-----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, OFSAMwmjN/R6flWx2Eq7dBykbbUO/uQJ0HZukxR52+Ik8Uef1Rv/IWiRAt7aj4ll RFPwgbktQzOo/nHBRV4W4g== 0000950131-97-006716.txt : 19971114 0000950131-97-006716.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950131-97-006716 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 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: SEC FILE NUMBER: 811-01829 FILM NUMBER: 97714335 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 QUARTERLY REPORT - ACORN INVESTMENT TRUST Acorn The Acorn Family of Funds Third Quarter Report --------------------------------------------------- September 30, 1997 Managed by Wanger Asset Management, L.P. Acorn Family of Funds Third Quarter Report 1997 .Table of Contents Squirrel Chatter .Markets Unleashed 2 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 [AIU LOGO APPEARS HERE] .Squirrel Chatter: Markets Unleashed [PHOTO APPEARS HERE] You've certainly noticed the stock market has started having bigger day to day swings than it did a couple of years ago. A statistical study of the market shows that from 1992 to 1995 the U.S. stock market had unusually low volatility, but lately, market volatility has moved to levels above the long-term average. How can you manage your investments when the stock market gets wild? A Day In The Park Last week I watched a lady walking her golden retriever in the park. The dog romped all over the park. The dog chased a squirrel 50 yards to the north (the squirrel was too smart for him and got away). Then the dog ran the opposite direction to interview a little boy with an ice-cream cone. After that, another dog showed up and they chased each other in circles for awhile. In ten minutes the golden retriever had run a mile in all directions. If you tried to guess where that dog was going to run next, it would be a very difficult forecasting problem! You would have to know where every squirrel, child and dog was in the whole park and then guess what the retriever's response would be. However, there is a simpler way to solve this problem. The dog's owner entered the park at the south entrance. She then walked 3 miles an hour down the sidewalk and left the park at the west entrance after 30 minutes. The dog came in with its owner and left with its owner. You know where the dog started and where the dog ended up, even though for the half-hour in the park the dog's motion was unpredictable. You can think about the stock market in the same way. If you read the morning newspaper or watch the stock market on TV, the journalists will stress the short-term movements of the market in order to deliver an exciting story (and it has been exciting recently!), but all they are doing is recording the random romping of the retriever. However, if you concentrate on the long-term basic economic trends that move smoothly and steadily over multi-year time spans, you know where the lady is going and therefore where the market dog will end up eventually. So Where Is The Lady Going? The market lady is affected by two big trends. First, inflation is dead. Consumer Price Index (CPI) in the U.S. is being reported around 2%. This is just as true in the rest of the world. Over the last 40 years, the poster boy for inflation in Europe was Italy. This is why a plate of pasta in Pisa costs 17,000 lira. The latest CPI figures for Italy are 1.6%, lower than in the U.S. The same dramatic drop in inflation has occurred in almost every other country. This means that long-term bond rates will go down. Japan, which has had falling prices over the last few years, has a long-term government bond rate that just dropped below 2%. I don't think that the U.S. will get to 2%, but 5% is plausible (the U.S. long-term bond rate is currently 6.2%). Consumer Price Index (Italy) [CHART APPEARS HERE] 2 [AIU LOGO APPEARS HERE] Why is inflation dead? Over the very long-term, inflation has been associated with wars while during peace time, prices were stable. The cold war era (1945-89) counted as a war because it forced the U.S. and other countries to spend trillions on military preparedness. A decade ago, many socialist economies were military threats but counted for little in world trade. Russia, Eastern Europe, China, India and Argentina made little the rest of the world wanted to buy (except arms), and didn't have enough hard currency to buy what the rest of the world wanted to sell. Now all of these more-or-less ex-socialist countries are back in the economic world. They have well-educated, motivated workers who are willing to work for a fraction of U.S. or European wages. The cold war is over, we won, and inflation has gone away. The Privatization of Pension Plans A second great trend in the world is the privatization of pension schemes. In the March 31, 1996 shareholder report we knocked "pay-as-you-go" funding for social security: The state systems work only as long as the promised benefits are modest, and the pool of people who "pay" grows at about the same rate as the people who "go." Unfortunately, the promised benefits are in fact fairly extravagant, and the "go" pool is growing while the "pay" pool is shrinking. Both politicians and would-be pensioners are worried they will wake up one day to a giant sucking sound coming from the benefits department of their national retirement administration. This is why we believe that individually funded pension plans will replace pay-as-you go state run social security systems. Social security privatization has been denounced as "radical", but lots of countries have made the switch. Chile was first, followed by Argentina, Mexico, Australia, and the U.K. The USA has been running a large pilot program, in the form of your 401(k) or 403(b) plan. The 401(k) system has been a big hit, partly by producing good investment returns, and also by changing John Doe from the client of a bureaucracy into a free citizen investing his money in a funded program. These new pension plans will demand vast quantities of long duration, high quality assets, so that bonds and high-grade stocks will be in strong demand. The 401(k) system has been a big hit, partly by producing good investment returns, and also by changing John Doe from the client of a bureaucracy into a free citizen investing his money in a funded program. Because these individually funded pension plans start off with buying big company stocks, we have seen blue-chip indexes outperform small-cap stock averages in the U.S. and the rest of the world, too. This relative price movement against small-cap stocks has created an enormous disparity. The valuation gap is now starting to close in the U.S. Since May 1997, small-cap stocks have been outperforming the S&P 500 index. This trend change has not yet spread around the world, but it is likely to. If this unfolds as we hope, the Acorn Family of Funds will be rewarding investments over the next several years. Best Regards, /s/ Ralph Wanger - ------------------------ President and Lead Portfolio Manager, Acorn Fund 3 Acorn USA .In a Nutshell [U--TAB] [PHOTO OF ROBERT A. MOHN APPEARS HERE] It was good to be a small-cap last quarter. Just as soon as the last Wall Street strategist pronounced big-caps to be the better-caps, bigger suddenly became badder. Acorn USA's 15.2% third-quarter return whipped Saint S&P 500 (+7.5%) and beat the Russell small-caps (+14.9%). Over the past 12 months, Acorn USA's sparkling 43.1% gain beat both the biggies (S&P 500: +40.4%) and our pint-sized peers, topping 80% of the 433 funds in Lipper's small-cap growth fund universe. Our spunkiest stock was C-Tec, a truffle uncovered by one of our ace analysts, Mark Yost. C-Tec is a telecommunications conglomerate that underwent stock fission on October 1, splitting into 3 isotopes--RCN Corp (bundles cable, phone and internet service to downtown apartment tower dwellers), Commonwealth Telephone (Pennsylvanian local phone company) and Cable Michigan (eponymous). Telecom deregulation and fiber optic fever have put some pizzazz back into the stodgy old phone business, sending C-Tec's stock up 110% over the first nine months of the year. A week later, C-Tec had broken itself into three parts, and the three offsprung stocks had gained another 35%, proof that on Wall Street, the sum of the parts can indeed be worth more than the whole. Other winners last quarter were J Ray McDermott (constructs offshore oil platforms), United Video (cable's Prevue channel), and Wonderware (PC software for controlling factory machinery). We will continue to keep your Fund well stocked with these and other innovative, niche-living, reasonably-priced small company stocks. /s/ Robert A. Mohn Robert A. Mohn Lead Portfolio Manager
Fund Assets as of 9/30/97: $159.2 million .Acorn USA Top 10 Holdings CalEnergy 5.4% Power Plants Coast Savings 5.2% California Savings & Loan HealthCare Compare 4.6% PPO Network C-Tec 4.2% Cable TV/Local Telephone Data Transmission 3.9% Data Services for Farmers United Video Satellite 3.7% CATV & Satellite Dish Programming Wackenhut 3.4% Prison Management Royal Caribbean Cruise 3.2% Cruises to Caribbean and Alaska Wonderware 3.2% Industrial Control Software Tesoro Petroleum 3.2% Oil Refinery/Gas Reserves
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. IRA The new Education and Roth IRAs will be available to shareholders on January 1, 1998. If you would like more information, including an application, please call 1-800-922-6769. We'll send materials as soon as they are available. 4 [U LOGO APPEARS HERE] .Performance at a Glance The Value of a $10,000 Investment in Acorn USA .September 4, 1996 through September 30, 1997 [GRAPH APPEARS HERE] Average Annual Total Return 1 Year Life of Fund 43.1% 49.2% This graph compares the results of $10,000 invested in Acorn USA on September 4, 1996 (the date Fund shares were first offered to the public), with the Russell 2000 Stock Index with dividends reinvested. 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 USA Portfolio Diversification .as a % of net assets, as of 9/30/97 [PIE CHART APPEARS HERE] Information 25.3% Health Care 10.2% Consumer Goods/Services 8.0% Finance/Real Estate 13.9% Industrial Goods/Services/Transportation 19.4% Energy/Minerals 18.6% Cash 4.6% ------ 100.0%
