (c) 7,195 240,000 First Washington Realty Trust, Cv. Pfd. (c) 5,730 Community Shopping Centers 250,000 BRE Properties 5,672 Apartments - Class A 200,000 General Growth Properties 5,600 Shopping Malls REIT 250,000 Amli Residential 5,047 Midwestern Apartments 250,000 Summit Properties 4,469 Southeastern Apartments 153,000 Consolidated Tomoka 1,951 16,000 Acres of Florida Land - ----------------------------------------------------------------------- 164,904 >Waste Management: 0.1% 287,000 Stericycle (b) 5,399 Medical Waste Disposal >Regulated Utilities: 1.0% 1,300,000 Azurix (b) 11,619 Water Utility Holding Company Principal Amount or Number of Shares Value (000) - ----------------------------------------------------------------------- 600,000 Conectiv $10,087 Electric Utility in New Jersey, Delaware & Maryland 865,000 Unisource Energy (b) 9,677 Electric Utility in Arizona 130,000 CH Energy 4,290 Electric Utility in New York 200,000 Utilicorp United 3,888 Global Utility Holding Company - ----------------------------------------------------------------------- 39,561 -------- Other Industries: Total 209,864 - ----------------------------------------------------------------------- Other Securities: 0.0% 19 Total Common Stocks and Other ---------- Equity-Like Securities: 92.2% $3,615,126 (Cost: $2,077,035) Short-Term Obligations: 7.7% Yield 4.00%-6.60% Due 1/3-2/3/00 $ 39,106 Aetna 39,073 37,110 Ford Motor Credit 37,098 33,386 GTE Corp 33,333 33,232 Exxon 33,214 29,974 Sears 29,920 28,962 AON 28,905 25,000 Bell Atlantic Financial 24,989 18,308 Citicorp 18,289 16,503 Wal-Mart 16,491 14,943 Associates First Capital 14,940 14,350 US West 14,334 11,907 US Treasury Bill 11,853 --------- (Amortized Cost: $302,439) 302,439 --------- Total Investments: 99.9% 3,917,565 (Cost: $2,379,474) Cash and Other Assets Less Liabilities: 0.1% 3,274 --------- Total Net Assets: 100% $3,920,839 ======================================================================== - ------------------------------------------------------------------------ >Notes to Statement of Investment: (a) At December 31, 1999, for federal income tax purposes, cost of investment was $2,318,230,000 and net unrealized appreciation was $1,536,335,000, consisting of gross unrealized appreciation of $1,771,700,000 and gross unrealized depreciation of $235,365,000. (b) Non-income producing security. 38 (c) On December 31, 1999, the Fund held the following percentages of the outstanding voting shares of the companies listed below: Corvas International............................................ 9.99% Sirena Apparel.................................................. 9.92% World Acceptance................................................ 9.47% First Washington Realty Trust................................... 8.65% COMARCO......................................................... 8.28% Microcide Pharmaceuticals....................................... 8.24% Gadzooks........................................................ 8.17% Airnet Systems.................................................. 7.53% International Total Services.................................... 7.51% Aztec Technology Partners....................................... 7.28% Synaptic Pharmaceuticals........................................ 7.15% Data Transmission Network....................................... 6.99% Phoenix Investment Partners..................................... 6.90% Bigfoot International........................................... 6.54% Tesoro Petroleum................................................ 6.49% Creditrust...................................................... 6.48% Gibraltar Steel................................................. 6.38% Capital Trust................................................... 6.25% RCM Technologies................................................ 5.86% Commonwealth Bancorp............................................ 5.86% Labor Ready..................................................... 5.84% Kronos.......................................................... 5.66% Ace Cash Express................................................ 5.66% Monarch Casino & Resort......................................... 5.64% National Data................................................... 5.53% Atchison Casting................................................ 5.49% GP Strategies................................................... 5.41% Philadelphia Consolidated Holding............................... 5.38% Americredit..................................................... 5.32% Tipperary....................................................... 5.29% Myriad Genetics................................................. 5.19% The aggregate cost and value of investments in these companies at December 31, 1999, was $391,459,000 and $457,372,000, respectively. The market value of these securities represents 11.67% of the total net assets at December 31, 1999. During the year ended December 31, 1999, cost of purchases and proceeds from sales in affiliated companies was $115,904,000 and $38,702,000, respectively. Dividends received from these companies amounted to $2,378,000 and net realized gain on sales of investments in such companies amounted to $18,100,000. (d) On December 31, 1999, the market value of foreign securities represents 17.16% of total net assets. The Fund's foreign portfolio was diversified as follows: Value(000) Percent ---------- ------- Japan............................................ $224,817 5.73% United Kingdom................................... 98,921 2.52% Singapore........................................ 93,493 2.38% Sweden........................................... 64,368 1.64% Canada........................................... 44,042 1.12% France........................................... 38,098 0.97% Italy............................................ 34,490 0.88% Netherlands...................................... 