-----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, WbX79fFX1BEwcYWb3dRg9zYEGl8KIG6j0awG0BZuTmKpQrPBPDbt59bCCTP65aON AotRzyUhVwHE0YGKqKBR0g== 0000950131-97-003579.txt : 19970523 0000950131-97-003579.hdr.sgml : 19970523 ACCESSION NUMBER: 0000950131-97-003579 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970522 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: 97612706 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 FIRST QUARTER REPORT Acorn The Acorn Family of Funds First Quarter Report -------------------------------- March 31, 1997 Managed by Wanger Asset Management, L.P. Acorn Family of Funds First Quarter Report 1997 .Table of Contents Squirrel Chatter .Excerpt from A Zebra in Lion Country by Ralph Wanger 1 Acorn USA .In a Nutshell 4 .Performance at a Glance 5 .Major Portfolio Changes 10 .Statement of Investments 11 Acorn Fund .In a Nutshell 6 .Performance at a Glance 7 .Major Portfolio Changes 13 .Statement of Investments 15 .Foreign Portfolio Diversification 21 Acorn International .In a Nutshell 8 .Performance at a Glance 9 .Major Portfolio Changes 22 .Statement of Investments 25 .Portfolio Diversification 32 A Zebra in Lion Country: Ralph Wanger's Investment Survival Guide (Simon & Schuster) is now available in bookstores nationwide. All of the investment philosophies and techniques that have guided Mr. Wanger over the past 25 years are revealed in this book. As readers of his quarterly shareholder reports have come to expect, Mr. Wanger has included lively anecdotes, metaphors and stock stories that make the book fun to read (Absolutely no algebra required.) How can you get your copy? 1. Purchase a copy at your local bookstore 2. Call 1-800-888-4741 to order your copy directly and receive about 25% off the suggested retail price. 3. Send a new investment of $5,000 or more for a new or existing Acorn Fund, Acorn International or Acorn USA account between April 1, 1997 and Flag Day (June 14, 1997), and Wanger Asset Management will automatically send you a book for FREE. Frankly, we like the last option the best. We hope you share our excitement over this event. Our shareholders are very important to us, and we look forward to a long and mutually rewarding relationship with you. .Squirrel Chatter A Zebra in Lion Country by Ralph Wanger is worth a special run to the bookstore...Not only is it entertaining and well written, but you'll get market- tested, proven and profitable advice about managing your money in stocks and mutual funds. --Terry Savage, Chicago Sun-Times, April 13, 1997 Market volatility characterized the first quarter of 1997. We thought you would appreciate this timely excerpt from Mr. Wanger's new book. Is There a Pattern? Why do we fall for such tricks and listen to market forecasters who are no better than astrologers? Because the human mind is a pattern-seeking mind. We are all descended from people who are good pattern finders, because at some point our ancestors were walking around with some fellow hunters and there was a little rustle in the tall grass a hundred feet ahead. And Og said, "That's the wind," and Magog said, "I think it's a leopard." And Og marched forward and was leopard lunch. Your ancestor is Magog, who read that rustle aright. We're all descended from people who were very good at finding patterns in things. All of us at some point in our lives lie down on our back on a hillside and look up at the sky and see objects or creatures in the clouds. At least, I hope everyone has done that. It's an excellent thing to do. You will see patterns in the clouds -- horses, whales, faces. You'll see them because we're genetically trained to be pattern recognizers. If you ask a computer scientist what people can do very readily that computers have a tough time doing, the answer will be pattern recognition. You or I could recognize any of thousands of faces instantly. You won't remember all their names, but if you've seen a face before, you'll recognize it. Computers have a very difficult time with pattern recognition. The human brain is itself a very good computer, programmed to perform functions like that. It was damned important to know if that rustle ahead was the wind or a leopard, or if those three men in uniform coming toward you were from your army or theirs. In the investment world, however, extrapolating patterns from historical data is unreliable because of the constantly changing nature of that world. We all accept the cliche that the pace of change has accelerated, but I wonder if what that really means has sunk in. The institutionalization of the market, for example, has had a profound effect on market behavior. Individual investors tend to hold on to their stocks; institutions have been turning over their portfolios almost 100 percent a year. They may not be trying to time the market -- many professional managers stay fully invested -- but they are constantly changing the names in their portfolios. The incessant stock switching that has taken hold among many professional managers is like a bride's announcing at the wedding reception that she is already planning her divorce. Furthermore, individuals make sales at scattered times, while institutions tend to act in unison. We're back to the herd of zebras, responding similarly to any given stimuli. This time, the zebras are in a canyon, with the lion asleep at the head wall. Every zebra is going to munch grass right up to the lion's nose, then bolt down the trail just before the lion pounces. Unfortunately, it is a narrow trail, and in fact, the zebras will pile up in a helpless clot at the first narrow point and become instant steak tartare. Many large institutions, responsible for billion-dollar portfolios and dealing in often illiquid markets, claim that they can make a quick switch from stock to stock or stocks to cash, and vice versa. No way. The result is the highly volatile market we have today. It makes very large, very abrupt moves that create impossible situations for timers. By the time they have figured out what's going on, it's already too late. The effect of the globalization of economies and markets--to a degree that far surpasses that of even ten years ago--has had an enormous impact on what happens in our own market. The shift from an industrial to a service economy has also made older data suspect. Wall Street 1 .Squirrel Chatter - -------------------------------------------------------------------------------- Beware of False Metaphors When you stop to think about it, all investing rests on metaphors. Your broker calls you and says, "This is Murray. I've got a stock here that's going to be the next Intel." That's a metaphor. Metaphors are ways of finding common patterns between dissimilar things. As essential as metaphors are for investors, therefore, they require critical analysis. In December 1994 the Mexican peso collapsed. The Mexican economy reeled. The Mexican stock market tanked. ("Collapsed," "reeled," and "tanked" are all metaphors, if that's of any interest.) Investors then sold stocks in Argentina, causing a drop in prices and a run on Argentina's peso. There was no problem with the Argentine economy or banking system. Investors had simply assumed a metaphor: "They speak Spanish and use pesos as money, so they are the same." Never mind that Buenos Aires is 4,609 airline miles away from Mexico. Often those who believe in false metaphors create opportunities for those who think a bit harder. Bad metaphors trap investors all the time. How often do we read, "This market is just like the market in April 1966?" There are similarities, sure, but not enough to bank on them. Chart reading is a metaphor. Momentum investing is another. In fact, almost all models that forecast the future have to be viewed suspiciously. That is why at Acorn we established a powerful and far-reaching group, the Metaphor Committee, whose ruthless and unsleeping members can pounce at any time, crushing an overworked simile or dismembering a mixed metaphor. The most complex area in which the committee operates is criticism of mathematical models that predict stock price behavior. It has become popular in recent years to put one's metaphor into a series of equations that can then be run on a computer, adding the veneer of infallibility provided by neatly typed- out rows of numbers. All models have an inherent limitation on their validity, the Cricket Limit. There is a nearly perfect mathematical fit between air temperature and the pitch at which crickets chirp. As the temperature drops down to about 50/o/, crickets chirp more slowly. One might expect the pitch to decline further as the night cools from 50/o/ to 45/o/. This doesn't happen; under 50/o/, the cricket packs it in and stops chirping altogether. No matter how reliable the relationship of two variables has been (such as interest rates and inflation), there is no reason to think the relationship will hold for previously unknown levels (as happens when inflation rates soar). - -------------------------------------------------------------------------------- inventions such as program trading and derivatives have introduced new factors that have further muddied the picture. Lately, the influx of hundreds of billions of dollars into mutual funds has tossed in another fresh element. All those indicators that are supposed to tell you when the bull market is over can, again, be unreliable extrapolations of past behavior. As a prime example, in October 1992 the dividend yield of the S&P 500 fell below 3 percent, and it has been common wisdom that whenever that occurs, the market is ready for a tumble. It always happens, proclaimed the soothsayers (citing 1987 as another instance), and it always will. When the bear didn't pounce, the timers blamed dropping interest rates and rising corporate earnings but declared they were only stalling the inevitable. But still no great correction came, even though the yield stayed under 3 percent. By March 31, 1997, 2 A I U If you ask a computer scientist what people can do very readily that computers have a tough time doing, the answer will be pattern recognition. the dividend yield on the S&P 500 hit a record low of 1.9 percent, while the market was still making new highs. By that time the pundits had changed their tune. Well, maybe the old signal isn't valid anymore, after all. Now the argument runs: "Investors currently want appreciation more than income, so companies are using their earnings to expand operations or buy back stock, and dividend payouts are going to stay low from now on." (No one has challenged this reasoning, though stocks are increasingly owned by tax-exempt holders who are happy to get dividends, and less by individuals who have to pay taxes on them.) As Wharton professor Jeremy Siegel wrote