-----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, FDX9Npfpd6O2/HkdOEUeZpsrDuTjeGXlgAoVn8ykqvgij9VMAYbXCd/ryOlkcHiB d/r4ig27WWuGLbMFSId33Q== 0000950131-96-006024.txt : 19961125 0000950131-96-006024.hdr.sgml : 19961125 ACCESSION NUMBER: 0000950131-96-006024 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961122 SROS: NONE 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-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-01829 FILM NUMBER: 96670608 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-30B-2 1 ACORN - THIRD QUARTER REPORT [PHOTO OF ACORN] The Acorn Family of Funds Third Quarter Report -------------------------------------- September 30, 1996 [LOGO] Managed by Wanger Asset Management, L.P. Acorn Family of Funds Third Quarter Report 1996 Table of Contents SQUIRREL CHATTER Letter from Ralph Wanger 2 MORE SQUIRREL CHATTER Meet the Manager, Robert Mohn 4 ACORN FUND In a Nutshell 6 Performance at a Glance 7 Major Portfolio Changes 12 Statement of Investments 14 Portfolio Diversification 21 ACORN INTERNATIONAL In a Nutshell 8 Performance at a Glance 9 Major Portfolio Changes 22 Statement of Investments 24 Portfolio Diversification 31 ACORN USA In a Nutshell 5 Statement of Investments 10 ACORN USA On September 4, 1996, we launched Acorn USA. We are very excited about our newest addition to the Acorn Family of Funds, and thank all of our shareholders who helped Acorn USA grow to over $20 million in assets during its first month. To find out more about Acorn USA, read "Meet the Manager" on page 4, and "In a Nutshell" on page 5. Squirrel Chatter: HOW TECHNOLOGY CHANGES THE WAY WE WORK Ten years ago there were no phone books in Moscow. If you wanted to obtain someone's phone number, you either had to call information (a very slow process given Soviet levels of customer service) or go to a special kiosk, where a government clerk would supply the number to you for a nominal fee. The Soviet government's control over this information enabled them to closely monitor their citizens for anti-Communist activities. Thus, attempting to place a phone call was handing the secret police a card that read "treason planned here". Control of information has always been a source of power. When communism collapsed, the people recaptured power from the bureaucracy. One of Russia's earliest reforms was to publish telephone books. Another way governments have increased their power over their subjects is by a labyrinthine legal system. Laws are bad if they are arbitrary, overly complex, or hard to discover. In ancient China and Japan, laws were passed but not published. This created a lot of fear among the lower classes, for people were never certain whether or not a specific action broke the law. The emperors have been trashed, but the imperial legacy persists at the IRS, whose rules are complex and arbitrary. That is why Flat Tax advocates strongly argue that a simpler tax code would have the effect of reducing bureaucratic tyranny. CASUALTIES OF THE REVOLUTION Information is power for business as well as government. However, the way business uses information is changing. In the olden days, many business and professional people wielded the power of information control because they controlled proprietary lists or data files. These lists are not as valuable as they used to be; as the lists lose economic value, jobs are changing and even disappearing. What do I mean by "lists"? For instance, think of the role of a traditional banker, who has information in the form of lists of names. A banker has one list of people who are willing to lend the bank money as deposits, and a second list of people who want to borrow money as loans. Because the banker controls this information, the bank makes a profit on the spread or "difference" between borrowing and lending rates. Over the last 30 years, however, these lists have become obsolete. As Tom Brown of DLJ puts it, "Banks have been losing market share to nonbanks for years." Individuals now deposit their money in money market funds, consumers obtain short-term loans through credit cards, and corporate borrowers use commercial paper. On both sides of the transaction, the banker is bypassed. This revolution has forced banks to search for new ways to make profits. Consolidation has occurred within the banking industry as many of these institutions struggle to learn how to make a profit from their roles and some are inclined to sell out to acquirers. There are other industries that have historically benefited by owning information lists, but like banks, are finding their lists less valuable because of information networks such as the Internet. Travel agents, for instance, have lists of clients and lists of hotels and airlines. The role of the travel agent is changing; now customers are able to call into airline reservation systems directly. Similarly, insurance agents have proprietary lists of the policies issued by different insurance companies. A consumer can easily obtain the same information by logging onto the Internet and getting quotes for standard policies from a large number of insurance companies. Travel and insurance agents are likely to see their commission rates decline as people switch from full-service to self-service. If people can pump their own gas, they can learn to make their own airline reservations. The investment world is going through these same transitions. I had dinner with a successful retail stock broker recently. He confided that the conventional commission business of buying and selling stocks was now an insignificant part of his job. Flogging this week's hot picks from the research department's "focus list" is no longer included in his daily ritual. Today, he sells wrap accounts, mutual funds, insurance and other products in an effort to become a fee-based advisor rather than a commissioned salesman. When Smith Barney starts to sell no-load funds, you know there is a revolution going on. The typical personal 2 One of Russia's earliest reforms was to publish telephone books. account has gone from a portfolio of stocks held by an individual in a brokerage account to a package of mutual funds in a 401(k) program. Mutual fund companies are leading the revolution by expanding their product lines in an attempt to keep customer money within the fund family. There are now over 6,000 mutual funds from which to choose./1/ Instead of working with a broker who controls a list of good investments, individuals are now looking up their own mutual fund data, sometimes on the Internet. Morningstar has become a key resource for fund buyers. Your local newsstand carries lots of financial magazines that give tips on buying mutual funds. With all this free advice, the individual can construct a diversified portfolio of funds with or without a broker's help. As if the shift from stocks to mutual funds were not demoralizing enough to traditional retail stock brokers, discount brokers such as Charles Schwab offer both low commission rates and a full array of no-load and low-load mutual funds. Not long ago we depended on station attendants to pump our gas, check our oil and wash our windshields. Now most of us drive up to the self-service island, fill our tanks, pay with a swipe of the credit card and drive away. Information is going self-service, too. A Muscovite now has the freedom to look up Olga's phone number. As technology continues to change the way we work, traditional jobs will be redefined and new jobs will be created. The Acorn Family of Funds will participate in this revolution by looking for great companies that will win the information revolution. Happy Investing! /s/ Ralph Wanger Ralph Wanger President NEWS YOU CAN USE Shareholder INVESTMENT BOOKLETS containing customized investment slips will be mailed to all shareholders in November. This booklet will serve as a convenient way for you to buy more shares. We've expanded our AUDIO RESPONSE SYSTEM for added convenience. This means that you can call 1-800-962-1585 during any time of the day or night, and use your touch-tone telephone to obtain fund prices or your personal account balance(s). Simply make your choice from the main menu and follow the recorded instructions. The main menu includes these choices: Press 1#: For fund prices Press 2#: For account balances Press 3#: To buy or sell shares, make a telephone exchange or speak with a shareholder service representative (this option available during normal business hours only) Press *4#: For help Press **#: To return to the main menu We want to thank all of you who attended the September 10, 1996 Annual INFORMATION MEETING FOR SHAREHOLDERS. It was especially exciting for us to formally introduce the newest member of our Acorn Family of Funds, Acorn USA. Following the meeting, many of our shareholders told us they did not know that Acorn Fund and Acorn International were open to new investors. Indeed, BOTH FUNDS REOPENED ON NOVEMBER 16, 1995. Mark your calendars now for next year's meeting--September 16, 1997. - -------------------------------------------------------------------------------- /1/ I am often asked, "How many mutual funds are there going to be in ten years?" It is Acorn's official opinion that the number of funds will quit increasing when we reach one fund per person. 