32,055 0.82% Australia........................................ 14,388 0.37% Argentina........................................ 13,326 0.34% Mexico........................................... 9,309 0.24% Germany.......................................... 4,583 0.12% China............................................ 1,112 0.03% Total............................................ $673,002 17.16% 39 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 schedule of investments of Acorn Fund, Acorn International, Acorn USA, Acorn Twenty and Acorn Foreign Forty, comprising the Acorn Investment Trust, as of December 31, 1999, 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 audit 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, 1999, 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 Acorn Investment Trust as of December 31, 1999, 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 3, 2000 See accompanying notes to financial statements 40 Acorn Family of Funds >Statements of Assets and Liabilities
Acorn Acorn Acorn Acorn Acorn (in thousands) Fund International USA Twenty Foreign Forty - ------------------------------------------------------------------------------------------------------------------------ 12/31/99 Assets Investments, at value (cost: Acorn Fund $2,379,474; Acorn International $1,278,170; Acorn USA $326,308; Acorn Twenty $54,344; Acorn Foreign Forty $68,412) $3,917,565 $2,863,460 $373,990 $65,782 $106,507 Cash 1 13,086 1 1 618 Organization costs -- -- 36 -- -- Receivable for: Securities sold 3,710 1,676 294 4,410 -- Fund shares sold 2,692 3,816 906 170 478 Dividends and interest 2,744 1,897 23 24 134 Other assets 468 210 28 -- -- - ------------------------------------------------------------------------------------------------------------------------ Total assets 3,927,180 2,884,145 375,278 70,387 107,737 Liabilities and Net Assets Net unrealized depreciation on foreign forward currency contracts -- 1,951 -- -- -- Payable for: Securities purchased 4,681 10,739 3,279 1,872 332 Fund shares redeemed 675 2,088 424 12 11 Organization costs -- -- 36 -- -- Other 985 1,164 111 33 43 - ------------------------------------------------------------------------------------------------------------------------ Total liabilities 6,341 15,942 3,850 1,917 386 - ------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Fund shares outstanding $3,920,839 $2,868,203 $371,428 $68,470 $107,351 ======================================================================================================================== Fund shares outstanding 211,618 81,178 22,170 4,996 5,387 ======================================================================================================================== Pricing of Shares Net asset value, offering price and redemption price per share $ 18.53 $ 35.33 $ 16.75 $ 13.70 $ 19.93 ======================================================================================================================== Analysis of Net Assets Paid-in capital $2,171,715 $1,246,840 $317,053 $53,298 $ 68,575 Accumulated net realized gain on sales of investments, futures and foreign currency transactions 208,505 49,089 6,668 3,734 767 Net unrealized appreciation of investments and other assets (net of unrealized PFIC gains of $65,710 for Acorn International and $305 for Acorn Foreign Forty) 1,538,091 1,517,676 47,682 11,438 37,790 Undistributed net investment income 2,528 54,598 25 -- 219 - ------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Fund shares outstanding $3,920,839 $2,868,203 $371,428 $68,470 $107,351 ========================================================================================================================
41 Acorn Family of Funds >Statements of Operations
Acorn Acorn Fund International Year Year Year Year (in thousands) ended 12/31, ended 12/31, ended 12/31, ended 12/31, - ------------------------------------------------------------------------------------------------------------------------- 1999 1998 1999 1998 Investment Income: Dividends $ 34,159 $ 28,483 $ 20,878 $ 26,225 Interest 11,416 13,414 4,883 10,223 - ------------------------------------------------------------------------------------------------------------------------- 45,575 41,897 25,761 36,448 Foreign taxes withheld (330) (513) (2,094) (2,521) - ------------------------------------------------------------------------------------------------------------------------- Total investment income 45,245 41,384 23,667 33,927 Expenses: Investment advisory 23,437 24,905 15,668 14,124 Administration 1,699 1,812 961 858 Custodian 875 924 2,321 1,957 Transfer and dividend disbursing agent 1,312 1,414 1,380 1,384 Reports to shareholders 448 573 446 575 Legal and audit 229 223 136 97 Registration and blue sky 64 55 58 58 Trustees' and other 683 446 399 166 - ------------------------------------------------------------------------------------------------------------------------- Total expenses 28,747 30,352 21,369 19,219 Less custodian fees paid indirectly -- -- -- -- Less reimbursement of expenses by advisor -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------- Net expenses 28,747 30,352 21,369 19,219 - ------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) 16,498 11,032 2,298 14,708 Net Realized and Unrealized Gain (Loss) on Investments, Futures and Foreign Currency Transactions: Net realized gain (loss) on sales of investments 915,362 252,065 205,354 2,408 Net realized gain (loss) on foreign currency transactions (110) (132) 1,133 (6,031) Net realized gain (loss) on futures (6,918) (17,930) (403) 7,811 Change in net unrealized appreciation of investments and foreign currency transactions 92,272 (43,553) 1,054,166 215,847 - ------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments, futures and foreign currency transactions 1,000,606 190,450 1,260,250 220,035 - ------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $1,017,104 $201,482 $1,262,548 $234,743 =========================================================================================================================
