-----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, Jn9Z4hdI3DkZy6o6k6dU+cdygcp+rTZ+vP0tJMJ2QGaCH6WjgqJbz1ZWceRoiWEh KgAdCNttX/SPZKdpcP0+Ig== 0000950131-98-003518.txt : 19980525 0000950131-98-003518.hdr.sgml : 19980525 ACCESSION NUMBER: 0000950131-98-003518 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980522 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: 98630444 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 1ST QUARTER REPORT - ACORN INVESTMENT TRUST Acorn The Acorn Family of Funds First Quarter Report ----------------------------------- March 31, 1998 Managed by Wanger Asset Management, L.P. [ORANGE BAR] Wanger Asset Management, L.P. ("WAM") is one of the leading global small-cap equity managers in the U.S., with over 27 years of small-cap investment experience. WAM manages over $7 billion in equities and is also the investment advisor for Wanger Advisors Trust, Wanger Investment Company, PLC, and separately managed accounts for institutions and high net worth individuals. Acorn Family of Funds First Quarter Report 1998 .Table of Contents Squirrel Chatter .Wealth and Poverty 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 14 .Statement of Investments 16 .Foreign Portfolio Diversification 22 Acorn International .In a Nutshell 8 .Performance at a Glance 9 .Major Portfolio Changes 23 .Statement of Investments 25 .Portfolio Diversification 31 . Squirrel Chatter: Wealth and Poverty How does one invest? You must decide whether a prospective investment is going to be a long-term winner or loser, using the lessons of the past as a guide. There is an excellent new book out demonstrating how a top historian can do this. When our own Leah Zell got her Ph.D. in History at Harvard, her thesis advisor was Professor David Landes. His latest book is The Wealth and Poverty of Nations: Why Some are So Rich and Some So Poor. That is a long title, but it is a long book, since it covers 500 years of world economic history. The major players (Spain, Netherlands, Great Britain, Japan, USA) are discussed in detail and some unexpected minor leaguers (Egypt, Paraguay) get their stories told, too. Medieval Europe had a fractured political system that allowed both invention and enterprise. Two major inventions in Europe were eyeglasses and the clock. Climate has a lot to do with energy level; most of the poor nations are in the tropics, and substantial populations cannot live in deserts or tundra. Today, of course, we have air conditioning, so Singapore and Hong Kong found comfort and economic success. More important are cultural, governmental, and religious factors. Imperial China had a strong bureaucratic government that suppressed technology and entrepreneurship, while medieval Europe had a fractured political system that allowed both invention and enterprise. The two early European inventions that Landes likes best were eyeglasses and the clock. Professor Landes spent much of his career studying the Industrial Revolution, so Great Britain bulks large in his book. The Brits hustled their way past the bigger and richer countries such as Spain and France, who were hampered by aristocratic disdain for manufacturing and religious intolerance. Great Britain built the first modern industrial country, accumulated an empire, and was then passed in turn by Germany and America. Why did Britain lose leadership at the end of the 19th century? "Part of the difficulty lay in British schooling: the continental countries had created technical and scientific institutions as a matter of policy, whereas Britain had let this kind of education grow like a weed and had treated it, once grown, like a poor relation of 'proper' schools and universities."/1/ In 1869, an English chemist, William H. Perkin, created a synthetic mauve dye, initiating the organic chemical industry. However, Britain soon lost its pioneering edge to the Germans, so that by 1900, 80-90% of the world's artificial dyes were from Germany. Why did chemistry become a German discipline? Education was key. Apart from Perkin and a few others, Britain did not train gifted chemists and Germany did. As a result, the major chemical companies a century ago were Hoechst, BASF, Bayer, and Agfa, all German corporations built around Nobel-class chemists with first-rate laboratories./2/ Most Englishmen were not concerned about chemistry. The English had solid steel and machinery expertise, allowing them to build railways, ships, machine tools, and cannon. If synthetic dyes gave Germany an edge in ladies ready-to- wear, that was of no concern to English men of affairs. Events proved otherwise. The first half of the twentieth century was dominated by chemical and electrical advance; chemists produced drugs, plastics, synthetic fibers, and through Fritz Haber's nitrogen fixation process, fertilizers and explosives. Almost all of these were German inventions. In 1942, American chemists were able to duplicate the German process for making synthetic rubber. At this time the Japanese had captured all the natural rubber plantations. Without synthetic rubber, Germany might not have dared to start the war, and the U.S. couldn't have won it. 2 When Japan had a great bull market in the 1980's, everyone thought that the Japanese would take over the world. What about us? Professor Landes' book describes how the Spanish went from the richest and most powerful country to a middling power, as did the Portuguese, the Dutch, the English, and the Germans. If British schooling spent too much time on Latin and Greek and not enough on calculus and chemistry in the last century, and therefore lost world leadership to ungentlemanly Germans and Americans, can the same thing happen to the United States? How is our educational system preparing us for the new century? F's for U.S. Schools: Results from the latest and most comprehensive comparison of education in 23 nations showed that American high school seniors fall further behind their foreign counterparts than anyone thought. In tests of general mathematics, students from only two nations--Cyprus and South Africa-- fared worse than U.S. 12th graders. And no country performed more poorly on tests of advanced mathematics and physics. Only those American students taking advanced placement calculus ranked higher than the average in that field./3/ Perhaps the 1990's grand bull market in the U.S. has made us complacent. Historical precedent suggests that we should be a lot more worried. When Japan had a great bull market in the 1980's, everyone thought that the Japanese would take over the world./4/ The Tokyo bull market ended, and Japanese triumphalism has vanished. It can happen here. The moral for investors? Today's leader may be an also-ran tomorrow. If American industry has some special magic, why are we running a $200 billion trade deficit with the rest of the world? Historical precedent suggests that a prudent long-term investor should have a meaningful part of his or her portfolio diversified outside of the United States. Investing in Acorn International is one way to accomplish this. Best Regards, /s/Ralph Wanger - --------------- Ralph Wanger Chief Investment Officer, Wanger Asset Management Lead Portfolio Manager, Acorn Fund . Press Recognition In the February 1998 issue, Worth Magazine editors chose Acorn Fund as one of their 20 favorite top-performing equity funds. Funds were chosen for their combination of superior returns and relatively low risk. In Bottom Line Personal (March 1, 1998), A. Michael Lipper, president of Lipper Analytical Services, Inc. observed that shrewd investors select mutual fund investments based on a fund's clear and consistent buy/sell strategies, rather than simply on a fund's performance. Acorn International was highlighted as one such shrewd fund investment. - -------------------------------------------------------------------------------- /1/ The Wealth and Poverty of Nations: Why Some are So Rich and Some So Poor, p. 458. /2/ Ibid, p. 289. /3/ Scientific American, May 1998. /4/ Michael Crichton's Rising Sun, a Japan-is-taking-over novel, came out in early 1992. 3 Acorn USA . In a Nutshell [Photo] The good times kept rolling last quarter. Acorn USA gained +12.9%, more than most other small-cappers (Russell 2000 index rose +10.1%), and a little less than the mega-cap S&P 500 (+14.0%). Over the past year, Acorn USA has returned an astonishing +51.6%, beating the S&P's +48.0%, as well as all of our other benchmarks. Our stocks seduced several suitors last quarter. Five of our 56 companies received takeover proposals--four said "I do" and one demurred (Data Transmission). Three of the newlyweds (Wonderware, Computer Language and ForeFront) were niche technology companies discovered by our tech wiz, Laura McKenna. Both she and the Acquirers were smitten with the three companies' heady growth prospects and bargain stock prices...but Laura got there first. Our other takeover was California banker H.F. Ahmanson, which became the latest notch in the money belt for merger-addict Washington Mutual. Cable television stocks were the blockbusters of the quarter. Our headliners included Liberty Media (Discovery Channel, SportsChannels), United Video (on-screen TV guides), Cablevision (New York cable system) and RCN (bundles cable, phone and internet services). A year ago, TV know-it-alls bashed cable TV as a has-been technology for half-baked couch potatoes. A year later, it's the experts who are abashed. Cable's entrenched customer base, abundance of channels and speedy internet access are making it a multimedia king. It's been nothing but fun owning stocks in the Nineties (the decade, not the p/e). Wall Street's direction arrow has been stuck on UP. Physicists are baffled and old-timers babble on about bubbles and tulip bulbs, but the investing public parties on. So is the market too high or not too high? That's not our question. Rather than gawk at the market, we zero in on individual companies, hunting for dynamic firms with stocks trading at prices below what we believe to be their worth. Those are the stocks of Acorn USA. /s/ Robert A. Mohn - ------------------ Robert A. Mohn Lead Portfolio Manager Fund Assets as of 3/31/98: $249.9 million . Acorn USA Top 10 Holdings Lincare Holdings 5.6% Home Health Care Services CalEnergy 4.7% Power Plants H.F. Ahmanson (formerly Coast Savings) 4.0% California Savings & Loan Micros Systems 3.9% Information Systems for Restaurants & Hotels Acceptance Insurance 3.5% Crop Insurance Wonderware 3.3% Industrial