3 Meet the Manager: Robert Mohn [PHOTO OF ROBERT MOHN] Robert Mohn is the Portfolio Manager of Acorn USA. He is one of six principals at Wanger Asset Management, L.P., advisor to the Acorn Family of Funds, and has been a key member of WAM's analytical team since 1992. Mr. Mohn has a B.S. from Stanford University and an MBA from the University of Chicago. Mr. Mohn and his wife, Ann, reside in Chicago with their baby daughter, Samantha. Q Acorn USA is the newest member of the Acorn Family of Funds. Why did you decide to launch a third fund? A WE HAD A GAP IN OUR GEOGRAPHY. WHILE ACORN INTERNATIONAL INVESTS EXCLUSIVELY OVERSEAS AND ACORN FUND INVESTS BOTH IN THE U.S. AND OVERSEAS, WE HAD NO FUND DEDICATED TO THE U.S. MARKET. SO WE LAUNCHED OUR PATRIOT FUND, ACORN USA. Q What else is different about Acorn USA? A ACORN USA IS A SMALL FUND, TINY RIGHT NOW, SO WE CAN CONCENTRATE ON A SMALL NUMBER OF STOCKS. ACORN USA WILL BE MANAGED MORE AGGRESSIVELY AND WILL BE LESS DIVERSIFIED THAN ACORN FUND. Q Will there be much overlap in investments between the two funds? A YES. BOTH FUNDS WILL OWN MANY OF THE SAME STOCKS BECAUSE BOTH SHARE THE SAME TALENTED TEAM OF ANALYSTS AND FEED ON OUR TEAM'S FAVORITE INVESTMENT IDEAS. Q Then is Acorn USA just a clone of Acorn Fund's U.S. portfolio? A NO. THE INGREDIENTS MAY BE THE SAME, BUT THE CHEF AND THE RECIPE ARE DIFFERENT. AS LEAD PORTFOLIO MANAGER, I MIX USA'S GROUP OF ACORN STOCKS INTO MY OWN INVESTMENT STEW. FOR EXAMPLE, NONE OF ACORN USA'S TOP 10 HOLDINGS MAKE ACORN'S TOP TEN LIST. EACH FUND HAS ITS OWN DISTINCT FLAVOR, SO OUR SHAREHOLDERS CAN SALT TO TASTE. Q Are there still enough "undiscovered" small companies in the U.S.? A THERE ARE OVER 7,000 SMALL STOCKS UNDER $1 BILLION IN MARKET CAP TRADING IN THE U.S. THAT'S A BIG FIELD FOR US TO EXPLORE. MANY OF THESE COMPANIES ARE UNKNOWN BURIED GEMS. THAT'S WHERE WE DO OUR DIGGING. OUR TEAM EXCELS AT UNEARTHING NEAT LITTLE COMPANIES AHEAD OF THE CROWD. EVEN IN A DOW 6000 MARKET, WE ARE FINDING GREAT STOCKS TO BUY. Q Can you tell me about your team? A OUR TEAM OF ANALYSTS IS THE HEART AND SOUL OF ACORN USA. TERRY HOGAN, LAURA MCKENNA, CHUCK MCQUAID, JOHN PARK, JASON SELCH, RALPH WANGER, AND MARK YOST ARE ALL SUPERSTAR STOCK PICKERS. Q How are you building the portfolio? A WE ARE PUTTING TOGETHER ACORN USA ONE STOCK AT A TIME. WE ARE A TEAM OF STOCK PICKERS, NOT MARKET TIMERS AND NOT SECTOR ROTATORS. WE ARE BUILDING THE PORTFOLIO FROM THE BOTTOM UP, PREFERRING OUR ANALYSTS' WORM'S-EYE VIEWS OF THEIR STOCKS TO ANY STRATEGIST'S BIRD'S-EYE VIEW OF THE ECONOMY. WE TAKE LITTLE HEED OF OUR INDUSTRY WEIGHTS. INSTEAD, OUR TEAM'S BEST STOCKS DETERMINE WHAT OUR WEIGHTINGS WILL BE. Q What are Acorn USA's expenses? A CURRENTLY, TOTAL OPERATING EXPENSES ARE 2% OF ASSETS, BUT KEEP IN MIND THAT NEWLY HATCHED FUNDS ALWAYS SUFFER FROM HIGH START-UP COSTS. SOME FUND EXPENSES, LIKE CUSTODY AND TRANSFER AGENCY FEES, ARE SEMI-FIXED COSTS. AS THE FUND GROWS, THESE EXPENSES WILL BECOME A LOWER PERCENTAGE OF ASSETS. WE ESTIMATE THAT ACORN USA'S EXPENSE RATIO WILL DROP TO THE 1.50% AREA WHEN AVERAGE NET ASSETS REACH $100 MILLION. Q Acorn USA is off to a fast start, with assets already over $27 million (as of October 17). Do you have plans to close this fund? A WE'RE STILL CELEBRATING THE BIRTH OF OUR NEW FUND. WE WON'T RULE OUT CLOSING THE FUND AT SOME POINT, BUT IT'S TOO EARLY TO THINK ABOUT RETIREMENT. 4 Acorn USA In a Nutshell Fund facts Where to find us in the newspaper: NAV YTD Name NAV Chg %ret Acorn Funds: AcornInt 19.37 +0.02 +17.1 AcornF 15.60 +0.03 +16.4 AcornUS 10.72 +0.01 NA AdsnCa p 26.08 +0.04 16.5 Advance Capital I Balanc p 13.50 +0.01 +10.2 Equity p 14.01 +0.02 +11.8 RetInc p 10.6 +0.01 +2.8 Name NAV Arrow Funds: Equity 19.37 FxdIncm 9.89 Muni 10.28 ArtisanIntl 12.45 ArtisanSmCp 13.91 Astra Group: AUS l-A 13.50 Equity p 14.01 RetInc p 10.6 Advatus Fds Acorn USA Portfolio Diversification as a % of net assets, as of 9/30/96 [PIE CHART APPEARS HERE] Information 15.1% Health Care 10.2% Consumer Goods/Services 9.0% Finance 14.3% Industrial Goods/Services 21.3% Energy/Minerals 19.6% Cash 10.5% ----- 100.0% Fund Net Assets as of 9/30/96: $20.2 million Acorn USA Top 10 Holdings Tesoro Petroleum 6.6% Oil Refinery/Gas Reserves Wackenhut 6.1% Prison Management NGC 5.4% Gas Processing/Marketing Penn Treaty 5.1% Nursing Home Insurance World Color Press 4.5% Printing Global Natural Resources 3.6% Oil/Gas Producer Coast Savings 3.5% California Savings & Loan Rawlings 3.2% Baseball Equipment ACT Manufacturing 3.2% Manufactures Telecom Equipment Showboat 3.2% Casinos 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. Fund facts Where to find us on NASDAQ: Acorn USA: AUSAX Net Asset Value Per Share 9/30/96: $10.72 5 Acorn Fund In a Nutshell Acorn Fund rose 2.1% in the third quarter, topping the small company Russell 2000, but trailing the larger capitalization indices shown on the following page. After the market's brief July sell-off, investors turned to the bigger, more familiar names. We are pleased that your fund still leads all of the indices on a year-to-date basis. In keeping with the "bigger is better" tone of the quarter, our largest positions performed well. The top 10 holdings listed to the right averaged a gain over eight percent. Two newcomers to the list posted noteworthy numbers: AES, a global power producer, surged 39% and International Game Technology's slot machine stock paid us a 23% jackpot. Notable winners in Acorn Fund's foreign portfolio included Lusomundo, a Portuguese newspaper company --read all about it-- a 65% gain. Our results were inflated by a 42% return in Autoliv, a Swedish seatbelt and airbag manufacturer. Year-to-date, the foreign equities of Acorn have provided similar returns to Acorn's domestic stocks while providing an extra element of diversification that reduces risk. In last quarter's Nutshell, we welcomed back volatility and the opportunities which it creates. We are long-term investors, but we can use short-term up or down moves in a stock for opportunistic trading. An example of this is Douglas & Lomason. We first purchased the automotive supplier in 1983, at under $5 per share. The stock fluctuated wildly from 1989-1993, but we bought more on dips. We were rewarded last quarter when Douglas & Lomason accepted a $31 per share offer from Magna International. The market is making new all-time highs. We are not going to chase "hot IPOs" or stocks that have speculative stories but no substance. We will keep hunting for great businesses at attractive prices for you. Fund Net Assets as of 9/30/96: $2,885.2 million Acorn Fund Top 10 Holdings ADVANTA 2.0% Credit Cards Newell 1.7% Consumer Goods Harley Davidson 1.6% Recreational Vehicles Manufacturer Liberty Media 1.6% CATV Programming Thermo Electron 1.6% Energy Systems & Processing Equipment Carnival 1.5% Cruise Ship Line Lincare Holdings 1.4% Home Health Care Services AES Corporation 1.4% Global Power Producer International Game Technology 1.3% Gaming Equipment Borders 1.3% Bookstores 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, including those described under "In a Nutshell." Fund facts Estimated year-end per share distributions Acorn Fund Acorn Int'l Acorn USA Short-Term Capital Gain $0.17 -- -- Long-Term Capital Gain $1.20 $0.34 -- The record date and payable date for these distributions are tentatively scheduled for early December. Remember that these are preliminary estimates and are subject to change. /s/ Charles P. McQuaid /s/ Terence M. Hogan - --------------------- --------------------- Charles P. McQuaid Terence M. Hogan Co-Portfolio Manager Co-Portfolio Manager 6 Performance at a Glance The Value of a $10,000 Investment in Acorn Fund June 10, 1970 through September 30, 1996 [PERFORMANCE GRAPH APPEARS HERE] Date Acorn Fund ($) S & P ($) ---- -------------- --------- 1970 10,000 10,000 1971 17,828 14,490 1972 19,368 17,242 1973 14,765 14,709 1974 10,691 10,816 1975 13,945 14,842 1976 23,045 18,394 1977 27,168 17,077 1978 31,777 18,200 1979 47,790 21,586 1980 62,594 28,602 1981 58,005 27,195 1982 68,208 33,054 1983 85,389 40,510 1984 89,045 43,051 1985 117,142 56,710 1986 136,843 67,295 1987 142,923 70,828 1988 178,370 82,591 1989 222,681 108,761 1990 183,674 105,386 1991 270,641 137,492 1992 336,210 147,928 1993 444,889 162,882 1994 411,750 165,032 1995 497,407 227,047 9/30/96 584,766 257,697 Average Annual Total Return 1 Year 5 Years 10 Years Life of Fund 17.9% 18.9% 16.0% 16.7% Acorn Fund S&P 500 9/30/96 9/30/96 ---------- ------------ $584,766 $257,697 This graph compares the results of $10,000 invested in Acorn Fund on June 10, 1970 (the date Fund shares were first offered to the public), with all dividends and capital gains reinvested, with the Standard & Poor's 500 Stock Index with dividends reinvested (source: Salomon Brothers Inc Stock Facts and Shaw Data Services, Inc.). Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Acorn Fund Portfolio Diversification as a % of net assets, as of 9/30/96 [PIE CHART APPEARS HERE]
Information 18.0% Health Care 9.9% Consumer Goods/Services 9.5% Finance 14.5% Industrial Goods/Services 10.2% Energy/Minerals 8.9% Real Estate 2.0% Foreign 20.5% Cash 6.5% ------ 100.0%
Relative Performance - ----------------------------------------------------------------- 3rd quarter Last 9 mos. Last 12 mos. Acorn Fund 2.1% 17.6% 17.9% Dow-Jones 4.6% 17.0% 25.7% S&P 500 3.1% 13.5% 20.3% S&P MidCap 400 2.9% 12.4% 14.0% Russell 2000 0.3% 10.7% 13.1%