See accompanying notes to financial statements 42
Acorn Acorn USA Acorn Twenty Foreign Forty Year Year Year Inception 11/23 Year Inception 11/23 ended 12/31, ended 12/31, ended 12/31, through 12/31, ended 12/31, through 12/31, - ----------------------------------------------------------------------------------------- 1999 1998 1999 1998 1999 1998 $ 2,223 $ 882 $ 280 $ 38 $ 459 $ 6 1,259 1,042 130 7 158 3 - ----------------------------------------------------------------------------------------- 3,482 1,924 410 45 617 9 -- -- -- -- (42) (1) - ----------------------------------------------------------------------------------------- 3,482 1,924 410 45 575 8 2,805 2,336 503 26 426 11 150 124 28 1 22 1 43 39 12 2 85 3 218 246 105 18 60 13 95 126 75 1 53 1 41 32 29 1 29 1 26 33 20 4 25 2 85 43 17 -- 6 -- - ----------------------------------------------------------------------------------------- 3,463 2,979 789 53 706 32 (6) (5) (11) (2) (13) (3) -- -- (23) (12) (42) (11) - ----------------------------------------------------------------------------------------- 3,457 2,974 755 39 651 18 - ----------------------------------------------------------------------------------------- 25 (1,050) (345) 6 (76) (10) 38,768 23,791 5,015 (246) 792 74 -- -- -- -- -- -- -- -- -- -- -- -- 30,941 (14,625) 8,906 2,532 36,932 1,163 - ----------------------------------------------------------------------------------------- 69,709 9,166 13,921 2,286 37,724 1,237 - ----------------------------------------------------------------------------------------- $69,734 $ 8,116 $13,576 $2,292 $37,648 $1,227 =========================================================================================
43 Acorn Family of Funds >Statements of Changes in Net Assets
Acorn Acorn Fund International Year Year Year Year (in thousands) ended 12/31, ended 12/31, ended 12/31, ended 12/31, - ------------------------------------------------------------------------------------------------------------------ 1999 1998 1999 1998 From Operations: Net investment income (loss) $ 16,498 $ 11,032 $ 2,298 $ 14,708 Net realized gain (loss) on sales of investments, futures and foreign currency transactions 908,334 234,003 206,084 4,188 Change in net unrealized appreciation of investments and foreign currency transactions 92,272 (43,553) 1,054,166 215,847 ------------------------------------------------------------------------------------------------------------------ Net increase in net assets resulting from operations 1,017,104 201,482 1,262,548 234,743 Distributions to Shareholders From: Net investment income (16,501) (6,284) (16,992) (12,611) Net realized gain (638,460) (219,264) (119,344) (22,701) - ------------------------------------------------------------------------------------------------------------------ Total distributions to shareholders (654,961) (225,548) (136,336) (35,312) From Fund Share Transactions: Reinvestment of dividend and capital gain distributions 586,161 204,856 128,048 33,102 Proceeds from other shares sold 346,317 490,137 648,562 406,219 - ------------------------------------------------------------------------------------------------------------------ 932,478 694,993 776,610 439,321 Payments for shares redeemed (923,243) (802,923) (760,116) (536,194) - ------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from Fund share transactions 9,235 (107,930) 16,494 (96,873) - ------------------------------------------------------------------------------------------------------------------ Total increase (decrease) in net assets 371,378 (131,996) 1,142,706 102,558 Net Assets: Beginning of period 3,549,461 3,681,457 1,725,497 1,622,939 - ------------------------------------------------------------------------------------------------------------------ End of period $3,920,839 $3,549,461 $2,868,203 $1,725,497 ================================================================================================================== Undistributed Net Investment Income $ 2,528 $ 2,531 $ 54,598 $ 5,419 ==================================================================================================================
See accompanying notes to financial statements 44
Acorn Acorn USA Acorn Twenty Foreign Forty Year Year Year Inception 11/23 Year Inception 11/23 ended 12/31, ended 12/31, ended 12/31, through 12/31, ended through 12/31, - -------------------------------------------------------------------------------------------------- 1999 1998 1999 1998 1999 1998 $ 25 $ (1,050) $ (345) $ 6 $ (76) $ (10) 38,768 23,791 5,015 (246) 792 74 30,941 (14,625) 8,906 2,532 36,932 1,163 - -------------------------------------------------------------------------------------------------- 69,734 8,116 13,576 2,292 37,648 1,227 -- -- -- -- -- -- (28,268) (19,532) (705) -- (99) -- - -------------------------------------------------------------------------------------------------- (28,268) (19,532) (705) -- (99) -- 25,972 17,705 658 -- 94 -- 118,916 175,578 34,563 31,688 66,325 14,739 - -------------------------------------------------------------------------------------------------- 144,888 193,283 35,221 31,688 66,419 14,739 (95,877) (85,540) (13,346) (256) (12,402) (181) - -------------------------------------------------------------------------------------------------- 49,011 107,743 21,875 31,432 54,017 14,558 - -------------------------------------------------------------------------------------------------- 90,477 96,327 34,746 33,724 91,566 15,785 280,951 184,624 33,724 -- 15,785 -- - -------------------------------------------------------------------------------------------------- $371,428 $280,951 $ 68,470 $33,724 $107,351 $15,785 ================================================================================================== $ 25 -- -- $ 6 $ 219 $ 9 ==================================================================================================
