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