The Dow Jones Industrial Average includes 30 large companies. The S&P 500 is a broad market-weighted average, still blue-chip dominated. 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 Russell 2000 is formed by taking 3,000 companies and then eliminating the largest 1,000 leaving a good small company index. All indices are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 9/30/96: $15.76 - ----------------------------------------- 7 Acorn International In a Nutshell World markets declined sharply in July, led by a fall in U.S. technology stocks, only to recover through the end of September to just about where they had begun. Acorn International lost 1.2% over the quarter, midway between the international fund averages. Our nine month gain of 15.9% is well ahead of the Lipper averages. For the year-to-date, our performance ranks among the top ten international funds. Broad diversification helped dampen volatility. Individual stocks often produce widely divergent returns. Our best percentage riser this summer was Bank Komunalny, which soared a spectacular 283% after listing in Warsaw. Next door in Budapest, Cofinec fell an equally noteworthy 42% when management announced poor earnings in August. Markets also moved in opposite directions. We made the most money this quarter in Finland, only to give it back in Japan. It would be nice if we could time our selections to capture the upside while avoiding the downside, but crystal balls are in short supply. The good news is that no one stock or market overwhelms the returns of the Fund, smoothing out the ride and lowering risk for our shareholders. The fourth quarter has begun well. The Fund is back to its historic high. We are already thinking about what names will contribute to 1997 results and beyond. Good returns in a given year are welcome, but a superior record over time can only be built with steady effort and a lot of patience. Fund Net Assets as of 9/30/96: $1,647.3 million Accorn International Top 10 Holdings
WM Data Sweden 3.1% Computer Services/Consulting T T Tieto Finland 1.7% Computer Services/Consulting Rhoen Klinikum Germany 1.6% Hospital Management Fresenius Germany 1.5% Dialysis Equipment/Solutions Getronics Netherlands 1.4% Computer Consulting Korea Mobile Telecom Korea 1.4% Mobile Communications Hennes & Mauritz Sweden 1.1% Apparel Stores Serco Group United Kingdom 1.0% Facilities Management Banca Fideuram Italy 1.0% Life Insurance/Mutual Funds Village Roadshow Australia 1.0% Film Distribution/Exhibition/Production
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, including those described under "In a Nutshell." Fund facts You can buy the Acorn funds from a "one-stop shopping" vendor, like Charles Schwab or Fidelity, but they will charge you 0.25% for the convenience they add. You could buy one of a long list of funds that do not charge the 0.25%. Are the other funds therefore cheaper to buy? Nay, they are not! Schwab and Fidelity always get paid--directly by the customer or indirectly by the customer (through higher fund expenses). To really compare charges, add the 0.25% transaction fee to our funds' expense ratio and compare that to the total expense ratio of funds sold through "no transaction fee" programs. /s/ Leah Joy Zell - ----------------- Leah Joy Zell Co-Portfolio Manager 8 Performance at a Glance The Value of a $10,000 Investment in Acorn International September 23, 1992 through September 30, 1996
[PERFORMANCE GRAPH APPEARS HERE] Date Acorn Int'l ($) EAFE ($) ---- --------------- -------- 09/23/92 10,000 10,000 09/30/92 10,010 10,000 12/31/92 10,690 9,614 03/31/93 12,000 10,767 06/30/93 12,920 11,849 09/30/93 13,910 12,635 12/31/93 15,940 12,745 03/31/94 15,850 13,190 06/30/94 15,550 13,864 09/30/94 16,491 13,877 12/31/94 15,334 13,736 03/31/95 14,811 13,992 06/30/95 15,727 14,093 09/30/95 16,824 14,681 12/31/95 16,703 15,275 03/31/96 18,203 15,717 06/30/96 19,593 15,965 09/30/96 19,362 15,945
Average Annual Total Return 1 Year 3 Years Life of Fund 15.1% 11.7% 17.9% Acorn International EAFE 9/30/96 9/30/96 - ------------------- ------- $19,362 $15,945 This graph compares the results of $10,000 invested in Acorn International on September 23, 1992 (the date the Fund began operations), with all dividends and capital gains reinvested, with Morgan Stanley's Europe, Australia and Far East Index (EAFE). The beginning value of EAFE is as of 9/30/92. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Acorn International Portfolio Diversification as a % of net assets, as of 9/30/96
[PIE CHART APPEARS HERE] Information 24.9% Health Care 7.6% Consumer Goods/Services 25.2% Finance 18.8% Industrial Goods/Services 9.1% Energy/Minerals 6.0% Real Estate 1.4% Transportation 0.4% Cash 6.6% ------ 100.0%
Relative Performance - ------------------------------------------------------------------------------ 3rd quarter Last 9 mos. Last 12 mos. Acorn International -1.2% 15.9% 15.1% EAFE -0.1% 4.4% 8.6% Lipper International Small Company Funds Average -1.7% 10.9% 10.6% Lipper International Fund Index 0.3% 8.8% 10.8%
EAFE is Morgan Stanley's Europe, Australia and Far East Index, an unmanaged index of companies throughout the world in proportion to world stock market capitalization, excluding the U.S. and Canada. The Lipper International Small Company Funds Average is a group comprised of 12 small company international funds, including Acorn International. The Lipper International Fund Index is an equal-weighted index of the 30 largest international funds. All indices are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 9/30/96: $19.18 - ------------------------------------------- 9 Acorn USA Statement of Investments (unaudited) September 30, 1996
Number of Shares Value (000) - ---------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 89.5% - ---------------------------------------------------------- Information: 15.1% Broadcasting/CATV: 2.8% 21,900 C-Tec $ 569 Cable TV/Local Telephone Programming for CATV/TV/Satellites: 4.4% 19,300 Data Transmission Network 405 Data Services for Farmers 9,000 Tele-Communications, Liberty Media Group 258 Cable TV Programming 13,000 International Family Entertainment 213 Cable TV Programming - ---------------------------------------------------------- 876 Mobile Communications: 2.0% 22,800 COMARCO 396 Wireless Network Testing Computer Software/Services: 1.2% 14,000 CACI International 244 Computer Software Systems Business Information - 1.5% 17,000 American Business Information 306 Collects Data on Small Businesses Computer Systems - 3.2% 36,000 ACT Manufacturing 648 Manufactures Telecom Equipment --------- Information: Total 3,039 - ---------------------------------------------------------- Health Care: 10.2% Pharmaceuticals: 2.0% 11,000 Watson Pharmaceuticals 412 Generic Drugs Medical Equipment: 5.8% 44,000 Kinetic Concepts 635 Hospital Beds 16,000 Steris 542 Sterilization Equipment - ---------------------------------------------------------- 1,177 Number of Shares Value (000) - ---------------------------------------------------------- Services: 2.4% 12,000 Lincare Holdings $ 480 Home Health Care Services --------- Health Care: Total 2,069 - ---------------------------------------------------------- Consumer Goods/Services: 9.0% Retail: 2.6% 7,000 Borders Group 261 Bookstores 32,000 Host Marriott Services 260 Runs Airport Restaurants - ---------------------------------------------------------- 521 Entertainment/Leisure: 3.2% 29,000 Showboat 638 Casinos Manufacturers: 3.2% 68,000 Rawlings 655 Baseball Equipment -------- Consumer Goods/Services: Total 1,814 - ---------------------------------------------------------- Finance: 14.3% Savings & Loans: 4.8% 22,000 Coast Savings 704 California Savings & Loan 11,000 Peoples Bank Bridgeport 272 Consumer Finance - ---------------------------------------------------------- 976 Insurance: 6.4% 43,000 Penn Treaty 1,021 Nursing Home Insurance 11,000 Leucadia National 267 Insurance Holding Company - ---------------------------------------------------------- 1,288 Money Management: 1.1% 12,000 Baker Fentress 233 Closed-End Investment Company - ---------------------------------------------------------- Other: 2.0% 28,000 Jayhawk 396 Finances Used Cars --------- Finance: Total 2,893
10 Number of Shares Value (000) - ------------------------------------------------------ Industrial Goods/Services - 21.3% Steel: 4.8% 20,000 Schnitzer Steel $ 580 Junkyard 20,900 Atchison Casting 319 Foundries 2,500 Gibraltar Steel 56 Steel Processing - ------------------------------------------------------ 955 Machinery: 3.6% 17,000 Bearings 480 Distributes Industrial Components 20,000 Thermo Fibergen 252 Paper Recycling - ------------------------------------------------------ 732 Industrial Suppliers: 2.3% 28,000 Lilly Industries, Cl. A 466 Industrial Coatings Services: 10.6% 79,000 Wackenhut, Cl. B 1,234 Prison Management 41,000 World Color Press 912 Printing - ------------------------------------------------------ 2,146 --------- Industrial Goods/Services: Total 4,299 Number Of Shares Value (000) - ------------------------------------------------------ Energy/Minerals: 19.6% Independent Power: 2.5% 16,000 CalEnergy $ 510 Power Plants Oil/Gas Producers: 10.2% 103,000 Tesoro Petroleum 1,326 Oil Refinery/Gas Reserves 42,000 Global Natural Resources 730 Oil & Gas Producer - ----------------------------------------------------- 2,056 Distribution/Marketing/ Refining: 5.4% 70,000 NGC 1,094 Gas Processing/Marketing Oil Services: 1.5% 10,000 J Ray McDermott 291 Offshore Drilling Rigs -------- Energy/Minerals: Total 3,951 Total Common Stocks and Other -------- Equity-Like Securities: 89.5% 18,065 -------- Cash and Other Assets Less Liabilities: 10.5% 2,129 -------- Total Net Assets: 100% $ 20,194 ======================================================