Relative Performance - ---------------------------------------------------------------- 3rd quarter Last 9 mos. Last 12 mos. 1997 Acorn USA 15.2% 31.7% 43.1% Russell 2000 14.9% 26.6% 33.2% Lipper Small Cap Funds Avg. 16.6% 27.0% 29.8% S&P MidCap 400 16.1% 31.2% 39.1% S&P 500 7.5% 29.6% 40.4% Dow-Jones 4.0% 24.9% 37.7%
The Russell 2000 is formed by taking the 3,000 largest companies and then eliminating the largest 1,000 leaving a good small company index. The Lipper Small Cap Funds Avg. is an average of all U.S. small-cap funds tracked by Lipper, which consisted of 510, 468, and 433 funds for the 3rd qtr., 9-mos., and 12 mos. periods above. The S&P MidCap 400 is a market value-weighted index of 400 stocks that are in the next tier down from the S&P 500. The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The 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. All indexes are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 9/30/97: $15.34 - ----------------------------------------- 5 Acorn Fund .In a Nutshell [A--TAB] [PHOTO OF RALPH WANGER AND CHARLES P. MCQUAID APPEARS HERE] Acorn Fund jumped 13.7% in the third quarter, continuing to ride the wild bull market. As the indexes on page 7 indicate, small-cap stocks outperformed large- caps in the quarter. Acorn Fund landed in the middle, handily beating the Dow and S&P 500 indexes, but slightly lagging the S&P MidCap and the Russell 2000. Through nine months, your fund jumped 25.9%, tracking closely the small-cap Russell 2000 index. Our oil service stocks pumped out huge profits in the quarter. Veritas rose 89%, J Ray McDermott jumped 81%, Atwood Oceanics floated a 68% gain, Shaw Industries serviced a 55% boost, and EVI Inc. ventured a 52% rise. Selected technology stocks also did well. IFR Systems transmitted a 76% return, Systems & Computer Technology outsourced a 68% move, and American Power Conversion surged 48 percent. Our cable software theme again topped the ratings, as BET Holdings scored a 61% gain on a buy-out proposal. Special situations research unearthed a trio of golden acorns: Expeditors International delivered a 48% return, Applied Industrial Technologies distributed a 43% profit, and C-TEC showed a 43% rise. Acorn's losers were relatively few in number and small in size. American Management System mismanaged its way to a 28% loss, Bisys Group processed a 23% decline and Medeva took ill, dropping 21%. Acorn's foreign holdings were not immune to currency and market turmoil overseas. Our names held up fairly well. We have reduced our foreign holdings to 14.3% of Acorn, retaining our most compelling long-term investments. /s/ Ralph Wanger /s/ Charles P. McQuaid - ------------------ ------------------------- Ralph Wanger Charles P. McQuaid Lead Portfolio Manager Co-Portfolio Manager Fund Assets as of 9/30/97: $3,731.9 million .Acorn Fund Top 10 Holdings AES Corporation 2.6% Global Power Producer Liberty Media 1.9% CATV Programming HealthCare Compare 1.8% PPO Network Carnival 1.7% Cruise Ship Line Harley-Davidson 1.7% Motorcycle Manufacturer Borders Group 1.4% Bookstores Lincare Holdings 1.4% Home Health Care Services Solectron 1.3% Electronics Contract Manufacturer EVI 1.2% Oil Services International Game Technology 1.1% Gaming 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. Shareholder News To better serve our shareholders, we are working to create consolidated account statements. Watch your mail for upcoming information on the new statements, which will list activity for all of your Acorn accounts on one statement. In response to shareholder requests, monthly automatic investment plan purchases will now be confirmed on a quarterly basis. This cost savings effort will go into effect January 1, 1998. 6 [A LOGO APPEARS HERE] .Performance at a Glance The Value of a $10,000 Investment in Acorn Fund .June 10, 1970 through September 30, 1997 [GRAPH APPEARS HERE] Average Annual Total Return ------------------------------------------ 1 Year 5 Years 10 Years Life of Fund 31.2% 21.5% 15.6% 17.2% 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. 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 9/30/97 [PIE CHART APPEARS HERE] Information 22.9 % Health Care 8.9 % Consumer Goods/Services 7.8 % Finance/Real Estate 14.7 % Industrial Goods/Services/Transportation 9.7 % Energy/Minerals 11.6 % Foreign 14.3 % Cash less liabilities 10.1 % ----- 100.0 % Relative Performance - ----------------------------------------------------------------- 3rd quarter Last 9 mos. Last 12 mos. 1997 Acorn Fund 13.7% 25.9% 31.2% S&P 500 7.5% 29.6% 40.5% Russell 2000 14.9% 26.6% 33.2% S&P MidCap 400 16.1% 31.2% 39.1% Dow-Jones 4.0% 24.9% 37.7% The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The Russell 2000 is formed by taking the 3,000 largest 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 Dow Jones Industrial Average includes 30 large companies. All indexes are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 9/30/97: $18.67 - ----------------------------------------- 7 [I LOGO APPEARS HERE] Acorn International .In a Nutshell [PHOTO OF LEAH JOY ZELL APPEARS HERE] Acorn International finished the third quarter down less than 1%, after a rollercoaster ride that saw losses of 6.6% through Labor Day. However, September was a strong month in which sensible values re-emerged, bringing our portfolio back to where we started. As I write, world equity markets have turned volatile again, unnerved by the same crisis in Southeast Asia that sparked the retreat last summer. Sharp equity market swings can be scary even without Halloween. What enables us to stay the course through such periods is confidence in the companies we own. We decided early in the second quarter to concentrate on those names we knew and liked best. This review resulted in 20% fewer positions and higher cash levels. The process of pruning the portfolio has given our analysts more time to identify long-term values. What made us cautious was watching blue chip stocks soar while prices of high-quality smaller companies lagged. To provide our shareholders with better guidance, we would like to introduce the Salomon Brothers Extended Market Index (World ex-U.S.) as an additional benchmark for the fund (see box). While EAFE and the Lipper International Fund Average track the large-caps, EMI shows the dramatic degree to which small-caps have missed the party. Ralph Wanger notes in his letter that he sees small-cap stocks coming back into favor in the U.S. We are beginning to see signs of the same trend overseas. We are also beginning to see real bargains in our markets. Long-term performance is excellent. This quarter marks our fifth anniversary and the inauguration of the Fund's five-year return. We are pleased that Acorn International's average annual total return for five years is 16.7%. We will continue to work hard to find the best small-cap international stocks for you. /s/ Leah Joy Zell - ---------------------- Leah Joy Zell Lead Portfolio Manager Fund Assets as of 9/30/97: $1,876.3 million .Acorn International Top 10 Holdings T T Tieto Finland 3.0% Computer Services/Consulting WM Data Sweden 2.4% Computer Services/Consulting Rhoen Klinikum Germany 1.7% Hospital Management Banca Fideuram Italy 1.5% Life Insurance/Mutual Funds Serco Group United Kingdom 1.4% Facilities Management Kempen Netherlands 1.3% Stock Brokerage/ Investment Management Venture Manufacturing Singapore 1.3% Contract Electronics Manufacturing Atos (formerly known as Axime Ex Segin) France 1.2% Computer Services Genting International Singapore 1.1% Cruise Line Shaw Industries Canada 1.1% Oil Field Services The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. A New Benchmark The Salomon Brothers Extended Market Index (World ex-U.S.) tracks the performance of the bottom quintile of stocks by investable market capitalization by country worldwide (excluding the U.S.). Currently, large-cap stocks make up 80% of the value of what investors can buy around the world, but represent only 25% of the number of publicly traded companies. The EMI measures the performance of that 75% portion of stocks outside the United States from which we choose our investments. It has become the benchmark most widely used by consultants and our competitors to measure international small-cap performance. 8 [I LOGO] . Performance at a Glance The Value of a $10,000 Investment in Acorn International .September 23, 1992 through September 30, 1997 [GRAPH APPEARS HERE] Average Annual Total Return 1 Year 5 Years Life of Fund 11.9% 16.7% 16.6% This graph compares the results of $10,000 invested in Acorn International on September 23, 1992 (the date Fund shares were first offered to the public), with all dividends and capital gains reinvested, with Morgan Stanley's Europe, Australasia 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 9/30/97 [PIE CHART APPEARS HERE] Information 23.8% Health Care 6.6% Consumer Goods/Services 20.6% Finance/Real Estate 17.6% Industrial Goods/Services/Transportation 14.5% Energy/Minerals 5.8% Cash less liabilities 11.1% ------ 100.0% Relative Performance - ---------------------------------------------------------------- 3rd quarter Last 9 mos. Last 12 mos. 1997 Acorn International -0.7% 7.5% 11.9% EAFE -0.7% 10.4% 12.2% EMI (world ex-U.S.) -4.0% 1.0% 0.3% Lipper Int'l Small Cap Funds Avg. -0.1% 10.9% 15.8% Lipper Int'l Funds Avg. 1.2% 14.0% 18.6% EAFE is Morgan Stanley's Europe, Australasia 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 EMI is Salomon Brothers' index of the bottom 20% of institutionally investable capital of countries, as selected by Salomon, excluding the U.S. The Lipper Int'l Small Cap Funds Avg. is calculated from the performance of a group of small-cap int'l funds, including Acorn Int'l. For the 3rd qtr., 9-mos. and 12-mos. periods above, the group consisted of 31, 28 and 25 funds, respectively. The Lipper Int'l Funds Avg. is an average of all int'l funds tracked by Lipper, excluding the Int'l Small Cap Funds group. This group consisted of 463, 424 and 397 funds for the 3rd qtr., 9-mos. and 12-mos. periods above, respectively. All indexes are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 9/30/97: $20.86 - ----------------------------------------- 9 [U LOGO APPEARS HERE] Acorn USA . Major Portfolio Changes in the Third Quarter