Control Software United Video Satellite 3.2% CATV & Satellite Dish Programming Host Marriott 3.0% Fast Food Kiosks in Airports Data Transmission 2.9% Data Services for Farmers Atmos Energy 2.9% Natural Gas Utility 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. Deep Breathing Lincare Holdings is the leading home health care provider of oxygen therapy for patients with respiratory diseases such as emphysema. Respiratory care is a rapidly growing, highly profitable business. Too profitable, according to Federal health care regulators, who this year slashed oxygen reimbursement rates by 30%. The Big Cut will temporarily sting Lincare's earnings (one step back), but will murder smaller, higher-cost competitors and bequeath their market share to Lincare (two steps forward). When the stock market misdiagnosed the Cut's benevolent side effect, analyst John Park began buying shares on the cheap. Since John's masterful call, Lincare has surged +85% to become the largest position in the Fund. 4 Performance at a Glance The Value of a $10,000 Investment in Acorn USA . September 4, 1996 through March 31, 1998 Acorn USA($) Russsell 2000($) 09/04/96 10,000 10,000 09/30/96 10,720 10,360 12/31/96 11,650 10,899 03/31/97 11,480 10,335 06/30/97 13,320 12,011 09/30/97 15,340 13,798 12/31/97 15,413 13,335 03/31/98 17,401 14,678 +12.9% Average Annual Total Return 1 Year Life of Fund 51.6% 42.3% 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 % of net assets, at 3/31/98 [Pie chart appears here] Information 38.3% Finance 14.7% Energy/Minerals 14.6% Industrial Goods/Services 9.8% Health Care 11.1% Consumer Goods/Services 6.1% Other Industries 2.1% Cash and other assets less liabilities 3.3% ----- 100.0% Relative Performance - ------------------------------------------------ 1st quarter Last 12 mos. 1998 Acorn USA 12.9% 51.6% Russell 2000 10.1% 42.0% Lipper Small Cap Funds Avg. 10.9% 43.5% S&P MidCap 400 11.0% 49.0% S&P 500 14.0% 48.0% Dow-Jones 11.8% 36.1% The Russell 2000 is formed by taking the 3,000 largest U.S. 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 583 and 493 funds for the 1st qtr. 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. All indexes are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 3/31/98: $17.07 5 Acorn Fund . In a Nutshell Acorn Fund surged 12.0% in the first quarter, beating many of its peers and the small-cap Russell 2000's gain of 10.1%. Large-cap stocks continued to outperform small-caps; the S&P 500 was up 14.0%. Media stocks remained hot as programmers continued to prosper and the cable industry rolled out new services. Liberty Media showed a 43% rise, United Video Satellite Group beamed a 48% boost, RCN wired a 46% jolt, and Cablevision exhibited a 37% gain. International cable stocks finally joined the party, as NTL jumped 55%, United International Holdings 46%, and Comcast UK Cable 42%. Our wares were wonderful. Wonderware returned a 69% gain as it agreed to be acquired, and Compuware jumped 54% on the year 2000 computer bug mania. Although Acorn Fund co-manager Chuck McQuaid is from Ware (MA), our technology analyst Laura McKenna warehoused these stocks for Acorn. SEI Investments returned a 63% gain as its investments in mutual fund marketing and pension administration boosted earnings. Italy's Banca Fideuram took in lots of mutual fund money and provided a 59% return to its shareholders. Other European stocks did well. Britain's Serco Group and Sweden's WM Data computed 54% and 46% gains. Aeroporti di Roma landed a 66% return. As pages 14-15 indicate, we swapped several technology positions and began to take some gains on media stocks during the quarter. We believe the stocks we purchased are more attractive, given current valuations. /s/ Ralph Wanger Ralph Wanger Lead Portfolio Manager /s/ Charles P. McQuaid Charles P. McQuaid Co-Portfolio Manager Fund Assets as of 3/31/98: $4,023.9 million . Acorn Fund Top 10 Holdings Liberty Media 3.0% CATV Programming AES Corporation 2.9% Global Power Producer Carnival 2.4% Cruise Ship Line Lincare Holdings 2.2% Home Health Care Services Harley Davidson 1.8% Motorcycle Manufacturer Borders Group 1.7% Bookstores National Data 1.6% Credit Card Processing HBO and Company 1.5% Health Care Information Systems International Game Technology 1.3% Gaming Equipment People's Bank Bridgeport 1.2% Consumer Finance 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. Prime Time Liberty Media was Acorn's largest dollar winner in the 1st quarter, gaining over $36 million as it rose 42% to become Acorn's biggest investment. We like CATV programmers--subscribership and advertising both provide revenues. Mature channel cash flows have been climbing over 15% a year, and Liberty is adding new channels. While value grows consistently, Liberty stock has been volatile. It jumped over 100% in each of 1991, 1992, 1993 and 1997, but underperformed when CATV was out of favor. We bought more shares when Liberty stock was disappointing, correctly believing that growth would eventually be rewarded. 6 Performance at a Glance The Value of a $10,000 Investment in Acorn Fund June 10, 1970 through March 31, 1998 [Pie chart appears here] Acorn S&P Date Fund ($) ($) - ---- -------- ------ 6/10/70 10,000 10,000 1970 13,587 12,676 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 411,750 165,932 1995 497,407 227,047 1996 609,569 279,177 1997 761,852 372,320 3/31/98 853,328 424,257 +12.0% Average Annual Total Return ---------------------------------------- 1 Year 5 Years 10 Years Life of Fund 43.5% 18.3% 18.3% 17.3% 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, at 3/31/98 [Pie chart appears here] Information 29.4% Finance 12.3% Energy/Minerals 10.1% Industrial Goods/Services 10.4% Health Care 8.1% Consumer Goods/Services 9.2% Other Industries 3.1% Foreign 11.9% Cash and other assets less liabilities 5.5% ----- 100.0% Relative Performance - -------------------------------------------- 1st quarter Last 12 mos. 1998 Acorn Fund 12.0% 43.5% S&P 500 14.0% 48.0% Russell 2000 10.1% 42.0% Lipper Small Cap Funds Avg. 10.9% 43.5% S&P MidCap 400 11.0% 49.0% Dow-Jones 11.8% 36.1% The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then eliminating the largest 1,000 leaving a 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 583 and 493 funds for the 1st qtr. 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 Dow Jones Industrial Average includes 30 large companies. All indexes are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 3/31/98: $19.03 - ----------------------------------------- 7 Acorn International In a Nutshell [Photo] Acorn International rose 18.2% in the first quarter, exceeding all of our benchmarks. It was the highest return the Fund has achieved in any one quarter since inception. Being small-cap and heavily invested in Europe has paid off handsomely so far in 1998. The European stock markets have risen sharply. International small- cap stocks outperformed their large-cap brethren by more than 3% over the quarter, as measured by the relative performance of their respective Lipper averages. Five countries alone--Italy, UK, Netherlands, Finland and Sweden-- contributed over 80% of our total gain for the three months. The remaining 20% came mainly from Singapore, Australia and Hong Kong, where our names did much better than the local indexes. We also marked a milestone of another sort this quarter. Redemptions in January hit a record monthly high of $59 million. Fortuitously, the withdrawals meant that we reduced our cash at the bottom, which is positive for returns. It's no surprise that redemptions peak when prices are low, because they are part of what makes a market bottom. What is worth some thought is the nature of investor psychology, which tempts us to sell when at market bottoms. Behavioral studies show that individuals take credit (or assign blame) for investment results that can depend, to a large degree, on market forces beyond their control. This leads them to feel great about investment decisions that exceed expectations and feel badly about those that disappoint. As prices sink, the psychological pressure to "get rid of the dogs" mounts, often to the detriment of investment results. One way to counterbalance the alternating emotions of fear and greed is to practice patience, which is the hallmark of the truly long-term investor. Your patience finally paid off in the first quarter. Congratulations on your success! /s/ Leah Joy Zell - ---------------------- Leah Joy Zell Lead Portfolio Manager Fund Assets as of 3/31/98: $1,816.9 million Acorn International Top 10 Holdings T T Tieto Finland 4.7% Computer Services/Consulting WM Data Sweden 3.1% Computer Services/Consulting Serco Group United Kingdom 2.4% Facilities Management Banca Fideuram Italy 2.3% Life Insurance/Mutual Funds Kempen Netherlands 2.1% Stock Brokerage/ Investment Management Rhoen Klinikum Germany 1.9% Hospital Management Atos France 1.6% Computer Services/ Transactions Processing Venture Manufacturing Singapore 1.4% Contract Electronics Manufacturer Getronics Netherlands 1.3% Computer Services Li and Fung Hong Kong 1.2% Sourcing of Consumer Goods 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. Baker's Dozen While "sifting" for bargains in Mexico after the tequila crisis, analyst Margaret Forster found a bakery named Bimbo. It has $2.2 billion in sales and one of the best brands in Latin America. Trucks bearing the company logo, a pudgy white bear, deliver bread daily to nearly every bodega in Mexico. This national distribution system gives Bimbo dominance in the marketplace that few U.S. companies can match. Its financials are equally impressive, as all transactions are for cash. Yet when we added Bimbo to our portfolio, no broker followed it. Since our purchase, Bimbo has appreciated 130%. This March, the company bought Mrs. Baird, a Texas bakery with $300 million in sales, making it the largest bakery in North America. 8 Performance at a Glance [GRAPH APPEARS HERE] The Value of a $10,000 Investment in Acorn International September 23, 1992 through March 31, 1998 Acorn International Performance History
Year AI Return AI$ EAFE Return EAFE$ $10,000 $10,000 1992* 6.79% $10,679 -3.86% $ 9,614 1993 49.11% $15,924 32.56% $12,745 1994 -3.80% $15,319 7.78% $13,736 1995 8.93% $16,686 11.21% $15,275 1996 20.65% $20,133 6.05% $16,199 1997 0.19% $20,170 1.78% $16,487 3/31/98 18.16% $23,833 14.71% $18,912
*Since inception (9/23/92) through 12/31/92. The beginning value used for EAFE is as of 9/30/92.