11 Acorn Fund Major Portfolio Changes in the Third Quarter Number of Shares ------------------- 6/30/96 9/30/96 Additions - --------------------------------------------------- Information The 3DO Company 0 180,000 American Business Information 500,000 700,000 American Management Systems 125,000 220,000 American Power Conversion 0 265,000 Analysts International 130,000 180,000 C-Tec 0 200,000 Canal Plus 0 15,000 Cognos 0 150,000 Getty Communications, Cl. A 0 400,000 Grupo Radio Centro 300,000 600,000 Softkey International 300,000 350,000 Thermo BioAnalysis 0 100,000 - --------------------------------------------------- Health Care Biogen 70,000 114,000 Invacare 650,000 733,000 United Payors and Providers 0 505,000 Watson Pharmaceuticals 320,000 450,000 - --------------------------------------------------- Consumer Goods/Services Flughafen Wien 30,000 120,000 Host Marriott Services 0 332,000 Mac Frugal's 0 84,000 Shoney's 0 725,000 Showboat 0 60,000 - --------------------------------------------------- Finance Axime Ex Segin 0 20,000 Commonwealth Bancorp 0 538,000 Edinburgh Fund Managers 0 600,000 Foremost 162,000 197,000 Jayhawk 375,000 496,000 People's Bank Bridgeport 700,000 845,000 World Acceptance 0 700,000 - --------------------------------------------------- Number of Shares -------------------- 6/30/96 9/30/96 - --------------------------------------------------- Industrial Goods/Services A M Castle 0 250,000 Bearings 250,000 313,000 Material Sciences 225,000 450,000 Siderca 2,000,000 4,000,000 Wackenhut, Cl. B 562,000 660,000 World Color Press 100,000 760,000 Zoltek 0 35,000 - --------------------------------------------------- Energy/Minerals AES Corporation Warrants 0 1,852 Atmos Energy 53,000 303,000 Devon Energy 350,000 500,000 Energy Ventures 255,000 350,000 Forest Oil 500,000 700,000 Global Natural Resources 770,000 1,000,000 NGC 679,000 750,000 Ranger Oil 400,000 800,000 Seagull Energy 300,000 600,000 Tesoro Petroleum 800,000 900,000 - ---------------------------------------------------
12
Number of Shares ------------------------- 6/30/96 9/30/96 Sales - ------------------------------------------------------------------------------- Information Argyle Television 277,000 170,000 Bell Microproducts 470,000 201,000 In Focus Systems 256,000 0 Kent Electronics 334,000 300,000 Kronos 457,000 423,000 PriCellular 468,000 350,000 Sanmina 180,000 0 Sece Cortaillod Holdings 13,200 0 Shared Technologies 246,000 0 Solectron 950,000 600,000 Tele-Communications, Series A TCI Group 1,800,000 1,500,000 - ------------------------------------------------------------------------------- Health Care Andrx 43,000 0 Apria Healthcare Group 316,000 0 Boston Scientific 89,000 0 Cellpro 133,000 0 Cygnus Therapeutic Systems 145,000 0 Human Genome Sciences 120,000 0 Incyte Pharmaceutical 60,000 0 Pharmaceutical Marketing Services 450,000 235,000 Protein Design Labs 155,000 0 Sepracor 150,000 0 TheraTech 163,000 0 (includes effect of 3 for 2 split) - ------------------------------------------------------------------------------- Consumer Goods/Services Alliance Entertainment 2,000,000 445,000 Cato 191,000 0 First Brands 300,000 0 Huhtamaki 150,000 0 Nine West 50,000 0 Noritsu Koki 175,000 145,000 Panamerican Beverages 170,000 110,000 Shinsegae 134,956 110,956 St. John Knits 60,000 0 Waterford Wedgwood 3,800,000 0 - ------------------------------------------------------------------------------- Finance Aames Financial 295,000 0 BayBanks 46,000 0 The China Investment Company 111,275 0 Concord EFS 220,000 275,000 (includes effect of 3 for 2 split) First Commerce 73,000 0 First USA 600,000 544,000 T. Rowe Price 254,000 174,000 - ------------------------------------------------------------------------------- Industrial Goods/Services ADT 450,000 0 Douglas & Lomason 300,000 255,000 Unitog 154,000 0 - ------------------------------------------------------------------------------- Energy/Minerals Barrett Resources 103,000 0 Carbo Ceramics 56,000 0 Coeur D'Alene Mines 250,000 0 Coho Resources 550,000 0 United Meridian 440,000 300,000 - ------------------------------------------------------------------------------- Real Estate Vallehermoso 300,000 185,000
13 Acorn Fund Statement of Investments (unaudited) September 30, 1996
Number of Shares Value (000) - -------------------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 93.5% - -------------------------------------------------------------------------------- Information: 18.0% Broadcasting/CATV: 2.8% 1,500,000 Tele-Communications, Series A TCI Group $ 22,406 50,000 Tele-Communications, Cum. Pfd. 3,031 400,000 Providence Journal 11,750 300,000 TCA Cable TV 7,725 300,000 Silver King Communications 7,050 440,000 Jones Intercable, Cl. A 5,995 22,500 Jones Intercable 312 200,000 C-Tec 5,200 170,000 Argyle Television 4,781 300,000 Granite Broadcasting 4,275 500,000 Century Communications, Cl. A 3,750 80,000 Cablevision Systems 3,480 - -------------------------------------------------------------------------------- 79,755 Programming for CATV/TV/Satellites: 3.2% 1,600,000 Tele-Communications, Liberty Media Group 45,800 750,000 Data Transmission Network 15,750 700,000 International Family Entertainment 11,463 550,000 United Video Satellite 11,138 300,000 BET Holdings 8,625 - -------------------------------------------------------------------------------- 92,776 Mobile Communications: 2.6% 500,000 Telephone and Data Systems 20,125 800,000 Mobile Telecommunication Technologies 12,600 450,000 Cellular Communications of Puerto Rico 11,475 500,000 Vanguard Cellular Systems 9,688 350,000 Palmer Wireless 6,191 355,000 COMARCO 6,168 350,000 PriCellular 5,031 300,000 Centennial Cellular 4,088 - -------------------------------------------------------------------------------- 75,366 Principal Amount or Number of Shares Value (000) - -------------------------------------------------------------------------------- Computer Software/Services: 2.2% 618,000 CACI International $ 10,738 266,000 BRC Holdings 9,576 180,000 Analysts International 8,280 153,000 Compuware 7,000 104,000 BDM International 6,188 220,000 American Management Systems 6,160 480,000 Systems & Computer Technology 5,880 105,000 Keane 5,040 208,333 Source Informatics Cv. Pfd. 2,360 183,000 Computer Language Research 2,105 170,000 Kurzweil Applied Intelligence 404 - -------------------------------------------------------------------------------- 63,731 Gaming Equipment: 1.3% 1,830,000 International Game Technology 37,515 Consumer Software: 0.4% 350,000 Softkey International 6,781 215,000 Activision 3,037 350,000 Spectrum HoloByte 2,275 180,000 The 3DO Company 1,013 - -------------------------------------------------------------------------------- 13,106 Business Information: 0.6% 700,000 American Business Information 12,600 600,000 GIGA Cv. Pfd. 4,800 - -------------------------------------------------------------------------------- 17,400 Computer Systems: 1.6% 600,000 Solectron 29,400 505,000 ACT Manufacturing 9,090 287,000 Altron 3,875 700,000 Triad Systems 3,763 - -------------------------------------------------------------------------------- 46,128 Instrumentation: 1.1% 535,000 Thermo Instrument Systems 19,594 $5,000,000 Thermo Optek, 5% Note Due 10/15/00 5,450 228,000 IFR Systems 3,534 $1,500,000 Thermoquest, 5% Note Due 8/15/00 1,560 100,000 Thermo Bio Analysis 1,375 85,000 Datum 946 20,000 Thermoquest 268 - -------------------------------------------------------------------------------- 32,727
14
Number of Shares Value (000) --------------------------------------------------------------- Distribution: 0.8% 1,000,000 Pioneer-Standard Electronics $ 11,250 300,000 Kent Electronics 6,488 310,000 Richey Electronics 2,906 201,000 Bell Microproducts 1,558 --------------------------------------------------------------- 22,202 Components/Peripherals: 1.4% 500,000 Oak Industries 16,625 423,000 Kronos 13,007 265,000 American Power Conversion 3,876 325,000 Planar Systems 3,291 270,000 Exide Electronics Group 2,903 50,000 Daktronics 200 --------------------------------------------------------------- 39,902 -------- Information: Total $520,608 --------------------------------------------------------------- Health Care: 9.9% Biotechnology/Drug Delivery: 1.8% 450,000 Watson Pharmaceuticals 16,875 260,000 RP Scherer 12,675 114,000 Biogen 8,664 450,000 Inhale Therapeutic Systems 5,794 800,000 Corvas International 3,700 800,000 Corvas International Warrants 800 280,000 CIMA Labs 2,275 200,000 Genome Therapeutics 1,775 --------------------------------------------------------------- 52,558 Medical Equipment: 3.6% 684,000 Steris 23,171 733,000 Invacare 20,524 552,000 Thermedics 14,559 1,000,000 Kinetic Concepts 14,438 582,000 Respironics 14,114 345,000 Space Labs Medical 7,418 350,000 Affymetrix 5,233 267,000 Innovasive Devices 2,537 125,000 Trex Medical 2,453 --------------------------------------------------------------- 104,447 Hospital/Laboratory Supplies: 0.7% 273,000 Hillenbrand Industries 9,965 322,000 Sybron International 9,338 --------------------------------------------------------------- 19,303 Services: 3.8% 1,000,000 Lincare Holdings 40,000 498,000 HBO & Company 33,242 462,000 Renal Treatment Centers 15,362 505,000 United Payors and Providers 6,313 185,000 MDL Information Systems 5,851 100,000 ThermoTrex 3,700 300,000 Walsh International 2,822 235,000 Pharmaceutical Marketing Services 2,115 --------------------------------------------------------------- 109,405 -------- Health Care: Total 285,713 --------------------------------------------------------------- Consumer Goods/Services: 9.5% Retail: 1.9% 980,000 Borders Group 36,505 295,000 Quality Food Centers 10,251 200,000 Duckwall Alco Stores 2,700 332,000 Host Marriott Services 2,698 84,000 Mac Frugal's 1,985 60,000 Dave & Buster's 1,335 --------------------------------------------------------------- 55,474 Recreational Vehicles: 1.9% 1,100,000 Harley-Davidson 47,300 320,000 Thor Industries 7,640 --------------------------------------------------------------- 54,940 Food: 0.5% 725,000 Shoney's 6,616 634,000 Au Bon Pain 4,517 125,000 Morton Restaurant Group 2,188 --------------------------------------------------------------- 13,321
15 ACORN FUND STATEMENT OF INVESTMENTS (UNAUDITED)