Number of Shares ------------------- 6/30/97 9/30/97 Additions - ------------------------------------------------------------ Information Aspect Telecommunications 0 149,000 Cablevision Systems 0 24,000 COMARCO 62,800 97,800 Data Transmission Network 189,100 209,100 Gaylord Entertainment 62,000 103,000 Mecklermedia 0 6,200 National Data 0 39,000 United Video Satellite Group 133,000 213,000 Wonderware 230,700 278,700 - ------------------------------------------------------------ Health Care HealthCare Compare 94,000 114,000 Lincare Holdings 57,000 85,000 - ------------------------------------------------------------ Consumer Goods/Services Oshkosh B'Gosh 0 27,000 - ------------------------------------------------------------ Finance Acceptance Insurance 76,100 178,100 Leucadia National 23,000 52,000 - ------------------------------------------------------------ Industrial Goods/Services Insurance Auto Auctions 0 229,600 Schnitzer Steel 111,000 138,300 Vallen 0 37,000 Wackenhut, Cl. B 234,900 262,900 - ------------------------------------------------------------ Energy/Minerals Atmos Energy 27,000 187,000 (includes effect of merger with United Cities Natural Gas) CalEnergy 224,000 259,000 J Ray McDermott 54,600 88,600 Tesoro Petroleum 165,700 282,700 - ------------------------------------------------------------ Transportation Trailer Bridge 0 40,000
Number of Shares ------------------- 6/30/97 9/30/97 Sales - ------------------------------------------------------------ Information ACT Manufacturing 7,100 0 BDM International 11,800 0 - ------------------------------------------------------------ Health Care United Payors & Providers 22,400 0 - ------------------------------------------------------------ Consumer Goods/Services Borders 14,000 0 Showboat 15,800 0 - ------------------------------------------------------------ Finance Phoenix Duff & Phelps 55,000 0 - ------------------------------------------------------------ Industrial Goods/Services Applied Industrial Technologies 108,200 138,000 (includes effect of 3 for 2 stock split) Steel Dynamics 88,300 57,000 - ------------------------------------------------------------ Energy/Minerals United Meridian 6,700 0
10 Acorn USA .Statement of Investments (unaudited) September 30, 1997
Number of Shares Value (000) - -------------------------------------------------------------- Common Stocks: 95.4% - -------------------------------------------------------------- Information: 25.3% .CATV/TV/Satellites: 14.1% 133,000 C-Tec $ 6,650 Cable TV/Local Telephone 209,100 Data Transmission Network 6,168 Data Services for Farmers 213,000 United Video Satellite Group 5,911 CATV & Satellite Dish Programming 73,000 Tele-Communications, Liberty Media Group 2,185 Cable Channels 24,000 Cablevision Systems 1,506 Cable TV - -------------------------------------------------------------- 22,420 .Mobile Communications: 1.8% 97,800 COMARCO 2,170 Wireless Network Testing 41,000 Centennial Cellular 702 Cellular Franchises - -------------------------------------------------------------- 2,872 .Telecommunications Equipment: 2.2% 149,000 Aspect Telecommunications 3,483 Call Center Equipment - -------------------------------------------------------------- .Computer Software/Services: 3.8% 278,700 Wonderware 5,121 Industrial Control Software 74,300 Computer Language Research 929 Commercial Tax Software - -------------------------------------------------------------- 6,050 .Transaction Processors: 1.0% 39,000 National Data 1,599 Credit Card Processing - --------------------------------------------------------------- .Business Information: 0.5% 26,000 American Business Information 705 Small Business Data 6,200 Mecklermedia 144 Internet Trade Shows & Magazines - -------------------------------------------------------------- 849 .Computer Systems: 1.9% 118,000 Kronos 3,053 Time Accounting Software & Clocks ------ Information: Total 40,326
Number of Shares Value (000) - -------------------------------------------------------------- Health Care: 10.2% .Medical Equipment: 2.9% 128,000 Respironics $ 3,520 Sleep Apnea Products 44,000 Kinetic Concepts 820 Hospital Beds 40,000 Cardiac Pathways 335 Heart Surgery Device - -------------------------------------------------------------- 4,675 .Services: 7.3% 114,000 HealthCare Compare 7,282 PPO Network 85,000 Lincare Holdings 4,287 Home Health Care Services - -------------------------------------------------------------- 11,569 ------ Health Care: Total 16,244 - -------------------------------------------------------------- Consumer Goods/Services: 8.0% .Retail: 3.1% 288,200 Host Marriott Services 4,287 Fast Food Kiosks in Airports, Rest Stops & Malls 27,000 Oshkosh B'Gosh 705 Children's Clothing - -------------------------------------------------------------- 4,992 .Entertainment/Leisure: 4.9% 117,700 Royal Caribbean Cruises 5,149 Cruises to Caribbean & Alaska 103,000 Gaylord Entertainment 2,659 Opryland Hotel & Other Assets - -------------------------------------------------------------- 7,808 ------ Consumer Goods/Services: Total 12,800 - -------------------------------------------------------------- Finance: 11.9% .Savings & Loans: 5.2% 159,000 Coast Savings 8,338 California Savings & Loan - -------------------------------------------------------------- .Insurance: 6.3% 178,100 Acceptance Insurance 4,675 Crop Insurance 59,500 Amerus Life Holdings 1,952 Annuities/Life Insurance 52,000 Leucadia National 1,788 Insurance Holding Company 51,000 Penn Treaty American 1,683 Nursing Home Insurance - -------------------------------------------------------------- 10,098
[U LOGO APPEARS HERE] 11 Acorn USA .Statement of Investments (unaudited)
Number of Shares Value (000) - -------------------------------------------------------------- .Money Management: 0.4% 17,000 SEI Investments $ 561 Mutual Fund Administration -------- Finance: Total 18,997 - -------------------------------------------------------------- Industrial Goods/Services: 19.0% .Steel: 5.6% 138,300 Schnitzer Steel 4,650 Scrap Steel Processor 77,000 Atchison Casting 1,636 Steel Foundries 57,000 Steel Dynamics 1,340 Steel Mini-Mill 53,000 Gibraltar Steel 1,292 Steel Processing - -------------------------------------------------------------- 8,918 .Industrial Distribution: 3.5% 138,000 Applied Industrial Technologies 4,752 Industrial Components Distribution 37,000 Vallen 722 Safety Products Distribution - -------------------------------------------------------------- 5,474 .Machinery: 1.4% 125,000 Farr Company 2,250 Filters .Industrial Suppliers: 1.4% 109,000 Lilly Industries, Cl. A 2,289 Industrial Coatings .Services: 7.1% 262,900 Wackenhut, Cl. B 5,455 Prison Management 100,000 World Color Press 3,019 Printing 229,600 Insurance Auto Auctions 2,870 Auto Salvage Services - -------------------------------------------------------------- 11,344 -------- Industrial Goods/Services: Total 30,275 - -------------------------------------------------------------- Energy/Minerals: 18.6% .Independent Power: 5.4% 259,000 CalEnergy 8,612 Power Plants
Number of Shares Value (000) - -------------------------------------------------------------- .Oil/Gas Producers: 4.2% 282,700 Tesoro Petroleum 5,106 Oil Refinery/Gas Reserves 59,100 Seagull Energy 1,507 Oil & Gas Producer 6,613 - -------------------------------------------------------------- .Distribution/Marketing/Refining: 4.4% 187,000 Atmos Energy 4,652 Natural Gas Distributor 131,400 NGC 2,332 Gas Processing/Marketing - -------------------------------------------------------------- 6,984 .Oil Services: 4.6% 88,600 J Ray McDermott 4,341 Offshore Construction Company 252,000 GeoScience 2,961 Offshore Seismic Equipment Company - -------------------------------------------------------------- 7,302 -------- Energy/Minerals: Total 29,511 - -------------------------------------------------------------- Other Industries: 2.4% .Real Estate: 2.0% 40,700 Forest City Enterprises, Cl. A 2,340 Shopping Centers 45,000 Cornerstone Properties 861 Downtown Office Buildings - -------------------------------------------------------------- 3,201 .Transportation: 0.4% 40,000 Trailer Bridge 530 Tug & Barge Transportation -------- Other Industries: Total 3,731 -------- Total Common Stocks: 95.4% 151,884 -------- Short-Term Obligations: 4.3% 6,772 -------- Total Investments: 99.7% 158,656 -------- Cash and Other Assets Less Liabilities: 0.3% 507 -------- Total Net Assets: 100% $159,163 ==============================================================
12 [A LOGO] Acorn Fund .Major Portfolio Changes in the Third Quarter