45 Acorn Family of Funds >Financial Highlights
Years Acorn Fund ended 12/31, - ---------------------------------------------------------------------------------------------------------------- For a share outstanding throughout each period 1999 1998 Net Asset Value, beginning of year $16.85 $16.99 Income From Investment Operations Net investment income .09 .04 Net realized and unrealized gain (loss) on investments, foreign currency and futures 5.22 .91 - ---------------------------------------------------------------------------------------------------------------- Total from investment operations 5.31 .95 Less Distributions Dividends from net investment income (0.09) (0.03) Distributions from net realized and unrealized gains reportable for federal income taxes (3.54) (1.06) - ---------------------------------------------------------------------------------------------------------------- Total distributions (3.63) (1.09) - ---------------------------------------------------------------------------------------------------------------- Net Asset Value, end of year $18.53 $16.85 ================================================================================================================ Total Return 33.4% 6.0% Ratios/Supplemental Data Ratio of expenses to average net assets .85% .84% Ratio of net investment income to average net assets .49% .30% Portfolio turnover rate 34% 24% Net assets at end of period (in millions) $3,921 $3,549 Years Acorn International ended 12/31, - ---------------------------------------------------------------------------------------------------------------- For a share outstanding throughout each period 1999 1998 Net Asset Value, beginning of period $20.82 $18.39 Income From Investment Operations Net investment income (loss) .83 .17 Net realized and unrealized gain (loss) on investments 15.45 2.68 - ---------------------------------------------------------------------------------------------------------------- Total from investment operations 16.28 2.85 Less Distributions Dividends from net investment income (.22) (.15) Distributions from net realized and unrealized gains reportable for federal income taxes (1.55) (.27) - ---------------------------------------------------------------------------------------------------------------- Total distributions (1.77) (.42) - ---------------------------------------------------------------------------------------------------------------- Net Asset Value, end of period $35.33 $20.82 ================================================================================================================ Total Return (a) 79.2% 15.4% Ratios/Supplemental Data Ratio of expenses to average net assets 1.11% 1.12% Ratio of net investment income to average net assets .12% .86% Portfolio turnover rate 46% 37% Net assets at end of period (in millions) $2,868 $1,725 (a) Total return is not annualized for periods less than one year. * Annualized Years Acorn USA ended 12/31, - ---------------------------------------------------------------------------------------------------------------- For a share outstanding throughout each period 1999 1998 Net Asset Value, beginning of period $14.80 $15.12 Income From Investment Operations Net investment gain (loss) (b) -- (.07) Net realized and unrealized gain on investments 3.32 .87 - ---------------------------------------------------------------------------------------------------------------- Total from investment operations 3.32 .80 - ---------------------------------------------------------------------------------------------------------------- Less Distributions Dividends from net investment income -- -- Distributions from net realized and unrealized gains reportable for federal income taxes (1.37) (1.12) - ---------------------------------------------------------------------------------------------------------------- Total distributions (1.37) (1.12) - ---------------------------------------------------------------------------------------------------------------- Net Asset Value, end of period $16.75 $14.80 ================================================================================================================ Total Return (c) 23.0% 5.8% Ratios/Supplemental Data Ratio of expenses to average net assets (a) 1.15% 1.20% Ratio of net investment income (loss) to average net assets 0.00% (.42%) Portfolio turnover rate 49% 42% Net assets at end of period (in millions) $ 371 $ 281
(a) In accordance with a requirement by the Securities and Exchange Commission, the Acorn USA ratio reflects gross custodian fees. This ratio net of custodian fees paid indirectly would have been 1.79% for the year ended December 31, 1996. (b) Net investment income (loss) per share was based upon the average shares outstanding during each period. (c) Total return is not annualized for periods less than one year. * Annualized See accompanying notes to financial statements 46
- ------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991 1990 $15.04 $13.60 $12.24 $13.95 $11.06 $ 9.32 $ 6.51 $ 8.58 .15 .09 .11 .06 .04 .07 .11 .12 3.57 2.93 2.42 (1.10) 3.50 2.16 2.95 (1.62) - ------------------------------------------------------------------------- 3.72 3.02 2.53 (1.04) 3.54 2.23 3.06 (1.50) (0.16) (.11) (.09) (.11) (.06) (.08) (.10) (.13) (1.61) (1.47) (1.08) (.56) (.59) (.41) (.15) (.44) - ------------------------------------------------------------------------- (1.77) (1.58) (1.17) (.67) (.65) (.49) (.25) (.57) - ------------------------------------------------------------------------- $16.99 $15.04 $13.60 $12.24 $13.95 $11.06 $ 9.32 $ 6.51 ========================================================================= 25.0% 22.6% 20.8% (7.4%) 32.3% 24.2% 47.3% (17.5%) .56% .57% .57% .62% .65% .67% .72% .82% .75% .53% .89% .55% .30% .72% 1.30% 1.60% 32% 33% 29% 18% 20% 25% 25% 36% $3,681 $2,842 $2,399 $1,983 $2,035 $1,449 $1,150 $ 767 Inception 9/23 through 12/31, - ---------------------------------------------------------- 