in his book Stocks for the Long Run, "Any yardstick for stock valuation, even one with a sound theoretical basis or one that has worked for more than a century, can stop working." Meanwhile, a good number of portfolio managers, observing the low dividend yield and other negative signs, moved heavily into bonds and cash, and their performance suffered, in some cases for several years. (One celebrity casualty of the urge to time: Jeff Vinik, late of the Fidelity Magellan fund, who in late 1995 and early 1996 shifted a good part of his portfolio from stocks into bonds, expecting the former to correct and the latter to rally. Wrong on both counts, he was soon no longer employed by Fidelity). Eventually the Cassandras will prove right -- bear markets have not been repealed -- but it is very doubtful that the timers will be any better off at the end of the day than if they had just stayed in the stocks of companies they liked. Even the timers with the best records concede that they have added no return to a buy-and-hold policy; their claim is that since they are often in cash, they achieve their returns with lower volatility. The stock market, at least in the short run, responds to many factors besides profits and dividends. Inflation and interest rates, supply of new stock underwritings, the money supply, investor confidence, governmental actions, and international events are all factors that interact with one another in subtle, changing, and unpredictable ways. What we have, really, is a complex system with lags and multiple feedback loops. All such systems share certain characteristics that hinder predictive accuracy. Behavior can be counterintuitive. The long-term response will often be the opposite of a short-term response. (Price and wage controls bring down the rate of inflation at first but then create distortions that make the situation worse.) Trying to predict what will happen to a complex system by looking at only one part of it leads to inaccurate conclusions. (Trying to predict the market by watching corporate profits alone is a perfect example.) Setting policy to optimize one part of the system often produces poor results for the total system. (Environmental rules to reduce auto exhaust emissions cause large increases in gasoline consumption, so the effect on the total system may be negative.) One might think, for example, that at least the state of the economy would provide a road map to securities prices, but as Peter Lynch has said, "I spend about fifteen minutes a year on economic analysis. The way you lose money in the stock market is to start off with an economic picture." Market levels simply have little to do with whether the economy is up 3 percent or down 1 percent. They have a great deal to do with cash flow into and out of markets. Every study shows that the stock market is a reliable lead indicator of where the economy is headed, but it's no help trying to look at events the other way round. You simply have to buy stocks you believe in because you think you've found people who have an important reason to be in business, and then you have to stick with them as long as your faith in them remains. But nothing seems to stop people from trying to call the market's direction. I sometimes think they are less interested in making money than they are in proving their brilliance. "The market has a will of its own, does it? Very well, I'll tame it and show who's boss." It's a silly challenge. When the market's going down, it's not because you are stupid. And when it's going up, it's not because you are smart. - ------------------------------------------------------------------------------- From A ZEBRA IN LION COUNTRY by Ralph Wanger with Everett Mattlin. Copyright (C) 1997 by Ralph Wanger. Published by Simon & Schuster, New York, $25.00. Reprinted by permission. 3 U Acorn USA .In a Nutshell Small-cap stocks took a beating last quarter. The small-cap Russell 2000 index sank over 5%, and Lipper's Small Company Growth Funds Index cratered nearly 10%. Acorn USA held its ground better than most, falling only 1.5%. Since its launch date last September, Acorn USA is up 14.8%, just less than the S&P 500's gain, but more than quadruple the Russell 2000's return. Our star performer was Applied Industrial Technologies. The stock (formerly known as Bearings) gained a princely 26% in the quarter. A large acquisition is expected to ratchet up earnings at this industrial component distributor. Other winners were Respironics (manufactures pumps that help apnea sufferers breathe while asleep) and Data Transmission (provides satellite-delivered agricultural data and analysis to farmers). Oil stocks took a spill last quarter. Warmer than expected winter weather sent petrol prices plunging, tripping up Seagull Energy and Tesoro. Both are savvy operators, with new oilfields coming on stream to stem the ill effects of today's cruddy crude prices. Tech stocks went to heck in the first quarter. Worst hit were the fancy- multiple glamour stocks favored by momentum investors and Internet chatterers. We avoided most of the tech wreck, being underweight in tech overall and completely weightless in the sexy tech symbols beloved of the technology papparazzi. Our favorite tech companies are plain Janes like Kronos and Act Manufacturing, with their proven niche products, sustainable growth rates and cheap stock prices. The stock market has been sloppy so far this year. We look at the stock market's wriggles like we would a solar eclipse. We may give them a glance, but we're careful not to stare. Instead, we spend our time calling on managements, visiting companies and digging through financial statements in search of thriving well-priced stocks for your Fund. /s/ Robert A. Mohn - ---------------------- Robert A. Mohn Lead Portfolio Manager Fund Assets as of 3/31/97: $86.9 million .Acorn USA Top 10 Holdings CalEnergy 8.4% Power Plants Coast Savings 7.3% California Savings & Loan Data Transmission 5.1% Data Services for Farmers Applied Industrial Technologies 4.4% Distributes Industrial Components HealthCare Compare 4.1% Managed Care Services Royal Caribbean Cruise 3.9% Exotic Cruises C-Tec 3.6% Cable TV/Local Telephone United Cities Natural Gas 3.3% Natural Gas Distributor Wackenhut 3.3% Prison Management Schnitzer Steel 3.3% Scrap Steel Processor The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. Fund -------------------------------------------------------------------------- facts Remember, you can use your touch-tone telephone to obtain your fund account balance(s) 24 hours a day. Simply call 1-800-962-1585 and follow the easy automated instructions. 4 .Performance at a Glance U Acorn USA Portfolio Diversification .as a % of net assets, as of 3/31/97 [PIE CHART APPEARS HERE]
Information 17.8% Health Care 11.1% Consumer Goods/Services 8.2% Finance 12.2% Industrial Goods/Services 21.2% Energy/Minerals 23.2% Cash 6.3% ----- 100.0%
Relative Performance - ------------------------------------------------------------ 1st quarter since inception 1997 (9/4/96) Acorn USA -1.5% 14.8% Russell 2000 -5.2% 3.4% S&P MidCap 400 -1.5% 9.0% S&P 500 2.7% 16.8% Dow-Jones 2.6% 18.7% Lipper Small Company Growth Funds Index -9.4% -5.1%
The Russell 2000 is formed by taking 3,000 companies and then eliminating the largest 1,000 leaving a good small company index. The S&P MidCap 400 is a market value-weighted index of 400 stocks that are in the next tier down from the S&P 500. The S&P 500 is a broad market-weighted average, blue-chip dominated. The Dow Jones Industrial Average includes 30 large companies. The beginning value used to compute the Dow Jones "since inception" return in the chart above is as of 8/31/96. The Lipper Small Company Growth Funds Index is composed of the 30 largest small company growth funds tracked by Lipper Analytical Services. All indexes are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 3/31/97: $11.48 - ----------------------------------------- Did You U - -------------------------------------------------------------------------------- Know? You can now open a new Acorn account by wire. Simply call 1-800-962-1585 to obtain an account number and wiring instructions. After your account is open you may easily add to it by: .wiring money from your bank .exchanging from one Acorn account to another .mailing your check with the stub from one of your account statements, with a slip from your Acorn investment booklet or with a letter of instruction. Please remember the Acorn funds do not accept third party checks. 5 A Acorn Fund .In a Nutshell Acorn Fund weathered a stormy first quarter. The fund outperformed the small cap averages, losing 2.5 percent in the quarter, while the Russell 2000 slid 5.2 percent. The larger capitalization Dow Jones Industrials and S&P 500 each managed more than a two percent rise. Our winners were literally all over the map. AES, a global power producer, and its affiliate AES China Generating, turned on electrifying 20+ percent performance. Genting International, our Malaysian cruise and gaming investment, hit the jackpot, paying off with a 23% jump. Nearer to home, Royal Caribbean & Carnival cruised into port with double-digit gains. Broadcasters International Family Entertainment & Data Transmission scored boffo ratings, rising 31 and 18 percent. Acquisitions are back in vogue; we benefited when BankOne charged in to buy First USA's credit cards and Reed Elsevier tapped into MDL Information Systems. On the losing side of the ledger, Thermo Electron, HBO & Co and Harley- Davidson all hit speedbumps. Financial stocks gave back some of their great profits, while technology short-circuited. Our underweight position in technology and focus on downstream technology groups aided our relative performance. Oil and gas companies also retreated after a winning 1996. We are proud of our long-term record, built by purchasing great businesses at attractive prices. Although we hate to see Acorn decline in any quarter, many of our peers fell over 10 percent in the first period. The Acorn team will not chase momentum stocks up and down. Instead of whiplash, we will strive to provide consistent long-run returns. Lastly, we are pleased to announce that Andrew Morley is joining us to cover domestic electronics and computers. Andrew has an MBA from Harvard and a BS in electrical engineering from Yale University. We look forward to his contribution to the Acorn funds. /s/Charles P. McQuaid /s/ Terence M. Hogan Charles P. McQuaid Terence M. Hogan Co-Portfolio Manager Co-Portfolio Manager Fund Assets as of 3/31/97: $2,803.4 million .Acorn Fund Top 10 Holdings Carnival 1.8% Cruise Ship Line AES Corporation 1.8% Global Power Producer Liberty Media 1.7% CATV Programming First USA 1.5% Credit Cards Lincare Holdings 1.5% Home Health Care Services HealthCare Compare 1.5% Managed Care Services Harley Davidson 1.3% Motorcycle Manufacturer Borders 1.3% Bookstores Seagull Energy 1.2% Oil/Gas Producer CalEnergy 1.2% Power Plants 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. New - -------------------------------------------------------------------------------- Prospectus This month, the 1997 Acorn Family of Funds prospectus was mailed with the first quarter report to shareholders. (The funds saved on postage by consolidating the two mailings.) Look on prospectus pages 24-25 to meet your fund managers, and pages 38-43 for easy shareholder reference charts. 6 A .Performance at a Glance The Value of a $10,000 Investment in Acorn Fund .June 10, 1970 through March 31, 1997 [GRAPH APPEARS HERE] Average Annual Total Return ------------------------------------------ 1 Year 5 Years 10 Years Life of Fund 11.0% 15.2% 14.0% 16.5%