Principal Amount of Number of Shares Value (000) - -------------------------------------------------------- Entertainment/Leisure: 2.8% 1,400,000 Carnival $ 43,400 215,000 GC Companies 7,740 265,000 Royal Caribbean Cruises 7,056 276,000 Carmike Cinemas 6,383 251,000 Toy Biz 4,455 472,000 Hollywood Park, Cv. Pfd. 4,425 180,000 Rio Hotel & Casino 2,835 445,000 Alliance Entertainment 2,503 535,000 Monarch Casino & Resort 1,547 60,000 Showboat 1,320 $6,250,000 Grand Palais Casino 14% Note Due 2/25/98 313 - -------------------------------------------------------- 81,977 Manufacturers: 2.4% 1,650,000 Newell 49,500 565,000 Wolverine World Wide 15,679 232,000 Norwood Promotional 4,060 - -------------------------------------------------------- 69,239 ------- Consumer Goods/Services: Total 274,951 - -------------------------------------------------------- Finance: 14.5% Banks: 1.0% 380,000 Texas Regional Bancshares 10,925 285,000 Union Planters 10,118 105,000 First American 5,040 104,000 Riverside National Bank 1,430 - -------------------------------------------------------- 27,513 Savings & Loans: 3.1% 845,000 Peoples Bank Bridgeport 20,914 756,000 Washington Federal 17,861 390,000 Washington Mutual 14,528 418,000 Coast Savings 13,376 260,000 TCF 9,783 538,000 Commonwealth Bancorp 6,389 280,000 Imperial Thrift & Loan 3,815 156,000 Indiana Federal 3,159 - -------------------------------------------------------- 89,825 Insurance: 1.9% 836,000 Baldwin & Lyons, Cl. B $ 15,362 351,000 United Fire & Casualty 11,232 197,000 Foremost 10,835 331,000 Transnational Re 7,985 216,000 Leucadia National 5,238 318,000 ALLIED Life Financial 5,009 - -------------------------------------------------------- 55,661 Money Management: 2.6% 880,000 United Asset Management 20,790 784,000 Baker Fentress 15,190 618,000 SEI 14,369 1,621,000 Phoenix Duff and Phelps 10,131 231,000 BISYS 9,471 174,000 T. Rowe Price 5,655 - -------------------------------------------------------- 75,606 Credit Cards: 4.2% 767,000 ADVANTA, Cl. A 35,252 520,000 ADVANTA, Cl. B 22,230 544,000 First USA 30,124 575,000 National Data 25,084 275,000 Concord EFS 7,081 - -------------------------------------------------------- 119,771 Other: 1.7% 1,049,000 Americredit 19,276 898,000 Mercury Finance 10,776 496,000 Jayhawk 7,006 620,000 Cash America 4,418 310,000 DVI Health Services 4,418 700,000 World Acceptance 4,113 - -------------------------------------------------------- 50,007 --------- Finance: Total 418,383
16 Number of Shares Value (000) - ----------------------------------------------------------- Industrial Goods/Services: 10.2% Steel: 1.7% 1,110,000 Worthington Industries $ 22,200 440,000 Gibraltar Steel 9,900 220,000 Schnitzer Steel 6,380 360,000 Atchison Casting 5,490 250,000 A M Castle 5,031 - ----------------------------------------------------------- 49,001 Machinery: 3.6% 1,125,000 Thermo Electron 45,563 800,000 Baldor Electric 15,600 675,000 Thermo Fibertek 8,859 313,000 Bearings 8,842 150,000 Nordson 8,363 96,000 Mine Safety Appliances 4,860 135,000 Valmont Industries 4,607 110,000 Applied Power 3,506 180,000 Hein-Werner 1,226 500,000 Stevens International, Cl. A 1,188 34,000 Stevens International, Cl. B 98 - ----------------------------------------------------------- 102,712 Industrial Suppliers: 1.7% 600,000 Unifi 16,500 750,000 Lilly Industries, Cl. A 12,469 240,000 Sealed Air 8,940 255,000 Douglas & Lomason 7,873 204,000 U. S. Can 3,290 35,000 Zoltek 1,330 - ----------------------------------------------------------- 50,402 Principal Amount or Number of Shares Value (000) - ----------------------------------------------------------- Services: 3.2% 600,000 Expeditors International of Washington $ 21,150 760,000 World Color Press 16,910 384,000 HALO Industries 11,136 660,000 Wackenhut, Cl. B 10,313 45,000 Wackenhut, Cl. A 827 430,000 Hub Group 9,138 450,000 Material Sciences 7,650 530,000 Thermo TerraTech 5,698 374,000 Thomas Group 5,236 $2,900,000 Western Water, 9% Cv. Note Due 9/25/05 3,611 119,000 AG Services of America 1,384 - ----------------------------------------------------------- 93,053 -------- Industrial Goods/Services: Total 295,168 - ----------------------------------------------------------- Energy/Minerals: 8.9% Independent Power: 2.8% 1,000,000 AES Corporation 39,375 1,852 AES Corporation Warrants 34 850,000 CalEnergy 27,094 390,000 Thermo Ecotek 8,921 285,000 Thermo Power 2,743 85,000 Thermo Optek 1,233 - ----------------------------------------------------------- 79,400 Oil/Gas Producers: 3.2% 1,000,000 Global Natural Resources 17,375 300,000 United Meridian 13,650 500,000 Devon Energy 12,750 600,000 Seagull Energy 11,775 900,000 Tesoro Petroleum 11,588 700,000 Forest Oil 9,013 440,000 Louis Dreyfus Natural Gas 6,490 200,000 St. Mary Land & Exploration 3,300 800,000 Tipperary 3,000 360,000 Abraxas Petroleum 2,070 110,000 Abraxas Petroleum CVRs 939 - ----------------------------------------------------------- 91,950
17 ACORN FUND STATEMENT OF INVESTMENTS (UNAUDITED)
NUMBER OF SHARES VALUE (000) - ------------------------------------------------------------------------------- DISTRIBUTION/MARKETING/REFINING: 1.3% 600,000 Southern Union $ 13,950 750,000 NGC 11,719 303,000 Atmos Energy 7,083 150,000 KN Energy 5,288 - ------------------------------------------------------------------------------- 38,040 OIL SERVICES: 1.4% 350,000 Energy Ventures 14,175 320,000 Atwood Oceanics 14,080 400,000 Veritas DGC (formerly known as Digicon) 7,200 200,000 J Ray McDermott 5,825 - ------------------------------------------------------------------------------- 41,280 MINING: 0.2% 300,000 Zeigler Coal Holding 5,175 -------- ENERGY/MINERALS: TOTAl 255,845 - ------------------------------------------------------------------------------- REAL ESTATE: 2.0% 829,000 The Rouse Company 21,554 155,000 Forest City Enterprises, Cl. B 7,595 123,000 Forest City Enterprises, Cl. A 6,027 210,000 Equity Residential Properties Trust 7,508 165,000 Weingarten Realty Investors 6,394 120,000 First Washington Realty Trust, Cv. Pfd. 3,240 80,000 First Washington Realty Trust 1,640 243,000 Sunstone Hotel Investors 2,460 ------- REAL ESTATE: TOTAL 56,418 - ------------------------------------------------------------------------------- FOREIGN SECURITIES: 20.5% CANADA: 1.0% 800,000 Ranger Oil 6,000 800,000 Shaw Communications, Cl. B 5,197 150,000 Cognos 4,894 125,000 BCE Mobile Communications 4,083 180,000 Veritas Energy Services 3,257 200,000 Shaw Industries 2,944 200,000 Cogeco Cable 1,281 - ------------------------------------------------------------------------------- 27,656 UNITED KINGDOM: 3.4% 1,200,000 Serco Group $11,416 2,700,000 Medeva 10,785 400,000 International CableTel 10,250 2,000,000 Securicor Group, Cl. A 8,474 717,000 Comcast UK Cable Partners 7,260 1,150,000 N. Brown Group 7,030 1,700,000 Invesco 6,286 68,000 Invesco ADS 2,516 700,000 Powerscreen International 6,014 400,000 Getty Communications, Cl. A 5,800 600,000 Edinburgh Fund Managers 5,558 580,000 Oriflame 4,879 1,200,000 Body Shop International 3,546 1,000,000 Capital 2,939 350,000 Ethical Holdings 2,450 4,500,000 Electronics Boutique 1,337 700,000 Pittencrieff Resources 465 - ------------------------------------------------------------------------------- 97,005 GERMANY/AUSTRIA: 0.6% 120,000 Flughafen Wien (Austria) 6,330 425,000 United International Holdings (Austria) 5,791 8,000 Binding-Brauerei 2,974 20,000 Escada 2,911 - ------------------------------------------------------------------------------- 18,006 NORDIC COUNTRIES: 2.4% 460,000 WM Data Nordic (Sweden) 29,444 100,000 Hennes & Mauritz, Cl. B (Sweden) 12,274 240,000 Autoliv (Sweden) 10,362 725,000 SensoNor (Norway) 5,241 180,000 Esselte, Series A (Sweden) 3,927 220,000 Pricer, Cl. B (Sweden) 3,388 50,000 Sentra, Cl. A (Finland) 1,533 90,000 Benefon (Finland) 1,517 200,000 Sysdeco Group (Norway) 1,138 - ------------------------------------------------------------------------------- 68,824 NETHERLANDS: 0.5% 280,000 Getronics 7,103 175,000 Telegraaf Holdings 3,825 50,000 Hunter Douglas 3,492 - ------------------------------------------------------------------------------- 14,420
18 Number of Shares Value (000) - -------------------------------------------------------------------- Switzerland: 0.7% 6,000 Societe Generale de Surveillance $13,569 14,000 Liechtenstein Global Trust 6,366 - -------------------------------------------------------------------- 19,935 France: 0.8% 50,000 Guilbert 7,498 26,000 Cetelem 5,602 65,000 Sligos 5,504 15,000 Canal Plus 3,691 20,000 Axime Ex Segin 2,000 - -------------------------------------------------------------------- 24,295 Spain/Portugal: 0.3% 375,000 Filmes Lusomundo (Portugal) 3,832 185,000 Vallehermoso 3,580 70,000 Cortefiel 1,747 - -------------------------------------------------------------------- 9,159 Italy/Greece: 1.2% 4,300,000 Banca Fideuram 10,204 300,000 Cellular Communications International 10,050 200,000 Hellenic Bottling (Greece) 6,806 85,000 Industrie Natuzzi 3,953 1,100,000 Tecnost 2,096 1,200,000 Costa Crociere 1,573 - -------------------------------------------------------------------- 34,682 Israel: 0.1% 200,000 Pec Israel Economic 3,425 India: 0.2% 300,000 IS Himalaya Fund 3,510 39,393 Housing Development Finance 2,540 298,700 Industrial Credit & Investment Corp. of India 610 - -------------------------------------------------------------------- 6,660 Hong Kong: 0.5% 4,500,000 Varitronix International 8,263 7,000,000 JCG Holdings 6,291 - -------------------------------------------------------------------- 14,554 China: 0.3% 810,000 AES China Generating 7,708 200,000 The Investment Company of China 1,376 - -------------------------------------------------------------------- 9,084 Singapore: 0.4% 5,100,000 Genting International 11,628 Malaysia: 0.7% 1,450,000 Resorts World 8,215 1,125,000 Kian Joo Can Factory 6,194 400,000 O.Y.L. Industries 4,069 40,000 O.Y.L. Industries Rights 390 - -------------------------------------------------------------------- 18,868 Thailand: 0.3% 70,000 The Thailand Fund 5,872 3,300,000 Sinpinyo Fund V 1,947 200,000 Thai President Foods 1,157 56,100 International Cosmetics 395 - -------------------------------------------------------------------- 9,371 Korea/Taiwan: 1.5% 120,000 Formosa Fund (Taiwan) 10,680 400,000 President Enterprises (Taiwan) 6,900 110,956 Shinsegae 6,314 7,843 Shinsegae (New) 418 5,300 Korea Mobile Telecom 5,861 275,000 Korea Mobile Telecom GDS 4,159 255,000 Kookmin Bank 5,400 80,000 Seoul International Trust 3,080 300,000 Korea-Europe Fund 1,950 - -------------------------------------------------------------------- 44,762 Indonesia/Philippines: 0.6% 6,550,000 PILTEL (Philippines) 8,988 1,728,000 Tigaraksa Satria 3,331 195,501 Unilever Indonesia 2,948 1,884,000 Mayora Indah 791 - -------------------------------------------------------------------- 16,058 19 Acorn Fund Statement of Investments (unaudited)