Number of Shares ------------------ 6/30/97 9/30/97 Additions - -------------------------------------------------------- Information ACT Manufacturing 325,000 360,000 Aspect Telecommunications 0 714,000 ACNielsen 0 1,015,000 Altron 357,000 450,000 American Management Systems 294,000 495,000 Cablevision Systems 80,000 311,000 Cellular Communications International 300,000 400,000 Coherent Communications 0 115,000 Electronic Arts 150,000 250,000 Getty Communications, Cl. A 350,000 700,000 HSN 600,000 750,000 International Game Technology 1,800,000 1,880,000 Itron 200,000 300,000 Kronos 600,000 650,000 Larscom 0 236,000 Mecklermedia 0 100,000 Micros Systems 279,000 330,000 National Data 575,000 729,000 Thermo Optek 165,000 265,000 Thermoquest 293,000 613,000 United Video Satellite Group 810,000 850,000 Verilink 0 393,000 - -------------------------------------------------------- Health Care Kinetic Concepts 1,115,000 1,179,000 Lincare Holdings 1,000,000 1,040,000 Magellan Health Services 528,000 1,000,000 Medeva 3,270,000 3,700,000 - -------------------------------------------------------- Consumer Goods/Services Bally Total Fitness 0 185,000 Binding-Brauerei 8,000 23,000 Cie Fin Richemont 2,500 4,500 Quality Food Centers 313,000 490,000 - --------------------------------------------------------
Number of Shares ------------------ 6/30/97 9/30/97 Finance Acceptance Insurance 229,000 612,000 ASR Verzekeringsgrp (formerly known as Stad Rotterdam) 25,000 160,000 Genting International 5,100,000 7,250,000 Highlands Insurance 0 210,000 Leucadia National 396,000 444,000 Pioneer Group 181,000 620,000 Shohkoh Fund 9,000 16,000 - -------------------------------------------------------- Industrial Goods/Services Aeroporti di Roma 0 500,000 AirNet Systems 174,000 280,000 H B Fuller 0 150,000 Intermet 0 175,000 MA Hanna 0 176,000 Societe Generale de Surveillance 6,050 9,000 Worthington Industries 1,210,000 1,260,000 Zoltek 0 72,000 - -------------------------------------------------------- Energy/Minerals Atmos Energy 303,000 553,000 (includes effect of Merger with United Cities Natural Gas) CalEnergy 950,000 1,200,000 Equitable Resources 0 401,000 J Ray McDermott 505,000 555,000 KN Energy 150,000 190,000 Perez Companc 0 600,000 PetSec Energy ADR 0 210,000 Pride International 550,000 600,000 Ranger Oil 800,000 1,200,000 Saipem 1,000,000 1,855,000 - -------------------------------------------------------- Real Estate Homestead Village 619,000 741,000 Security Capital Atlantic 0 250,000 Security Capital Group, Cl. B 0 101,000 - -------------------------------------------------------- Transportation Trailer Bridge 0 320,000
13 [A LOGO APPEARS HERE] Acorn Fund .Major Portfolio Changes in the Third Quarter
Number of Shares ----------------- 6/30/97 9/30/97 Sales - ---------------------------------------------------------------- Information Activision 460,000 0 Analysts International 360,000 285,000 BCE Mobile Communications 125,000 0 Broderbund Software 200,000 100,000 Canal Plus 20,000 0 Cognos 150,000 0 Concord EFS 275,000 225,000 Compuware 240,000 200,000 Getronics 207,000 167,000 Grupo Radio Centro 225,000 0 International Family Entertainment 700,000 0 Oak Industries 250,000 200,000 Shaw Communications, Cl. B 500,000 0 Tele-Communications, Series A TCI Group 1,000,000 0 Vanguard Cellular Systems 465,000 300,000 Village Roadshow 800,000 0 Village Roadshow Pfd. 550,000 0 - ---------------------------------------------------------------- Health Care Cofar B 170,000 0 Gedeon Richter 20,000 0 Paramount Bed 110,000 20,000 Trex Medical 29,000 0 - ---------------------------------------------------------------- Consumer Goods/Services Body Shop International 1,200,000 0 Capital 899,900 0 Carmike Cinemas 276,000 0 GC Companies 215,000 0 Guilbert 24,000 12,000 Hennes & Mauritz, Cl. B 50,000 0 President Enterprises 460,000 453,620 (includes effect of 12 for 10 stock split) Resorts World 800,000 0 Royal Caribbean Cruises 235,000 140,000 Secom 75,000 0 Tigaraksa Satria 1,700,000 0 Unilever Indonesia 195,501 0 Wolverine World Wide 450,000 0 Number of Shares ----------------- 6/30/97 9/30/97 - ---------------------------------------------------------------- Finance ADVANTA, Cl. B 93,000 0 Banc One 1,151,909 412,000 Formosa Fund 115,000 0 JCG Holdings 7,318,000 0 Kookmin Bank 170,707 0 Korea-Europe Fund 300,000 0 Liechtenstein Global Trust 14,000 6,000 PXRE 145,000 0 Sinpinyo Fund V 3,300,000 0 T. Rowe Price 64,000 0 - ---------------------------------------------------------------- Industrial Goods/Services Metal Management 120,000 0 Mine Safety Appliances 96,000 0 Pameco 65,000 0 Pec Israel Economic 200,000 0 US Can 244,000 0 - ---------------------------------------------------------------- Energy/Minerals KCS Energy 320,000 0 Seagull Energy 1,500,000 1,300,000 Siderca 3,000,000 2,800,000 (includes effect of 7.3% stock dividend) United Meridian 400,000 275,000 Veritas DGC 400,000 300,000 - ---------------------------------------------------------------- Real Estate Homestead Village Warrants 125,000 0 Tokyu Land 720,000 0
14 [A LOGO APPEARS HERE] Acorn Fund .Statement of Investments (unaudited) September 30, 1997
Number of Shares Value (000) - -------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 89.9% - -------------------------------------------------------- Information: 22.9% .Broadcasting/CATV: 1.7% 560,000 C-Tec $ 28,000 311,000 Cablevision Systems 19,515 300,000 TCA Cable TV 11,700 370,000 Granite Broadcasting 4,394 - -------------------------------------------------------- 63,609 .Programming for CATV/TV/ Satellites: 4.7% 2,400,000 Tele-Communications, Liberty Media Group 71,850 750,000 HSN 30,469 819,000 Data Transmission Network 24,160 850,000 United Video Satellite Group 23,588 420,000 BET Holdings, Cl. A 22,207 280,000 Macrovision 4,340 - -------------------------------------------------------- 176,614 .Mobile Communications: 1.6% 500,000 Telephone and Data Systems 22,500 865,000 Mobile Telecommunication Technologies 14,002 355,000 COMARCO 7,877 400,000 Centennial Cellular 6,850 300,000 Vanguard Cellular Systems 4,725 450,000 PriCellular 4,472 - -------------------------------------------------------- 60,426 .Telecommunications Equipment: 0.7% 714,000 Aspect Telecommunications 16,690 393,000 Verilink 3,635 115,000 Coherent Communications 3,263 236,000 Larscom 2,389 - -------------------------------------------------------- 25,977 .Business Software: 1.6% 505,000 Systems & Computer Technology 22,757 200,000 Compuware 12,100 650,000 Wonderware 11,944 160,000 Sterling Commerce 5,750 400,000 Computer Language Research 5,000 - -------------------------------------------------------- 57,551
Principal Amount or Number of Shares Value (000) - -------------------------------------------------------- .Consumer Software: 0.5% 250,000 Electronic Arts $ 9,656 1,100,000 Spectrum HoloByte 6,806 100,000 Broderbund Software 3,400 - -------------------------------------------------------- 19,862 .Computer Services: 1.9% 350,000 Premiere Technologies 11,944 285,000 Analysts International 11,044 330,000 Keane 10,477 405,000 BDM International 10,176 254,000 BRC Holdings 9,716 495,000 American Management Systems 9,467 418,000 CACI International 8,360 - -------------------------------------------------------- 71,184 .Gaming Equipment: 1.3% 1,880,000 International Game Technology 42,770 370,000 Acres Gaming 4,186 - -------------------------------------------------------- 46,956 .Business Information: 1.5% 1,015,000 ACNielsen 24,360 830,000 American Business Information 22,514 885,714 GIGA Cv. Pfd. 3,100 208,333 Source Informatics Cv. Pfd. 2,360 100,000 Mecklermedia 2,319 - -------------------------------------------------------- 54,653 .Contract Manufacturing: 1.8% 1,090,000 Solectron 48,505 360,000 ACT Manufacturing 11,970 450,000 Altron 7,481 - -------------------------------------------------------- 67,956 .Instrumentation: 2.3% 865,000 Thermo Instrument Systems 36,438 613,000 Thermoquest 12,260 300,000 IFR Systems 9,900 300,000 Itron 7,425 $5,000,000 Thermo Optek, 5% Note Due 10/15/00 6,350 265,000 Thermo Optek 4,919 232,500 Metrika Systems 3,674 200,000 Thermo Bio Analysis 3,425 $1,500,000 Thermoquest, 5% Note Due 8/15/00 1,849 73,684 Onix Systems 700 - -------------------------------------------------------- 86,940
15 Acorn Fund .Statement of Investments (unaudited) [A LOGO APPEARS HERE]
Number of Shares Value (000) - -------------------------------------------------------------------------------- .Electronics Distribution: 0.9% 1,090,000 Pioneer-Standard Electronics $ 18,734 300,000 Kent Electronics 11,850 450,000 Richey Electronics 4,612 - -------------------------------------------------------------------------------- 35,196 .Transaction Processors: 1.0% 729,000 National Data 29,889 225,000 Concord EFS 6,075 - -------------------------------------------------------------------------------- 35,964 .Computer Systems: 0.9% 650,000 Kronos 16,819 330,000 Micros Systems 16,500 - -------------------------------------------------------------------------------- 33,319 .Components/Peripherals: 0.5% 425,000 American Power Conversion 11,953 200,000 Oak Industries 5,425 - -------------------------------------------------------------------------------- 17,378 -------- Information: Total 853,585 - -------------------------------------------------------------------------------- Health Care: 8.9% .Biotechnology/Drug Delivery: 0.9% 260,000 RP Scherer 16,104 450,000 Inhale Therapeutic Systems 14,119 800,000 Corvas International 4,100 800,000 Corvas International Warrants 800 - -------------------------------------------------------------------------------- 35,123 .Medical Equipment: 1.9% 1,162,000 Respironics 31,955 1,179,000 Kinetic Concepts 21,959 300,000 Affymetrix 13,800 275,000 Innovasive Devices 2,630 - -------------------------------------------------------------------------------- 70,344 .Hospital/Laboratory Supplies: 0.7% 322,000 Sybron International 13,826 273,000 Hillenbrand Industries 12,302 - -------------------------------------------------------------------------------- 26,128