Acorn Fund Mountain Chart Plot Points Date Acorn Fund($) 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 1996 609,569 279,177 3/31/97 594,573 286,661
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 3/31/97 [PIE GRAPH APPEARS HERE]
Information 17.9% Health Care 9.6% Consumer Goods/Services 8.8% Finance 13.6% Industrial Goods/Services 9.9% Energy/Minerals 10.1% Real Estate 3.1% Foreign 20.0% Cash 7.0% ------ 100.0%
Relative Performance - -------------------------------------------------- 1st quarter Last 12 mos. 1997 Acorn Fund -2.5% 11.0% Dow-Jones 2.6% 20.5% S&P 500 2.7% 19.8% S&P MidCap 400 -1.5% 10.6% Russell 2000 -5.2% 5.1%
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 indexes are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 3/31/97: $14.67 - ----------------------------------------- 7 I Acorn International .In a Nutshell In the first quarter of 1997 a strategy of international diversification rewarded patient investors. While the average U.S. small-cap fund lost nearly 7% from January to March, the average international small-cap fund rose over 2%. Acorn International fully participated in the relative outperformance of its peer group, gaining 2.1% for the period. As always, good stock picks determined where we made our money. Capita Group, Rhoen Klinikum, Kempen and Genting International contributed mightily to overall results. We are amused by how little-known these companies are by large- cap investors, even in their home markets. It tells us that our investment philosophy of seeking tomorrow's blue chips is sound. We hope to hold them until they become household names, reaping the benefits of rising share prices along the way. Our losses this quarter were primarily in Japan. The Nikkei average (big stocks) dropped 7% while the Japanese over-the-counter average plunged 15% in the quarter in a demoralized market. When sentiment turns, the rebound should be sharp. While we also took a markdown on the currency translation of some foreign holdings, we see a stronger dollar as mostly positive for overseas markets. It helps many non-U.S. companies to compete and boosts their reported earnings, supporting their economies and their valuations. We are pleased to announce that Todd Narter is joining us to cover international technology stocks. Todd has spent the last eight years working in the semiconductor industry in Japan. He has an M.A. from Stanford in electrical engineering and a B.A. from the University of Texas. His unique expertise enhances our analytical capabilities and we look forward to having him on the team. /s/ Leah Joy Zell Leah Joy Zell Co-Portfolio Manager
Fund Assets as of 3/31/97: $1,873.9 million .Acorn International Top 10 Holdings WM Data Sweden 3.0% Computer Services/Consulting T T Tieto Finland 2.2% Computer Services/Consulting Rhoen Klinikum Germany 1.7% Hospital Management Getronics Netherlands 1.5% Computer Consulting Axime Ex Segin France 1.3% Computer Services Serco Group United Kingdom 1.1% Facilities Management Hennes & Mauritz Sweden 1.1% Apparel Stores Fresenius Germany 1.0% Dialysis Equipment/Solutions Banca Fideuram Italy 1.0% Life Insurance/Mutual Funds Getinge Industrier Sweden 0.9% Sterilization/Disinfection Equipment
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 The Acorn funds have a free telephone exchange plan with a family of money market mutual funds. To find out more, call us at 1-800-9-ACORN-9 (1-800- 922-6769). 8 I .Performance at a Glance The Value of a $10,000 Investment in Acorn International .September 23, 1992 through March 31, 1997 Average Annual Total Return 1 Year 3 Years Life of Fund 13.1% 9.1% 17.3% [GRAPH APPEARS HERE] Acorn International Mountain Chart Plot Points
Date Acorn Int'l ($) 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 12/31/96 20,133 16,199 03/31/97 20,564 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 3/31/97 [PIE CHART APPEARS]
Information 22.3% Health Care 7.2% Consumer Goods/Services 23.2% Finance 18.7% Industrial Goods/Services 11.2% Energy/Minerals 5.3% Real Estate 1.8% Transportation 0.6% Cash 9.7% ----- 100.0%
Relative Performance - ---------------------------------------------------------------- 1st quarter Last 12 mos. 1997 Acorn International 2.1% 13.1% EAFE -1.6% 1.5% Lipper Int'l Small Co. Funds Avg. 2.1% 11.7% Lipper Int'l Funds Avg. 1.3% 8.7% Lipper Small Co. Funds Avg. -6.9% 4.7%
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 Int'l Small Co. Funds Avg. is calculated from the performance of a group of small company international funds, including Acorn International. For the 1st quarter and 12- month periods above, the group consisted of 21 funds and 19 funds, respectively. The Lipper Int'l Funds Avg. is an average of all international funds tracked by Lipper Analytical Services. This group consisted of 408 and 354 funds for the quarter and 12-month periods above, respectively. The Lipper Small Co. Funds Avg. is calculated from the performance of a group of small company U.S. funds. For the 1st quarter and 12-month periods above, the group consisted of 465 and 393 funds, respectively. All indexes are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 3/31/97: $20.03 9 U Acorn USA >Major Portfolio Changes in the First Quarter
Number of Shares ----------------- 12/31/96 3/31/97 Additions - ------------------------------------------------------ Information C-Tec 39,000 111,000 Data Transmission Network 85,400 169,800 Gaylord Entertainment 0 20,000 Kronos 44,000 69,000 United Video Satellite 0 63,000 Wonderware 0 60,000 - ------------------------------------------------------ Health Care HealthCare Compare 0 87,000 - ------------------------------------------------------ Consumer Goods/Services Royal Caribbean Cruises 0 111,000 Showboat 33,000 78,000 - ------------------------------------------------------ Finance Acceptance Insurance 0 20,000 Amerus Life Holdings 0 59,500 Coast Savings 69,000 159,000 Phoenix Duff & Phelps 0 80,000 - ------------------------------------------------------ Industrial Goods/Services Applied Industrial Technologies 33,000 108,200 (formerly known as Bearings) Gibraltar Steel 12,000 53,000 Lilly Industries, Cl. A 28,000 96,000 Schnitzer Steel 32,000 111,000 Steel Dynamics 48,500 88,300 Wackenhut, Cl. B 155,200 198,900 - ------------------------------------------------------ Energy/Minerals Atmos Energy 0 27,000 CalEnergy 128,000 215,000 GeoScience 191,000 252,000 J Ray McDermott 10,000 54,000 United Cities Natural Gas 9,100 126,000 Sales - ------------------------------------------------------ Information The 3DO Company 80,000 0 CACI International 10,300 0 - ------------------------------------------------------ Health Care Invacare 30,000 0 Steris 16,000 0 - ------------------------------------------------------ Consumer Goods/Services Rawlings 65,200 0 - ------------------------------------------------------ Finance Jayhawk 28,000 0
10 U Acorn USA . Statement of Investments (unaudited) March 31, 1997
Number of Shares Value (000) - --------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 93.7% - --------------------------------------------------------------- Information: 17.8% . CATV/TV/Satellites: 12.2% 169,800 Data Transmission Network $ 4,457 Data Services for Farmers 111,000 C-Tec 3,136 Cable TV/Local Telephone 75,000 Tele-Communications, Liberty Media Group 1,495 Cable TV Programming 63,000 United Video Satellite 1,055 CATV & Satellite Dish Programming 20,000 Gaylord Entertainment 430 Country & Western Cable Channels - --------------------------------------------------------------- 10,573 . Mobile Communications: 0.7% 34,800 COMARCO 609 Wireless Network Testing . Computer Software/Services: 2.3% 60,000 Wonderware 585 Industrial Control Software 48,400 Computer Language Research 581 Tax Software 52,300 Simulation Sciences 530 Process Control Software 17,000 American Business Information 331 Provides Data on Small Businesses - --------------------------------------------------------------- 2,027 . Electronics: 2.6% 69,000 Kronos 1,207 Time Accounting Software & Clocks 34,500 ACT Manufacturing 716 Contract Manufacturing 30,000 Richey Electronics 353 Distributes Electronic Components - --------------------------------------------------------------- 2,276 ------ Information: Total 15,485 - --------------------------------------------------------------- Health Care: 11.1% . Medical Equipment: 3.8% 128,000 Respironics 2,720 Sleep Apnea Products 44,000 Kinetic Concepts 627 Hospital Beds - --------------------------------------------------------------- 3,347 . Services: 7.3% 87,000 HealthCare Compare 3,534 Managed Care Services 57,000 Lincare Holdings 2,351 Home Health Care Services 30,000 United Payors & Providers 428 Medical Claims Repricing - --------------------------------------------------------------- 6,313 -------- Health Care: Total 9,660 - --------------------------------------------------------------- Consumer Goods/Services: 8.2% . Retail: 1.7% 136,200 Host Marriott Services 1,209 Runs Airport Restaurants 14,000 Borders Group 264 Bookstores - --------------------------------------------------------------- 1,473 . Entertainment/Leisure: 6.5% 111,000 Royal Caribbean Cruises 3,386 Exotic Cruises 78,000 Showboat 1,541 Casinos 300,000 Fairfield Communities 750 Vacation Timeshares - --------------------------------------------------------------- 5,677 -------- Consumer Goods/Services: Total 7,150 - --------------------------------------------------------------- Finance: 12.2% . Savings & Loans: 7.7% 159,000 Coast Savings 6,300 California Savings & Loan 11,000 Peoples Bank Bridgeport 358 Consumer Finance - --------------------------------------------------------------- 6,658 . Insurance: 3.8% 51,000 Penn Treaty American 1,326 Nursing Home Insurance 59,500 Amerus Life Holdings 1,324 Annuities/Life Insurance 20,000 Acceptance Insurance 372 Crop Insurance 11,000 Leucadia National 302 Insurance Holding Company - --------------------------------------------------------------- 3,324