Average Annual Total Return --------------------------- 1 Year 5 Years Life of Fund 15.9% 14.7% 17.0%
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, at 3/31/98 [PIE CHART APPEARS HERE] Information 26.4% Finance 14.4% Energy/Minerals 4.4% Industrial Goods/Services 17.0% Health Care 5.8% Consumer Goods/Services 19.6% Other Industries 5.2% Cash and other assets less liabilities 7.2% ----- 100.0%
Relative Performance - --------------------------------------------------------------------- 1st quarter Last 12 mos. 1998 Acorn International 18.2% 15.9% EAFE 14.7% 18.6% EMI (World ex-U.S.) 17.2% 8.2% Lipper Int'l Small Cap Funds Avg. 18.0% 14.4% Lipper Int'l Funds Avg. 14.7% 19.5%
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 1st qtr. and 12-mos. periods above, the group consisted of 50 and 33 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 Avg. This group consisted of 519 and 459 funds for the 1st qtr. and 12-mos. periods above, respectively. All indexes are unmanaged and returns include reinvested dividends. Net Asset Value Per Share 3/31/98: $21.73 - ----------------------------------------- 9 Acorn USA Major Portfolio Changes in the First Quarter Number of Shares ------------------ 12/31/97 3/31/98 Additions - ----------------------------------------------------------- Information Centennial Cellular 162,000 254,000 IntelliQuest Information 0 124,000 Kronos 134,000 149,500 Mecklermedia 109,300 285,000 Micros Systems 0 160,600 National Data 86,000 144,100 Thermoquest 0 95,400 Wonderware 278,700 346,100 - ----------------------------------------------------------- Health Care Lincare Holdings 147,000 197,000 Magellan Health Services 0 196,000 - ----------------------------------------------------------- Consumer Goods/Services Host Marriott Services 342,500 523,200 Windmere Durable Holdings 0 25,000 - ----------------------------------------------------------- Finance Acceptance Insurance 231,900 362,100 AmerUs Life Holdings 121,300 187,500 Leucadia National 57,000 93,000 World Acceptance 0 590,000 - ----------------------------------------------------------- Industrial Goods/Services Compass International Services 0 68,000 Hub Group 0 19,000 Labor Ready 0 21,000 Lilly Industries, Cl. A 162,800 205,000 Wackenhut, Cl. B 263,000 298,400 - ----------------------------------------------------------- Energy/Minerals Atmos Energy 219,000 242,000 CalEnergy 297,000 419,000 Tesoro Petroleum 296,700 367,700 - ----------------------------------------------------------- Other Industries Gaylord Entertainment 35,000 55,000 Sales - ----------------------------------------------------------- Information Computer Language Research 74,300 0 ForeFront Group 40,000 0 United Video Satellite Group 213,000 189,000 Young Broadcasting 3,200 0 - ----------------------------------------------------------- Health Care Respironics 128,000 107,000 - ----------------------------------------------------------- Industrial Goods/Services Applied Industrial Technologies 63,000 0 - ----------------------------------------------------------- Energy/Minerals Seagull Energy 82,100 0 NGC 270,600 228,400 10 Acorn USA Statement of Investments (unaudited) March 31, 1998
Number of Shares Value (000) - -------------------------------------------------------------------------------- Common Stocks: 96.7% - -------------------------------------------------------------------------------- Information: 38.3% Broadcasting: 2.9% 209,100 Data Transmission Network $ 7,214 Data Services for Farmers Television Programming: 4.9% 189,000 United Video Satellite Group 8,033 CATV & Satellite Dish Programming 120,000 Liberty Media Group, Tele-Communications 4,125 Cable Programming - -------------------------------------------------------------------------------- 12,158 Cable Television: 3.5% 106,000 Cablevision Systems 6,969 Cable TV 73,300 Cable Michigan 1,869 Cable TV - -------------------------------------------------------------------------------- 8,838 Telephone Services: 4.1% 133,100 RCN 6,672 Metro Market: Voice, Video & Data Services 87,000 Startec Global Communications 2,175 International Telecommunications 54,000 Commonwealth Telephone 1,519 Rural Market: Local, Long Distance & Internet Access - -------------------------------------------------------------------------------- 10,366 Mobile Communications: 3.7% 254,000 Centennial Cellular 6,675 Cellular Franchises 121,800 COMARCO 2,626 Wireless Network Testing - -------------------------------------------------------------------------------- 9,301 Telecommunications Equipment: 1.7% 156,000 Aspect Telecommunications 4,183 Call Center Equipment Business Software: 3.3% 346,100 Wonderware 8,263 Industrial Control Software Transaction Processors: 2.4% 144,100 National Data 5,989 Credit Card & Health Claims Processor Instrumentation: 0.7% 95,400 Thermoquest 1,717 Mass Spectrometry Business Information/ Marketing Services: 5.1% 285,000 Mecklermedia 6,876 Internet Trade Shows & Magazines 100,000 World Color Press 3,475 Consolidating Commercial Printing Industry 124,000 IntelliQuest Information 1,411 Market Research 16,000 Harte Hanks Communications 380 Direct Marketing Services 26,000 American Business Information, Cl. B 370 26,000 American Business Information, Cl. A 341 Small Business Data - -------------------------------------------------------------------------------- 12,853 Computer Hardware/ Related Systems: 6.0% 160,600 Micros Systems 9,656 Information Systems for Restaurants & Hotels 149,500 Kronos 5,251 Time Accounting Software & Clocks - ------------------------------------------------------------------------------- 14,907 ------ Information: Total 95,789 - ------------------------------------------------------------------------------- Health Care: 11.1% Biotechnology/Drug Delivery: 0.4% 78,000 Synaptic Pharmaceuticals 995 Receptor Targeted Drug Design Medical Equipment: 1.4% 107,000 Respironics 3,096 Sleep Apnea Products 45,100 Cardiac Pathways 417 Heart Surgery Device 3,513 Services: 9.3% 197,000 Lincare Holdings 13,913 Home Health Care Services 196,000 Magellan Health Services 5,096 Mental Health Services 76,000 First Health Group 4,123 PPO Network - ------------------------------------------------------------------------------- 23,132 ------ Health Care: Total 27,640
11 Acorn USA Statement of Investments (unaudited) Number of Shares Value (000) - --------------------------------------------------------------------------- Consumer Goods/Services: 6.1% Retail: 3.0% 523,200 Host Marriott Services $ 7,390 Fast Food Kiosks in Airports Durable Goods: 0.3% 25,000 Windmere Durable Holdings 650 Household Appliances Cruise Lines: 2.8% 101,000 Royal Caribbean Cruises 7,076 Cruises to Caribbean & Alaska -------- Consumer Goods/Services: Total 15,116 - ------------------------------------------------------------------------- Finance: 14.7% Savings & Loans: 5.0% 128,000 H.F. Ahmanson 9,920 California Savings & Loan 159,000 Coast Contingency Rights 2,584 Litigation Claims Against US Government - ------------------------------------------------------------------------- 12,504 Finance Companies: 1.6% 590,000 World Acceptance 3,909 Small Consumer Loans Insurance: 8.1% 362,100 Acceptance Insurance 8,623 Crop Insurance 187,500 AmerUs Life Holdings 6,070 Annuities/Life Insurance 93,000 Leucadia National 3,662 Insurance Holding Company 69,000 Penn Treaty American 2,018 Nursing Home Insurance - ------------------------------------------------------------------------- 20,373 -------- Finance: Total 36,786 - ------------------------------------------------------------------------- Industrial Goods/Services: 9.8% Steel: 1.8% 97,300 Schnitzer Steel 2,378 Scrap Steel Processor 88,000 Atchison Casting 1,375 Consolidating Foundry Industry 28,000 Gibraltar Steel 599 Steel Processing - ------------------------------------------------------------------------- 4,352 Industrial Distribution: 0.4% 51,000 Vallen 1,046 Safety Products Distribution Machinery: 1.3% 167,500 Farr Company 3,224 Filters Specialty Chemicals: 1.6% 205,000 Lilly Industries, Cl. A 4,049 Industrial Coatings Outsourcing Services: 0.3% 21,000 Labor Ready 676 Temporary Manual Labor Other Industrial Services: 4.4% 298,400 Wackenhut, Cl. B 6,322 Prison Management 245,100 Insurance Auto Auctions 2,696 Auto Salvage Services 68,000 Compass International Services 1,012 Collection Agencies 19,000 Hub Group 531 Truck & Rail Freight Forwarder 51,000 Trailer Bridge 507 Tug & Barge Transportation - ------------------------------------------------------------------------- 11,068 -------- Industrial Goods/Services: Total 24,415 - ------------------------------------------------------------------------- Energy/Minerals: 14.6% Independent Power: 4.7% 419,000 CalEnergy 11,837 Power Plants Oil/Gas Producers: 2.6% 367,700 Tesoro Petroleum 6,573 Oil Refinery/Gas Producer Distribution/Marketing/Refining: 5.3% 242,000 Atmos Energy 7,169 Natural Gas Utility 228,400 NGC 3,340 Gas Processing/Marketing 81,000 Equitable Resources 2,693 Gas Utility & Gas Producer - ------------------------------------------------------------------------- 13,202