Principal Amount or Number of Shares Value (000) - -------------------------------------------------------------------------------- .Services: 5.4% 1,026,000 HealthCare Compare $ 65,536 1,040,000 Lincare Holdings 52,455 996,000 HBO & Company 37,599 1,000,000 Magellan Health Services 31,750 505,000 United Payors and Providers 8,711 300,000 Walsh International 3,750 - -------------------------------------------------------------------------------- 199,801 -------- Health Care: Total 331,396 - -------------------------------------------------------------------------------- Consumer Goods/Services: 7.8% .Retail: 2.3% 1,960,000 Borders Group 53,900 490,000 Quality Food Centers 20,059 731,000 Host Marriott Services 10,874 - -------------------------------------------------------------------------------- 84,833 .Recreational Vehicles: 2.0% 2,200,000 Harley-Davidson 64,212 320,000 Thor Industries 9,800 - -------------------------------------------------------------------------------- 74,012 .Food: 0.2% 634,000 Au Bon Pain 5,706 .Entertainment/Leisure: 2.7% 1,400,000 Carnival 64,750 300,000 Gaylord Entertainment 7,744 392,000 Hollywood Park 7,423 140,000 Royal Caribbean Cruises 6,125 210,000 Rio Hotel & Casino 4,397 535,000 Monarch Casino & Resort 3,678 185,000 Bally Total Fitness 3,191 124,000 Showboat 2,527 $6,250,000 Grand Palais Casino 14% Note Due 2/25/98 313 - -------------------------------------------------------------------------------- 100,148 .Manufacturers: 0.6% 600,000 Newell 24,000 -------- Consumer Goods/Services: Total 288,699
16 [A LOGO APPEARS HERE]
Number of Shares Value (000) - ---------------------------------------------------- Finance: 11.5% .Banks: 2.1% 412,000 Banc One $ 22,995 570,000 Texas Regional Bancshares 17,813 285,000 Union Planters 15,924 260,000 TCF Financial 15,194 156,000 Pinnacle Financial 5,470 - ---------------------------------------------------- 77,396 .Savings & Loans: 3.3% 1,267,000 Peoples Bank Bridgeport 40,623 538,000 Coast Savings 28,211 297,000 Washington Mutual 20,716 671,000 Washington Federal 19,878 538,000 Commonwealth Bancorp 9,684 280,000 Imperial Thrift & Loan 5,670 - ---------------------------------------------------- 124,782 .Insurance: 2.2% 836,000 Baldwin & Lyons, Cl. B 17,033 612,000 Acceptance Insurance 16,065 444,000 Leucadia National 15,262 247,000 Foremost 14,573 351,000 United Fire & Casualty 14,435 210,000 Highlands Insurance 5,119 - ---------------------------------------------------- 82,487 .Money Management: 2.8% 862,000 United Asset Management 24,729 618,000 SEI Investments 20,394 620,000 Pioneer Group 19,840 865,000 Baker Fentress 18,111 1,723,000 Phoenix Duff & Phelps 13,353 231,000 BISYS Group 7,421 - ---------------------------------------------------- 103,848 .Other: 1.1% 935,000 Americredit 26,647 1,390,000 World Acceptance 9,209 340,000 DVI 5,674 - ---------------------------------------------------- 41,530 ------- Finance: Total 430,043
Number of Shares Value (000) - ---------------------------------------------------- Industrial Goods/Services: 9.6% .Steel: 2.1% 1,260,000 Worthington Industries 25,515 540,000 Gibraltar Steel 13,162 350,000 Schnitzer Steel 11,769 405,000 Atchison Casting 8,606 340,000 Steel Dynamics 7,990 295,000 A M Castle 7,670 175,000 Intermet 3,062 - ---------------------------------------------------- 77,774 .Machinery: 2.6% 900,000 Thermo Electron 36,000 800,000 Baldor Electric 24,350 535,000 Applied Industrial Technologies 18,424 98,000 Applied Power 6,168 270,000 Valmont Industries 5,754 75,000 Nordson 4,397 189,000 Hein-Werner 1,441 500,000 Stevens International, Cl. A 1,125 34,000 Stevens International, Cl. B 128 - ---------------------------------------------------- 97,787 .Industrial Suppliers: 0.8% 625,000 Unifi 25,586 72,000 Zoltek 4,581 - ---------------------------------------------------- 30,167 .Specialty Chemicals: 0.8% 775,000 Lilly Industries, Cl. A 16,275 150,000 H B Fuller 8,128 176,000 MA Hanna 4,675 12,000 Cambrex 559 - ---------------------------------------------------- 29,637
17 [A LOGO APPEARS HERE] Acorn Fund .Statement of Investments (unaudited)
Principal Amount or Number of Shares Value (000) - -------------------------------------------------------------------------------- .Services: 3.3% 1,185,000 World Color Press $ 35,772 800,000 Expeditors International of Washington 33,500 901,000 Wackenhut, Cl. B 18,696 45,000 Wackenhut, Cl. A 1,001 430,000 Hub Group 15,964 280,000 AirNet Systems 6,755 210,000 HA.LO Industries 6,011 310,000 National Patent Development 3,739 $2,900,000 Western Water, 9% Cv. Note Due 9/25/05 2,926 - -------------------------------------------------------------------------------- 124,364 -------- Industrial Goods/Services: Total 359,729 - -------------------------------------------------------------------------------- Energy/Minerals: 11.6% .Independent Power: 3.7% 2,230,000 AES Corporation 97,562 1,852 AES Corporation Warrants 111 1,200,000 CalEnergy 39,900 - -------------------------------------------------------------------------------- 137,573 .Oil/Gas Producers: 2.3% 1,300,000 Seagull Energy 33,150 1,300,000 Tesoro Petroleum 23,481 275,000 United Meridian 10,106 475,000 Forest Oil 8,669 350,000 Costilla Energy 4,987 1,031,000 Tipperary 4,640 - -------------------------------------------------------------------------------- 85,033 .Distribution/Marketing/Refining: 1.7% 820,000 NGC 14,555 553,000 Atmos Energy 13,756 530,000 Southern Union 12,919 401,000 Equitable Resources 12,631 190,000 KN Energy 8,692 - -------------------------------------------------------------------------------- 62,553
Number of Shares Value (000) - -------------------------------------------------------------------------------- .Oil Services: 3.7% 700,000 EVI $ 44,800 288,000 Atwood Oceanics 32,436 555,000 J Ray McDermott 27,195 600,000 Pride International 20,400 300,000 Veritas DGC 12,769 - -------------------------------------------------------------------------------- 137,600 .Mining: 0.2% 400,000 Zeigler Coal Holding 9,350 -------- Energy/Minerals: Total 432,109 - -------------------------------------------------------------------------------- Other Industries: 3.3% .Real Estate: 3.2% 829,000 The Rouse Company 25,699 260,000 Equity Residential Properties Trust 14,186 233,000 Forest City Enterprises, Cl. B 13,339 185,000 Forest City Enterprises, Cl. A 10,637 741,000 Homestead Village 13,153 400,000 Macerich Company 11,550 350,000 Cornerstone Properties 6,694 165,000 Weingarten Realty Investors 6,590 250,000 Security Capital Atlantic 5,594 101,000 Security Capital Group, Cl. B 3,472 17,761 Security Capital Warrants 142 190,000 First Washington Realty Trust 4,679 120,000 First Washington Realty Trust, Cv. Pfd. 3,570 - -------------------------------------------------------------------------------- 119,305 .Transportation: 0.1% 320,000 Trailer Bridge 4,240 -------- Other Industries: Total 123,545 - -------------------------------------------------------------------------------- Foreign Securities: 14.3% .Canada: 0.7% 1,200,000 Ranger Oil 11,250 200,000 Shaw Industries, Cl. A 7,854 115,000 Veritas Energy Services 4,932 200,000 Cogeco Cable 1,750 - -------------------------------------------------------------------------------- 25,786
18 [A LOGO APPEARS HERE]
Number of Shares Value (000) - ----------------------------------------------------------------- .United Kingdom: 3.0% 1,200,000 Serco Group $16,089 700,000 Getty Communications, Cl. A 12,950 3,700,000 Medeva 12,492 400,000 NTL 10,550 1,270,000 Amvescap 8,504 81,000 Amvescap ADR 5,467 700,000 Powerscreen International 8,379 1,100,000 N. Brown Group 7,472 1,700,000 Securicor Group, Cl. A 7,415 650,000 Comcast UK Cable Partners 6,662 330,000 Airtours 5,611 580,000 Oriflame 4,497 600,000 Edinburgh Fund Managers 4,386 530,000 Ethical Holdings 2,418 - ----------------------------------------------------------------- 112,892 .Germany/Austria: 0.6% 180,000 Flughafen Wien (Austria) 7,444 552,000 United International Holdings (Austria) 6,762 23,000 Binding-Brauerei 6,186 - ----------------------------------------------------------------- 20,392 .Nordic Countries: 1.8% 1,500,000 WM Data Nordic (Sweden) 25,122 650,000 Getinge Industrier (Sweden) 12,215 254,000 Autoliv (Sweden) 10,795 260,000 Esselte, Series A (Sweden) 7,509 180,000 Pricer, Cl. B (Sweden) 5,246 625,000 SensoNor (Norway) 4,671 - ----------------------------------------------------------------- 65,558 .Netherlands: 0.7% 270,000 Hunter Douglas 11,563 160,000 ASR Verzekeringsgrp (formerly known as Stad Rotterdam) 8,083 167,000 Getronics 5,230 - ----------------------------------------------------------------- 24,876 .Switzerland: 0.7% 9,000 Societe Generale de Surveillance 15,772 4,500 Cie Fin Richemont 5,872 6,000 Liechtenstein Global Trust 3,264 - ----------------------------------------------------------------- 24,908