11 U Acorn USA . Statement of Investments (unaudited)
Number of Shares Value (000) - ---------------------------------------------------------- . Money Management: 0.7% 80,000 Phoenix Duff & Phelps $ 610 Mutual Funds -------- Finance: Total 10,592 - ---------------------------------------------------------- Industrial Goods/Services: 21.2% . Steel: 7.7% 111,000 Schnitzer Steel 2,831 Scrap Steel Processor 88,300 Steel Dynamics 1,545 Steel Mini-Mill 63,900 Atchison Casting 1,230 Steel Foundries 53,000 Gibraltar Steel 1,060 Steel Processing - ---------------------------------------------------------- 6,666 . Machinery: 5.6% 108,200 Applied Industrial Technologies 3,787 Distributes Industrial Components 82,650 Farr 1,064 Filters - ---------------------------------------------------------- 4,851 . Industrial Suppliers: 2.3% 96,000 Lilly Industries, Cl. A 1,740 Industrial Coatings 18,000 Aftermarket Techology 279 Auto Transmission Remanufacturer - ---------------------------------------------------------- 2,019 . Services: 5.6% 198,900 Wackenhut, Cl. B 2,834 Prison Management 100,000 World Color Press 2,038 Printing - ---------------------------------------------------------- 4,872 -------- Industrial Goods/Services: Total 18,408 - ---------------------------------------------------------- Energy/Minerals: 23.2% . Independent Power: 8.4% 215,000 CalEnergy 7,310 Power Plants . Oil/Gas Producers: 3.5% 86,000 Seagull Energy 1,548 Oil & Gas Producer 143,000 Tesoro Petroleum 1,502 Oil Refinery/Gas Reserves - ---------------------------------------------------------- 3,050 . Distribution/Marketing/Refining: 6.4% 126,000 United Cities Natural Gas 2,898 Natural Gas Distributor 124,400 NGC 1,959 Gas Processing/Marketing 27,000 Atmos Energy 685 Natural Gas Distributor - ---------------------------------------------------------- 5,542 . Oil Services: 4.9% 252,000 GeoScience 2,772 Offshore Seismic Equipment Company 54,000 J Ray McDermott 1,309 Offshore Construction Company 2,200 Atwood Oceanics 137 Offshore Drilling Company - ---------------------------------------------------------- 4,218 -------- Energy/Minerals: Total 20,120 Total Common Stocks and Other -------- Equity-Like Securities: 93.7% 81,415 -------- Short-Term Obligations: 6.5% 5,659 -------- Total Investments: 100.2% 87,074 -------- Cash and Other Assets Less Liabilities: (0.2%) (200) -------- Total Net Assets: 100% $ 86,874 - ----------------------------------------------------------
12 Acorn Fund .Major Portfolio Changes in the First Quarter
Number of Shares ---------------------- 12/31/96 3/31/97 Additions - ------------------------------------------------------------- Information ACT Manufacturing 350,000 500,000 American Management Systems 200,000 400,000 American Power Conversion 325,000 400,000 BDM International 140,000 340,000 (includes effect of 2 for 1 split) Broderbund Software 0 300,000 C-Tec 300,000 560,000 Cognos (Canada) 100,000 150,000 Data Transmission Network 750,000 800,000 Informix 330,000 600,000 Kronos 550,000 600,000 Macrovision 0 280,000 Micros Systems 0 125,000 Pioneer-Standard Electronics 1,000,000 1,090,000 Systems & Computer Technology 480,000 605,000 Thermoquest 20,000 229,000 United Video Satellite 567,000 700,000 Wonderware 0 250,000 - ------------------------------------------------------------- Health Care HealthCare Compare 573,000 1,000,000 Magellan Health Services 0 400,000 - ------------------------------------------------------------- Consumer Goods/Services Acres Gaming 0 80,000 Airtours (United Kingdom) 200,000 270,000 Dave and Buster's 60,000 135,000 Royal Caribbean Cruises 265,000 310,000 - ------------------------------------------------------------- Finance World Acceptance 1,190,000 1,390,000 - ------------------------------------------------------------- Industrial Goods/Services Gibraltar Steel 440,000 520,000 Hunter Douglas 110,000 125,000 Metal Management 0 105,000 Schnitzer Steel 300,000 350,000 Steel Dynamics 225,000 340,000 - ------------------------------------------------------------- Energy/Minerals CalEnergy 868,000 950,000 KCS Energy 0 160,000 Pride Petroleum 0 370,000 Seagull Energy 1,600,000 1,900,000 Tesoro Petroleum 900,000 1,200,000 United Meridian 200,000 300,000 - ------------------------------------------------------------- Real Estate Homestead Village 88,000 619,000
13 A
Acorn Fund .Major Portfolio Changes in the First Quarter Number of Shares -------------------- 12/31/96 3/31/97 Sales - ---------------------------------------------------------------- Information The 3DO Company 180,000 0 Argyle Television 170,000 44,000 Benefon (Finland) 90,000 0 CACI International 461,000 343,000 Compuware 153,000 130,000 Electronics Boutique (United Kingdom) 4,500,000 0 Exide Electronics Group 250,000 0 Jones Intercable, Cl. A 325,000 0 Kurzweil Applied Intelligence 170,000 0 Oak Industries 350,000 250,000 PILTEL (Philippines) 7,000,000 0 Securicor Group, Cl. A (United Kingdom) 2,000,000 1,700,000 Simulation Sciences 70,000 0 SK Telecom (Korea) (formerly known as Korea Mobile Telecom) 5,300 4,000 (includes effect of 3% bonus) Solectron 600,000 545,000 Sysdeco Group (Norway) 130,000 0 TCI Satellite Entertainment 130,000 0 Telegraaf Holdings (Netherlands) 180,000 0 Village Roadshow (Australia) 1,600,000 800,000 WM Data Nordic (Sweden) 400,000 350,000 - ---------------------------------------------------------------- Health Care Affymetrix 350,000 300,000 MDL Information Systems 275,000 0 Thermedics 268,000 63,000 ThermoTrex 100,000 0 - ---------------------------------------------------------------- Consumer Goods/Services Burswood Property (Australia) 2,500,000 450,000 Cortefiel (Spain) 70,000 0 Designer Holdings 290,000 0 Duckwall Alco Stores 200,000 48,000 Escada (Germany) 30,000 16,000 Guilbert (France) 45,000 27,000 Hennes & Mauritz, Cl. B (Sweden) 100,000 50,000 Mac Frugal's 84,000 0 Morton's Restaurant Group 125,000 0 Mr. Max (Japan) 134,900 34,000 Newell 825,000 700,000 O.Y.L. Industries (Malaysia) 440,000 255,000 Panamerican Beverages (Panama) 100,000 0 Sentra, Cl. A (Finland) 50,000 0 Shinsegae (Korea) 110,956 0 Shoney's 725,000 0 - ---------------------------------------------------------------- Finance ADVANTA, Cl. A 767,000 531,000 ADVANTA, Cl. B 520,000 247,000 Americredit 1,049,000 935,000 First American 70,000 0 First USA 1,088,000 1,013,000 Itau Banco PN (Brazil) 12,000,000 10,000,000 Jayhawk 496,000 0 Kookmin Bank (Korea) 275,000 155,000 Mercury Finance 818,000 0 Promise (Japan) 20,000 0 Riverside National Bank 104,000 0 T Rowe Price 145,000 100,000 The Thailand Fund (Thailand) 30,000 0 Washington Mutual 390,000 323,000 - ---------------------------------------------------------------- Industrial Goods/Services Aftermarket Technology 108,000 0 AG Services of America 119,000 0 Expeditors International of Washington 1,000,000 800,000 HA.LO Industries 353,000 210,000 Kian Joo Can Factory (Malaysia) 1,125,000 0 Tecnost (Italy) 1,100,000 0 Zoltek 35,000 0 - ---------------------------------------------------------------- Energy/Minerals Abraxas Petroleum 110,000 0 AES China Generating (China) 810,000 730,000 AES Corporation 955,000 900,000 Atwood Oceanics 320,000 298,000 Cemig (Brazil) 235,000,000 130,000,000 Devon Energy 300,000 0 Forest Oil 700,000 475,000 Louis Dreyfus Natural Gas 350,000 0 RAO Gazprom (Russia) 62,500 0 Siderar (Argentina) 160,000 0 Siderca (Argentina) 4,000,000 3,000,000 St. Mary Land & Exploration 200,000 0 Thermo Power 285,000 0 - ---------------------------------------------------------------- Real Estate Sunstone Hotel Investors 243,000 0
14 A
Acorn Fund . Statement of Investments (unaudited) March 31, 1997 Number of Shares Value (000) - -------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 93.0% - -------------------------------------------------------------- Information: 17.9% .Broadcasting/CATV: 1.6% 560,000 C-Tec $ 15,820 1,000,000 Tele-Communications, Series A TCI Group 12,000 44,000 Tele-Communications, Cum. Pfd. 2,662 300,000 TCA Cable TV 9,075 300,000 Granite Broadcasting 2,887 80,000 Cablevision Systems 2,380 44,000 Argyle Television 1,111 - -------------------------------------------------------------- 45,935 .Programming for CATV/TV/ Satellites: 4.3% 2,400,000 Tele-Communications, Liberty Media Group 47,850 800,000 Data Transmission Network 21,000 700,000 International Family Entertainment 14,262 700,000 United Video Satellite 11,725 300,000 BET Holdings, Cl. A 8,887 327,000 HSN 8,298 300,000 Gaylord Entertainment 6,450 280,000 Macrovision 2,415 - -------------------------------------------------------------- 120,887 .Mobile Communications: 1.9% 500,000 Telephone and Data Systems 19,188 450,000 CoreComm 6,525 355,000 COMARCO 6,212 850,000 Mobile Telecommunication Technologies 5,312 465,000 Vanguard Cellular Systems 5,115 350,000 Palmer Wireless 4,287 450,000 PriCellular 3,713 300,000 Centennial Cellular 3,112 - -------------------------------------------------------------- 53,464 .Computer Software/Services: 3.3% 605,000 Systems & Computer Technology 11,722 600,000 Informix 9,075 400,000 American Management Systems 8,800 246,000 BRC Holdings 8,179 130,000 Compuware 8,157 Principal Amount or Number of Shares Value (000) - -------------------------------------------------------------- 360,000 Analysts International $ 7,920 340,000 BDM International 7,480 210,000 Keane 6,904 343,000 CACI International 5,574 160,000 Sterling Commerce 4,640 369,000 Computer Language Research 4,428 125,000 Micros Systems 4,359 250,000 Wonderware 2,438 208,333 Source Informatics Cv. Pfd. 2,360 - -------------------------------------------------------------- 92,036 .Gaming Equipment: 1.0% 1,800,000 International Game Technology 29,025 .Consumer Software: 0.5% 300,000 Broderbund Software 6,562 280,000 Activision 3,150 450,000 Spectrum HoloByte 2,813 - -------------------------------------------------------------- 12,525 .Business Information: 0.6% 700,000 American Business Information 13,650 885,714 GIGA Cv. Pfd. 3,100 - -------------------------------------------------------------- 16,750 .Contract Manufacturing: 1.5% 545,000 Solectron 27,318 500,000 ACT Manufacturing 10,375 287,000 Altron 4,843 - -------------------------------------------------------------- 42,536 .Instrumentation: 1.3% 685,000 Thermo Instrument Systems 19,865 $5,000,000 Thermo Optek, 5% Note Due 10/15/00 5,266 300,000 IFR Systems 4,500 229,000 Thermoquest 3,121 $1,500,000 Thermoquest, 5% Note Due 8/15/00 1,580 100,000 Thermo Bio Analysis 925 65,000 Metrika Systems 487 - -------------------------------------------------------------- 35,744 .Distribution: 0.9% 1,090,000 Pioneer-Standard Electronics 13,897 300,000 Kent Electronics 6,900 450,000 Richey Electronics 5,288 - -------------------------------------------------------------- 26,085