12 Number of Shares Value (000) - ------------------------------------------------------------------------ Oil Services: 2.0% 252,000 GeoScience $ 2,583 Offshore Seismic Equipment Company 54,500 J Ray McDermott 2,296 Offshore Construction Company - ------------------------------------------------------------------------ 4,879 -------- Energy/Minerals: Total 36,491 - ------------------------------------------------------------------------ Other Industries: 2.1% Real Estate: 2.1% 50,700 Forest City Enterprises Cl. A 2,861 Shopping Centers 55,000 Gaylord Entertainment 1,966 Opryland Hotel & Other Assets 22,000 Cornerstone Properties 400 Downtown Office Buildings - ------------------------------------------------------------------------ 5,227 -------- Other Industries: Total 5,227 Total Common Stocks : 96.7% 241,464 -------- Short-Term Obligations: 4.8% 12,103 -------- Total Investments: 101.5% 253,567 -------- Cash and Other Assets Less Liabilities: (1.5%) (3,715) -------- Total Net Assets: 100% $249,852 ========================================================================
13 Acorn Fund Major Portfolio Changes in the First Quarter Number of Shares --------------------- 12/31/97 3/31/98 Additions - ----------------------------------------------------------------------- Information Acxiom 0 290,000 American Power Conversion 453,000 503,000 Bigfoot International 0 1,350 Centennial Cellular 400,000 600,000 Choicepoint 174,000 411,000 Harte Hanks Communications 205,000 600,000 (includes effect of 2 for 1 stock split) International Game Technology 2,050,000 2,110,000 Jabil Circuit 0 300,000 Mecklermedia 248,000 300,000 Micros Systems 375,000 450,000 National Data 1,292,000 1,510,000 Onix Systems 0 234,122 Rohm (Japan) 0 60,000 Sanmina 0 100,000 TVB (Hong Kong) 0 1,800,000 - ----------------------------------------------------------------------- Health Care Ethical Holdings (United Kingdom) 530,000 1,200,000 Magellan Health Services 1,000,000 1,220,000 Microcide Pharmaceuticals 0 683,000 - ----------------------------------------------------------------------- Consumer Goods/Services Amway Asia Pacific (Hong Kong) 0 185,000 Berjaya Sports Toto (Malaysia) 0 2,150,000 Cie Fin Richemont (Switzerland) 10,000 11,000 Royal Olympic Cruise 0 120,000 Windmere Durable Holdings 0 228,000 - ----------------------------------------------------------------------- Finance AmerUs Life Holdings 170,000 460,000 Formosa Growth Fund (Taiwan) 0 150,000 Leucadia National 444,000 511,000 World Acceptance 1,390,000 1,820,000 - ----------------------------------------------------------------------- Industrial Goods/Services Cambrex 120,000 305,000 Clarcor 0 181,000 Compass International Services 0 591,000 Gibraltar Steel 540,000 805,000 H B Fuller 250,000 295,000 Hub Group 482,000 709,000 Labor Ready 0 385,000 Metal Management 27,000 400,000 Powerscreen International (United Kingdom) 700,000 1,050,000 Steven Myers & Associates 0 350,000 Unifi 800,000 900,000 Wackenhut, Cl. B 901,000 1,051,000 - ----------------------------------------------------------------------- Energy/Minerals CalEnergy 1,355,000 1,420,000 KN Energy 190,000 240,000 Pride International 900,000 1,000,000 Seagull Energy 1,450,000 1,550,000 Tesoro Petroleum 1,300,000 1,600,000 Zeigler Coal Holding 700,000 800,000 - ----------------------------------------------------------------------- Other Industries Homestead Village 754,000 945,000
14 Principal Amount or Number of Shares ---------------------- 12/31/97 3/31/98 Sales - ------------------------------------------------------------------------ Information ACT Manufacturing 137,000 0 Activision, 6.75% Note Due 1/1/05 $13,000,000 $6,500,000 CACI International 249,000 83,000 Cellular Communications International (Italy) 400,000 300,000 Cogeco Cable (Canada) 200,000 0 Coherent Communications 178,000 0 Computer Language Research 400,000 0 Getty Images 700,000 500,000 (formerly known as Getty Communications) Liberty Media Group, Tele-Communications 2,400,000 3,500,000 (includes effect of 3 for 2 stock split) NTT Data (Japan) 200 0 Pricer, Cl. B (Sweden) 50,000 0 Sensonor (Norway) 590,000 0 Solectron 1,220,000 1,025,000 TCA Cable TV 300,000 180,000 Thermo Vision 37,100 0 USA Networks 350,000 500,000 (includes effect of 2 for 1 stock split) - ------------------------------------------------------------------------ Health Care R P Scherer 64,000 0 Respironics 1,162,000 812,000 United Payors and Providers 485,000 0 - ------------------------------------------------------------------------ Consumer Goods/Services Genting International (Singapore) 7,250,000 0 Hellenic Bottling (Greece) 400,000 250,000 Newell 600,000 540,000 Royal Caribbean Cruises 140,000 120,000 - ------------------------------------------------------------------------ Finance United Asset Management 712,000 641,000 Amvescap (United Kingdom) 960,000 445,000 Nichiei (Japan) 45,000 27,500 (includes effect of 10% stock dividend) - ------------------------------------------------------------------------ Industrial Goods/Services Applied Industrial Technologies 535,000 365,000 Nanophase 550,000 0 Schnitzer Steel 250,000 190,000 Societe Generale de Surveillance (Switzerland) 6,000 0 - ------------------------------------------------------------------------ Energy/Minerals Equitable Resources 600,000 500,000 Forest Oil 460,000 0 NGC 820,000 520,000 Perez Companc (Argentina) 710,000 510,000 Ranger Oil (Canada) 1,500,000 0 Saipem (Italy) 2,355,000 1,800,000 Southern Union 550,000 400,000 United Meridian 222,000 0 Veritas DGC 100,000 0 Veritas Energy Services (Canada) 80,000 0
15 Acorn Fund Statement of Investments (unaudited) March 31, 1998 Number of Shares Value (000) - ------------------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 94.5% - ------------------------------------------------------------------------------- Information: 29.4% Media Broadcasting: 1.4% 819,000 Data Transmission Network $ 28,256 465,000 Young Broadcasting 23,250 370,000 Granite Broadcasting 4,278 - ------------------------------------------------------------------------------- 55,784 Cable Television: 1.6% 700,000 Cablevision Systems 46,025 100,000 Cablevision Systems, Pfd. 5,138 180,000 TCA Cable TV 10,643 140,000 Cable Michigan 3,570 - ------------------------------------------------------------------------------- 65,376 Television Programming: 5.0% 3,500,000 Liberty Media Group, Tele-Communications 120,313 850,000 United Video Satellite Group 36,125 420,000 BET Holdings, Cl. A 25,673 500,000 USA Networks 13,625 280,000 Macrovision 5,145 50,000 Playboy Enterprises 875 - ------------------------------------------------------------------------------- 201,756 Telecommunications Telephone Services: 1.0% 564,000 RCN 28,271 374,000 Commonwealth Telephone 10,519 - ------------------------------------------------------------------------------- 38,790 Mobile Communications: 1.9% 500,000 Telephone and Data Systems 23,750 865,000 Mobile Telecommunication Technologies 19,354 600,000 Centennial Cellular 15,769 355,000 COMARCO 7,655 450,000 PriCellular 5,738 200,000 Vanguard Cellular Systems 3,638 - ------------------------------------------------------------------------------- 75,904 Principal Amount or Number of Shares Value (000) - ------------------------------------------------------------------------------- Telecommunications Equipment: 0.7% 714,000 Aspect Telecommunications 19,144 393,000 Verilink 4,323 500,000 Larscom 4,141 - ------------------------------------------------------------------------------- 27,608 Computer Related Hardware Computer Hardware/ Related Systems: 1.6% 450,000 Micros Systems 27,056 650,000 Kronos 22,831 503,000 American Power Conversion 14,430 - ------------------------------------------------------------------------------- 64,317 Semiconductors/ Related Equipment: 0.4% 350,000 Oak Industries 11,375 125,000 Electro Scientific Industries 4,828 - ------------------------------------------------------------------------------- 16,203 Gaming Equipment: 1.4% 2,110,000 International Game Technology 52,750 406,000 Acres Gaming 1,979 - ------------------------------------------------------------------------------- 54,729 Contract Manufacturing: 1.6% 1,025,000 Solectron 43,306 300,000 Jabil Circuit 9,994 100,000 Sanmina 6,994 285,000 Altron 4,346 - ------------------------------------------------------------------------------- 64,640 Instrumentation: 2.2% 1,085,000 Thermo Instrument Systems 35,941 613,000 Thermoquest 11,034 $1,500,000 Thermoquest, 5% Note Due 8/15/00 1,688 450,000 IFR Systems 10,013 330,000 Itron 6,414 $5,000,000 Thermo Optek, 5% Note Due 10/15/00 6,275 265,000 Thermo Optek 4,638 200,000 Thermo Bio Analysis 4,200 232,000 Metrika Systems 3,451 234,122 Onix Systems 3,395 - ------------------------------------------------------------------------------- 87,049