Number of Shares Value (000) - ----------------------------------------------------------------- .France: 0.6% 128,000 Atos (formerly known as Axime Ex Segin) 13,853 70,000 Cetelem 7,977 12,000 Guilbert 1,659 - ----------------------------------------------------------------- 23,489 .Spain/Portugal: 0.2% 185,000 Vallehermoso 5,103 375,000 Filmes Lusomundo (Portugal) 3,023 - ----------------------------------------------------------------- 8,126 .Italy/Greece: 1.7% 400,000 Cellular Communications International 16,600 3,795,000 Banca Fideuram 15,834 234,000 Hellenic Bottling (Greece) 12,164 1,855,000 Saipem 11,179 500,000 Aeroporti di Roma 4,856 170,000 Industrie Natuzzi 4,027 - ----------------------------------------------------------------- 64,660 .India: 0.2% 300,000 IS Himalaya Fund 3,870 39,383 Housing Development Finance 3,553 - ----------------------------------------------------------------- 7,423 .Hong Kong: 0.2% 4,500,000 Varitronix International 8,606 .China: 0.0% 200,000 The Investment Company of China 994 .Singapore: 0.5% 7,250,000 Genting International 18,052 .Taiwan: 0.2% 453,620 President Enterprises 6,974 .Japan: 1.2% 266 NTT Data 12,052 110,000 Nintendo 10,296 174,000 Noritsu Koki 7,134 16,000 Shohkoh Fund 4,466 33,000 Nichiei 3,143 130,000 Heiwa 2,487 90,000 Sankyo 1,864 520,000 Orient 1,146 20,000 Paramount Bed 800 - ----------------------------------------------------------------- 43,388
19 [A LOGO APPEARS HERE] Acorn Fund .Statement of Investments (unaudited)
Number of Shares Value (000) - -------------------------------------------------------------- .Australia/New Zealand: 0.4% 1,700,000 Sky City (New Zealand) $ 7,302 210,000 PetSec Energy ADR 5,407 600,000 PetSec Energy 3,129 - -------------------------------------------------------------- 15,838 .Mexico: 0.6% 3,000,000 Kimberly Clark de Mexico 15,683 6,000,000 Nadro, Series L 6,528 - -------------------------------------------------------------- 22,211 .Brazil: 0.3% 10,000,000 Itau Banco PN 6,462 115,000,000 Cemig 6,424 - -------------------------------------------------------------- 12,886
Number of Shares Value (000) - -------------------------------------------------------------- .Other Latin America: 0.7% 2,800,000 Siderca (Argentina) 8,374 165,000 Banco Latinoamericano de Export (Panama) 7,384 160,000 IRSA (Argentina) 7,080 600,000 Perez Companc (Argentina) 4,837 - -------------------------------------------------------------- 27,675 ---------- Foreign: Total 534,734 55,200 Miscellaneous Securities: 0.0% 189 Total Common Stocks and Other ---------- Equity-Like Securities: 89.9% 3,354,029 ---------- Short-Term Obligations: 10.4% 388,794 ---------- Total Investments: 100.3% 3,742,823 ---------- Cash and Other Assets Less Liabilities: (0.3%) (10,895) ---------- Total Net Assets: 100% $3,731,928 - --------------------------------------------------------------
20 [LOGO APPEARS HERE] Acorn Fund .Foreign Portfolio Diversification At September 30, 1997, the Fund's foreign portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent - ----------------------------------------------------- .Information Computer Systems $ 51,010 1.4% Software/Services 37,099 1.0 Broadcasting/CATV 25,724 0.7 Mobile Communications 24,015 0.6 - ----------------------------------------------------- 137,848 3.7 .Health Care Biotechnology/Drug Delivery 24,461 0.7 Equipment 12,215 0.3 Hospital/Laboratory Supplies 800 0.0 - ----------------------------------------------------- 37,476 1.0 .Consumer Goods/Services Manufacturers 58,130 1.5 Entertainment/Leisure 33,452 0.9 Food 25,324 0.7 Retail 13,628 0.4 - ----------------------------------------------------- 130,534 3.5
Value (000) Percent - ----------------------------------------------------- .Finance Money Management $ 39,055 1.0% Banks 21,576 0.6 Insurance 8,083 0.2 Other 31,908 0.9 - ----------------------------------------------------- 100,622 2.7 .Industrial Goods/Services Services 44,882 1.2 Machinery Processing 13,050 0.3 - ----------------------------------------------------- 57,932 1.5 .Energy/Minerals Oil/Gas Producers 24,718 0.7 Oil Services 19,553 0.5 Independent Power 6,424 0.2 - ----------------------------------------------------- 50,695 1.4 .Real Estate 12,183 0.3 .Transportation 7,444 0.2 ------------------- Total Foreign Portfolio $534,734 14.3% =====================================================
21 Acorn International .Major Portfolio Changes in the Third Quarter
Number of Shares ------------------- 6/30/97 9/30/97 Additions Europe .Germany/Austria Rhoen Klinikum 100,000 122,500 Schaltbau 0 40,000 .Denmark Kompan International 31,000 44,000 .Sweden Atle 400,000 525,000 Autoliv 320,000 350,000 .France Assystem 30,000 50,000 .United Kingdom Euro Money Publications 0 110,000 Medeva 3,170,000 3,600,000 Serco Group 1,800,000 2,000,000 Shanks & McEwan 125,000 2,000,000 .Switzerland Cie Fin Richemont 6,000 9,000 Phoenix Mecano 25,000 28,000 Publicitas Holding 30,000 45,000 Selecta Group 40,000 60,000 Societe Generale de Surveillance 6,550 9,000 .Italy Aeroporti di Roma 0 500,000 Autogrill (includes effect of merger) 0 2,750,000 Banco Pop Commercia e Industria 400,000 500,000 Cellular Communications International 80,000 160,000 Dalmine 0 20,000,000 Saes Getters 125,000 300,000 .Spain Mapfre Vida 100,000 140,000 .Netherlands ASR Verzekeringsgrp (formerly known as Stad Rotterdam) 75,000 160,000 .Hungary Gedeon Richter 20,000 40,000
Principal Amount or Number of Shares ------------------------ 6/30/97 9/30/97 Asia .Hong Kong TVB 2,300,000 3,500,000 Varitronix International 7,500,000 8,500,000 .Japan Aderans 330,000 440,000 Aeon Credit Service 0 140,000 Keyence 0 35,000 Long Term Credit Bank 0 1,500,000 Nihon Unisys 0 350,000 Shinki 240,000 290,000 Shohkoh Fund 35,000 39,000 Softbank Corporation 95,000 120,000 .Indonesia Medco Energi 220,000 2,000,000 .Philippines Int'l Container Terminal Services 27,000,000 50,000,000 (includes effect of 50% stock bonus) Int'l Container Terminal Services Cv. 1.75% 3/31/04 $ 3,000,000 $ 5,000,000 Ionics Circuits 0 12,000,000 .Singapore Genting International 6,124,600 8,300,000 Venture Manufacturing 3,500,000 3,800,000 .Thailand BEC World Public 450,000 815,000 - ---------------------------------------------------------------- Latin America .Mexico Corp Interamericana de Entretenimiento 100,000 600,000 Tubos de Acero de Mexico 400,000 460,000 .Brazil Bompreco 100,000 150,000 .Argentina Perez Companc 1,000,000 1,400,000 .Peru Enrique Ferreyros 4,200,000 6,000,000 (includes effect of 18% stock bonus) - ---------------------------------------------------------------- Other Countries .Australia Anaconda Nickel 2,500,000 3,200,000 .Canada Bracknell 1,100,000 1,600,000
22
Number of Shares ------------------ 6/30/97 9/30/97 Sales - --------------------------------------------------------- Europe .Germany/Austria Binding-Brauerei 15,000 0 Fresenius 60,000 50,000 KTM-Motorradholding 29,000 0 .Denmark Falck 125,000 70,000 .Finland Benefon 200,000 25,000 .Sweden Hennes & Mauritz, Cl. B 440,000 0 Hexagon 175,000 0 Micronic Laser Systems 225,000 0 Oresa Ventures 96,000 0 Pricer, Cl. B 350,000 180,000 WM Data Nordic 3,000,000 2,700,000 .France Canal Plus 27,000 0 Guilbert 30,000 15,000 Technip 50,000 0 .United Kingdom Body Shop International 1,800,000 0 Capita Group 3,000,000 2,750,000 Capital 2,200,000 0 Peek 4,000,000 0 Premier Oil 12,000,000 6,000,000 Securicor Group, Cl. A 1,700,000 0 Spirax Sarco 100,000 0 .Switzerland Liechtenstein Global Trust 13,000 5,000 Suedelektra Holding 8,000 0 .Italy/Greece Banca Di Legnano 1,100,000 0 Banca Fideuram 7,100,000 6,730,000 Ergo Bank 228 0 Fila Holdings 100,000 0 Pininfarina 30,000 0 Unipol 1,000,000 0 .Spain/Portugal Cortefiel 160,000 110,000 Investec 24,800 0 Zardoya Otis 16,000 0
Number of Shares ------------------ 6/30/97 9/30/97 .Netherlands Getronics 700,000 560,000 .Hungary Cofinec 145,000 0 .Poland Amica Wronki 210,000 0 - --------------------------------------------------------- Asia .Hong Kong Innovative International Holdings 12,000,000 0 JCG Holdings 11,000,000 0 Pacific Ports 2,000,000 0 Regent Pacific 8,910,000 0 .India/Pakistan Mirc Electronics 500 0 Pakistan State Oil 59,035 0 .Japan Belluna 249,700 0 HIS 115,000 0 Mars Engineering 142,000 0 Nanto Bank 415,000 135,000 Nidec 120,000 0 Orix Corporation 140,000 100,000 Paramount Bed 110,000 20,000 Secom 163,000 0 Shochiku 165,000 0 Tokyu Land 1,330,000 0 Xebio 135,000 0 .Korea Dongbu Fire & Marine Insurance 233,330 0 Kookmin Bank 319,387 0 S1 Corporation 26,265 0 .Taiwan Baring Taiwan Fund 150,000 0 Formosa Fund 80,000 0 Formosa Growth Fund 230,000 0 President Enterprises 480,000 473,380 (includes effect of 20% stock dividend) Taipei Fund 70,000 0
23 Acorn International .Major Portfolio Changes in the Third Quarter
Number of Shares ------------------- 6/30/97 9/30/97 .Malaysia AMFB 3,230,000 0 Malaysian Assurance Alliance 1,210,000 0 .Indonesia Tigaraksa Satria 2,900,900 0 Unilever Indonesia 230,000 0 .Philippines Mondragon International 14,100,000 0 .Thailand Shinawatra Satellite 4,470,100 500,000 Sinpinyo Fund V 2,600,000 0 - ------------------------------------------------------ Latin America .Mexico Bufete Industrial 450,000 200,000 Cofar 107,000 0 Grupo Accion 2,100,000 0 Grupo Radio Centro 263,000 0 Kimberly Clark de Mexico 3,600,000 3,200,000 .Brazil Brazilian Smaller Companies Warrants 1,000,000 0 Banco Itau Pfd. 20,000,000 18,000,000 White Martins 2,250,000 310,000 .Argentina Cresud 1,400,000 0 Siderca 4,000,000 3,600,000 (includes effect of 7.3% stock dividend) - ------------------------------------------------------ Other Countries
Number of Shares ------------------- 6/30/97 9/30/97 .Australia/New Zealand Hudson Conway 420,000 240,000 PDL Holdings 600,000 0 Skilled Engineering 1,800,000 175,000 Village Roadshow Pfd., Cl. A 3,000,000 0 .Canada Fundy Cable 250,000 0 Pan East Petroleum 1,700,000 0 Shaw Communications 600,000 0 Shermag 300,000 0 Veritas Energy Services 395,000 0 .Israel Pec Israel Economic 200,000 0
24 [I LOGO APPEARS HERE] Acorn International .Statement of Investments (unaudited) September 30, 1997