1997 1996 1995 1994 1993 1992 $19.61 $16.59 $15.24 $15.94 $10.69 10.00 .40 .13 .16 .07 -- (.03) (.34) 3.29 1.20 (.67) 5.25 .72 - ---------------------------------------------------------- .06 3.42 1.36 (.60) 5.25 .69 (.38) (.12) -- -- -- -- (.90) (.28) (.01) (.10) -- -- - ---------------------------------------------------------- (1.28) (.40) (.01) (.10) -- -- - ---------------------------------------------------------- $18.39 $19.61 $16.59 $15.24 $15.94 $ 10.69 ========================================================== 0.2% 20.7% 8.9% (3.8%) 49.1% 6.9% 1.19% 1.17% 1.22% 1.24% 1.21% 2.35%* .58% .51% .90% 0.48% 0.06% (1.37%)* 39% 34% 26% 20% 19% 20%* $1,623 $1,773 $1,276 $1,363 $ 907 $ 30 Inception 9/4 through 12/31, - --------------------- 1997 1996 $11.65 $10.00 (.07) (.02) 3.83 1.67 - --------------------- 3.76 1.65 - --------------------- -- -- (.29) -- - --------------------- (.29) -- - --------------------- $15.12 $11.65 ===================== 32.3% 16.5% 1.35% 1.85%* (.49%) (.99%)* 33% 20%* $ 185 $ 53
47
Year Inception 11/23 Acorn Twenty ended 12/31, through 12/31, - ------------------------------------------------------------------------------------------------------------------------ For a share outstanding throughout each year 1999 1998 Net Asset Value, beginning of period $10.71 $ 10.00 Income From Investment Operations Net investment income (loss) (b) (.08) -- Net realized and unrealized gain on investments 3.21 .71 - ------------------------------------------------------------------------------------------------------------------------ Total from investment operations 3.13 .71 - ------------------------------------------------------------------------------------------------------------------------ Less Distributions Distributions from net realized and unrealized gains reportable for federal income taxes (.14) -- - ------------------------------------------------------------------------------------------------------------------------ Net Asset Value, end of period $13.70 $ 10.71 - ------------------------------------------------------------------------------------------------------------------------ Total Return (d) 29.3% 7.1% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (c) 1.37% 1.41%* Ratio of net investment income (loss) to average net assets (c) (.62%) 0.22%* Portfolio turnover rate 101% 173%* Net assets at end of period (in millions) $ 68 $ 34 - ------------------------------------------------------------------------------------------------------------------------
(a) In accordance with a requirement by the Securities and Exchange Commission, the Acorn Twenty ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian ("custodian fees paid indirectly"). This ratio net of custodian fees paid indirectly would have been 1.35% for the period ended December 31, 1998 and the year ended December 31, 1999. (b) Net investment income per share was based upon the average shares outstanding during the period. (c) Acorn Twenty was reimbursed by the Advisor for certain net expenses from November 23, 1998 through December 31, 1999. Without the reimbursement, the ratio of expenses (prior to custodian fees paid indirectly) to average net assets and the ratio of net investment income to average net assets would have been 1.83% and (.21%), respectively, for the period ended 12/31/98 and 1.41% and (.66%), respectively, for the year ended 12/31/99. (d) Total return is not annualized for periods less than one year. *Annualized
Year Inception 11/23 Acorn Foreign Forty ended 12/31, through 12/31, - ---------------------------------------------------------------------------------------------------------------------------- For a share outstanding throughout each year 1999 1998 Net Asset Value, beginning of period $11.00 $ 10.00 Income From Investment Operations Net investment loss (c) (.02) (.01) Net realized and unrealized gain on investments 8.98 1.01 - -------------------------------------------------------------------------------------------------------------------------- Total from investment operations 8.96 1.00 - -------------------------------------------------------------------------------------------------------------------------- Less Distributions Distributions from net realized and unrealized gains reportable for federal income taxes (.03) .00 - -------------------------------------------------------------------------------------------------------------------------- Net Asset Value, end of period $19.93 $ 11.00 - -------------------------------------------------------------------------------------------------------------------------- Total Return (d) 81.6% 10.0% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (c) 1.48% 1.73%* Ratio of net investment loss to average net assets (c) (.17)% (.78)%* Portfolio turnover rate 60% 90%* Net assets at end of period (in millions) $ 107 $ 16 - --------------------------------------------------------------------------------------------------------------------------
(a) In accordance with a requirement by the Securities and Exchange Commission, the Acorn Foreign Forty ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian ("custodian fees paid indirectly"). This ratio net of custodian fees paid indirectly would have been 1.45% for the period ended December 31, 1998 and the year ended December 31, 1999. (b) Net investment loss per share was based upon the average shares outstanding during the period. (c) Acorn Foreign Forty was reimbursed by the Advisor for certain net expenses from November 23, 1998 through December 31, 1999. Without the reimbursement, the ratio of expenses (prior to custodian fees paid indirectly) to average net assets and the ratio of net investment income to average net assets would have been 2.70% and -1.75%, respectively, for the period ended 12/31/98 and 1.57% and (.26%), respectively, for the year ended 12/31/99. (d) Total return is not annualized for periods less than one year. * Annualized See accompanying notes to financial statements 48 Acorn Family of Funds >Notes to Financial Statements 1. Nature of Operations Acorn Fund, Acorn International, Acorn USA, Acorn Twenty and Acorn Foreign Forty (the "Funds") are series of Acorn Investment Trust (the "Trust"), an open-end management investment company organized as a Massachusetts business trust. The investment objective of each Fund is to seek long-term growth of capital. 