Number of Shares Value (000) - -------------------------------------------------------------------------------- Japan: 2.0% 145,000 Noritsu Koki $ 8,319 120,000 Nintendo 7,703 100,000 Paramount Bed 7,138 75,000 Secom 4,747 720,000 Tokyu Land 3,782 209,000 Mr. Max 3,715 115 NTT Data 3,572 90,000 Sankyo 3,313 120,000 Royal 3,178 90,000 Aucnet 3,054 60,000 Promise 2,801 40,000 Nichiei 2,636 130,000 Heiwa 2,580 - -------------------------------------------------------------------------------- 56,538 Australia / New Zealand: 0.9% 1,700,000 Sky City (New Zealand) 8,715 1,600,000 Village Roadshow 7,191 750,000 Village Roadshow Pfd. 2,285 2,500,000 Burswood Property Trust 3,403 700,000 Petroleum Securities 3,229 - -------------------------------------------------------------------------------- 24,823 Mexico: 0.7% 400,000 Kimberly Clark de Mexico 7,581 2,000,000 Nadro, Series L 6,676 600,000 Grupo Radio Centro 4,950 4,200,000 Grupo Herdez, Series B 1,524 600,000 Fondo Opcion, Series B 510 170,000 Cofar, Series B 204 - -------------------------------------------------------------------------------- 21,445 Brazil: 0.4% 14,000,000 Itau Banco PN 5,807 190,000,000 Cemig 5,676 - -------------------------------------------------------------------------------- 11,483 Other Latin America: 1.0% 130,000 Banco Latinoamericano de Export (Panama) 7,296 4,000,000 Siderca (Argentina) 5,961 300,000 Credicorp (Peru) 5,700 160,000 IRSA (Argentina) 4,740 110,000 Panamerican Beverages (Panama) 4,524 - -------------------------------------------------------------------------------- 28,221 ---------- Foreign: Total 590,902 43,000 Other 22 Total Common Stocks and Other ---------- Equity-Like Securities: 93.5% 2,698,010 Money Market Instruments: 6.8% 195,787 ---------- Total Investments: 100.3% 2,893,797 ---------- Cash and Other Assets Less Liabilities: (0.3%) (8,610) ---------- Total Net Assets: 100% $2,885,187 - --------------------------------------------------------------------------------
20 PAGE Acorn Fund Portfolio Diversification At September 30, 1996, Acorn Fund's foreign portfolio of investments as a percentage of net assets was diversified as follows:
Value (000) Percent - ----------------------------------------------------- Information Computer Systems $ 48,381 1.7% Mobile Communications 43,132 1.5 Broadcasting/CATV 38,420 1.3 Software/Services 27,039 0.9 Distribution 13,301 0.5 - ----------------------------------------------------- 170,273 5.9 Health Care Biotechnology/Drug Delivery 23,947 0.8 Hospital/Laboratory Supplies 7,138 0.3 - ----------------------------------------------------- 31,085 1.1 Consumer Goods/Services Retail 61,627 2.1 Manufacturers 52,997 1.8 Entertainment/Leisure 39,053 1.4 Food 26,209 0.9 - ----------------------------------------------------- 179,886 6.2 Finance Money Management 52,979 1.8 Banks 37,470 1.3 Other 24,995 0.9 - ----------------------------------------------------- 115,444 4.0 Industrial Goods/Services Services 29,624 1.0 Machinery Processing 13,351 0.5 - ----------------------------------------------------- 42,975 1.5 Energy/Minerals Independent Power 13,384 0.5 Oil/Gas Producers 12,951 0.4 Oil Services 5,961 0.2 - ----------------------------------------------------- 32,296 1.1 Real Estate 12,612 0.5 Transportation 6,331 0.2 ---------------------- Total Foreign Portfolio $590,902 20.5% =====================================================
21 Acorn International Major Portfolio Changes in the Third Quarter
Number of Shares ------------------------- 6/30/96 9/30/96 Additions - --------------------------------------------------------- Europe Austria Flughafen Wien 80,000 120,000 Norway Maritime Group 250,000 300,000 Switzerland Societe Generale d'Affichage 6,500 10,000 Disetronic Holding 0 1,450 Italy Mediolanum 100,000 250,000 Greece Intracom 0 150,000 France Canal Plus 0 15,000 Axime Ex Segin 70,000 80,000 United Kingdom Dorling Kindersley 500,000 700,000 Peek 0 2,214,000 Premier Oil 7,100,000 10,000,000 Netherlands Toolex Alpha 55,000 145,000 Hungary Cofinec 65,000 125,000 - --------------------------------------------------------- Asia Malaysia Arab Malaysian Finance 1,200,000 1,615,000 Singapore Venture Manufacturing 1,900,000 2,650,000 Thailand Shinawatra Satellite 4,200,000 5,000,000 Japan People 0 59,900 Mars Engineering 113,000 142,000 Tiemco 0 3,000 Mirai Industry 0 140,000 King 0 100,000 Xebio 0 135,000 Chuo Trust & Banking 274,000 382,000 Sochiko 0 165,000 IX Corporation 0 60,000 Meitec 45,000 275,000 Konami 79,000 220,000 Japan Information Processing 0 27,000 Korea Dongbu Fire & Marine Insurance 157,284 200,004 - --------------------------------------------------------- Latin America Mexico Grupo Radio Centro 400,000 700,000 Argentina Siderca 5,000,000 6,000,000 Brazil White Martins 2,000,000 3,000,000 - --------------------------------------------------------- Other Countries Canada Cinar Films 100,000 150,000 Ranger Oil 800,000 1,000,000 Australia Hudson Conway 0 175,000 Israel Blue Square Israel 0 280,000
22 Number of Shares ------------------------ 6/30/96 9/30/96 Sales - -------------------------------------------------------------- Europe Austria BWT 30,000 16,500 Vae Eisenbahnsysteme 35,000 0 Finland Huhtamaki 170,000 0 Raision Tehtaat, Series V 300,000 70,000 Italy Banca Fideuram 8,000,000 7,100,000 Sweden Allgon, Series B 500,000 200,000 Hennes & Mauritz, Cl. B 185,000 150,000 United Kingdom Invesco 90,000 0 ADT 500,000 0 Netherlands Getronics 1,000,000 940,000 Switzerland Bobst 3,900 2,250 Sece Cortaillod 21,600 0 Turkey Hurriyet Gazetecilik 30,000,000 0 Medya Holdings 62,000,000 0 Tat Konserve Sanayii 5,999,850 0 Spain Vallehermoso 350,000 200,000 - -------------------------------------------------------------- Asia Hong Kong Chen Hsong Holdings 7,500,000 1,400,000 First Sign International Holdings 5,000,000 0 India Dabur India 300 0 Business India TV 525,000 0 Japan Hokuto 250,000 230,000 Nemic Lambda 135,000 0 Noritsu Koki 275,000 227,000 Promise 220,000 150,000 Secom 200,000 163,000 Sari 70,000 0 Korea Korea Housing Bank Old 83,250 0 Korea Housing Bank New 48,740 0 Daehan Bluechip Index 225,000 0 Singapore Want Want Holdings 840,000 0 Thailand Singer Thailand 201,512 0 Srithai Superware 600,000 97,200 - -------------------------------------------------------------- Latin America Mexico Grupo Fernandez 3,000,000 0 Colombia Banco de Bogota 405,714 0 Chile Banco De A Edwards 200,000 0 Panama Panamerican Beverages 170,000 110,000 Peru Banco Wiese 2,200,000 0 - -------------------------------------------------------------- Other Countries Australia Command Petroleum Holdings 14,500,000 12,000,000 23 Acorn International Statement of Investments (unaudited) September 30, 1996 Number of Shares Value (000) - ---------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 93.4% - ---------------------------------------------------------------------- Europe: 47.3% Germany/Austria: 5.8% 120,000 Fresenius $ 22,272 14,000 Fresenius Pfd. 2,588 Dialysis Equipment & Solutions 135,000 Rhoen Klinikum Pfd. 15,046 90,000 Rhoen Klinikum 10,739 Hospital Management 50,000 Marschollek Lautenschlager 6,786 Financial Planning 120,000 Flughafen Wien 6,330 Vienna Airport Authority (Austria) 21,000 Cewe Color Holding 6,044 Photographic Developing & Printing 40,000 Escada 5,822 Fancy Dresses 15,000 Binding-Brauerei 5,576 Brewer 400,000 United International Holdings 5,450 Cable TV for Austria & Other Countries (Austria) 15,000 Pfleiderer 4,130 Construction Materials 80,000 Biotest 2,224 Immunoglobulins 16,500 BWT 1,844 Water Filtration Systems (Austria) - ---------------------------------------------------------------------- 94,851 Denmark: 0.3% 31,000 Kompan International 4,261 Playground Equipment Finland: 3.2% 500,000 TT Tieto, Cl. B 27,586 Computer Services/Consulting 370,000 Benefon 6,238 Mobile Telephones 80,000 Fiskars, Series A 6,113 Scissors & Gardening Tools 100,000 Vaisala, Cl. A 5,583 Meteorological Instruments 70,000 Raision Tehtaat, Series V 4,169 Foodstuffs & Specialty Chemicals 105,000 Sentra, Cl. A 3,218 Convenience Stores, Restaurants - ---------------------------------------------------------------------- 52,907 Norway: 1.7% 300,000 Maritime Group $ 7,982 Oil Field Equipment & Services 1,000,0000 SensoNor 7,229 Electronic Sensors for Airbags 300,000 Elkjoeb Norge 6,829 Consumer Electronics Retailer 1,000,000 Sysdeco 5,691 Software "Toolsets" & Systems - ---------------------------------------------------------------------- 27,731 Sweden: 7.0% 800,000 WM Data Nordic 51,208 Computer Services/Consulting 150,000 Hennes & Mauritz, Cl. B 18,410 Apparel Stores 320,000 Autoliv 13,816 Seatbelts & Airbags 650,000 Getinge Industrier 12,462 Sterilization & Disinfection Equipment 450,000 Pricer, Cl. B 