16 Principal Amount or Number of Shares Value (000) - ----------------------------------------------------------- Business Software: 1.8% 400,000 Compuware $ 19,750 430,000 Systems & Computer Technology 17,738 608,000 Wonderware 14,516 266,000 National Instruments 9,077 160,000 Sterling Commerce 7,420 355,000 Walsh International 5,503 - ----------------------------------------------------------- 74,004 Consumer Software: 0.6% 350,000 Electronic Arts 16,428 $6,500,000 Activision, 6.75% Note Due 1/1/05 5,655 1,100,000 MicroProse 2,338 - ----------------------------------------------------------- 24,421 Computer Services: 1.4% 340,000 Computer Task Group 14,004 427,000 Analysts International 12,490 200,000 Keane 11,300 254,000 BRC Holdings 9,970 225,000 American Management Systems 6,188 83,000 CACI International 1,826 - ----------------------------------------------------------- 55,778 Software/Services Business Information/ Marketing Services/Publishing: 4.3% 1,185,000 World Color Press 41,179 1,300,000 ACNielsen 34,369 411,000 Choicepoint 22,374 600,000 Harte Hanks Communications 14,250 1,035,000 American Business Information, Cl. A 13,584 945,000 American Business Information, Cl. B 13,446 500,000 Getty Images 12,563 (formerly known as Getty Communications) 290,000 Acxiom 7,431 300,000 Mecklermedia 7,238 885,714 GIGA Cv. Pfd. 3,100 208,333 Source Informatics Cv. Pfd. 2,361 1,350 Bigfoot International 2,025 50,000 Peterson Companies 1,250 - ----------------------------------------------------------- 175,170 Number of Shares Value (000) - ----------------------------------------------------------- Electronics Distribution: 0.8% 1,090,000 Pioneer-Standard Electronics 13,353 600,000 Kent Electronics 12,638 450,000 Richey Electronics 4,444 - ----------------------------------------------------------- 30,435 Transaction Processors: 1.7% 1,510,000 National Data 62,759 200,000 Concord EFS 6,913 - ----------------------------------------------------------- 69,672 --------- Information: Total 1,181,636 - ----------------------------------------------------------- Health Care: 8.1% Biotechnology/Drug Delivery: 0.8% 450,000 Inhale Therapeutic Systems 12,206 680,000 Synaptic Pharmaceutical 8,670 683,000 Microcide Pharmaceuticals 5,891 800,000 Corvas International 4,000 800,000 Corvas International Warrants 800 - ----------------------------------------------------------- 31,567 Medical Equipment: 0.9% 812,000 Respironics 23,497 300,000 Affymetrix 10,444 275,000 Innovasive Devices 2,750 - ----------------------------------------------------------- 36,691 Hospital/Laboratory Supplies: 0.8% 644,000 Sybron International 16,825 273,000 Hillenbrand Industries 16,807 - ----------------------------------------------------------- 33,632 Services: 5.6% 1,235,000 Lincare Holdings 87,222 996,000 HBO & Company 60,134 850,000 First Health Group 46,113 1,220,000 Magellan Health Services 31,720 43,000 Spectrum Health Solutions 11 - ----------------------------------------------------------- 225,200 --------- Health Care: Total 327,090
17 Acorn Fund Statement of Investments (unaudited)
Principal Amount or Number of Shares Value (000) - ------------------------------------------------------------------------------- Consumer Goods/Services: 9.2% Goods Leisure Vehicles: 2.1% 2,200,000 Harley-Davidson $ 72,600 320,000 Thor Industries 13,100 - ------------------------------------------------------------------------------- 85,700 Hardware/Appliances: 0.7% 540,000 Newell 26,156 228,000 Windmere Durable Holdings 5,928 - ------------------------------------------------------------------------------- 32,084 Services Retail: 3.1% 1,960,000 Borders Group 66,763 911,000 Fred Meyer 42,077 731,000 Host Marriott Services 10,325 634,000 Au Bon Pain 5,349 - ------------------------------------------------------------------------------- 124,514 Fitness Centers: 0.2% 200,000 Bally Total Fitness 6,300 Casinos: 0.4% 290,000 Rio Hotel & Casino 7,522 392,000 Hollywood Park 4,606 535,000 Monarch Casino & Resort 3,177 $6,250,000 Grand Palais Casino 14% Note Due 2/25/98 313 - -------------------------------------------------------------------------------- 15,618 Cruise Lines: 2.7% 1,400,000 Carnival 97,650 120,000 Royal Caribbean Cruises 8,408 120,000 Royal Olympic Cruise 2,010 - ------------------------------------------------------------------------------- 108,068 ------- Consumer Goods/Services: Total 372,284 - ------------------------------------------------------------------------------- Finance: 12.3% Banks: 1.6% 570,000 Texas Regional Bancshares 19,131 285,000 Union Planters 17,723 510,000 TCF Financial 17,308 156,000 Pinnacle Financial 7,751 - ------------------------------------------------------------------------------- 61,913 Savings & Loans: 3.4% 1,267,000 Peoples Bank Bridgeport 48,106 447,000 H. F. Ahmanson 34,643 738,000 Washington Federal 20,480 538,000 Commonwealth Bancorp 11,466 554,000 Coast Contingency Rights 9,003 116,000 Washington Mutual 8,319 277,000 Imperial Thrift & Loan 5,886 - ------------------------------------------------------------------------------- 137,903 Insurance: 3.0% 511,000 Leucadia National 20,121 741,000 Foremost 18,155 823,000 Baldwin & Lyons, Cl. B 17,695 351,000 United Fire & Casualty 15,312 460,000 AmerUs Life Holdings 14,893 200,000 Protective Life 14,600 612,000 Acceptance Insurance 14,573 210,000 Highlands Insurance 5,644 - ------------------------------------------------------------------------------- 120,993 Money Management: 3.1% 618,000 SEI Investments 42,179 620,000 Pioneer Group 19,375 974,000 Baker Fentress 18,263 641,000 United Asset Management 17,467 1,723,000 Phoenix Duff & Phelps 16,153 231,000 BISYS 8,143 60,000 Affiliated Managers Group 2,093 - ------------------------------------------------------------------------------- 123,673 Finance Companies: 1.2% 935,000 Americredit 25,713 1,820,000 World Acceptance 12,058 340,000 DVI Health Services 7,799 345,000 Capital Trust 3,364 - ------------------------------------------------------------------------------- 48,934 ------- Finance: Total 493,416
18
Number of Shares Value (000) - -------------------------------------------------------------------------------- Industrial Goods/Services: 10.4% Steel: 2.0% 1,295,000 Worthington Industries $ 23,472 805,000 Gibraltar Steel 17,207 500,000 Steel Dynamics 10,625 350,000 A M Castle 8,094 405,000 Atchison Casting 6,328 400,000 Metal Management 5,750 190,000 Schnitzer Steel 4,643 200,000 Intermet 4,500 - -------------------------------------------------------------------------------- 80,619 Machinery: 1.5% 1,071,000 Baldor Electric 28,850 365,000 Applied Industrial Technologies 9,832 196,000 Applied Power 7,546 270,000 Valmont Industries 6,548 181,000 Clarcor 6,018 198,000 Hein-Werner 1,386 410,000 Stevens International, Cl. A 718 19,000 Stevens International, Cl. B 64 - -------------------------------------------------------------------------------- 60,962 Conglomerates: 0.9% 900,000 Thermo Electron 36,338 Specialty Chemicals/Materials: 2.5% 900,000 Unifi 33,525 900,000 Lilly Industries, Cl. A 17,775 295,000 H B Fuller 17,663 305,000 Cambrex 15,364 600,000 M A Hanna 14,663 - -------------------------------------------------------------------------------- 98,990 Electrical Components: 0.1% 223,000 Spectra Physics Lasers 3,540 Outsourcing Services/Training: 0.6% 385,000 Labor Ready 12,392 350,000 Steven Myers & Associates 6,213 350,000 GP Strategies 6,059 - -------------------------------------------------------------------------------- 24,664 Logistics: 1.7% 775,000 Expeditors International of Washington 33,228 709,000 Hub Group 19,808 400,000 C H Robinson 10,400 200,000 Airnet Systems 5,800 - -------------------------------------------------------------------------------- 69,236 Other Industrial Services: 1.1% 1,051,000 Wackenhut, Cl. B 22,268 45,000 Wackenhut, Cl. A 1,074 591,000 Compass International Services 8,791 210,000 HA(Yen)LO Industries 7,337 406,000 Trailer Bridge 4,034 - -------------------------------------------------------------------------------- 43,504 ------- Industrial Goods/Services: Total 417,853 - -------------------------------------------------------------------------------- Energy/Minerals: 10.1% Independent Power: 3.9% 2,230,000 AES Corporation 116,936 1,853 AES Corporation Warrants 145 1,420,000 CalEnergy 40,115 - -------------------------------------------------------------------------------- 157,196 Oil/Gas Producers: 1.6% 1,550,000 Seagull Energy 29,741 1,600,000 Tesoro Petroleum 28,600 1,031,000 Tipperary 3,995 165,000 Costilla Energy 1,650 - -------------------------------------------------------------------------------- 63,986 Distribution/Marketing/Refining: 1.6% 500,000 Equitable Resources 16,625 560,000 Atmos Energy 16,590 240,000 KN Energy 14,175 400,000 Southern Union 9,600 520,000 NGC 7,605 - -------------------------------------------------------------------------------- 64,595 Oil Services: 2.6% 700,000 EVI 32,419 516,000 Atwood Oceanics 27,896 1,000,000 Pride International 23,875 500,000 J Ray McDermott 21,063 - -------------------------------------------------------------------------------- 105,253
19 Acorn Fund Statement of Investments (unaudited)