2. Significant Accounting Policies >Security valuation Investments are stated at current value. Securities traded on securities exchanges or in over-the-counter markets in which transaction prices are reported are valued at the last sales price at the time of valuation. Securities for which there are no reported sales on the valuation date are valued at the mean of the latest bid and ask quotation or, if there is no ask quotation, at the most recent bid quotation. Money market instruments having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis. Securities for which quotations are not available and any other assets are valued at a fair value as determined in good faith by the Board of Trustees. >Foreign currency translations Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales of investments and dividend and interest income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The gain or loss resulting from changes in foreign exchange rates is included with net realized and unrealized gain or loss from investments, as appropriate. >Security transactions and investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the information is available to the Funds. Interest income is recorded on the accrual basis and includes amortization of discounts on money market instruments and long-term debt instruments when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. >Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. >Financial instruments Each Fund may purchase or sell exchange-traded financial futures contracts, which are contracts that obligate that Fund to make or take delivery of a financial instrument or the cash value of a securities index at a specified future date at a specified price. The Funds enter into such contracts to hedge a portion of their portfolio. Gains and losses are reflected as "Net Realized Gain (Loss) on Futures" in the Statements of Operations. Additionally, each Fund may engage in portfolio hedging with respect to changes in currency exchange rates by entering into forward foreign currency contracts to purchase or sell foreign currencies. The Statements of Operations reflect gains and losses as realized for closed forward foreign currency contracts and unrealized for open contracts. A Fund bears the market risk that arises from changes in the value of financial instruments and securities indices (futures contracts) or from changes in foreign currency rates (forward foreign currency contracts) and the credit risk should a counterparty fail to perform under such contracts. None of the funds had futures contracts open at December 31, 1999. Acorn International entered into forward contracts to sell foreign currency as described below: Acorn International
Foreign Settlement U.S. Dollar Unrealized Loss Amount (000) Currency Date Proceeds (000) (000) - -------------------------------------------------------------------------------- 155,000 Hong Kong Dollar 1/10/00 $19,939 $ 439 5,260,000 Japanese Yen 3/10/00 $52,040 $1,512 ------ Total Unrealized Loss $1,951 ======
Acorn USA, Acorn Twenty and Acorn Foreign Forty did not enter into any futures or forward foreign currency contracts during the year ended December 31, 1999. 49 Acorn Family of Funds >Notes to Financial Statements >Fund share valuation Fund shares are sold and redeemed on a continuing basis at net asset value. Net asset value per share is determined daily as of the close of trading on the New York Stock Exchange on each day the Exchange is open for trading by dividing the total value of each Fund's investments and other assets, less liabilities, by the respective number of Fund shares outstanding. >Federal income taxes, dividends and distributions to shareholders Each Fund has complied with the special provisions of the Internal Revenue Code available to investment companies. In accordance with the distribution requirements imposed on investment companies, Acorn Fund, Acorn International and Acorn USA paid long-term capital gain distributions in 1999 of $715,158,000, $135,249,000 and $27,669,000, respectively, which was sufficient to allow each fund not to incur any income tax. Acorn Twenty and Acorn Foreign Forty were not required to pay a long-term capital gain distribution. Acorn Fund, Acorn International and Acorn Foreign Forty have elected to mark- to-market their investments in Passive Foreign Investment Companies ("PFICs") for Federal income tax purposes. A summary of transactions relating to PFICs for Acorn International is follows:
Acorn International (000) - ----------------------------------------------------------------------------- Cumulative net unrealized appreciation recognized in prior years at December 31, 1998 $ 311 Unrealized appreciation recognized through December 31, 1999 66,039 Cumulative net unrealized appreciation recognized in prior years on PFICs sold through December 31, 1999 (640) ------- Cumulative net unrealized appreciation recognized in prior years at December 31, 1999 65,710 ------- A summary of transactions relating to PFICs during 1999 follows: Unrealized appreciation recognized 66,039 Gain on the sale of PFICs classified as ordinary income 2,710