6,929 Electronic Shelf Labels for Supermarkets 225,000 Esselte, Series A 4,908 Office Supplies & Related Equipment 400,000 Frontec, Series B 4,710 Computer Software & Services 200,000 Allgon, Series B 3,170 Mobile Telephone Antennae & Systems - ---------------------------------------------------------------------- 115,613 France: 4.0% 42,000 Cetelem 9,049 Credit Cards 100,000 Sligos 8,467 Computer Services/Credit Card Processing 80,000 Axime Ex Segin 7,998 Computer Services 50,000 Guilbert 7,498 Office Supplies Distributor 62,000 NRJ 7,388 Radio Network 65,000 Spir Communication 5,900 Regional Newspaper Publisher & Printer 42,000 Virbac 4,736 Drugs for Animals 50,000 Technip 4,572 Engineering & Construction 40,000 Fininfo 4,146 Data Feeds for French Banks & Brokers 24 Number of Shares Value (000) - ------------------------------------------------------------------------- 15,000 Canal Plus $ 3,691 Pay TV 40,000 CEP Communications 2,947 Trade Magazines & Book Publisher - ------------------------------------------------------------------------- 66,392 United Kingdom: 11.6% 1,800,000 Serco Group 17,124 Facilities Management 1,800,000 Oriflame International 15,140 Natural Cosmetics Sold Door-to-Door 1,600,000 Powerscreen International 13,745 Mobile Crushing & Screening Equipment 2,000,000 Capita Group 13,148 Outsourcing Government Services 467,000 International CableTel 11,967 Cable TV & Telephone System 2,800,000 Medeva 11,185 Drugs for Hyperactive Children 1,650,000 N. Brown Group 10,086 Mail Order Clothing in Large Sizes 2,500,000 Capital 7,348 Classy Casinos 3,700,000 City Centre Restaurants 7,289 Fast Food Restaurants 1,700,000 Securicor Group, Cl. A 7,203 Mobile Communications 1,700,000 Rotork 7,043 Valve Actuators for Oil & Water Pipelines 710,000 Edinburgh Fund Managers 6,577 Investment Management 1,330,000 Ivory & Sime 5,843 Investment Management 700,000 Seton Healthcare Group 5,762 Pharmaceuticals 567,000 Comcast UK Cable Partners 5,741 Cable TV & Telephone System 1,800,000 Body Shop International 5,319 Natural Cosmetics & Toiletries 700,000 Dorling Kindersley 5,297 Reference Books & CD-ROMs 410,000 Vosper Thornycroft Holdings 5,138 Naval Shipbuilding 670,000 Ethical Holdings 4,690 Drug Delivery 10,000,000 Premier Oil 4,534 Oil & Gas Producer 900,000 Tunstall 4,397 "I've fallen and I can't get up" Monitors 1,400,000 HALMA 4,191 Fire Detection Devices & Burglar Alarms 2,214,000 Peek 3,946 Traffic Control Systems 13,000,000 Electronics Boutique 3,862 Videogame/Computer Software Stores 1,100,000 Bluebird Toys 2,416 "Polly Pocket" Toy Manufacturer 1,750,000 Pittencrieff Resources 1,163 Oil & Gas Producer - ------------------------------------------------------------------------- 190,154 Switzerland: 3.1% 6,500 Societe Generale de Surveillance 14,700 Inspection/Testing of Trade Goods 25,000 Phoenix Mecano 12,065 Electrical Components Manufacturer 13,000 Liechtenstein Global Trust 5,911 Banking & Investment Management 7,000 Suedelektra Holding 5,299 Pool of Commodity-Related Projects 10,000 Societe Generale d'Affichage 4,587 Billboard Advertising 1,450 Disetronic Holding 3,059 Medical Equipment 10,000 Prodega 3,031 Cash-and-Carry Retailer 2,250 Bobst 2,926 Packaging Machinery - ------------------------------------------------------------------------- 51,578 Italy/Greece: 5.3% 7,100,000 Banca Fideuram 16,849 Life Insurance & Mutual Funds 2,200,000 Saipem SPA 10,308 Pipeline Construction & Drilling Contractor 550,000 Banca Popolare Di Bergamo 8,894 Regional Bank 600,000 Gewiss 7,869 Electrical Plugs & Switches 120,000 Ergo Bank 6,922 Bank (Greece) 170,000 Hellenic Bottling 5,785 Coca-Cola Bottler (Greece) 2,000,000 Editoriale L'Espresso 5,265 Newspaper & Magazines 100,000 Industrie Natuzzi 4,650 Leather Couches 3,100,000 Costa Crociere 4,063 Mediterranean Cruise Line 25 Acorn International Statement of Investments (unaudited) Number of Shares Value (000) - ------------------------------------------------------------------------- 1,100,000 Banca Di Legnano $ 3,888 Regional Bank 150,000 Intracom 3,698 Telecommunications Equipment (Greece) 1,600,000 Tecnost 3,048 ATM, Lotto, Toll Collection Equipment Manufacturer 80,000 Cellular Communications International 2,680 Mobile Phones 250,000 Mediolanum 2,715 Life Insurance & Mutual Funds 200,000 Attica Enterprises 1,361 Ferry Line (Greece) - ------------------------------------------------------------------------- 87,995 Turkey: 0.1% 83,000,000 Sabah Yayincilik 1,266 Newspapers, Magazines Spain/Portugal: 1.6% 100,000 Mapfre Vida 5,919 Life Insurance & Mutual Funds 62,000,000 Cortefiel 3,993 Apparel Retailer 30,000,000 Campofrio Alimentacion 3,872 Sausage Maker 200,000 Vallehermoso 3,870 Residential Property Developer & Landlord 170,000 Lusotur 2,904 Real Estate/Resort Developer (Portugal) 235,000 Estoril Sol 2,115 Casino Resort (Portugal) 150,000 Filmes Lusomundo 1,533 Newspapers, Radio, Video, Film Distribution (Portugal) 11,000 Zardoya Otis 1,066 Elevator Maintenance 350,000 Televisao Independente 1,038 Television Station (Portugal) 125,000 Oscar Mayer S.A. 450 Sausage Maker - ------------------------------------------------------------------------- 26,760 Netherlands: 3.3% 940,000 Getronics 23,845 Computer Consulting 620,000 Kempen 10,437 Stock Brokerage/Investment Management 280,000 Telegraaf Holdings 6,121 Newspaper Publisher 250,000 Fugro McClelland 3,843 Engineering, Consulting & Surveying 50,000 Hunter Douglas 3,492 Window Coverings 145,000 Toolex Alpha 3,262 Compact Disc Manufacturing Equipment 30,000 Wegener 2,823 Newspaper Publisher - ------------------------------------------------------------------------- 53,823 Hungary: 0.2% 125,000 Cofinec 3,463 Consumer Goods Packaging Poland: 0.1% 180,813 Bank Komunalny 1,989 Bank -------- Europe: Total 778,783 - ------------------------------------------------------------------------- Asia: 28.9% China: 0.2% 390,000 AES China Generating 3,711 Independent Power Hong Kong: 2.8% 5,500,000 Varitronix International 10,100 LCD Manufacturer 10,000,000 Li and Fung 9,052 Sourcing of Consumer Goods 10,000,000 JCG Holdings 8,987 Consumer Finance 20,000,000 Golden Harvest Entertainment 6,272 Movie Distribution & Exhibition 15,000,000 Vitasoy International Holdings 5,722 Soya Milk Manufacturer 11,000,000 Manhattan Card 5,441 Chase's Local Credit Card 1,400,000 Chen Hsong Holdings 896 Plastic Injection Moulding Machines - ------------------------------------------------------------------------- 46,470 India/Pakistan: 1.4% 82,702 Housing Development Finance 5,333 Mortgage Lender 1,047,800 Zee Telefilms 3,916 Hindi Television Programming & Broadcasting 300,000 IS Himalaya Fund 3,510 Closed-End Fund 285,200 Max India 2,040 Rs 50,000 Max India Zero Coupon 386 50,000 Max India New Shares 358 Penicillin & Mobile Phones 26 Number of Shares Value (000) - --------------------------------------------------------------------------- 987,800 Industrial Credit & Investment Corporation of India $ 2,016 Bank/Financial Services 221,785 Pakistan State Oil 2,006 Oil Distribution (Pakistan) 810,000 Tube Investment GDR 1,924 Bicycle Manufacturer 342,100 Kotak Mahindra Finance 736 Consumer Finance 2,000,000 Centurion Quantum Growth 224 Closed-End Fund 34,800 Mirc Electronic 64 Consumer Electronics - --------------------------------------------------------------------------- 22,513 Japan: 11.4% 227,000 Noritsu Koki 13,023 Photo Processing Lab Manufacturer 163,000 Secom 10,317 Security Alarm Systems 230,000 Hokuto 9,829 Mushroom Grower 130,000 Nichiei 8,567 Lender to Small-Medium Sized Businesses 142,000 Mars Engineering 8,478 Gaming Systems & Machinery 120,000 Nintendo 7,703 Video Games 220,000 Konami 7,447 Entertainment Software/Hardware 195,000 Sankyo 7,178 Pachinko Machine Manufacturer 100,000 Paramount Bed 7,138 Hospital Bed Manufacturer 150,000 Promise 7,003 Consumer Finance 1,330,000 Tokyu Land 6,986 Real Estate 110,000 Sanyo Shinpan 6,716 Consumer Finance 215 NTT Data 6,679 Computer Consulting/Services 100,000 HIS 5,899 Travel Agent 200,000 Central Uni 5,692 Health Care/Medical Equipment 165,000 Aucnet 5,600 Used Auto Auctions Via Satellite 275,000 Meitec 5,259 Engineering Outsourcing 165,000 Lasertec 5,222 Manufacturer of LCD & Photomask Defect Detectors 255,000 Heiwa 5,060 Pachinko Machine Manufacturer 135,000 Xebio 4,836 Sporting Goods Retailer 150,000 Itariyard 4,592 Designer/Wholesaler of Women's Apparel 50,000 Ryohin Keikaku 4,238 Designer & Retailer of Trendy Housewares 103,720 Nihon Jumbo 4,191 Photo Processing Lab 140,000 Mirai Industry 4,047 Manufacturer of Plastic Construction Materials 382,000 Chuo Trust & Banking 4,013 Bank 150,000 Royal 3,973 Retail Auto Parts 198,000 Mr. Max 3,520 Household Goods & Appliance Retailer 90,000 Daimon 3,224 Discount Liquor Retailer 430,000 Nanto Bank 2,953 Bank 200,000 Cats 2,747 Pest Control 59,900 People 2,253 Sports Clubs 165,000 Sochiko 1,763 Film, Television & Kabuki Producer 100,000 King 678 Retail Apparel 60,000 IX Corporation 587 Software Development 27,000 Japan Information Processing 572 Software Development 3,000 Tiemco 240 Fishing Equipment ------------------------------------------------------------------------- 188,223 Korea/Taiwan: 4.7% 20,500 Korea Mobile Telecom 22,672 Mobile Communications 440,000 Kookmin Bank 9,318 Retail Bank 480,000 President Enterprises 8,280 Food Manufacturer & Distributor (Taiwan) 200,004 Dongbu Fire & Marine Insurance 7,932 Non-Life Insurance 95,000 Daehan City Gas 7,706 Gas Utility 80,000 Formosa Fund 7,120 Closed-End Fund (Taiwan) 27 Acorn International Statement of Investment (unaudited)