Number of Shares Value (000) - --------------------------------------------------------------- Mining: 0.4% 800,000 Ziegler Coal Holding $ 13,700 ---------- Energy/Minerals: Total 404,730 - --------------------------------------------------------------- Other Industries: 3.1% Real Estate: 3.1% 829,000 The Rouse Company 26,114 945,000 Homestead Village 14,293 233,000 Forest City Enterprises, Cl. B 13,150 185,000 Forest City Enterprises, Cl. A 10,441 260,000 Equity Residential Properties Trust 13,065 400,000 Macerich Company 11,900 165,000 Weingarten Realty Investors 7,384 350,000 Security Capital Atlantic 7,350 350,000 Cornerstone Properties 6,366 190,000 First Washington Realty Trust 5,142 120,000 First Washington Realty Trust, Cv. Pfd. 3,979 100,000 Gaylord Entertainment 3,575 101,000 Security Capital Group, Cl. B 3,106 18,000 Security Capital Group Warrants 59 - --------------------------------------------------------------- 125,924 -------- Other Industries: Total 125,924 - --------------------------------------------------------------- Foreign Securities: 11.9% Canada: 0.2% 200,000 Shaw Industries, Cl. A 6,912 United Kingdom: 2.5% 1,200,000 Serco Group 26,124 400,000 NTL 17,300 3,300,000 Medeva 9,173 650,000 Comcast UK Cable Partners 8,694 990,000 Airtours 8,264 1,100,000 N. Brown Group 7,810 600,000 Edinburgh Fund Managers 5,325 700,000 Oriflame 5,064 445,000 Amvescap 4,814 1,050,000 Powerscreen International 4,088 1,200,000 Ethical Holdings 3,600 - --------------------------------------------------------------- 100,256 Germany/Austria: 0.6% 552,000 United International Holdings (Austria) 9,246 180,000 Flughafen Wien (Austria) 8,126 23,000 Binding-Brauerei 5,161 - --------------------------------------------------------------- 22,533 Sweden: 1.5% 1,340,000 WM Data Nordic 35,534 650,000 Getinge Industrier 12,480 254,000 Autoliv 7,890 260,000 Esselte, Series A 5,594 - --------------------------------------------------------------- 61,498 Netherlands: 0.8% 270,000 Hunter Douglas 12,304 160,000 ASR Verzekeringsgroep 11,482 167,000 Getronics 7,170 - --------------------------------------------------------------- 30,956 Switzerland: 0.4% 11,000 Cie Fin Richemont 14,792 France: 0.5% 115,000 Atos 19,117 Portugal: 0.2% 375,000 Filmes Lusomundo 5,764 Italy/Greece: 1.9% 3,325,000 Banca Fideuram 23,146 300,000 Cellular Communications International 20,400 1,800,000 Saipem 10,714 500,000 Aeroporti di Roma 8,613 250,000 Hellenic Bottling (Greece) 7,192 260,000 Industrie Natuzzi 7,183 - --------------------------------------------------------------- 77,248 India: 0.1% 39,373 Housing Development Finance 3,170 Malaysia: 0.1% 2,150,000 Berjaya Sports Toto 5,848
20
Number of Shares Value (000) - --------------------------------------------------------------- Hong Kong: 0.2% 4,500,000 Varitronix International $ 9,031 1,800,000 TVB 4,739 185,000 Amway Asia Pacific 2,995 - --------------------------------------------------------------- 16,765 China: 0.0% 200,000 The Investment Company of China 1,116 Taiwan: 0.1% 150,000 Formosa Growth Fund 3,206 Singapore: 0.4% 7,250,000 Star Cruises 14,494 Japan: 0.8% 145,000 Nintendo 12,504 20,000 Shohkoh Fund 6,674 60,000 Rohm 5,489 174,000 Noritsu Koki 5,102 27,500 Nichiei 2,433 - --------------------------------------------------------------- 32,202 Australia/New Zealand: 0.3% 260,000 PetSec Energy ADR 4,875 600,000 PetSec Energy 2,264 1,700,000 Sky City (New Zealand) 4,277 - --------------------------------------------------------------- 11,416 Mexico: 0.5% 3,100,000 Kimberly Clark de Mexico 16,013 5,960,000 Nadro, Series L 4,380 - --------------------------------------------------------------- 20,393 Other Latin America: 0.8% 250,000 IRSA (Argentina) 9,578 2,800,000 Siderca (Argentina) 7,449 175,000 Banco Latinoamericano de Export (Panama) 6,584 115,000,000 Cemig (Brazil) 5,583 510,000 Perez Companc (Argentina) 3,453 - --------------------------------------------------------------- 32,647 --------- Foreign: Total 480,812 345 Miscellaneous Securities: 0.0% 479 Total Common Stocks and Other --------- Equity-Like Securities: 94.5% 3,803,745 --------- Short-Term Obligations: 5.3% 211,503 --------- Total Investments: 99.8% 4,015,248 --------- Cash and Other Assets Less Liabilities: 0.2% 8,697 --------- Total Net Assets: 100% $4,023,945 ===============================================================
21 Acorn Fund Foreign Portfolio Diversification At March 31, 1998 Acorn Fund's foreign portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent - ---------------------------------------------------------- Information Computer Services $ 61,821 1.5% Cable Television 35,240 0.9 Semiconductors/Related Equipment 31,613 0.8 Mobile Communications 20,400 0.5 Business Information/Publishing 5,764 0.1 Broadcasting 4,739 0.1 - ---------------------------------------------------------- 159,577 3.9 Health Care Hospital/Laboratory Supplies 12,480 0.3 Pharmaceuticals 9,173 0.2 Biotechnology/Drug Delivery 3,600 0.1 - ---------------------------------------------------------- 25,253 0.6 Consumer Goods/Services Nondurable Goods 26,671 0.7 Travel 22,758 0.6 Consumer Software 12,504 0.3 Beverages 12,353 0.3 Gaming 10,125 0.3 Retail 7,810 0.2 Furniture & Textiles 7,183 0.2 Consumer Goods Distribution 4,380 0.1 Consumer Services 2,995 0.1 Other Durable Goods 20,194 0.5 Other Entertainment 14,792 0.4 - ---------------------------------------------------------- 141,765 3.7 Finance Money Management 33,285 0.8 Finance Companies 12,277 0.3 Insurance 11,482 0.3 Banks 6,584 0.2 Closed-End Funds 4,801 0.1 - ---------------------------------------------------------- 68,429 1.7 Industrial Goods/Services Machinery 9,190 0.2 Electrical Components 9,031 0.2 Steel 7,449 0.2 - ---------------------------------------------------------- 25,670 0.6 Energy/Minerals Oil Services 17,626 0.4 Oil/Gas Producers 10,592 0.3 - ---------------------------------------------------------- 28,218 0.7 Other Industries Transportation 16,739 0.4 Real Estate 9,578 0.2 Utilities 5,583 0.1 - ---------------------------------------------------------- 31,900 0.7 ---------------------- Total Foreign Portfolio $480,812 11.9% ==========================================================
22 Acorn International Major Portfolio Changes in the First Quarter
Number of Shares ----------------------- 12/31/97 3/31/98 Additions - -------------------------------------------------------------------------------- Europe Germany/Austria Rhoen Klinikum 125,000 135,000 Rhoen Klinikum Pfd. 180,000 200,000 Finland Elcoteq Network 245,000 507,000 KCI Konecranes International 0 55,000 Sweden Segerstrom & Svensson 0 90,000 WM Data Nordic 1,985,000 2,100,000 France Penauille Polyservice 0 9,500 United Kingdom AEA Technology 250,000 565,000 Atkins 500,000 900,000 Dialog Corporation 0 1,200,000 Euro Money Publications 150,000 510,000 Switzerland Julius Baer Holdings 0 1,000 Cie Fin Richemont 12,000 13,000 Phoenix Mecano 28,000 33,000 Prodega 10,000 12,500 Italy/Greece Ergo Bank 0 20,000 Industrie Natuzzi ADR 245,000 300,000 - -------------------------------------------------------------------------------- Asia Hong Kong Dickson Concepts 0 1,400,000 TVB 3,100,000 3,500,000 Vanda Systems 8,896,000 16,000,000 Japan Aiful 60,000 90,000 Asatsu 0 10,000 Jafco 0 99,000 Jusco 0 200,000 Orix Corporation 40,000 90,000 Rohm 0 40,000 Taiwan Chroma Ate 0 250,000
Principal Amount or Number of Shares --------------------- 12/31/97 3/31/98 Malaysia Berjaya Sports Toto 0 1,400,000 Oriental Holdings 0 265,000 Technology Resources 0 1,000,000 Philippines Int'l Container Terminal Services Cv. 1.75% 3/13/04 $5,000,000 $ 8,750,000 Singapore Datacraft Asia 0 3,300,000 Genting International 8,300,000 16,900,000 Natsteel Electronics 1,916,000 4,400,000 Venture Manufacturing 4,056,000 6,850,000 Thailand Telecom Asia 0 12,800,000 - -------------------------------------------------------------------------------- Latin America Mexico Corp Interamericana de Entretenimiento 0 700,000 Grupo Continental 1,140,000 1,570,000 Tubos de Acero de Mexico ADR 460,000 510,000 Peru Telefonica del Peru 0 250,000 Panama Panamerican Beverage 0 120,000 - -------------------------------------------------------------------------------- Other Countries Australia Coca Cola Amatil 0 900,000 Canada Dundee Realty 0 400,000 Dundee Realty Special Warrants 0 1,600,000 LGS Group 0 170,000 Power Financial 0 150,000 Israel Orbotech 0 100,000
23 Acorn International Major Portfolio Changes in the First Quarter
Number of Shares --------------------- 12/31/97 3/31/98 Sales - -------------------------------------------------------------------------------- Europe Germany Fresenius 7,000 0 Schaltbau 30,000 7,000 Finland Vaisala, Cl. A 88,000 0 Norway SensoNor 800,000 0 Sweden Pricer, Cl. B 50,000 0 United Kingdom Aberdeen Asset Management 1,600,000 0 Comcast UK Cable Partners 500,000 0 Ethical Holdings ADR 670,000 0 Expro International Group 790,000 0 Ivory & Sime 1,200,000 0 Vitec 50,000 0 Vosper Thornycroft Holdings 800,000 700,000 Switzerland PubliGroupe 45,000 40,000 Societe Generale de Surveillance 6,000 0 Italy/Greece Banca Fideuram 6,340,000 6,025,000 Cellular Communications International 160,000 120,000 Danieli 130,000 0 Hellenic Bottling 400,000 250,000 Saipem SPA 3,300,000 1,800,000 Netherlands Fugro NV 310,000 200,000 Telegraaf Holdings 300,000 240,000 - -------------------------------------------------------------------------------- Asia Hong Kong China HK Photo Products 20,000,000 5,200,000 Golden Harvest Entertainment 16,525,000 0 India Max India 389,450 0 Japan Amway Japan 300,000 0 Chuo Trust & Banking 555,000 0 Konami 143,000 0 Nichiei 140,000 68,000 (includes effect of 10% stock dividend) Nihon Unisys 152,000 0 NTT Data 250 0 Tiemco 49,500 0 Indonesia Modern Photo Film 2,985,000 0 Tunas Ridean 6,166,000 0 Philippines Ionics Circuits 9,398,000 0 - -------------------------------------------------------------------------------- Latin America Argentina Perez Companc 1,650,000 1,200,000 Brazil Telemig 23,000,000 0 Chile Embotelladora Andina, Series A ADR 120,000 0 Embotelladora Andina, Series B ADR 120,000 0 Genesis Chile Fund 150,000 0 Santa Isabel ADR 220,000 0 - -------------------------------------------------------------------------------- Other Countries Australia Publishing & Broadcasting 2,200,000 1,000,000 Siddons Ramset 1,000,000 690,000 Canada Cinar Films 150,000 0 Cogeco 500,000 0 Cogeco Cable 300,000 0 Pangea Goldfields 900,000 0 Ranger Oil 1,200,000 0