15
A Acorn Fund . Statement of Investments (unaudited) Number of Shares Value (000) ------------------------------------------------------------- .Components/Peripherals: 1.0% 600,000 Kronos $ 10,500 400,000 American Power Conversion 8,650 250,000 Oak Industries 4,937 375,000 Planar Systems 4,125 ------------------------------------------------------------- 28,212 -------- Information: Total 503,199 ------------------------------------------------------------- Health Care: 9.6% .Biotechnology/Drug Delivery: 1.9% 450,000 Watson Pharmaceuticals 16,088 260,000 RP Scherer 13,488 450,000 Inhale Therapeutic Systems 8,606 228,000 Biogen 8,521 800,000 Corvas International 4,400 800,000 Corvas International Warrants 800 253,000 CIMA Labs 1,518 130,000 Genome Therapeutics 894 ------------------------------------------------------------- 54,315 .Medical Equipment: 2.5% 1,162,000 Respironics 24,693 740,000 Invacare 17,390 1,000,000 Kinetic Concepts 14,250 300,000 Affymetrix 7,209 275,000 Innovasive Devices 3,025 125,000 Trex Medical 1,453 63,000 Thermedics 984 ------------------------------------------------------------- 69,004 .Hospital/Laboratory Supplies: 0.7% 273,000 Hillenbrand Industries 10,886 322,000 Sybron International 8,936 ------------------------------------------------------------- 19,822 .Services: 4.5% 1,000,000 Lincare Holdings 41,250 1,000,000 HealthCare Compare 40,625 498,000 HBO & Company 23,655 400,000 Magellan Health Services 9,850 505,000 United Payors and Providers 7,196 300,000 Walsh International 2,325 ------------------------------------------------------------- 124,901 -------- Health Care: Total 268,042 Principal Amount or Number of Shares Value (000) ------------------------------------------------------------- Consumer Goods/Services: 8.8% .Retail: 2.0% 1,960,000 Borders $ 36,995 295,000 Quality Food Centers 12,390 700,000 Host Marriott Services 6,212 48,000 Duckwall Alco Stores 678 ------------------------------------------------------------- 56,275 .Recreational Vehicles: 1.6% 1,100,000 Harley-Davidson 37,262 320,000 Thor Industries 7,480 ------------------------------------------------------------- 44,742 .Food: 0.3% 634,000 Au Bon Pain 4,081 135,000 Dave & Buster's 3,004 ------------------------------------------------------------- 7,085 .Entertainment/Leisure: 3.2% 1,400,000 Carnival 51,800 310,000 Royal Caribbean Cruises 9,455 215,000 GC Companies 8,439 276,000 Carmike Cinemas 7,900 472,000 Hollywood Park, Cv. Pfd. 5,812 140,000 Showboat 2,765 180,000 Rio Hotel & Casino 2,520 535,000 Monarch Casino & Resort 1,204 80,000 Acres Gaming 380 $6,250,000 Grand Palais Casino 14% Note Due 2/25/98 313 ------------------------------------------------------------- 90,588 .Manufacturers: 1.7% 700,000 Newell 23,450 565,000 Wolverine World Wide 20,623 232,000 Norwood Promotional 3,132 ------------------------------------------------------------- 47,205 -------- Consumer Goods/Services: Total 245,895 ------------------------------------------------------------- Finance: 13.6% .Banks: 1.2% 380,000 Texas Regional Bancshares 12,350 285,000 Union Planters 11,578 260,000 TCF 10,303 ------------------------------------------------------------- 34,231
16 A
Number of Shares Value (000) - ----------------------------------------------------------- .Savings & Loans: 3.4% 845,000 Peoples Bank Bridgeport $ 27,462 528,000 Coast Savings 20,922 323,000 Washington Mutual 15,605 671,000 Washington Federal 15,265 538,000 Commonwealth Bancorp 8,137 280,000 Imperial Thrift & Loan 4,165 156,000 Indiana Federal 4,075 - ----------------------------------------------------------- 95,631 .Insurance: 2.1% 836,000 Baldwin & Lyons, Cl. B 14,525 247,000 Foremost 14,326 351,000 United Fire & Casualty 10,793 350,000 PXRE Corporation 8,969 216,000 Leucadia National 5,940 318,000 ALLIED Life Financial 5,446 - ----------------------------------------------------------- 59,999 .Money Management: 2.7% 880,000 United Asset Management 22,550 865,000 Baker Fentress 15,462 618,000 SEI 12,978 1,648,000 Phoenix Duff and Phelps 12,566 231,000 BISYS 7,276 100,000 T. Rowe Price 3,713 - ----------------------------------------------------------- 74,545 .Credit Cards: 3.2% 1,013,000 First USA 42,926 575,000 National Data 20,341 531,000 ADVANTA, Cl. A 14,271 247,000 ADVANTA, Cl. B 6,391 275,000 Concord EFS 5,156 - ----------------------------------------------------------- 89,085 .Other: 1.0% 935,000 Americredit 16,246 1,390,000 World Acceptance 7,819 310,000 DVI Health Services 3,449 - ----------------------------------------------------------- 27,514 -------- Finance: Total 381,005
Principal Amount or Number of Shares Value (000) - ----------------------------------------------------------- - ----------------------------------------------------------- Industrial Goods/Services: 9.9% .Steel: 2.1% 1,110,000 Worthington Industries $ 21,229 520,000 Gibraltar Steel 10,400 350,000 Schnitzer Steel 8,925 374,000 Atchison Casting 7,199 340,000 Steel Dynamics 5,950 295,000 A M Castle 5,126 105,000 Metal Management 919 - ----------------------------------------------------------- 59,748 .Machinery: 3.4% 975,000 Thermo Electron 30,103 800,000 Baldor Electric 20,100 340,000 Applied Industrial Technologies 11,900 148,000 Nordson 7,585 675,000 Thermo Fibertek 6,117 96,000 Mine Safety Appliances 6,096 135,000 Valmont Industries 5,265 110,000 Applied Power 4,620 189,000 Hein-Werner 1,205 500,000 Stevens International, Cl. A 375 34,000 Stevens International, Cl. B 77 - ----------------------------------------------------------- 93,443 .Industrial Suppliers: 1.3% 600,000 Unifi 18,300 750,000 Lilly Industries, Cl. A 13,594 244,000 U.S. Can 3,721 - ----------------------------------------------------------- 35,615 .Services: 3.1% 1,185,000 World Color Press 24,144 800,000 Expeditors International of Washington 19,200 851,000 Wackenhut, Cl. B 12,127 45,000 Wackenhut, Cl. A 726 430,000 Hub Group 10,750 450,000 Material Sciences 7,594 434,000 Thermo TerraTech 3,960 210,000 HA.LO Industries 3,202 300,000 Thomas Group 2,925 $2,900,000 Western Water, 9% Cv. Note Due 9/25/05 2,900 - ----------------------------------------------------------- 87,528 -------- Industrial Goods/Services: Total 276,334
17 A Acorn Fund .Statement of Investments (unaudited)
Number of Shares Value (000) - ------------------------------------------------------------------- - ------------------------------------------------------------------- Energy/Minerals: 10.1% .Independent Power: 3.3% 900,000 AES Corporation $50,400 1,852 AES Corporation Warrants 57 950,000 CalEnergy 32,300 585,000 Thermo Ecotek 8,263 110,000 Thermo Optek 1,320 - ------------------------------------------------------------------- 92,340 .Oil/Gas Producers: 2.7% 1,900,000 Seagull Energy 34,200 1,200,000 Tesoro Petroleum 12,600 300,000 United Meridian 9,038 475,000 Forest Oil 6,294 160,000 KCS Energy 5,260 350,000 Costilla Energy 5,075 920,000 Tipperary 4,198 110,000 Abraxas Petroleum Rights 167 - ------------------------------------------------------------------- 76,832 .Distribution/Marketing/Refining: 1.5% 630,000 Southern Union 14,411 800,000 NGC 12,600 303,000 Atmos Energy 7,689 150,000 KN Energy 5,925 110,000 United Cities Natural Gas 2,530 - ------------------------------------------------------------------- 43,155 .Oil Services: 2.3% 350,000 Energy Ventures 21,569 298,000 Atwood Oceanics 18,513 385,000 J Ray McDermott 9,336 400,000 Veritas DGC 7,900 370,000 Pride Petroleum 7,678 - ------------------------------------------------------------------- 64,996 .Mining: 0.3% 300,000 Zeigler Coal Holding 7,125 -------- Energy/Minerals: Total 284,448 - ------------------------------------------------------------------- Real Estate: 3.1% 829,000 The Rouse Company 24,248 400,000 Macerich 11,200 619,000 Homestead Village 10,446 125,000 Homestead Village Warrants 906
Number of Shares Value (000) - ------------------------------------------------------------------- 233,000 Forest City Enterprises, Cl. B $ 9,902 185,000 Forest City Enterprises, Cl. A 7,862 210,000 Equity Residential Properties Trust 9,319 165,000 Weingarten Realty Investors 6,992 120,000 First Washington Realty Trust, Cv. Pfd. 3,540 150,000 First Washington Realty Trust 3,394 ------- Real Estate: Total 87,809 - ------------------------------------------------------------------- Foreign Securities: 20.0% .Canada: 1.0% 800,000 Ranger Oil 7,600 200,000 Shaw Industries, Cl. A 4,271 150,000 Cognos 3,900 125,000 BCE Mobile Communications 3,800 500,000 Shaw Communications, Cl. B 3,529 115,000 Veritas Energy Services 2,362 200,000 Cogeco Cable 1,498 - ------------------------------------------------------------------- 26,960 .United Kingdom: 4.0% 3,100,000 Medeva 15,652 1,200,000 Serco Group 13,596 1,920,000 Amvesco 10,814 81,000 Amvesco ADR 4,394 400,000 NTL 8,450 1,700,000 Securicor Group, Cl. A 8,179 650,000 Comcast UK Cable Partners 7,231 700,000 Powerscreen International 7,063 1,075,000 N. Brown Group 6,875 600,000 Edinburgh Fund Managers 5,394 350,000 Getty Communications, Cl. A 5,250 580,000 Oriflame 4,857 270,000 Airtours 4,374 1,200,000 Body Shop International 3,694 1,000,000 Capital 3,407 530,000 Ethical Holdings 2,650 - ------------------------------------------------------------------- 111,880 .Germany/Austria: 0.6% 180,000 Flughafen Wien (Austria) 8,243 425,000 United International Holdings (Austria) 4,037 16,000 Escada 2,752 8,000 Binding-Brauerei 2,278 - ------------------------------------------------------------------- 17,310
18