Number of Shares Value (000) - -------------------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 88.9% - -------------------------------------------------------------------------------- Europe: 51.2% .Germany/Austria: 4.8% 170,000 Rhoen Klinikum Pfd. $ 18,192 122,500 Rhoen Klinikum 13,664 Hospital Management 330,000 Pfleiderer 9,230 Construction Materials 50,000 Fresenius 8,436 Dialysis Equipment & Solutions 290,000 IVG Holdings 8,243 Real Estate & Logistics 190,000 Flughafen Wien 7,858 Vienna Airport Authority (Austria) 473,000 United International Holdings 5,794 Cable Television for Austria & Other Countries (Austria) 40,000 Schaltbau 5,549 Railcar Components 21,000 Cewe Color Holding 5,113 Photographic Developing & Printing 90,000 Boewe Systec 2,956 Envelope Stuffing Machines 200,000 Berzelius Umwelt - Service 2,888 Industrial Waste Recycling 229,860 Scala Business Solutions (formerly known as Scala International) 2,071 95,775 Scala Business Solutions Warrants 3/31/99 235 95,775 Scala Business Solutions Warrants 3/31/01 196 Financial Accounting Software (Austria) - -------------------------------------------------------------------------------- 90,425 .Denmark: 0.5% 44,000 Kompan International 5,398 Playground Equipment 70,000 Falck 3,279 Ambulance, Firefighting & Security Services - -------------------------------------------------------------------------------- 8,677
Number of Shares Value (000) - -------------------------------------------------------------------------------- .Finland: 4.6% 500,000 TT Tieto, Cl. B 56,276 Computer Services/Consulting 80,000 Fiskars, Series A 8,399 Scissors & Gardening Tools 100,000 Vaisala, Cl. A 7,567 Meteorological Instruments 550,000 Talentum 6,555 Trade Journals 100,000 Sentra, Cl. A 6,432 Grocery Wholesaling & Retailing 25,000 Benefon 364 Mobile Telephones - -------------------------------------------------------------------------------- 85,593 .Norway: 0.4% 855,000 SensoNor 6,391 Electronic Sensors for Airbags 500,000 Atex Media Solutions 1,410 Print Media Software - -------------------------------------------------------------------------------- 7,801 .Sweden: 5.9% 2,700,000 WM Data Nordic 45,220 Computer Services/Consulting 1,005,000 Getinge Industrier 18,886 Sterilization & Disinfection Equipment 350,000 Autoliv 14,875 Seatbelts & Airbags 315,000 Esselte, Series A 9,097 Office Supplies & Related Equipment 665,000 Bure Investment 8,638 Health Care Services & Investments 525,000 Atle 7,927 Investment Company 180,000 Pricer, Cl. B 5,246 Electronic Shelf Labels for Supermarkets - -------------------------------------------------------------------------------- 109,889
25 Acorn International .Statement of Investments (unaudited)
Number of Shares Value (000) - ----------------------------------------------------------------- .France: 3.7% 200,000 Atos (formerly known as Axime Ex Segin) 21,645 Computer Services 94,000 Cetelem 10,712 Consumer Financing 62,000 NRJ 8,413 Radio Network 60,000 Fininfo 7,323 Data Feeds for French Banks & Brokers 85,000 Spir Communications 6,048 Regional Newspapers 55,000 Virbac 4,895 Drugs for Animals 50,000 Groupe Partouche 3,178 Casinos 350,000 Groupe AB 2,931 Television Programming 50,000 Assystem 2,461 Consultants on Nuclear Power Plants 15,000 Guilbert 2,073 Office Supplies Distribution - ----------------------------------------------------------------- 69,679 .United Kingdom: 12.1% 2,000,000 Serco Group 26,816 Facilities Management 1,600,000 Powerscreen International 19,152 Mobile Crushing & Screening Equipment 1,950,000 Oriflame International 15,120 Natural Cosmetics Sold Door-to-Door 2,750,000 Capita Group 12,638 Outsourcing Government Services 467,000 NTL 12,317 Cable TV & Telephone System 3,600,000 Medeva 12,154 Drugs for Hyperactive Children 1,450,000 Seton Healthcare Group 10,716 Pharmaceuticals 800,000 Vosper Thornycroft Holdings 10,545 Naval Shipbuilding
Number of Shares Value (000) - ----------------------------------------------------------------- 4,500,000 City Centre Restaurants 10,250 Fast Food Restaurants 1,500,000 N. Brown Group 10,189 Mail Order Clothing in Large Sizes 4,000,000 St. James Place 9,272 Life Insurance 1,700,000 Rotork 8,582 Valve Actuators for Oil & Water Pipelines 13,000,000 Electronics Boutique 7,980 Videogame/Computer Software Stores 800,000 Expro International Group 6,979 Oil Field Services 950,000 Edinburgh Fund Managers 6,944 Investment Management 2,950,000 HALMA 6,433 Fire Detection Devices & Burglar Alarms 1,300,000 Dorling Kindersley 5,985 Reference Books & CD-ROMs 500,000 Comcast UK Cable Partners 5,125 Cable TV & Telephone System 2,000,000 Shanks & McEwan 5,008 Landfills & Waste Incinerators 6,000,000 Premier Oil 4,967 Oil & Gas Producer 1,200,000 Ivory & Sime 4,003 Investment Management 2,000,000 Aberdeen Trust 3,360 Money Management 670,000 Ethical Holdings 3,057 Drug Delivery 110,000 Euro Money Publications 2,994 Press Printing 600,000 Hozelock Group 2,903 Garden Hoses 400,000 Eurotherm 2,633 Instruments & Measuring Devices 250,000 Gentia Software 1,000 Computer Software 230,000 Tunstall 279 "I've fallen and I can't get up" Monitors - ----------------------------------------------------------------- 227,401
26
Number of Shares Value (000) - ------------------------------------------------------------------------------ >Switzerland: 4.5% 9,000 Societe Generale de Surveillance $ 15,772 Inspection/Testing of Trade Goods 28,000 Phoenix Mecano 15,192 Electrical Components Manufacturer 9,000 Cie Fin Richemont 11,743 Luxury Goods & Tobacco 45,000 Publicitas Holding 10,566 Print Advertising Broker 60,000 Selecta Group 8,717 Vending Machines 18,000 Societe Generale d'Affichage 7,120 Billboard Advertising 12,000 Hero 6,652 Packaged Foods 10,000 Prodega 4,992 Cash-and-Carry Retailer 5,000 Liechtenstein Global Trust 2,720 Banking & Investment Management - ------------------------------------------------------------------------------ 83,474 >Italy/Greece: 8.0% 6,730,000 Banca Fideuram 28,079 Life Insurance & Mutual Funds 2,500,000 Saipem SPA 15,066 Pipeline Construction & Drilling Contractor 250,000 Hellenic Bottling 12,996 Coca-Cola Bottler (Greece) 600,000 Gewiss 11,595 Electrical Plugs & Switches 2,750,000 Autogrill 11,466 Tollway Restaurants 650,000 Mediolanum 10,546 Life Insurance & Mutual Funds 700,000 Banca Popolare Di Bergamo 10,344 Regional Bank 2,000,000 Editoriale L'Espresso 8,182 Newspapers & Magazines 500,000 Banco Pop Commercia e Industria 7,128 Regional Bank 160,000 Cellular Communications International 6,640 Mobile Communications 480,000 Attica Enterprises 6,023 Ferry Line (Greece) 300,000 Saes Getters 5,667 Getters used in TVs/PCs
Number of Shares Value (000) - ------------------------------------------------------------------------------ 20,000,000 Dalmine 5,157 Seamless Steel Pipes 500,000 Aeroporti di Roma 4,856 Airport Management 200,000 Industrie Natuzzi 4,738 Leather Couches 175,000 Danieli 1,398 Steel-making Machinery - ------------------------------------------------------------------------------ 149,881 >Spain/Portugal: 1.4% 140,000 Mapfre Vida 8,541 Life Insurance & Mutual Funds 200,000 Vallehermoso 5,517 Residential Property Developer & Landlord 110,000 Cortefiel 4,668 Apparel Retailer 214,000 Estoril Sol 3,551 Casino Resort (Portugal) 200,000 Lusotur 2,780 Real Estate/Resort Developer (Portugal) 150,000 Filmes Lusomundo 1,209 Newspapers, Radio, Video, Film Distribution (Portugal) 350,000 Televisao Independente 642 Television Station (Portugal) - ------------------------------------------------------------------------------ 26,908 >Netherlands: 4.8% 630,000 Kempen 24,986 Stock Brokerage/Investment Management 560,000 Getronics 17,537 Computer Services 270,000 Hunter Douglas 11,563 Decorative Window Coverings 310,000 Fugro McClelland 10,830 Engineering, Consulting & Surveying 160,000 ASR Verzekeringsgrp (formerly known as Stad Rotterdam) 8,083 Insurance 300,000 Telegraaf Holdings 6,334 Newspaper Publisher 310,000 Wegener Arcade NV 6,233 Newspaper Publisher 320,000 DOC Data 5,228 Audio CD & CD-Rom Replication - ------------------------------------------------------------------------------ 90,794
27 [I] Acorn International .Statement of Investments (unaudited)
Number of Shares Value (000) - -------------------------------------------------------------------------------- .Hungary: 0.2% 40,000 Gedeon Richter $ 4,244 Generic Drugs .Poland: 0.3% 2,500,000 Bank Inicjatyw Gospodarczych 3,217 Warsaw Bank 200,000 Best Company, Series D 1,416 Electronics Retailer 200,000 Bank Komunalny 971 Gdansk-Area Bank - -------------------------------------------------------------------------------- 5,604 -------- Europe: Total 960,370 - -------------------------------------------------------------------------------- Asia: 20.9% .Hong Kong: 3.2% 8,500,000 Varitronix International 16,255 LCD Manufacturer 13,810,000 Li and Fung 16,149 Sourcing of Consumer Goods 3,500,000 TVB 12,392 Television Broadcasting 21,000,000 China HK Photo Products 6,920 Fuji Film Distributor 8,500,000 Vanda Systems 4,970 Systems Integrator 20,000,000 Golden Harvest Entertainment 3,308 Movie Distribution & Exhibition - -------------------------------------------------------------------------------- 59,994 .India/Pakistan: 0.9% 82,692 Housing Development Finance 7,460 Mortgage Lender 300,000 IS Himalaya Fund 3,870 Closed-End Fund 1,047,200 Zee Telefilms 3,170 Hindi Television Programming & Broadcasting 349,450 Max India 1,560 50,000 Max India New Shares 223 Penicillin & Mobile Phones 810,000 Tube Investment GDR 810 Bicycle Manufacturer 2,000,000 Centurion Quantum Growth 307 Closed-End Fund - -------------------------------------------------------------------------------- 17,400