24 Acorn International Statement of Investments (unaudited) March 31, 1998 Number of Shares Value (000) - ---------------------------------------------------------------------- Common Stocks and Other Equity-Like Securities: 92.8% - ---------------------------------------------------------------------- Europe: 60.4% Germany/Austria: 4.7% 200,000 Rhoen Klinikum Pfd. $ 20,763 135,000 Rhoen Klinikum 14,380 Hospital Management 375,000 IVG Holdings 11,000 Real Estate & Logistics 190,000 Flughafen Wien (Austria) 8,578 Vienna Airport Authority 473,000 United International Holdings (Austria) 7,923 Cable Television for Austria & Other Countries 21,000 Cewe Color Holding 5,280 Photographic Developing & Printing 260,000 Pfleiderer 5,033 Construction Materials 100,000 Boewe Systec 4,218 Envelope Stuffing Machines 212,000 Berzelius Umwelt 3,313 Industrial Waste Recycling 250,000 Scala Business Solutions 2,267 95,775 Scala Business Solutions Warrants 3/31/99 221 95,775 Scala Business Solutions Warrants 3/31/01 (Austria) 162 Financial Accounting Software 110,000 Rofin Sinar 2,117 Lasers 7,000 Schaltbau 719 Railcar Components - ---------------------------------------------------------------------- 85,974 Denmark: 0.2% 44,000 Kompan International 4,525 Playground Equipment Finland: 6.6% 500,000 TT Tieto, Cl. B 84,630 Computer Services/Consulting 80,000 Fiskars, Series A 9,835 Scissors & Gardening Tools 550,000 Talentum 8,721 Trade Journals 100,000 Spar Finland 8,374 (formerly known as Sentra) Grocery/Convenience Stores 507,000 Elcoteq Network 6,097 Contract Electronics Manufacturer 55,000 KCI Konecranes International 2,528 Industrial Equipment - ---------------------------------------------------------------------- 120,185 Norway: 0.1% 500,000 Atex Media Solutions 1,164 Print Media Software Sweden: 6.4% 2,100,000 WM Data Nordic 55,688 Computer Services/Consulting 1,000,000 Getinge Industrier 19,201 Sterilization & Disinfection Equipment 350,000 Autoliv 10,872 Seatbelts & Airbags 525,000 Atle 10,113 Investment Company 665,000 Bure Investment 10,065 Health Care Services & Investments 315,000 Esselte, Series A 6,777 Office Supplies & Related Equipment 90,000 Segerstrom & Svensson 2,803 Contract Electronics Manufacturer - ---------------------------------------------------------------------- 115,519 France: 3.8% 180,000 Atos 29,923 Computer Services/Transaction Processing 62,000 NRJ 10,707 Radio Network 60,000 Fininfo 8,715 Data Feeds for French Banks & Brokers 95,000 Spir Communications 7,130 Regional Newspapers 55,000 Virbac 4,927 Drugs for Animals 50,000 Groupe Partouche 3,235 Casinos 50,000 Assystem 2,565 Consultants on Nuclear Power Plants 9,500 Penauille Polyservice 2,254 Industrial Cleaning - ---------------------------------------------------------------------- 69,456 25
Acorn International Statement of Investments (unaudited) Number of Shares Value (000) ================================================================================ United Kingdom: 15.1% 2,000,000 Serco Group 43,540 Facilities Management 467,000 NTL 20,198 Cable TV & Telephone System 510,000 Euro Money Publications 18,682 Financial Publications 4,000,000 St. James Place 18,287 Life Insurance 1,450,000 Seton Healthcare Group 15,261 Pharmaceuticals 2,000,000 Capita Group 15,055 Outsourcing Government Services 2,000,000 Oriflame International 14,469 Natural Cosmetics Sold Door-to-Door 13,000,000 Electronics Boutique 14,042 Videogame/Computer Software Stores 1,500,000 N. Brown Group 10,650 Mail Order Clothing in Large Sizes 1,700,000 Rotork 9,864 Valve Actuators for Oil & Water Pipelines 4,400,000 City Centre Restaurants 9,579 Fast Food Restaurants 700,000 Vosper Thornycroft Holdings 8,979 Naval Shipbuilding 3,200,000 Medeva 8,895 Drugs for Hyperactive Children 950,000 Edinburgh Fund Managers 8,432 Investment Management 900,000 Atkins 7,664 Outsourcing Services 3,400,000 HALMA 7,117 Fire Detection Devices 565,000 AEA Technology 6,987 Nuclear Energy Consulting 2,000,000 Shanks & McEwan 6,246 Landfills & Waste Incinerators 600,000 Fairey Group 5,923 Electronic Products 1,500,000 Powerscreen International 5,840 Mobile Crushing & Screening Equipment 1,300,000 Dorling Kindersley 4,822 Reference Books & CD-ROMs 1,000,000 Hogg Robinson 4,664 Corporate Travel Management 600,000 Eurotherm 3,502 Instruments & Measuring Devices 1,200,000 Dialog Corporation 3,366 Online Business Information 450,000 Hozelock Group 2,555 Garden Hoses - ------------------------------------------------------------------------ 274,619 Switzerland: 4.4% 33,000 Phoenix Mecano 18,616 Electrical Components Manufacturer 13,000 Cie Fin Richemont 17,481 Luxury Goods & Tobacco 60,000 Selecta Group 9,997 Vending Machines 40,000 PubliGroupe 8,921 Advertising 12,000 Hero 7,596 Packaged Foods 12,500 Prodega 7,388 Cash-and-Carry Retailer 18,000 Societe Generale d'Affichage 7,143 Billboard Advertising 1,000 Julius Baer Holdings 2,427 International Bank - ------------------------------------------------------------------------ 79,569 Italy/Greece: 11.0% 6,025,000 Banca Fideuram 41,942 Life Insurance & Mutual Funds 2,750,000 Autogrill Finanziari 19,687 Tollway Restaurants 650,000 Mediolanum 19,504 Life Insurance & Mutual Funds 2,000,000 Editoriale L'Espresso 17,203 Newspapers & Magazines 600,000 Gewiss 16,622 Electrical Plugs & Switches 700,000 Banca Popolare Di Bergamo 16,013 Regional Bank 1,800,000 Saipem SPA 10,714 Pipeline Construction & Drilling Contractor 500,000 Banco Pop Commercia e Industria 10,697 Regional Bank 500,000 Aeroporti di Roma 8,613 Airport Management 300,000 Industrie Natuzzi ADR 8,288 Leather Couches 120,000 Cellular Communications International 8,160 Mobile Communications
26 Number of Shares Value (000) - ------------------------------------------------------------------- 250,000 Hellenic Bottling (Greece) $ 7,192 Coca-Cola Bottler 480,000 Attica Enterprises 7,130 480,000 Attica Enterprises GRD (Greece) 437 Ferry Line 325,000 Saes Getters 6,169 Getters used in TV's/PC's 20,000 Ergo Bank (Greece) 1,432 Commercial Bank - ------------------------------------------------------------------- 199,803 Spain/Portugal: 1.6% 290,000 Mapfre Vida 14,295 Life Insurance & Mutual Funds 220,000 Cortefiel 5,289 Apparel Retailer 150,000 Estoril Sol (Portugal) 3,864 Casino Resort 180,000 Lusotur (Portugal) 2,777 Real Estate/Resort Developer 150,000 Filmes Lusomundo (Portugal) 2,305 Newspapers, Radio, Video, Film Distribution 87,500 Televisao Independente (Portugal) 111 Television Station - ------------------------------------------------------------------- 28,641 Netherlands: 6.2% 570,000 Kempen 37,295 Stock Brokerage/Investment Management 558,000 Getronics 23,956 Computer Services 270,000 Hunter Douglas 12,304 Decorative Window Coverings 150,000 ASR Verzekeringsgroep 10,764 Insurance 320,000 DOCdata 9,133 Audio CD & CD-Rom Replication 200,000 Fugro NV 7,867 Consulting & Surveying 310,000 Wegener Arcade NV 6,008 Newspaper Publisher 240,000 Telegraaf Holdings 5,089 Newspaper Publisher - ------------------------------------------------------------------- 112,416 Hungary: 0.2% 40,000 Gedeon Richter 4,209 Generic Drugs Poland: 0.1% 200,000 Best Company Series D 1,077 Electronics Retailer 140,000 Bank Komunalny 482 Gdansk-Area Bank - ------------------------------------------------------------------- 1,559 --------- Europe: Total 1,097,639 - ------------------------------------------------------------------- Asia: 17.9% Hong Kong: 3.2% 14,020,000 Li and Fung 22,256 Sourcing of Consumer Goods 8,500,000 Varitronix International 17,059 LCD Manufacturer 3,500,000 TVB 9,215 Television Broadcasting 16,000,000 Vanda Systems 5,730 Systems Integrator 1,400,000 Dickson Concepts 2,439 Retailer 5,200,000 China HK Photo Products 1,154 Fuji Film Distributor - ------------------------------------------------------------------- 57,853 India: 0.4% 82,682 Housing Development Finance 6,657 Mortgage Lender 810,000 Tube Investment GDR 648 Bicycle Manufacturer 2,000,000 Centurion Quantum Growth 215 Closed-End Fund - ------------------------------------------------------------------- 7,520 Japan: 8.1% 40,000 Shohkoh Fund 13,348 Short-Term Loans for Small Businesses 390,000 Meitec 12,195 Engineering Outsourcing 130,000 Nintendo 11,211 Video Games 370,000 Aderans 8,712 Hairpieces & Wigs 250,000 Fuji Software ABC 8,174 Computer Services/Consulting 270,000 Noritsu Koki 7,916 Photo Processing Lab Manufacturer 300,000 Hokuto 7,795 Mushroom Grower 27 Acorn International Statement of Investments (unaudited)
Number of Shares Value (000) - -------------------------------------------------------------------------------- 165,000 Aeon Credit Service $ 7,659 Credit Cards 85,000 Ryohin Keikaku 6,565 Designer & Retailer of Muji Brand Specialty Consumer Goods 90,000 Orix Corporation 6,115 Leasing Company 68,000 Nichiei 6,017 Short-Term Loans for Small Businesses 125,000 Nidec 5,812 Spindle Motor Manufacturer 90,000 Aiful 5,669 Consumer Lending 40,000 Keyence 5,519 Sensors 310,000 Shinki 4,556 Corporate & Consumer Lending 204,000 People 4,283 Sports Clubs 160,000 NuSkin Asia Pacific 4,120 Direct Consumer Goods Sales 165,000 Lasertec 3,823 LCD & Photomask Defect Detectors 40,000 Rohm 3,659 Semiconductors & Electronic Components 200,000 Jusco 3,584 Retail Stores 275,000 Mirai Industry 3,464 Manufacturer of Plastic Housing Components 99,000 Jafco 3,341 Venture Capital Investments 210,000 Arrk Corporation 2,992 Industrial Modeling 130,000 Central Uni 634 Health Care/Medical Equipment 10,000 Asatsu 175 Advertising - -------------------------------------------------------------------------------- 147,338 Taiwan: 0.1% 250,000 Chroma Ate 913 Measuring Instruments Manufacturer
