Interim Results

Acorn Income Fund Ld
28 September 2007



Chairman's Statement



Dear Shareholder,


The opening month of the year saw the completion of the tender offer scheme that
provided shareholders with an opportunity to realise all or part of their
investment in Acorn Income Fund (the Company) at a price close to NAV. This was
followed by the transfer of the investment management contract to Premier Asset
Management (Guernsey) Ltd (Premier). Premier assumed responsibility for the
management of the Income portfolio whilst Unicorn Asset Management were retained
as investment adviser responsible for the management of the Smaller Companies
portfolio.


A new banking facility was arranged with the Bank of Scotland under which a
flexible £6m loan was made available to the Company at a variable interest rate
of 1% over the London Inter-Bank Offered Rate (LIBOR). £5.5m of this facility
was drawn down and committed to investments in the Income portfolio at the
beginning of April.


Investment performance

As a consequence of the tender offer in January the Company's net assets fell
from £59.3m to £18.02m. The Net Asset Value ('NAV') per share (on mid price
valuations) rose from 200.40p to 204.56p over the first half year. UK equity
markets also rose during the period. The FTSE All-Share Index was up 5.7%,
although smaller company shares (in which the Company is mainly invested) tended
to under-perform the broader market; the Hoare Govett Smaller Companies ex
investment trust (HGSMC) Index rose by only 3.4%.


The Company's performance over the first few weeks of the year was affected by
the need to raise a substantial amount of cash to finance the tender offer. This
was carried out during a period of rising markets, causing a cash drag on
performance relative to the benchmark index. It is therefore more relevant to
look at performance from 17 January, the date the tender was completed. The NAV
of the shares rose by 0.9% from this date to the half year end. The HGSMC Index
rose by 3.7%. Net Asset Value Total Return (taking account of dividends paid
during the period) was 1.1% compared to the total return on the HGSMC Index of
4.7%.


Dividends

Earnings per share during the half year were 5.07p and a second interim dividend
of 2.0p was paid on 29 June 2007 making a total distribution in respect of the
first half of the year of 4.0p. A third interim dividend of 2.0p was declared on
19 September 2007 and will be payable to shareholders on 26 October 2007.


Outlook.

Since the year end, markets have suffered a period of uncertainty triggered
initially by the rising level of defaults on sub-prime mortgages in the United
States. The potential damage from these defaults was magnified as a result of
the way in which mortgage liabilities had been packaged in complex and in some
cases highly leveraged financial instruments. This in turn caused a more
widespread credit crisis as the banks themselves lost confidence in lending to
one another. The outcome was a credit crunch which required an injection of
liquidity by central banks to stabilise markets and restore confidence. The
Company has ridden this storm with relative ease. The Smaller Companies
portfolio has been focused on companies with low gearing and the portfolio has
had minimal exposure to the unsettled financial sector. The Income portfolio,
with its high yield requirement, might have been drawn into sub-prime
instruments in search of yield. However, it has had no direct exposure to
sub-prime and with a mix of gilts, reverse convertible bonds and carefully
selected corporate instruments and investment company shares, the portfolio has
not suffered materially from the market disruption. Meanwhile the equity
markets, buoyed by robust earnings and the prospect of a downturn in the
interest-rate cycle, have performed quite well in the face of turbulence
elsewhere.


The overall outcome is that the Company's Net Asset Value has held up well
relative to markets and has not experienced the degree of volatility that might
have been expected. It is too soon to judge whether the credit crisis of the
last few months is over or whether it might even cause a period of economic
recession. The outlook therefore remains uncertain but, with its balance of
asset classes, the Company is reasonably well positioned to weather a further
period of unsettled market conditions.


John Boothman

Chairman.



Statement of Total Return (unaudited)

For the period from 1 January 2007 to 30 June 2007

                                                            Six months    Year
                                                                          ended
                                                            ended         31 Dec
                           Six months ended 30 June 2007    30 June       2006
                                                            2006
                           (unaudited)                      (unaudited)   (audited)
                           Revenue     Capital    Total     Total         Total
                           £'000       £'000      £'000     £'000         £'000

Gains and losses
on investments
Realised gain/             -           1,691      1,691     1,247         29,349
(loss) on
investments at
fair value
through profit or
loss

Movement in                -           (1,230)    (1,230)   3,561         (19,171)
unrealised gain/
(loss) on
investments at
fair value
through profit or
loss
                                                  -

Net Investment             -           461        461       4,808         10,178
gain

Income                     721         -          721       1,661         3,158
Management fee             (16)        (48)       (64)      (411)         (781)
Performance fee            -           -          -         -             (150)
Costs of Tender            -           -          -         -             (189)
Offer
Other expenses             (92)        (22)       (114)     (171)         (455)

Net return on              613         391        1,004     5,887         11,761
ordinary
activities before
finance costs

Interest payable           (21)        (62)       (83)      (731)         (1,253)
and similar
charges