Number of Shares Value (000) - -------------------------------------------------------------------------------- .Japan: 10.7% 350 NTT Data $ 15,858 Computer Services/Consulting 440,000 Aderans 11,735 Hairpieces & Wigs 350,000 Meitec 11,219 Engineering Outsourcing 270,000 Noritsu Koki 11,070 Photo Processing Lab Manufacturer 39,000 Shohkoh Fund 10,886 Short-Term Loans for Small Business 112,600 Nichiei 10,726 Short-Term Loans for Small Business 110,000 Nintendo 10,296 Video Games 300,000 Amway Japan 8,598 Direct Consumer Goods Sales 140,000 Aeon Credit Service 8,465 Credit Cards 300,000 Hokuto 8,200 Mushroom Grower 100,000 Orix Corporation 7,604 Leasing Company 235,000 Konami 7,202 Entertainment Software/Hardware 216,840 Fuji Software ABC 7,148 Computer Services/Consulting 1,500,000 Long Term Credit Bank 6,548 Bank 290,000 Shinki 5,885 Corporate & Consumer Lending 80,000 Ryohin Keikaku 5,188 Designer & Retailer of Muji Brand Specialty Consumer Goods 120,000 Softbank Corporation 4,900 Publisher/Software Distributor 35,000 Keyence 4,899 Detection Devices 255,000 Heiwa 4,879 Pachinko Machine Manufacturer 165,000 Lasertec 4,852 Manufacturer of LCD & Photomask Defect Detectors 170,000 People 4,534 Sports Clubs 900,000 Chuo Trust & Banking 4,324 Bank
28
Number of Shares Value (000) - --------------------------------------------------------------------- 195,000 Sankyo $ 4,038 Pachinko Machine Manufacturer 275,000 Mirai Industry 3,963 Manufacturer of Plastic Housing Components 1,760,000 Orient Corporation 3,878 Credit Cards 210,000 Arrk Corporation 3,496 Industrial Modeling 160,000 NuSkin Asia Pacific 3,090 Direct Consumer Goods Sales 350,000 Nihon Unisys 2,319 Data Communications 213,500 Central Uni 1,547 Health Care/Medical Equipment 55,000 Tiemco 920 Fishing Equipment 20,000 Paramount Bed 800 Hospital Bed Manufacturer 135,000 Nanto Bank 694 Bank 65,020 Nihon Jumbo 641 Photo Processing Lab - --------------------------------------------------------------------- 200,402 .Taiwan: 0.4% 473,380 President Enterprises 7,278 Food Manufacturer & Distributor .Malaysia: 0.4% 2,000,000 Malaysian Oxygen 7,404 Industrial Gases .Indonesia: 0.9% 11,400,000 Bank Niaga 5,578 Banking 3,200,000 Modern Photo Film 4,159 Fuji Film Distributor 2,000,000 Medco Energi 2,599 Oil & Gas Drilling & Production 3,000,000 Mustika Ratu 2,500 Traditional Cosmetics 2,700,000 Tunas Ridean 1,858 Auto Retailing - --------------------------------------------------------------------- 16,694
Principal Amount or Number of Shares Value (000) - --------------------------------------------------------------------- .Philippines: 1.3% 50,000,000 Int'l Container Terminal Services $ 10,335 $5,000,000 Int'l Container Terminal Services Cv. 1.75% 3/13/04 4,450 Container Handling Terminals & Port Management 12,000,000 Ionics Circuits 8,035 Computers 3,500,000 Philippine Savings Bank 1,707 Banking - --------------------------------------------------------------------- 24,527 .Singapore: 2.4% 8,300,000 Genting International 20,667 Cruise Line 3,800,000 Venture Manufacturing 16,144 2,500,000 Venture Manufacturing Warrants 7/26/99 8,464 Contract Electronics Manufacturer - --------------------------------------------------------------------- 45,275 .Thailand: 0.7% 815,000 BEC World Public 5,658 Television/Radio Broadcasting 320,000 Bangkok Insurance 4,478 Finance/Insurance 200,000 Serm Suk 2,796 Pepsi Bottler 500,000 Shinawatra Satellite 258 Satellite Leasing - --------------------------------------------------------------------- 13,190 -------- Asia: Total 392,164
29 [I] Acorn International .Statement of Investments (unaudited)
Number of Shares Value (000) - --------------------------------------------------------------- Latin America: 9.6% .Mexico: 3.1% 3,200,000 Kimberly Clark de Mexico $ 16,728 Paper Products 1,500,000 Grupo Industrial Bimbo 13,696 Bread, Baked Goods & Snacks 460,000 Tubos de Acero de Mexico 10,666 Seamless Pipe for Oil Wells 9,000,000 Nadro, Series L 9,792 Pharmaceutical Distributor 200,000 Bufete Industrial 3,775 Engineering & Construction 600,000 Corp Interamericana de Entretenimiento 3,627 Management of Live Entertainment - --------------------------------------------------------------- 58,284 .Brazil: 2.1% 18,000,000 Banco Itau Pfd. 11,632 Bank 165,000,000 Cemig Pfd. 9,217 Electric Utility 350,000 Elevadores Atlas 5,559 Elevator Services 30,000,000 Telemig 4,655 30,000,000 Telemig Pfd. 4,422 Telecommunications 150,000 Bompreco 3,863 Supermarket Chain 310,000 White Martins 722 Industrial Gases - --------------------------------------------------------------- 40,070 .Argentina: 1.9% 320,000 IRSA 14,160 Real Estate Management & Development 1,400,000 Perez Companc 11,286 Oil & Gas Producer 3,600,000 Siderca 10,766 Steel Pipe Producer - ---------------------------------------------------------------
Number of Shares Value (000) - --------------------------------------------------------------- 36,212 .Chile: 1.3% 150,000 Genesis Chile Fund 7,425 Closed-End Fund 260,000 Banco BHIF 5,298 Financial Services 220,000 Santa Isabel 5,129 Supermarket Chain 120,000 Embotelladora Andina, Series A 3,090 120,000 Embotelladora Andina, Series B 2,910 Coca-Cola Bottler - --------------------------------------------------------------- 23,852 .Peru: 0.4% 6,000,000 Enrique Ferreyros 6,561 Heavy Machinery Dealer .Panama: 0.8% 185,000 Banco Latinoamericano de Exportaciones 8,279 Trade Financing (Panama) 161,000 Carnival 7,446 Cruise Ship Line (Panama) - --------------------------------------------------------------- 15,725 -------- Latin America: Total 180,704 - --------------------------------------------------------------- Other Countries: 7.2% .Australia/New Zealand: 3.2% 2,200,000 Publishing & Broadcasting 14,498 Media & TV Broadcasting 4,500,000 Tyndall Australia 8,636 Money Management & Insurance 3,200,000 Anaconda Nickel 8,343 Nickel Mining 1,750,000 Sky City 7,516 Casino & Hotel (New Zealand) 1,400,000 PetSec Energy 7,300 Oil & Gas Producer 5,200,000 Sonic Healthcare 6,854 Pathology Labs 1,000,000 Siddons Ramset 5,866 Manufacturer & Distributor of Construction Materials 240,000 Hudson Conway 1,642 Casino Managers 175,000 Skilled Engineering 264 Temporary Skilled Labor - --------------------------------------------------------------- 60,919
30 [I]
Number of Shares Value (000) - --------------------------------------------------------------------- .Canada: 2.8% 520,000 Shaw Industries $ 20,419 Oil Field Services 250,000 Cinar Films 9,531 Children's Television Programming 1,000,000 Ranger Oil 9,375 Oil & Gas Producer 1,600,000 Bracknell 5,612 Speciality Contractor 500,000 Cogeco 3,580 Cable TV 300,000 Cogeco Cable 2,625 Cable TV 900,000 Pangea Goldfields 2,083 Gold Mining Exploration - --------------------------------------------------------------------- 53,225 .Israel: 0.4% 325,000 Blue Square Israel 4,225 Supermarkets & Department Stores 310,000 ZAG Industries 3,720 Plastic Hardwares - ---------------------------------------------------------------------
Number of Shares Value (000) - --------------------------------------------------------------------- 7,945 .South Africa: 0.3% 780,000 Energy Africa 4,517 Oil & Gas Producer .United States: 0.5% 203,000 AES Corporation 8,881 Worldwide Electric Generating Plants ---------- Other Countries: Total 135,487 3,444 Miscellaneous Securities: 0.0% 14 Total Common Stocks and Other ---------- Equity-Like Securities: 88.9% 1,668,739 ---------- Short-Term Obligations: 9.8% 183,773 ---------- Total Investments: 98.7% 1,852,512 ---------- Cash and Other Assets Less Liabilities: 1.3% 23,809 ---------- Total Net Assets: 100% $1,876,321 - ---------------------------------------------------------------------
31 [I] Acorn International .Portfolio Diversification At September 30, 1997, the Fund's portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent - ------------------------------------------------------------- .Information Software/Services $150,186 8.0% Computer Systems 99,288 5.3 Broadcasting/CATV 91,576 4.9 Consumer Electronics 38,091 2.0 Distribution 32,782 1.7 Mobile Communications 18,122 1.0 Instrumentation 15,867 0.9 - ------------------------------------------------------------- 445,912 23.8 .Health Care Biotechnology/Drug Delivery 46,067 2.5 Services 40,494 2.1 Equipment 20,433 1.1 Hospital/Laboratory Supplies 16,090 0.9 - ------------------------------------------------------------- 123,084 6.6 .Consumer Goods/Services Retail 126,619 6.8 Manufacturers 114,365 6.1 Food 79,334 4.2 Entertainment/Leisure 65,807 3.5 Recreational Vehicles 810 0.0 - ------------------------------------------------------------- 386,935 20.6 .Finance Money Management 116,501 6.2 Banks 74,028 4.0 Credit Cards 23,055 1.2 Insurance 21,102 1.1 Other 66,432 3.5 - ------------------------------------------------------------- 301,118 16.0
Value (000) Percent - ------------------------------------------------------------- .Industrial Goods/Services Services 148,182 7.9% Machinery Processing 68,997 3.7 Steel 26,368 1.4 Forest Products/Construction 9,230 0.5 - ------------------------------------------------------------- 252,777 13.5 .Energy/Minerals Oil/Gas Producers 47,448 2.5 Oil Services 32,811 1.7 Independent Power 18,098 1.0 Mining 10,426 0.6 - ------------------------------------------------------------- 108,783 5.8 .Real Estate 30,700 1.6 .Transportation 19,430 1.0 Total Common Stocks and Other Equity-Like Securities 1,668,739 88.9 Short-Term Obligations 183,773 9.8 --------------------- Total Investments 1,852,512 98.7 Cash and Other Assets less Liabilities 23,809 1.3 --------------------- Net Assets $1,876,321 100.0% - -------------------------------------------------------------
32 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. 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. --------------- The Acorn FIRST CLASS - ------------------------ PRE-SORT Family of Funds U.S. POSTAGE PAID WAM Brokerage Services, L.L.C. CHICAGO,IL P.O. Box 8502 PERMIT NO. 1200 Boston, MA 02266-8502 --------------- -----END PRIVACY-ENHANCED MESSAGE-----