Principal Amount or Number of Shares Value (000) - -------------------------------------------------------------------------------- Malaysia: 0.7% 2,350,000 Malaysian Oxygen 7,102 Industrial Gases 1,400,000 Berjaya Sports Toto 3,808 Lottery/Gaming 1,000,000 Technology Resources 1,143 Cellular Provider 265,000 Oriental Holdings 553 Honda Equipment Distributor - -------------------------------------------------------------------------------- 12,606 Indonesia: 0.1% 3,000,000 Mustika Ratu 798 Traditional Cosmetics 1,750,000 Medco Energi 718 Oil & Gas Drilling & Production - -------------------------------------------------------------------------------- 1,516 Philippines: 0.9% 52,840,000 Int'l Container Terminal Services 7,668 $8,750,000 Int'l Container Terminal Services Cv. 1.75% 3/13/04 7,481 Container Handling Terminals & Port Management 4,375,000 Philippine Savings Bank 2,049 Banking - -------------------------------------------------------------------------------- 17,198 Singapore: 4.0% 6,850,000 Venture Manufacturing 25,449 Contract Electronics Manufacturer 8,300,000 Star Cruises 16,593 Asian Cruise Line 3,300,000 Datacraft Asia 10,692 Network Integrator 4,400,000 Natsteel Electronics 8,555 Contract Electronics Manufacturer 4,000,000 Electronic Resources 4,384 5,015,000 Electronic Resources Warrants 7/17/01 3,105 Distribution of Electronic Components 16,900,000 Genting International 4,056 Investment Holding - -------------------------------------------------------------------------------- 72,834
28
Number of Shares Value (000) - -------------------------------------------------------------------------------- Thailand: 0.4% 12,800,000 Telecom Asia $ 5,055 Telecommunications 320,000 Bangkok Insurance 2,894 Finance/Insurance - -------------------------------------------------------------------------------- 7,949 -------- Asia: Total 325,727 - -------------------------------------------------------------------------------- Latin America: 8.2% Mexico: 3.3% 3,300,000 Kimberly Clark de Mexico 17,046 Paper Products 6,000,000 Grupo Industrial Bimbo 15,919 Bread, Baked Goods & Snacks 510,000 Tubos de Acero de Mexico ADR 9,531 Seamless Pipe for Oil Wells 8,940,000 Nadro, Series L 6,570 Pharmaceutical Distributor 1,570,000 Grupo Continental 5,529 Beverages 700,000 Corp Interamericana de Entretenimiento 5,424 Special Events & Live Entertainment - -------------------------------------------------------------------------------- 60,019 Brazil: 1.0% 150,000,000 Cemig Pfd. 7,282 Electric Utility 420,000 Elevadores Atlas 6,094 Elevator Services 200,000 Bompreco GDS 3,950 Supermarket Chain - -------------------------------------------------------------------------------- 17,326 Argentina: 2.0% 500,000 IRSA GDS 19,156 Real Estate Management & Development 3,600,000 Siderca 9,577 Steel Pipe Producer 1,200,000 Perez Companc 8,125 Oil & Gas Producer - -------------------------------------------------------------------------------- 36,858 Peru: 0.6% 6,000,000 Enrique Ferreyros 6,516 Heavy Machinery Dealer 250,000 Telefonica del Peru 5,391 Telecommunications - -------------------------------------------------------------------------------- 11,907 Panama: 1.3% 161,000 Carnival $ 11,230 Cruise Ship Line 195,000 Banco Latinoamericano de Exportaciones 7,337 Trade Financing 120,000 Panamerican Beverage 4,815 Coca-Cola Bottler - -------------------------------------------------------------------------------- 23,382 -------- Latin America: Total 149,492 - -------------------------------------------------------------------------------- Other Countries: 6.3% Australia/New Zealand: 2.7% 4,600,000 Tyndall Australia 8,328 Money Management & Insurance 5,200,000 Sonic Healthcare 7,553 Pathology Labs 3,200,000 Anaconda Nickel 7,534 Nickel Mining 900,000 Coca Cola Amatil 7,073 Coca-Cola Bottler 1,400,000 PetSec Energy 5,283 Oil & Gas Producer 1,000,000 Publishing & Broadcasting 5,206 Media & TV Broadcasting 1,750,000 Sky City (New Zealand) 4,402 Casino & Hotel 690,000 Siddons Ramset 3,478 Manufacturer & Distributor of Construction Materials - -------------------------------------------------------------------------------- 48,857 Canada: 2.1% 520,000 Shaw Industries 17,971 Oil Field Services 1,700,000 Bracknell 7,172 Electrical Contractor & Facilities Management 150,000 Power Financial 5,753 Financial Services Holding Company 1,600,000 Dundee Realty Special Warrants 3,600 400,000 Dundee Realty 900 Real Estate 170,000 LGS Group 2,271 Computer Systems Integration - -------------------------------------------------------------------------------- 37,667
29 Acorn International Statement of Investments (unaudited)
Principal Amount or Number of Shares Value (000) - -------------------------------------------------------------------------------- Israel: 0.6% 350,000 Blue Square Israel ADR $ 4,681 Supermarkets & Department Stores 350,000 ZAG Industries 3,981 Plastic Hardwares 100,000 Orbotech 3,238 Printed Circuit Board Manufacturing Equipment - -------------------------------------------------------------------------------- 11,900 South Africa: 0.2% 930,000 Energy Africa 3,341 Oil & Gas Producer United States: 0.7% 203,000 AES Corporation 10,645 Electric Generating Plants $1,500,000 Khanty Mansiysk 10% Notes 1,500 70 Khanty Mansiysk 32 Oil Production in Russia - -------------------------------------------------------------------------------- 12,177 ---------- Other: Total 113,942 Number of Shares Value (000) - -------------------------------------------------------------------------------- 340 Miscellaneous Securities: 0.0% $ 1 Total Common Stocks and Other ---------- Equity-Like Securities: 92.8% 1,686,801 ---------- Short-Term Obligations: 6.6% 119,316 ---------- Total Investments: 99.4% 1,806,117 ---------- Cash and Other Assets Less Liabilities: 0.6% 10,808 ---------- Total Net Assets: 100% $1,816,925 ================================================================================
30 Acorn International Portfolio Diversification At March 31, 1998, the Fund's portfolio of investments as a percent of net assets was diversified as follows:
Value (000) Percent - ------------------------------------------------------------------------ Information Computer Services $ 221,064 12.1% Publishing 69,960 3.9 Contract Manufacturing 43,137 2.4 CATV 28,121 1.5 Advertising 16,239 0.9 Broadcasting 14,532 0.8 Business Information 12,081 0.7 Semiconductors 10,720 0.6 Radio 10,707 0.6 Instrumentation 10,584 0.6 Telephone Services 10,446 0.6 Mobile Communications 9,303 0.5 Electronics Distribution 7,489 0.4 Computer Hardware 5,812 0.3 Marketing 5,424 0.3 Business Software 3,814 0.2 - ------------------------------------------------------------------------ 479,433 26.4 Health Care Hospital Management 35,143 1.9 Pharmaceuticals 33,292 1.8 Medical Equipment 19,835 1.1 Services 10,065 0.6 Hospital/Laboratory Supplies 7,553 0.4 - ------------------------------------------------------------------------ 105,888 5.8 Consumer Goods/Services Retail 59,665 3.3 Nondurables 42,148 2.3 Food 31,310 1.7 Restaurants 29,266 1.6 Travel 25,313 1.4 Beverages 24,609 1.4 Consumer Goods Distribution 19,617 1.1 Consumer Software 11,211 0.6 Leisure Products 9,456 0.5 Furniture & Textiles 8,288 0.5 Gaming 8,210 0.5 Other Entertainment 31,946 1.7 Other Durable Goods 29,712 1.6 Other Consumer Services 25,143 1.4 - ------------------------------------------------------------------------ 355,894 19.6 Finance Money Management 83,974 4.6 Insurance 51,993 2.9 Banks 38,010 2.1 Brokerage 37,295 2.1 Finance Companies 36,693 2.0 Credit Cards 7,659 0.4 Savings & Loans 5,669 0.3 Closed-End Funds 215 0.0 - ------------------------------------------------------------------------ 261,508 14.4 Industrial Goods/Services Outsourcing Services 110,136 6.0 Electrical Components 69,836 3.8 Machinery Processing 58,959 3.2 Industrial Services 21,441 1.2 Steel 19,108 1.1 Conglomerates 10,113 0.6 Construction 8,497 0.5 Speciality Chemicals 7,102 0.4 Industrial Materials 3,478 0.2 - ------------------------------------------------------------------------ 308,670 17.0 Energy/Minerals Oil Services 36,552 2.0 Oil/Gas Producers 25,776 1.4 Independent Power 10,645 0.6 Non-Ferrous Metals 7,534 0.4 - ------------------------------------------------------------------------ 80,507 4.4 Other Industries Transportation 40,626 2.2 Real Estate 37,433 2.1 Waste Management 9,559 0.5 Regulated Utilities 7,283 0.4 - ------------------------------------------------------------------------ 94,901 5.2 Total Common Stocks and ---------------------- Other Equity-Like Securities 1,686,801 92.8 Short-Term Obligations 119,316 6.6 ---------------------- Total Investments 1,806,117 99.4 Cash and Other Assets less Liabilities 10,808 0.6 ---------------------- Net Assets $1,816,925 100.0% ========================================================================
31 The Acorn - ------------------------ Family of Funds Trustees Irving B. Harris Chairman James H. Lorie Vice Chairman Leo A. Guthart Jerome Kahn, Jr. David C. Kleinman Charles P. McQuaid Roger S. Meier Adolph Meyer, Jr. Ralph Wanger Officers Ralph Wanger President Marcel P. Houtzager Vice President Kenneth A. Kalina Assistant Treasurer Merrillyn J. Kosier Senior Vice President and Secretary Bruce H. Lauer Vice President and Treasurer Charles P. McQuaid Senior Vice President Robert A. Mohn Vice President John H. Park Vice President Leah J. Zell Vice President 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. 32 [orange bar] [blue bar] [PICTURE] The Acorn - ------------------------- Family of Funds WAM Brokerage Services, L.L.C. P.O. Box 8502 Boston, MA 02266-8502 -----END PRIVACY-ENHANCED MESSAGE-----