Number of Shares Value (000) - -------------------------------------------------------------------- .Nordic Countries: 2.9% 350,000 WM Data Nordic (Sweden) $30,523 650,000 Getinge Industrier (Sweden) 11,734 240,000 Autoliv (Sweden) 10,369 220,000 Pricer, Cl. B (Sweden) 7,680 220,000 Pricer, Cl. B Rights (Sweden) 274 725,000 SensoNor (Norway) 6,978 50,000 Hennes & Mauritz, Cl. B (Sweden) 6,697 260,000 Esselte, Series A (Sweden) 6,178 - -------------------------------------------------------------------- 80,433 .Netherlands: 0.6% 125,000 Hunter Douglas 10,162 250,000 Getronics 8,130 - -------------------------------------------------------------------- 18,292 .Switzerland: 0.7% 6,000 Societe Generale de Surveillance 12,287 14,000 Liechtenstein Global Trust 7,872 - -------------------------------------------------------------------- 20,159 .France: 1.1% 128,000 Axime Ex Segin 15,146 70,000 Cetelem 8,295 27,000 Guilbert 5,037 20,000 Canal Plus 3,930 - -------------------------------------------------------------------- 32,408 .Spain/Portugal: 0.3% 185,000 Vallehermoso 4,306 375,000 Filmes Lusomundo (Portugal) 3,241 - -------------------------------------------------------------------- 7,547 .Italy/Greece: 1.4% 4,000,000 Banca Fideuram 10,358 260,000 Hellenic Bottling (Greece) 8,445 300,000 Cellular Communications International 8,325 1,000,000 Saipem 4,658 170,000 Industrie Natuzzi 4,059 1,200,000 Costa Crociere 2,733 - -------------------------------------------------------------------- 38,578 .Israel: 0.1% 200,000 Pec Israel Economic 3,775 .Eastern Europe: 0.1% 20,000 Gedeon Richter (Hungary) 1,292 .India: 0.2% 300,000 IS Himalaya Fund 4,110 39,393 Housing Development Finance 3,020 - -------------------------------------------------------------------- 7,130 .Hong Kong: 0.4% 4,500,000 Varitronix International 6,852 7,318,000 JCGHoldings 5,761 - -------------------------------------------------------------------- 12,613 .China: 0.5% 730,000 AES China Generating 12,045 200,000 The Investment Company of China 942 - -------------------------------------------------------------------- 12,987 .Singapore: 0.5% 5,100,000 Genting International 15,096 .Malaysia: 0.3% 1,350,000 Resorts World 5,772 255,000 O.Y.L. Industries 2,520 - -------------------------------------------------------------------- 8,292 .Thailand: 0.1% 3,300,000 Sinpinyo Fund V 1,302 .Korea/Taiwan: 1.1% 115,000 Formosa Fund (Taiwan) 12,362 460,000 President Enterprises (Taiwan) 8,625 4,000 SK Telecom (formerly known as Korea Mobile Telecom) 3,626 283,250 SK Telecom ADR (formerly known as Korea Mobile Telecom GDS) 2,903 155,000 Kookmin Bank 2,704 300,000 Korea-Europe Fund 1,335 - -------------------------------------------------------------------- 31,555 .Indonesia: 0.2% 195,501 Unilever Indonesia 3,898 1,700,000 Tigaraksa Satria 2,372 - -------------------------------------------------------------------- 6,270 .Japan: 1.5% 110,000 Nintendo 7,890 174,000 Noritsu Koki 7,519 246 NTT Data 6,537 110,000 Paramount Bed 4,584 75,000 Secom 4,210
19 Acorn Fund .Statement of Investments (unaudited)
Number of Shares Value (000) - ------------------------------------------------------------------------------- 40,000 Nichiei $ 3,102 720,000 Tokyu Land 2,437 90,000 Sankyo 1,905 130,000 Heiwa 1,711 30,000 Aucnet 715 34,000 Mr. Max 349 - ------------------------------------------------------------------------------- 40,959 .Australia/New Zealand: 0.5% 1,700,000 Sky City (New Zealand) 7,973 800,000 Village Roadshow 2,665 550,000 Village Roadshow Pfd. 1,483 600,000 PetSec Energy 2,493 450,000 Burswood Property Trust 490 - ------------------------------------------------------------------------------- 15,104 .Mexico: 0.8% 2,500,000 Kimberly Clark de Mexico 10,103 2,000,000 Nadro, Series L 7,010 496,000 Grupo Radio Centro 4,278 170,000 Cofar, Series B 255 - ------------------------------------------------------------------------------- 21,646 .Brazil: 0.4% 130,000,000 Cemig $ 5,346 10,000,000 Itau Banco PN 5,168 - ------------------------------------------------------------------------------- 10,514 .Other Latin America: 0.7% 3,000,000 Siderca (Argentina) 6,331 130,000 Banco Latinoamericano de Export (Panama) 6,142 160,000 IRSA (Argentina) 5,960 - ------------------------------------------------------------------------------- 18,433 ---------- Foreign: Total 560,535 43,200 Miscellaneous Securities: 0.0% 22 Total Common Stocks and Other ---------- Equity-Like Securities: 93.0% 2,607,289 ---------- Short-Term Obligations: 7.1% 198,756 ---------- Total Investments: 100.1% 2,806,045 ---------- Cash and Other Assets Less Liabilities: (0.1%) (2,644) ---------- Total Net Assets: 100% $2,803,401 - -------------------------------------------------------------------------------
20 A Acorn Fund .Foreign Portfolio Diversification At March 31, 1997, the Fund's foreign portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent - ---------------------------------------------------- .Information Computer Systems $ 52,042 1.9% Broadcasting/CATV 32,953 1.2 Software/Services 32,186 1.1 Mobile Communications 26,833 1.0 Distribution 4,148 0.1 - ---------------------------------------------------- 148,162 5.3 .Health Care Biotechnology/Drug Delivery 30,100 1.1 Equipment 11,734 0.4 Hospital/Laboratory Supplies 4,584 0.2 - ---------------------------------------------------- 46,418 1.7 .Consumer Goods/Services Manufacturers 58,715 2.1 Entertainment/Leisure 41,556 1.5 Retail 33,348 1.2 Food 19,348 0.7 - ---------------------------------------------------- 152,967 5.5
Value (000) Percent - ---------------------------------------------------- .Finance Money Management $ 51,011 1.8% Banks 27,647 1.0 Other 28,013 1.0 - ---------------------------------------------------- 106,671 3.8 .Industrial Goods/Services Services 30,495 1.1 Machinery Processing 14,041 0.5 - ---------------------------------------------------- 44,536 1.6 .Energy/Minerals Independent Power 17,391 0.6 Oil/Gas Producers 12,455 0.4 Oil Services 10,989 0.4 - ---------------------------------------------------- 40,835 1.4 .Real Estate 12,703 0.4 .Transportation 8,243 0.3 ----------------- Total Foreign Portfolio $560,535 20.0% ====================================================
21 I Acorn International .Major Portfolio Changes in the First Quarter
Number of Shares -------------------- 12/31/96 3/31/97 Additions - ------------------------------------------------------- Europe .Germany/Austria Boewe Systec 0 60,000 IVG Holdings 0 200,000 KTM-Motorradholding 5,000 29,000 .Denmark Falck 16,000 25,000 .Finland Talentum 0 80,000 .Norway Atex Media Solutions 0 500,000 .Sweden Atle 0 355,000 Getinge Industrier 800,000 975,000 Scala International 35,000 50,000 .France Canal Plus 20,000 27,000 Groupe AB 30,000 110,000 Groupe Partouche 15,000 30,000 .United Kingdom Aberdeen Trust 0 1,950,000 Dorling Kindersley 700,000 900,000 HALMA 1,400,000 2,000,000 Hozelock Group 5,000 238,000 Peek 3,000,000 4,000,000 Planning Sciences 150,000 250,000 .Switzerland Disetronic Holding 1,500 2,600 Societe Generale d'Affichage 12,000 16,000 .Italy Autogrill Finanziari 0 1,350,000 Banca Pop Commercia e Industria 0 100,000 Danieli 0 175,000 Fila Holdings 0 60,000 Mediolanum 400,000 600,000 Saes Getters 0 125,000 Unipol 0 1,000,000
Number of Shares -------------------- 12/31/96 3/31/97 .Netherlands Hunter Douglas 110,000 125,000 .Poland Amica Wronki 0 210,000 Bank Inicjatyw Gospodarczych 0 2,550,000 Best Company, Series D 0 85,000 - ------------------------------------------------------- Asia .Hong Kong China HK Photo Prods 0 7,000,000 Innovative International Holdings 0 5,500,000 TVB 65,000 1,300,000 Vanda Systems 1,500,000 7,200,000 .Japan Aderans 50,000 150,000 Amway Japan 70,000 110,000 Belluna 80,000 199,700 Fuji Software ABC 0 130,000 Koei 0 50,000 Nidec 0 121,000 (includes effect of 10% stock dividend) Orix 25,000 140,000 People 60,000 115,000 (includes effect of 20% stock dividend) Ryohin Keikaku 50,000 75,000 Shinki 50,000 240,000 (includes effect of 20% stock dividend) Shohkoh Fund 0 30,000 Softbank 0 78,000 (includes effect of 30% stock dividend) .Korea S1 Corporation 10,260 23,000 .Philippines Mondragon International 3,700,000 12,100,000 - ------------------------------------------------------- Latin America .Mexico Grupo Industrial Bimbo 1,200,000 1,500,000 Tubos de Acero de Mexico 0 250,000 .Brazil Elevadores Atlas 150,000 370,000
22 I
Number of Shares ------------------- 12/31/96 3/31/97 .Argentina Perez Companc 230,000 600,000 .Chile Embotelladora Andina 70,000 120,000 - ------------------------------------------- Other Countries .Australia Anaconda Nickel 0 2,000,000 Hudson Conway 175,000 420,000 Siddons Ramset 272,000 600,000 .Canada Bracknell 0 1,000,000 Shermag 0 300,000 .Israel ZAG Industries 75,000 200,000 .South Africa Energy Africa 0 405,000
Number of Shares ------------------- 12/31/96 3/31/97 Sales - --------------------------------------------------- Europe .Germany Escada 40,000 26,000 Fresenius 120,000 90,000 Fresenius Pfd. 5,000 0 Marschollek Lautenschlager 50,000 40,000 .Norway Aker Maritime 500,000 200,000 Elkjoep Norge 200,000 80,000 Sysdeco 660,000 0 .Sweden Frontec, Series B 300,000 150,000 WM Data Nordic 700,000 650,000 .France CEP Communications 30,000 0 .United Kingdom Bluebird Toys 1,100,000 0 Capita Group 2,000,000 1,400,000 N. Brown Group 1,610,000 1,460,000 Premier Oil 12,000,000 6,000,000 .Italy/Greece Ergo Bank 100,000 228 Tecnost 1,600,000 0 .Turkey Sabah Yayincilik 48,974,000 0 .Spain Oscar Mayer S.A. 7,000 0 .Netherlands Getronics 920,000 850,000 .Russia RAO Gazprom 62,500 0
23 I Acorn International .Major Portfolio Changes in the First Quarter
Number of Shares --------------------- 12/31/96 3/31/97 - ------------------------------------------------------------------- Asia .Hong Kong Chen Hsong Holdings 1,000,000 0 Vitasoy International Holdings 15,000,000 8,900,000 .Pakistan Pakistan State Oil 219,035 59,035 .Japan Aucnet 110,000 65,000 Itariyard 150,000 90,000 Mr. Max 120,000 26,000 Sanyo Shinpan 110,000 33,000 (includes effect of 10% stock dividend) .Korea Daehan City Gas 95,000 70,000 (includes effect of 25% stock dividend) Kookmin Bank 460,000 290,000 Shinsegae 74,161 0 SK Telecom (formerly known as Korea Mobile Telecom) 20,500 15,000 (includes effect of 3% stock dividend) .Malaysia O.Y.L. Industries 770,000 450,000 .Philippines PILTEL 8,000,000 0 - ------------------------------------------------------------------- Latin America .Mexico GBM Atlantico 353,375 0 Grupo Radio Centro 700,000 579,000 .Brazil Cemig Pfd. 215,000,000 185,000,000 Banco Itau Pfd. 23,000,000 20,000,000
Number of Shares --------------------- 12/31/96 3/31/97 .Argentina Siderar 240,000 0 Siderca 6,000,000 4,000,000 .Panama Panamerican Beverages 100,000 0 .Central America Ceteco Holdings 100,000 0 .Aruba Global Casinos Cv. Pfd. 450,000 0 Global Casinos 22,500 0 - ---------------------------------------------------- Other Countries >Australia Burswood Property Trust 3,700,000 670,000 Village Roadshow Pfd., Cl. A 4,000,000 3,000,000
24 Acorn International .Statement of Investments (unaudited) March 31, 1997