At December 31, 1999, Acorn Fund had no cumulative net unrealized appreciation on PFICs. At December 31, 1999, Acorn Foreign Forty had cumulative net unrealized appreciation on PFICs of $305,000, of which $286,000 was recognized in 1999. Distributions relating to PFICs are treated as ordinary income for Federal income tax purposes. Dividends payable to shareholders are recorded by the Funds on the ex-dividend date. Reclassifications have been made in 1999 for Acorn Fund, Acorn International and Acorn USA in the accompanying analysis of net assets from accumulated net realized gain on sale of investments to paid-in-capital of $95,281,000, $19,806,000 and $4,308,000, respectively. A reclassification was also made in Acorn International of $1,526,000 from undistributed net income to paid-in- capital. All reclassifications were made to reflect differences between financial reporting and income tax basis and had no impact on net asset value. 3. Transactions with Affiliates The Funds' investment advisor, Wanger Asset Management, L.P. ("WAM") furnishes continuing investment supervision to the Funds and is responsible for the overall management of the Funds' business affairs. Under the Funds' investment management agreement, fees are accrued daily and paid monthly to WAM at the annual rates shown in the table below for each fund. Acorn Fund - ------------------------------------------------ Net asset value: For the first $700 million .75% Next $1.3 billion .70% Net assets in excess of $2 billion .65% Acorn International - ------------------------------------------------ Net asset value: For the first $100 million 1.20% Next $400 million .95% Net assets in excess of $500 million .75% Acorn USA - ------------------------------------------------ Net asset value: For the first $200 million .95% Net assets in excess of $200 million .90% Acorn Twenty - ------------------------------------------------ On average daily net assets .90% Acorn Foreign Forty - ------------------------------------------------ On average daily net assets .95% WAM has also contracted to provide administrative services to each Fund at an annual rate of .05% of average daily net assets. Certain officers and trustees of the Trust are also principals of WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with WAM. Acorn Fund paid trustees' fees and expenses of the following: 50 - ------------------------------------------------- (in thousands) 1999 1998 Acorn Fund $ 293 $ 211 Acorn International 150 94 Acorn USA 24 11 Acorn Twenty 4 -- Acorn Foreign Forty 2 -- ----------------- $ 473 $ 316 ----------------- WAM advanced Acorn USA $107,000 in connection with the organization and initial registration of the Fund. These costs are being amortized and reimbursed to WAM over the period September 1996 through August 2001. WAM Brokerage Services, L.L.C., a wholly owned subsidiary of WAM, is the distributor of the Funds' shares and receives no compensation for its services. 4. Borrowing Arrangements The trust participates in a $250,000,000 credit facility which was entered into to facilitate portfolio liquidity. No amounts were borrowed under this facility during 1999. 5. Fund Share Transactions Proceeds and payments on Fund shares as shown in the Statements of Changes in Net Assets are in respect of the following numbers of shares: Acorn Fund - --------------------------------------------------------------------------- (in thousands) 1999 1998 Shares sold 19,615 28,471 Shares issued in reinvestment of dividend and capital gain distributions 33,973 12,814 --------------------- 53,588 41,285 Less shares redeemed 52,676 47,224 --------------------- Net increase (decrease) in Shares outstanding 912 (5,939) =========================================================================== Acorn International - --------------------------------------------------------------------------- (in thousands) 1999 1998 Shares sold 25,580 19,818 Shares issued in reinvestment of dividend and capital gain distributions 4,028 1,540 --------------------- 29,608 21,358 Less shares redeemed 31,304 26,757 --------------------- Net decrease in shares outstanding (1,696) (5,399) =========================================================================== Acorn USA - --------------------------------------------------------------------------- (in thousands) 1999 1998 Shares sold 7,922 11,062 Shares isued in reinvestment of dividend and capital gain distributions 1,645 1,270 --------------------- 9,567 12,332 Less shares redeemed 6,383 5,558 --------------------- Net increase in shares outstanding 3,184 6,774 =========================================================================== Acorn Twenty - --------------------------------------------------------------------------- (in thousands) 1999 1998 Shares sold 2,862 3,176 Shares issued in reinvestment of dividend and capital gain distributions 51 -- --------------------- 2,913 3,176 Less shares redeemed 1,067 26 --------------------- Net increase in shares outstanding 1,846 3,150 =========================================================================== Acorn Foreign Forty - --------------------------------------------------------------------------- (in thousands) 1999 1998 Shares sold 4,836 1,453 Shares issued in reinvestment of dividend and capital gain distributions 7 -- --------------------- 4,843 1,453 Less shares redeemed 891 18 --------------------- Net increase in shares outstanding 3,952 1,435 =========================================================================== 6. Investment Transactions Investment Transactions (excluding money market instruments) for each of the Funds are as follows: Acorn Fund - --------------------------------------------------------------------------- (in thousands) 1999 1998 Investment securities: Purchases $1,092,137 $ 830,390 Proceeds from sales 1,809,918 1,048,096 =========================================================================== Acorn International - --------------------------------------------------------------------------- (in thousands) 1999 1998 Investment securities: Purchases $ 846,014 $ 570,304 Proceeds from sales 844,062 709,630 =========================================================================== Acorn USA - --------------------------------------------------------------------------- (in