Number of Shares Value (000) - ------------------------------------------------------------------------------- 70,000 Taipei Fund $ 5,985 Closed-End Fund (Taiwan) 74,161 Shinsegae 4,220 5,039 Shinsegae (New) 268 Department Stores 230,000 Formosa Growth Fund 3,421 Closed-End Fund (Taiwan) 150,000 Baring Taiwan Fund 1,500 Closed-End Fund (Taiwan) - ----------------------------------------------------------------------------- 78,422 Malaysia: 2.3% 2,200,000 Malaysian Assurance Alliance 12,112 Insurance 1,800,000 Malaysian Oxygen 8,761 Industrial Gases 1,615,000 Arab Malaysian Finance 8,698 Consumer Finance 700,000 O.Y.L. Industries 7,121 70,000 O.Y.L. Industries Rights 682 Air Conditioners - ----------------------------------------------------------------------------- 37,374 Indonesia: 1.7% 2,500,000 Bank Niaga 6,623 Bank 2,939,400 Tigaraksa Satria 5,666 Distributor of Consumer Goods 3,000,000 Mustika Ratu 4,652 Traditional Cosmetics 1,470,000 Modern Photo Film 4,274 Fuji Film Distributor 230,000 Unilever 3,468 Consumer Goods 5,416,000 Mayora Indah 2,275 Baked Goods/Candy 702,000 Suba Indah 495 Beverage & Food - ----------------------------------------------------------------------------- 27,453 Philippines: 1.7% 16,500,000 Int'l Container Terminal Services 11,006 Container Handling Terminals & Port Management 8,000,000 PILTEL 10,978 Mobile Communications 3,000,000 Philippine Savings Bank 6,690 Bank - ----------------------------------------------------------------------------- 28,674 Singapore: 1.2% 5,400,000 Genting International 12,312 Cruise Line 2,650,000 Venture Manufacturing 4,630 2,401,674 Venture Manufacturing Warrants 7/26/99 2,200 Contract Electronics Manufacturer - ----------------------------------------------------------------------------- 19,142 Thailand: 1.5% 5,000,000 Shinawatra Satellite 8,213 Satellite Leasing 200,000 Serm Suk 6,137 Pepsi Bottler 320,000 Bangkok Insurance 5,061 Finance/Insurance 300,000 Thai President Foods 1,735 Instant Noodles & Cookies 2,600,000 Sinpinyo Fund V 1,534 Closed-End Fund 173,100 International Cosmetics 1,219 Consumer Goods Distribution 97,200 Srithai Superware 424 Plastic Tableware & Containers - ----------------------------------------------------------------------------- 24,323 ------- Asia: Total 476,305 - ----------------------------------------------------------------------------- Latin America: 8.5% Mexico: 3.1% 600,000 Kimberly Clark de Mexico 11,372 Paper Products 3,000,000 Nadro, Series L 10,013 Pharmaceutical Distributor 400,000 Bufete Industrial 7,000 Engineering & Construction 1,100,000 Grupo Industrial Bimbo 5,901 Bread, Baked Goods & Snacks 700,000 Grupo Radio Centro 5,775 Radio Stations & Networks 5,500,000 Grupo Herdez, Series B 1,996 Sauces & Condiments 600,000 GBM Atlantico 1,500 Bank & Brokerage 1,500,000 Fondo Opcion, Series B 1,275 Real Estate Investment Fund 107,000 Cofar 129 Drug Stores - ----------------------------------------------------------------------------- 50,362
28
Number of Shares Value (000) - -------------------------------------------------------------- Brazil: 1.8% 26,000,000 Banco Itau Pfd. $10,785 Bank 200,000,000 Cemig Pfd. 5,975 Electric Utility 3,000,000 White Martins 4,261 Industrial Gases 35,000,000 Telemig Pfd. 4,148 35,000,000 Telemig 3,341 Telecommunications 1,000,000 Brazilian Smaller Companies Warrants 525 Closed-End Fund - -------------------------------------------------------------- 29,035 Argentina: 1.2% 6,000,000 Siderca 8,941 Steel Pipe Producer 280,000 IRSA 8,295 Real Estate Management & Development 1,400,000 Cresud 2,408 Agriculture 229,500 Cerveceria Biekert 230 Brewer - -------------------------------------------------------------- 19,874 Chile: 1.0% 240,000 Santa Isabel 6,150 Grocery Stores 150,000 Genesis Chile Fund 6,131 Closed-End Fund 260,000 Banco BHIF 4,745 Financial Services - -------------------------------------------------------------- 17,026 Peru: 0.6% 370,000 Credicorp 7,030 Universal Bank 2,527,334 Enrique Ferreyros 2,658 Heavy Machinery Dealer - -------------------------------------------------------------- 9,688 Other Latin America: 0.8% 150,000 Banco Latinoamericano de Exportaciones $8,419 Trade Financing (Panama) 100,000 Ceteco Holdings 5,401 Appliances Retailer (Central America) 110,000 Panamerican Beverages 4,524 Coca-Cola Bottler (Panama) 450,000 Global Casinos Cv. Pfd. 375 225,000 Global Casinos 105 Casino Operator (Aruba) - -------------------------------------------------------------- 13,423 ------- Latin America: Total 139,408 - -------------------------------------------------------------- Other Countries: 8.4% Australia/New Zealand: 5.0% 4,250,000 Village Roadshow Pfd. Cl. A 13,452 750,000 Village Roadshow Pfd. Cl. B 2,285 Film Distribution, Exhibition & Production 12,000,000 Command Petroleum Holdings 9,591 Oil & Gas Producer 2,000,000 Publishing & Broadcasting 9,496 Media & TV Broadcasting 1,750,000 Sky City 8,972 Casino & Hotel (New Zealand) 1,700,000 Petroleum Securities Australia 7,843 Oil & Gas Producer 4,000,000 Austereo 7,090 Radio Stations 3,700,000 Burswood Property Trust 5,036 Perth Casino & Resort 4,600,000 Sonic Healthcare 5,023 Pathology Labs 3,500,000 Tyndall Australia 4,708 Money Management & Insurance 1,200,000 Skilled Engineering 4,264 Temporary Skilled Labor 600,000 PDL Holdings 2,801 Electrical Equipment Manufacturer & Distributor (New Zealand) 175,000 Hudson Conway 2,382 Casino Managers ------------------------------------------------------------ 82,943
29 Acorn International Statement of Investments (unaudited)
Number of Shares Value (000) - --------------------------------------------------------------------- Canada: 2.6% 460,000 Veritas Energy Services $ 8,323 Geophysical Contractor 1,000,000 Ranger Oil 7,500 Oil & Gas Producer 1,000,000 Shaw Communications 6,496 Cable TV 435,000 Shaw Industries 6,402 Oil Field Services 1,400,000 Pan East Petroleum 4,111 Oil & Gas Producer 150,000 Cinar Films 3,909 Children's Television Programming 500,000 Cogeco 2,404 Cable TV 300,000 Cogeco Cable 1,921 Cable TV 250,000 Fundy Cable 1,064 Cable TV - -------------------------------------------------------------------- 42,130 Israel: 0.5% 280,000 Blue Square Israel 4,130 Supermarkets & Department Stores 200,000 Pec Israel Economic 3,425 Industrial Holdings 397,810 Alliance Tire 779 Off-the-Road Tires - -------------------------------------------------------------------- 8,334 South Africa: 0.3% 460,000 Kersaf Investments 4,766 Casino Resorts ---------- Other: Total 138,173 Foreign Corporations, Operations in the U.S.: 0.3% 161,000 Carnival $ 4,991 Cruise Ship Line (Panama) 2,044 Other 7 ---------- Total Common Stocks and Other Equity-Like Securities: 93.4% 1,537,667 ---------- Money Market Instruments: 6.5% 107,319 ---------- Total Investments: 99.9% 1,644,986 ---------- Cash and Other Assets Less Liabilities: 0.1% 2,289 ---------- Total Net Assets: 100% $1,647,275 ====================================================================
30 Portfolio Diversification At September 30, 1996, the Fund's portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent - ---------------------------------------------------- Information Computer Systems $ 98,826 6.0% Broadcasting/CATV 79,109 4.8 Distribution 73,750 4.5 Software/Services 70,771 4.3 Mobile Communications 48,755 3.0 Consumer Electronics 29,058 1.8 Instrumentation 5,583 0.3 Equipment 3,698 0.2 - ---------------------------------------------------- 409,550 24.9 Health Care Biotechnology/Drug Delivery 41,168 2.5 Hospital/Laboratory Supplies 37,021 2.2 Services 25,785 1.6 Equipment 21,213 1.3 - ---------------------------------------------------- 125,187 7.6 Consumer Goods/Services Retail 174,010 10.6 Manufacturers 97,475 5.9 Entertainment/Leisure 73,951 4.5 Food 66,782 4.0 Recreational Vehicles 2,710 0.2 - ---------------------------------------------------- 414,928 25.2 Finance Money Management 93,590 5.7 Banks 86,951 5.3 Insurance 25,698 1.6 Other 103,063 6.2 - ---------------------------------------------------- 309,302 18.8 Industrial Goods/Services Services 83,434 5.1 Machinery Processing 56,522 3.4 Steel 5,138 0.3 Forest Products/Construction 4,130 0.3 - ---------------------------------------------------- 149,224 9.1 Energy/Minerals Oil/Gas Producers 43,983 2.7 Oil Services 27,231 1.7 Independent Power 17,392 1.0 Mining 7,843 0.5 Refining/Marketing 2,006 0.1 - ---------------------------------------------------- 98,455 6.0 Real Estate 23,330 1.4 Transportation 7,691 0.4 Money Market Instruments 107,319 6.5 ------------------ Total Investments $1,644,986 99.9% - ----------------------------------------------------
31 The Acorn - ------------------------ Family of Funds Trustees Irving B. Harris Chairman James H. Lorie Vice Chairman Leo A. Guthart Jerome Kahn, Jr. David C. Kleinman Charles P. McQuaid Roger S. Meier Adolph Meyer, Jr. Malcolm N. Smith Ralph Wanger Officers Ralph Wanger President Charles P. McQuaid Senior Vice President Terence M. Hogan Vice President Leah J. Zell Vice President Merrillyn J. Kosier Vice President and Secretary Bruce H. Lauer Vice President and Treasurer Kenneth A. Kalina Assistant Treasurer Investment Advisor Wanger Asset Management, L.P. 227 West Monroe Street, Suite 3000 Chicago, Illinois 60606 1-800-9-ACORN-9 (1-800-922-6769) e-mail: wanger@mcs.com Distributor WAM Brokerage Services, L.L.C. P.O. Box 8502 Boston, Massachusetts 02266-8502 Transfer Agent, Dividend Disbursing Agent and Custodian State Street Bank and Trust Company Attention: Acorn Family of Funds P.O. Box 8502 Boston, Massachusetts 02266-8502 1-800-962-1585 Legal Counsel Bell, Boyd & Lloyd Chicago, Illinois This report, including the unaudited schedules of investments is submitted for the general information of the shareholders of Acorn Investment Trust. This report is not authorized for distribution unless preceded or accompanied by a prospectus. 32 -----END PRIVACY-ENHANCED MESSAGE-----