Number of Shares Value (000) - ------------------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 90.3% - ------------------------------------------------------------------------------- Europe: 50.0% .Germany/Austria: 5.5% 165,000 Rhoen Klinikum Pfd. $ 19,779 100,000 Rhoen Klinikum 12,827 Hospital Management 90,000 Fresenius 19,420 Dialysis Equipment & Solutions 190,000 Flughafen Wien 8,700 Vienna Airport Authority (Austria) 40,000 Marschollek Lautenschlager 8,631 Financial Planning 200,000 IVG Holdings 6,929 Real Estate 21,000 Cewe Color Holding 5,349 Photographic Developing & Printing 15,000 Pfleiderer 4,765 Construction Materials 26,000 Escada 4,473 Fancy Dresses 15,000 Binding-Brauerei 4,271 Brewer 400,000 United International Holdings 3,800 Cable Television for Austria & Other Countries (Austria) 60,000 Boewe Systec 1,978 Envelope Stuffing Machines 29,000 KTM-Motorradholding 1,815 Off-Road Motorcycles (Austria) - ------------------------------------------------------------------------------- 102,737 .Denmark: 0.6% 25,000 Falck 6,883 Provider of Emergency Services 31,000 Kompan International 3,975 Playground Equipment 20,000 Carli Gry 1,038 Casual Clothing - ------------------------------------------------------------------------------- 11,896 .Finland: 3.7% 500,000 TT Tieto, Cl. B 41,492 Computer Services/Consulting 370,000 Benefon 8,666 Mobile Telephones 100,000 Vaisala, Cl. A 6,592 Meteorological Instruments 80,000 Fiskars, Series A 6,540 Scissors & Gardening Tools 105,000 Sentra, Cl. A 5,819 Convenience Stores, Restaurants 80,000 Talentum 856 Trade Journals - ------------------------------------------------------------------------------- 69,965 .Norway: 0.9% 1,000,000 SensoNor 9,624 Electronic Sensors for Airbags 200,000 Aker Maritime 3,365 Oil Field Equipment & Services 80,000 Elkjoep Norge 2,267 Consumer Electronics Retailer 500,000 Atex Media Solutions 1,175 Software Toolsets & Systems - ------------------------------------------------------------------------------- 16,431 .Sweden: 8.1% 650,000 WM Data Nordic 56,685 Computer Services/Consulting 150,000 Hennes & Mauritz, Cl. B 20,090 Apparel Stores 975,000 Getinge Industrier 17,601 Sterilization & Disinfection Equipment 450,000 Pricer, Cl. B 15,709 450,000 Pricer Rights 561 Electronic Shelf Labels for Supermarkets 320,000 Autoliv 13,826 Seatbelts & Airbags 315,000 Esselte, Series A 7,484 Office Supplies & Related Equipment 355,000 Atle 5,113 Investment Company 50,000 Scala International 4,978 Accounting Software 160,000 Hexagon 4,662 Industrial Conglomerate 315,000 Bure Investment 4,098 Health Care Services & Investments 150,000 Frontec, Series B 1,513 Electronic Commerce Software & Services - ------------------------------------------------------------------------------- 152,320 .France: 4.4% 200,000 Axime Ex Segin 23,665 Computer Services 94,000 Cetelem 11,139 Credit Cards 62,000 NRJ 8,504 Radio Network 40,000 Guilbert 7,462 Office Supplies Distribution 70,000 Spir Communications 6,554 Regional Newspapers
25 Acorn International .Statement of Investments (unaudited)
Number of Shares Value (000) - ------------------------------------------------------------------------------- 50,000 Technip 5,366 Engineering & Construction 27,000 Canal Plus 5,305 Pay TV 50,000 Virbac 5,259 Drugs for Animals 40,000 Fininfo 5,223 Data Feeds for French Banks & Brokers 30,000 Groupe Partouche 2,665 Casinos 110,000 Groupe AB 1,059 Television Programming - ------------------------------------------------------------------------------- 82,201 .United Kingdom: 11.7% 1,800,000 Serco Group 20,394 Facilities Management 1,400,000 Capita Group 16,207 Outsourcing Government Services 1,900,000 Oriflame International 15,911 Natural Cosmetics Sold Door-to-Door 1,550,000 Powerscreen International 15,640 Mobile Crushing & Screening Equipment 3,000,000 Medeva 15,147 Drugs for Hyperactive Children 467,000 NTL 9,865 Cable TV & Telephone System 1,460,000 N. Brown Group 9,338 Mail Order Clothing in Large Sizes 3,700,000 City Centre Restaurants 9,143 Fast Food Restaurants 2,500,000 Capital 8,518 Classy Casinos 4,000,000 St. James Place 8,374 Life Insurance 1,700,000 Securicor Group, Cl. A 8,179 Mobile Communications 1,700,000 Rotork 7,607 Valve Actuators for Oil & Water Pipelines 710,000 Edinburgh Fund Managers 6,383 Investment Management 410,000 Vosper Thornycroft Holdings 6,008 Naval Shipbuilding 2,000,000 HALMA 5,846 Fire Detection Devices & Burglar Alarms 720,000 Seton Healthcare Group 5,763 Pharmaceuticals 500,000 Comcast UK Cable Partners 5,562 Cable TV & Telephone System 1,800,000 Body Shop International 5,542 Natural Cosmetics & Toiletries 1,400,000 Ivory & Sime 5,264 Investment Management 4,000,000 Peek 5,156 Traffic Control Systems 13,000,000 Electronics Boutique 5,016 Videogame/Computer Software Stores 500,000 Expro International Group 4,023 Oil Field Services 900,000 Dorling Kindersley 3,990 Reference Books & CD-ROMs 6,000,000 Premier Oil 3,497 Oil & Gas Producer 670,000 Ethical Holdings 3,350 Drug Delivery 900,000 Tunstall 3,177 "I've fallen and I can't get up" Monitors 1,950,000 Aberdeen Trust 3,122 Money Management 250,000 Planning Sciences 2,250 Database & Business Intelligence Software 238,000 Hozelock Group 1,663 Garden Hoses - ------------------------------------------------------------------------------- 219,935 .Switzerland: 2.9% 6,500 Societe Generale de Surveillance 13,310 Inspection/Testing of Trade Goods 25,000 Phoenix Mecano 11,801 Electrical Components Manufacturer 13,000 Liechtenstein Global Trust 7,309 Banking & Investment Management 8,000 Suedelektra Holding 6,775 Diversified Pool of Commodity-Related Projects 16,000 Societe Generale d'Affichage 6,442 Billboard Advertising 2,600 Disetronic Holding 5,306 Insulin Pens & Infusion Pumps 10,000 Prodega 2,777 Cash-and-Carry Retailer - ------------------------------------------------------------------------------- 53,720 .Italy/Greece: 5.8% 7,100,000 Banca Fideuram 18,386 Life Insurance & Mutual Funds 2,500,000 Saipem SPA 11,644 Pipeline Construction & Drilling Contractor 275,000 Hellenic Bottling 8,933 Coca-Cola Bottler (Greece) 600,000 Gewiss 8,524 Electrical Plugs & Switches
26 I
Number of Shares Value (000) - ----------------------------------------------------------------------------- 550,000 Banca Popolare Di Bergamo $ 8,391 Regional Bank 3,100,000 Crociere 7,061 Mediterranean Cruise Line 2,000,000 Editoriale L'Espresso 6,887 Newspapers & Magazines 150,000 Intracom 5,693 Telecommunications Equipment (Greece) 600,000 Mediolanum 5,337 Life Insurance & Mutual Funds 200,000 Industrie Natuzzi 4,775 Leather Couches 1,100,000 Banca Di Legnano 4,068 Regional Bank 60,000 Fila Holdings 3,262 Athletic Shoes 1,000,000 Unipol 3,105 Life & Auto Insurance 400,000 Attica Enterprises 3,018 Ferry Line (Greece) 80,000 Cellular Communications International 2,220 Mobile Communications 1,350,000 Autogrill Finanziari 2,007 Tollway Restaurants 125,000 Saes Getters 1,798 Getters used in TVs/PCs 175,000 Danieli 1,249 Steel-making Machinery 100,000 Banca Pop Commercia e Industria 1,319 Regional Bank 228 Ergo Bank 14 Bank (Greece) - ----------------------------------------------------------------------------- 107,691 >Spain/Portugal: 1.8% 110,000 Campofrio Alimentacion 7,294 Sausage Maker 100,000 Mapfre Vida 6,384 Life Insurance & Mutual Funds 160,000 Cortefiel 4,909 Apparel Retailer 200,000 Vallehermoso 4,655 Residential Property Developer & Landlord 250,000 Estoril Sol 3,428 Casino Resort (Portugal) 170,000 Lusotur 2,888 Real Estate/Resort Developer (Portugal) 16,000 Zardoya Otis 1,749 Elevator Maintenance 150,000 Filmes Lusomundo 1,296 Newspapers, Radio, Video, Film Distribution (Portugal) 350,000 Televisao Independente 960 Television Station (Portugal) - ----------------------------------------------------------------------------- 33,563 >Netherlands: 3.8% 850,000 Getronics 27,642 Computer Consulting 620,000 Kempen 16,328 Stock Brokerage/Investment Management 125,000 Hunter Douglas 10,162 Blinds 300,000 Fugro McClelland 6,397 Engineering, Consulting & Surveying 280,000 Telegraaf Holdings 6,045 Newspaper Publisher 50,000 Wegener 5,011 Newspaper Publisher - ----------------------------------------------------------------------------- 71,585 >Hungary: 0.3% 145,000 Cofinec 4,386 Consumer Goods Packaging 20,000 Gedeon Richter 1,292 Generic Drugs - ----------------------------------------------------------------------------- 5,678 >Poland: 0.5% 2,550,000 Bank Inicjatyw Gospodarczych 3,318 Warsaw Bank 210,000 Amica Wronki 1,878 Appliance Manufacturer 200,000 Bank Komunalny 1,626 Gdansk - Area Bank 85,000 Best Company, Series D 1,604 Electronics Retailer - ----------------------------------------------------------------------------- 8,426 ----------- Europe: Total 936,148 - ----------------------------------------------------------------------------- Asia: 24.3% >China: 0.3% 350,000 AES China Generating 5,775 Independent Power >Hong Kong: 2.6% 6,000,000 Varitronix International 9,137 LCD Manufacturer 11,000,000 JCG Holdings 8,659 Consumer Finance 10,000,000 Li and Fung 8,259 Sourcing of Consumer Goods
27 I Acorn International >Statement of Investments (unaudited)
Number of Shares Value (000) - ----------------------------------------------------------------------------- 1,300,000 TVB $ 5,285 Television Broadcasting 12,000,000 Manhattan Card 4,142 Chase's Local Credit Card 20,000,000 Golden Harvest Entertainment 3,355 Movie Distribution & Exhibition 8,900,000 Vitasoy International Holdings 3,130 Soya Milk Manufacturer 7,200,000 Vanda Systems 3,089 Systems Integrator 5,500,000 Innovative International Holdings 2,183 Auto Accessories 7,000,000 China HK Photo Prods 2,078 Photography Products - ----------------------------------------------------------------------------- 49,317 >India/Pakistan: 1.0% 82,702 Housing Development Finance 6,340 Mortgage Lender 300,000 IS Himalaya Fund 4,110 Closed-End Fund 1,047,800 Zee Telefilms 2,570 Hindi Television Programming & Broadcasting 299,450 Max India 1,711 50,000 Max India Zero Coupon 286 50,000 Max India New Shares 286 Penicillin & Mobile Phones 810,000 Tube Investment GDR 1,458 Bicycle Manufacturer 342,100 Kotak Mahindra Finance 508 Consumer Finance 59,035 Pakistan State Oil 412 Oil Distribution (Pakistan) 2,000,000 Centurion Quantum Growth 254 Closed-End Fund - ----------------------------------------------------------------------------- 17,935 >Japan: 9.7% 270,000 Noritsu Koki 11,667 Photo Processing Lab Manufacturer 130,000 Nichiei 10,080 Lender to Small & Medium Size Businesses 299,000 Hokuto 9,322 Mushroom Grower 163,000 Secom 9,150 Security Alarm Systems 330 NTT Data 8,769 Computer Services/Consulting 110,000 Nintendo 7,890 Video Games 325,000 Meitec 6,510 Engineering Outsourcing 235,000 Konami 6,434 Entertainment Software/Hardware 30,000 Shohkoh Fund 6,324 Lender to Small and Medium Size Businesses 140,000 Orix 6,163 Leasing Company 78,000 Softbank 4,945 Publisher/Software Distributor 115,000 HIS 4,923 Travel Agent 75,000 Ryohin Keikaku 4,876 Designer & Retailer of Muji Brand Specialty Consumer Goods 165,000 Lasertec 4,851 Manufacturer of LCD & Photomask Defect Detectors 110,000 Paramount Bed 4,584 Hospital Bed Manufacturer 1,330,000 Tokyu Land 4,501 Real Estate 121,000 Nidec 4,476 Manufacturer of Motors for Hard Disk Drives 230,000 Mirai Industry 4,366 Manufacturer of Plastic Housing Components 195,000 Sankyo 4,126 Pachinko Machine Manufacturer 240,000 Shinki 4,071 Corporate & Consumer Lending 240,000 Central Uni 3,732 Health Care/Medical Equipment 650,000 Chuo Trust & Banking 3,549 Banking 130,000 Fuji Software ABC 3,360 Computer Services/Consulting 255,000 Heiwa 3,357 Pachinko Machine Manufacturer 150,000 Aderans 3,247 Hairpieces & Wigs 115,000 People 3,065 Sports Clubs 110,000 Amway Japan 3,021 Network Sales 70,000 Promise 2,929 Consumer Finance 120,000 NuSkin Asia Pacific 2,895 Network Sales 142,000 Mars Engineering 2,879 Gaming Systems & Machinery