thousands) 1999 1998 Investment securities: Purchases $ 138,244 $ 178,181 Proceeds from sales 135,001 95,639 =========================================================================== Acorn Twenty - --------------------------------------------------------------------------- (in thousands) 1999 1998 Investment securities: Purchases $ 71,463 $ 34,025 Proceeds from sales 53,710 4,483 =========================================================================== Acorn Foreign Forty - --------------------------------------------------------------------------- (in thousands) 1999 1998 Investment securities: Purchases $ 76,252 $ 13,984 Proceeds from sales 26,238 974 =========================================================================== 51 The Acorn - ------------------------ Family of Funds Special Notice At a special meeting on September 28, 1999, shareholders of each of the Funds voted to elect trustees and ratified the selection of Ernst & Young LLP as each Fund's independent public accountants. In addition, the shareholders of Acorn Fund approved changes in the fund's fundamental investment restrictions relating to borrowing, pledging securities, making loans and potentially conflicting investments. The shareholders of Acorn International Fund approved a change in the fund's fundamental investment restriction relating to borrowing. The record date share position of each Fund and the total share position voted of each Fund were respectively: Acorn Fund 181,818,414.034 and 109,108,700.395; Acorn International 75,107,534.215 and 40,338,122.803; Acorn USA 19,659,364.098 and 11,684,245.812; Acorn Twenty 4,927,513.538 and 3,177,688.592; and Acorn Foreign Forty 3,725,825.422 and 2,395,620.278. The outcome of the votes were as follows: A. The shareholders of the Funds elected the following individuals to serve on the Board of Trustees:
Trustees For Against Abstentions Irving B. Harris 163,378,454.609 0 3,325,923.271 Ralph Wanger 164,345,992.521 0 2,358,385.359 James H. Lorie 164,061,574.524 0 2,642,803.356 Leo A. Guthart 163,666,160.185 0 3,038,217.695 Jerome Kahn, Jr. 164,403,059.047 0 2,301,318.833 Steven N. Kaplan 163,719,389.859 0 2,984,988.021 David C. Kleinman 163,688,990.045 0 3,015,387.835 Charles P. McQuaid 164,435,251.767 0 2,269,126.113 Roger S. Meier 164,237,804.009 0 2,466,573.871 Allan B. Muchin 163,644,858.679 0 3,059,519.201 Robert E. Nason 163,695,618.878 0 3,008,759.002 Katherine Schipper 163,690,662.247 0 3,013,715.633
B. The shareholders of the Funds also voted on the following matters:
For Against Abstentions Broker Non- Votes Acorn Fund (a) Changes in Fundamental Policies Elimination of restriction regarding ownership of securities of issuers in which affiliates have invested 94,505,322.836 5,320,314.152 3,584,052.407 5,699,011.000 Amendment of restriction regarding borrowing 92,982,636.813 6,745,187.615 3,681,864.967 5,699,011.000 Amendment of restriction regarding pledging of assets 92,714,704.717 6,855,170.904 3,839,813.774 5,699,011.000 Amendment of restriction regarding loans 92,597,514.287 7,078,660.830 3,733,514.278 5,699,011.000 (b) Ratification of Ernst & Young 106,497,904.924 943,541.308 1,667,254.163 Acorn International (a) Change in Fundamental Policy Amendment of restriction regarding borrowing 33,641,050.963 2,065,722.787 717,735.053 3,913,614.000 (b) Ratification of Ernst & Young 39,360,825.054 402,086.702 575,211.047 Acorn USA Ratification of Ernst & Young 11,420,978.579 68,795.912 194,471.321 Acorn Twenty Ratification of Ernst & Young 3,088,510.310 40,201.622 48,976.660 Acorn Foreign Forty Ratification of Ernst & Young 2,359,957.051 13,709.837 21,953.390
52 Acorn Fund Acorn International Acorn U.S.A. Acorn Twenty Acorn Foreign Forty Supplement dated January 4, 2000 to Prospectus dated May 1, 1999 of Acorn Investment Trust As of December 31, 1999, Mr. Roger Edgley is the Co-portfolio manager, with Marcel Houtzager, of Acorn Foreign Forty. Mr. Edgley joined Wanger Asset Management ("WAM") as an analyst in 1994, and was named Managing Director and Director of Research of WAM in 1998. Before joining WAM, Mr. Edgley was an analyst at Crosby Securities. He is a CFA, and earned his BSc from the University of Hertfordshire, his MA from the University of Sussex, and his MSc from the London School of Economics.
Trustees Officers Investment Advisor Irving B. Harris Ralph Wanger Wanger Asset Management, L.P. Chairman President 227 West Monroe Street, Suite 3000 James H. Lorie Margaret M. Forster Chicago, Illinois 60606 Vice Chairman Vice President 1-800-922-6769 Leo A. Guthart Marcel P. Houtzager Jerome Kahn, Jr. Vice President Distributor Steven N. Kaplan Kenneth A. Kalina WAM Brokerage Services, L.L.C. David C. Kleinman Assistant Treasurer P.O. Box 8502 Charles P. McQuaid Bruce H. Lauer Boston, Massachusetts 02266-8502 Roger S. Meier Vice President and Treasurer Allan B. Muchin Charles P. McQuaid Transfer Agent, Dividend Disbursing Agent and Custodian Robert E. Nason Senior Vice President State Street Bank and Trust Company Katherine Schipper Robert A. Mohn Attention: Acorn Family of Funds Ralph Wanger Vice President P.O. Box 8502 John H. Park Boston, Massachusetts 02266-8502 Vice President 1-800-962-1585 Steven A. Radis Vice President and Secretary Legal Counsel Mark H. Yost Bell, Boyd & Lloyd, LLC Vice President Chicago, Illinois Leah J. Zell Vice President Independent Auditors Ernst & Young LLP Chicago, Illinois
This report, including the audited schedules of investments, is submitted for the general information of the shareholders of Acorn Investment Trust. This report is not authorized for distribution unless preceded or accompanied by a prospectus. [PICTURE APPERARS HERE] The Acorn - ----------------------------- --------------- Family of Funds FIRSTCLASS PRE-SORT WAM Brokerage Services, L.L.C. U.S. POSTAGE P.O. Box 8502 PAID Boston, MA 02266-8502 CHICAGO,IL PERMIT NO. 1200 --------------- -----END PRIVACY-ENHANCED MESSAGE-----