Net return on              592         329        921       5,156         10,508
ordinary
activities for
the period/year
                                       -                    -             -
Return per                 5.07p       2.82p      7.89p     17.42p        35.49p
Ordinary Share



Reconciliation of Movements in Shareholders' Funds

For the six months ended 30 June 2007
(unaudited)
                    Share        Share       Capital    Revenue     Special    Capital      Total
                  Capital      Premium    Redemption    Reserve     Reserve    Reserve
                                             Reserve
                    £'000        £'000         £'000      £'000       £'000      £'000      £'000
Balance as at 1     7,400       17,079             -        682      10,000     24,110     59,271
January 2007
Transfer to       (7,104)     (17,000)             -          -           -     24,104          -
distributable
reserve
Tender offer        (207)            -           207          -           -   (41,651)   (41,651)
Return for the          -            -             -        592           -        329        921
period
Dividends paid          -            -             -      (358)           -          -      (358)

Balance as at 30       89           79           207        916      10,000      6,892     18,183
June 2007

For the six months ended 30 June 2006
(unaudited)

                    Share        Share       Capital    Revenue        Special    Capital   Total
                  Capital      Premium    Redemption    Reserve        Reserve    Reserve
                                             Reserve
                    £'000        £'000         £'000      £'000       £'000      £'000      £'000
Balance as at 1     7,400       17,079             -        902      10,000     16,046     51,427
January 2006
Return for the          -            -             -      1,277           -      3,879      5,156
period
Dividends paid          -            -             -    (1,184)           -          -    (1,184)

Balance as at 30    7,400       17,079             -        995      10,000     19,925     55,399
June 2006

For the year ended 31 December 2006
(audited)
                    Share        Share       Capital       Revenue     Special    Capital   Total
                  Capital      Premium    Redemption       Reserve     Reserve    Reserve
                                             Reserve
                    £'000        £'000         £'000      £'000       £'000      £'000      £'000
Balance as at 1     7,400       17,079             -        902      10,000     16,046     51,427
January 2006
Return for the          -            -             -      2,444           -      8,064     10,508
year
Dividends paid          -            -             -    (2,664)           -          -    (2,664)

Balance as at 31    7,400       17,079             -        682      10,000     24,110     59,271
December 2006




Balance Sheet (unaudited)

As at 30 June 2007

                                            30 June       30 June       31
                                                                        December
                                            2007          2006          2006
                                            £'000         £'000         £'000
Fixed assets
Listed investments                          22,874        75,156        21,943

Current assets
Debtors                                     411           440           159
Cash at bank                                682           5,895         37,547

                                            1,093         6,335         37,706
Creditors - amounts falling
due within one year
Creditors                                   (284)         (476)         (378)

Net current assets                          809           5,859         37,328


Total assets less current                   23,683        81,015        59,271
liabilities

Creditors - amounts falling due after
more than one year
Long term bank loan                         (5,500)       (25,616)      -

Net asset value                             18,183        55,399        59,271

Share capital and reserves
Called-up share capital                     89            7,400         7,400
Share premium                               79            17,079        17,079
Capital redemption reserve                  207           -             -
Revenue reserve                             916           995           682
Special reserve                             10,000        10,000        10,000
Capital reserve                             6,892         19,925        24,110

Total shareholders' funds                   18,183        55,399        59,271
attributable to equity
interests

Net asset value per Ordinary                203.40p       187.15p       200.24p
Share


Cash Flow Statement (unaudited)

For the period from 1 January 2007 to 30 June 2007

                                        Six months      Six months          Year
                                                                           ended
                                          ended 30   ended 30 June          31st
                                              June                      December
                                              2007            2006          2006
                                       (unaudited)     (unaudited)     (audited)
                                             £'000           £'000         £'000

Net cash inflow from operating                 186           1,261         2,159
activities

Servicing of finance
Interest paid                                 (83)           (671)       (1,452)

Net cash outflow from                         (83)           (671)       (1,452)
servicing of finance
Investing activities

Purchase of investments at fair           (16,896)        (14,646)      (14,646)
value through profit and loss
Sale of investments at fair                 16,437          15,897        74,528
value through profit and loss

Net cash (outflow)/inflow from               (459)           1,251        59,882
investing activities

Equity dividends paid                        (358)         (1,184)       (2,664)

Cash (outflow)/inflow before                 (714)             657        57,925
financing

Financing activities

Payment on redemption of redeemable       (41,651)               -             -

participating preference shares

Drawdown/(repayment) of bank                 5,500               -      (25,616)
loan

Net cash outflow from                     (36,151)               -      (25,616)
financing

(Decrease)/increase in cash in            (36,865)             657        32,309
the period/year

Opening Cash Balance                        37,547           5,238         5,238
(Decrease)/increase in cash in            (36,865)             657        32,309
the period/year
Closing Cash Balance                           682           5,895        37,547









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