28 I
Number of Shares Value (000) - ------------------------------------------------------------------------- 150,000 Arrk Corporation $2,726 Industrial Modeling 135,000 Xebio 2,671 Sporting Goods Retailer 55,000 Tiemco 2,643 Fishing Equipment 430,000 Nanto Bank 2,535 Banking 126,020 Nihon Jumbo 2,524 Photo Processing Lab 199,700 Belluna 2,419 Catalog Sales 33,000 Sanyo Shinpan 1,663 Consumer Finance 65,000 Aucnet 1,549 Used Auto Auctions Via Satellite 165,000 Shochiku 1,359 Film, Television & Kabuki Producer 50,000 Koei 783 Video Game Software 90,000 Itariyard 683 Designer/Wholesaler of Women's Apparel 86,000 Cats 633 Pest Control 26,000 Mr. Max 267 Household Goods & Appliance Retailer - ------------------------------------------------------------------------- 182,517 .Korea/Taiwan: 3.4% 15,000 SK Telecom (formerly known as Korea Mobile Telecom) 13,598 Mobile Communications 480,000 President Enterprises 9,000 Food Manufacturer & Distributor (Taiwan) 80,000 Formosa Fund 8,600 Closed-End Fund (Taiwan) 70,000 Taipei Fund 7,455 Closed-End Fund (Taiwan) 23,000 S1 Corporation 6,434 Systems Security 290,000 Kookmin Bank 5,059 Retail Bank 178,970 Dongbu Fire & Marine Insurance 4,457 Non-Life Insurance 230,000 Formosa Growth Fund 4,198 Closed-End Fund (Taiwan) 70,000 Daehan City Gas 3,596 Gas Utility 150,000 Baring Taiwan Fund 1,894 Closed-End Fund (Taiwan) - ------------------------------------------------------------------------- 64,291 .Malaysia: 2.1% 2,350,000 Malaysian Assurance Alliance 13,554 Insurance 2,000,000 Malaysian Oxygen 10,810 Industrial Gases 3,300,000 Arab Malaysian Finance 9,850 Consumer Finance 450,000 O.Y.L. Industries 4,447 Air Conditioners - ------------------------------------------------------------------------- 38,661 .Indonesia: 1.4% 3,000,000 Bank Niaga 8,996 Banking 1,600,000 Modern Photo Film 5,364 Fuji Film Distributor 2,900,900 Tigaraksa Satria 4,047 Distributor of Consumer Goods 230,000 Unilever 4,586 Consumer Goods 3,000,000 Mustika Ratu 3,639 Traditional Cosmetics - ------------------------------------------------------------------------- 26,632 .Philippines: 1.4% 25,000,000 Int'l Container Terminal Services 14,935 Container Handling Terminals & Port Management 3,000,000 Philippine Savings Bank 6,031 Banking 12,100,000 Mondragon International 5,163 Casinos/Resort - ------------------------------------------------------------------------- 26,129 .Singapore: 1.6% 5,500,000 Genting International 16,280 Cruise Line 3,050,000 Venture Manufacturing 7,470 2,500,000 Venture Manufacturing Wts. 7/26/99 4,342 Contract Electronics Manufacturer 750,000 Datacraft Asia 1,590 Networking Services - ------------------------------------------------------------------------- 29,682 .Thailand: 0.8% 4,700,000 Shinawatra Satellite 5,609 Satellite Leasing 320,000 Bangkok Insurance 4,805 Finance/Insurance 200,000 Serm Suk 3,234 Pepsi Bottler
29 Acorn International .Statement of Investments (unaudited)
Number of Shares Value (000) - ----------------------------------------------------------------------- 2,600,000 Sinpinyo Fund V $ 1,026 Closed-End Fund - ----------------------------------------------------------------------- 14,674 -------- Asia: Total 455,613 - ----------------------------------------------------------------------- Latin America: 8.2% .Mexico: 2.9% 3,000,000 Kimberly Clark de Mexico 12,123 Paper Products 3,000,000 Nadro, Series L 10,516 Pharmaceutical Distributor 1,500,000 Grupo Industrial Bimbo 9,267 Bread, Baked Goods & Snacks 450,000 Bufete Industrial 9,225 Engineering & Construction 579,000 Grupo Radio Centro 4,994 Radio Stations & Networks 250,000 Tubos de Acero de Mexico 4,281 Seamless Pipe for Oil Wells 2,100,000 Fondo Opcion, Series B 2,648 Real Estate Investment Fund 4,900,000 Grupo Herdez, Series B 1,816 Sauces & Condiments 107,000 Cofar 160 Drug Stores - ----------------------------------------------------------------------- 55,030 .Brazil: 2.1% 20,000,000 Banco Itau Pfd. 10,337 Bank 185,000,000 Cemig Pfd. 7,607 Electric Utility 3,500,000 White Martins 5,678 Industrial Gases 35,000,000 Telemig Pfd. 4,737 35,000,000 Telemig 4,687 Telecommunications 370,000 Elevadores Atlas 4,536 Elevator Services 1,000,000 Brazilian Smaller Companies Warrants 725 Closed-End Fund - ----------------------------------------------------------------------- 38,307 .Argentina: 1.5% 320,000 IRSA 11,920 Real Estate Management & Development 4,000,000 Siderca 8,441 Seamless Pipe for Oil Wells 600,000 Perez Companc 4,638 Oil & Gas Producer 1,400,000 Cresud 2,590 Grain & Cattle Farms 220,470 Cerveceria Biekert 392 Brewer - ----------------------------------------------------------------------- 27,981 .Chile: 1.2% 150,000 Genesis Chile Fund 6,712 Closed-End Fund 250,000 Santa Isabel 6,469 Grocery Stores 260,000 Banco BHIF 5,557 Financial Services 120,000 Embotelladora Andina 4,455 Coca-Cola Bottler - ----------------------------------------------------------------------- 23,193 .Peru: 0.1% 2,527,334 Enrique Ferreyros 2,288 795,685 Enrique Ferreyros Rights 30 Heavy Machinery Dealer - ----------------------------------------------------------------------- 2,318 .Panama: 0.4% 150,000 Banco Latinoamericano de Exportaciones 7,088 Trade Financing -------- Latin America: Total 153,917 - ----------------------------------------------------------------------- Other Countries: 7.5% .Australia/New Zealand: 3.9% 2,000,000 Publishing & Broadcasting 10,786 Media & TV Broadcasting 1,750,000 Sky City 8,207 Casino & Hotel (New Zealand) 3,000,000 Village Roadshow Pfd. Cl. A 8,090 Film Distribution, Exhibition & Production 4,000,000 Austereo 7,714 Radio Stations 1,400,000 Petsec Energy 5,817 Oil & Gas Producer 4,600,000 Sonic Healthcare 5,770 Pathology Labs 3,600,000 Tyndall Australia 5,616 Money Management & Insurance 1,970,000 Skilled Engineering 5,220 Temporary Skilled Labor 2,000,000 Anaconda Nickel 5,064 Nickel Mining 420,000 Hudson Conway 4,346 Casino Managers 600,000 Siddons Ramset 3,339 Manufacturer & Distributor of Construction Materials
30
Number of Shares Value (000) - ------------------------------------------------------------- 600,000 PDL Holdings $ 2,856 Electrical Equipment Manufacturer & Distributor (New Zealand) 670,000 Burswood Property Trust 730 Perth Casino & Resort - ------------------------------------------------------------- 73,555 .Canada: 2.8% 1,000,000 Ranger Oil 9,500 Oil & Gas Producer 450,000 Shaw Industries 9,609 Oil Field Services 395,000 Veritas Energy Services 8,113 Geophysical Contractor 215,000 Cinar Films 5,267 Children's Television Programming 1,400,000 Pan East Petroleum 4,560 Oil & Gas Producer 600,000 Shaw Communications 4,235 Cable TV 500,000 Cogeco 3,257 Cable TV 1,000,000 Bracknell 2,787 Speciality Contractor 300,000 Shermag 2,704 Manufacturer of Solid Wood Furniture 300,000 Cogeco Cable 2,248 Cable TV 250,000 Fundy Cable 1,086 Cable TV - ------------------------------------------------------------- 53,366 .Israel: 0.7% 325,000 Blue Square Israel 5,769 Supermarkets & Department Stores 200,000 Pec Israel Economic 3,775 Industrial Holdings 200,000 ZAG Industries 2,712 Plastic Hardwares - ------------------------------------------------------------- 12,256 .South Africa: 0.1% 405,000 Energy Africa 1,878 Oil & Gas Producer ---------- Other: Total 141,055 - ------------------------------------------------------------- Foreign Corporations, Operations in the U.S.: 0.3% 161,000 Carnival 5,957 Cruise Ship Line (Panama) Foreign Corporations, Operations ---------- in the U.S.: Total 5,957 4,744 Miscellaneous Securities: 0.0% 18 Total Common Stocks and Other ---------- Equity-Like Securities: 90.3% 1,692,708 ---------- Short-Term Obligations: 9.3% 173,935 ---------- Total Investments: 99.6% 1,866,643 ---------- Cash and Other Assets Less Liabilities: 0.4% 7,262 ---------- Total Net Assets: 100% $1,873,905 - -------------------------------------------------------------
31 Acorn International .Portfolio Diversification At March 31, 1997, the Fund's portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent - ------------------------------------------------------------- .Information Computer Systems $114,459 6.1% Broadcasting/CATV 88,801 4.7 Software/Services 85,649 4.6 Mobile Communications 49,979 2.7 Distribution 39,707 2.1 Consumer Electronics 24,816 1.3 Instrumentation 8,390 0.5 Equipment 5,693 0.3 - ------------------------------------------------------------- 417,494 22.3 .Health Care Biotechnology/Drug Delivery 42,784 2.3 Services 36,704 1.9 Hospital/Laboratory Supplies 29,774 1.6 Equipment 26,639 1.4 - ------------------------------------------------------------- 135,901 7.2 .Consumer Goods/Services Retail 157,106 8.4 Manufacturers 122,906 6.5 Entertainment/Leisure 79,204 4.3 Food 71,724 3.8 Recreational Vehicles 3,273 0.2 - ------------------------------------------------------------- 434,213 23.2 .Finance Money Management $ 118,566 6.3% Banks 75,967 4.0 Insurance 27,382 1.5 Other 129,255 6.9 - ------------------------------------------------------------- 351,170 18.7 .Industrial Goods/Services Services 132,555 7.1 Machinery Processing 62,322 3.3 Steel 10,289 0.5 Forest Products/Construction 4,765 0.3 - ------------------------------------------------------------- 209,931 11.2 .Energy/Minerals Oil/Gas Producers 48,813 2.6 Oil Services 27,473 1.5 Independent Power 16,978 0.9 Mining 5,064 0.3 Refining/Marketing 412 0.0 - ------------------------------------------------------------- 98,740 5.3 .Real Estate 33,541 1.8 .Transportation 11,718 0.6 Short-Term Obligations 173,935 9.3 ----------------------- Total Investments $1,866,643 99.6% - -------------------------------------------------------------
32 The Acorn A - --------------------------- I Family of Funds U .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. Ralph Wanger .Officers Ralph Wanger President Charles P. McQuaid Senior Vice President Terence M. Hogan Vice President Leah J. Zell Vice President Robert A. Mohn Vice President Marcel P. Houtzager 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: acorn@wanger.com web site: www.wanger.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. [PICTURE OF ACORNS] The Acorn - ------------------------------ Family of Funds WAM Brokerage Services, L.L.C. P.O. Box 8502 Boston, MA 02266-8502 -----END PRIVACY-ENHANCED MESSAGE-----