<PAGE>
[PHOTO APPEARS HERE]
Acorn Fund / Acorn International
Semi-Annual Report
---------------------------------
June 30, 1996
Managed by Wanger Asset Management, L.P.
<PAGE>
Acorn Fund and Acorn International Semi-Annual Report 1996
.Table of Contents
Squirrel Chatter
.Letter from Ralph Wanger 1
More Squirrel Chatter
.Meet Leah Zell 3
Acorn Fund
.In a Nutshell 4
.Performance at a Glance 5
.Major Portfolio Changes 8
.Statement of Investments 10
.Portfolio Diversification 17
Acorn International
.In a Nutshell 6
.Performance at a Glance 7
.Major Portfolio Changes 18
.Statement of Investments 20
.Portfolio Diversification 27
Acorn Fund and Acorn International
.Financial Highlights 28
.Statements of Assets
and Liabilities 30
.Statements of Operations 31
.Statements of Changes in
Net Assets 32
.Notes to Financial
Statements 33
.ACORN USA
Acorn Investment Trust recently filed a registration statement with the SEC
relating to shares of Acorn USA, a new, no-load U.S. small-cap fund to be
advised by Wanger Asset Management. Acorn expects to begin selling Acorn USA
shares in early September, after that registration statement becomes effective.
WAM Brokerage Services, L.L.C., distributor, will mail an Acorn USA prospectus
to all Acorn shareholders in early September.
If you are not currently an Acorn shareholder, you may obtain an Acorn USA
prospectus when it is available by calling 1-800-9-ACORN-9 (1-800-922-6769) or
by writing to WAM Brokerage Services, L.L.C., at 227 West Monroe Street, Suite
3000, Chicago, IL, 60606.
Securities of Acorn USA may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. This
communication does not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any state in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state.
<PAGE>
.Squirrel Chatter: Investing the Acorn Way
In a globalized world, investors must think globally, and so investment
values will be discovered wherever they may lie. In this issue, we are
highlighting Acorn International and our investment philosophy. We hope that
you gain a better understanding of small cap international investing.
International funds are doing very well in 1996. The foreign markets were
hot in 1993, but then went into a consolidation period in 1994 and 1995, a
normal market reaction after a big upmove. Now the markets, refreshed, are on
the move. The press has discovered this new strength, and written some
enthusiastic articles./1/
.It's a Small World After All
Small cap stocks have become more popular in recent years, but still receive far
less attention from Wall Street than large cap stocks like Coca-Cola or
McDonald's. This is why we do our own homework. Our analysts never unpack their
suitcases. Every few weeks they must head to the airport to search the world
over for small company stocks to buy. We look for companies that exhibit three
distinct qualities: growth potential, financial strength and fundamental value.
We find growth in an expanding marketplace for a company's product, a good
design, efficient manufacturing and sound marketing. Financial strength refers
to a company with low debt, adequate working capital and conservative accounting
principles. These attributes provide management the stability and flexibility it
needs to reach strategic objectives. Fundamental value means low price. A good
company is not the same as a good stock. The stock price must be fair relative
to the company's current and expected dividends, earnings, growth rate, book
value and economic replacement value of assets. We refer to our investment
approach as growth at a reasonable price. Historically, small cap stocks have
outperformed large caps, so our hard work and focus has been rewarded.
Most of you already know about the Acorn funds' low turnover rates and
long-term time horizon. Small cap stocks are very costly to trade, especially in
foreign markets. In order to save transaction costs, we have to hold stocks for
the long-term, so we must have a long-term reason to own them. There are
"themes" that will put companies on a growth path. Outsourcing is a major theme
of investing. We also like European companies that have proprietary technology,
can cut costs, and are friendly to shareholders. Following is an example of our
"Healthy Living" theme.
.No Small Potato
In 1994, we bought a small Finnish company, called Raision Tehtaat, for Acorn
International. Raision Tehtaat is a potato farmers cooperative that also deals
in paper and pulp specialty chemicals (the starch from potatoes gives paper a
shiny look). Co-Portfolio Manager Leah Zell discovered the company when it was
selling at 7x trailing earnings and 80% of book value. She bought stock for
Acorn International over an eight month period as the stock price declined from
FMK 120 to FMK 80. At the beginning of this year, the stock was selling at FMK
62 and looked like a loser. Then, suddenly, the price began to cook. It has
since gone up 500%. The reason behind the sharp rise is an obscure margarine
named Benecol. It turns out that Raision discovered a novel edible oil that,
taken daily, lowers cholesterol (Finnish men have unusually high levels of
cholesterol) and incorporated it into a margarine. Scientific studies
substantiating the health benefits were published in the New England Journal of
Medicine in November 1995. The next month, Raision rolled out Benecol and the
product has been flying off grocers' shelves ever since. You will notice the
company was one of Acorn International's top ten holdings at quarter end (we
have taken some profits since). Of course, not every stock reacts this way, and
we could not have foreseen Benecol's success. But a few big winners can make up
for the fizzlers, keeping our long-term performance strong.
- --------------------
1 See Fortune, "Now's The Time To Go Global," February, 1996
Your Money, "Hot International Mutual Funds: Undervalued
And Ready To Fly," April/May, 1996.
The Wall Street Journal, "Global Investing," June 27, 1996.
1
<PAGE>
...investing outside the U.S. is an easy yet powerful way to lower your
volatility and potentially increase your return at the same time.
.Diversifying Your Investments
Many of you know that diversification helps reduce risk. Acorn International
owns nearly 300 stocks, in over 40 countries worldwide. Therefore, fund
performance is not dependent upon the price of any one stock, or the economic
progress of any one region of the world.
There have been many studies on the value of international diversification.
One study by Morgan Stanley Capital International shows that adding
international stocks to a U.S. portfolio improves return without increasing
risk.
Risk/Reward Characteristics of Global Equity Investing
.10 years ended 12/31/95
[GRAPH APPEARS HERE]
The S&P 500, representing the U.S. stock market, and the EAFE index
representing the markets of Europe, Australia and the Far East, were used as
measures for U.S. and non-U.S. stock market performance. The S&P 500 and EAFE
are unmanaged, broad, market-weighted indexes. Portfolios of the indices were
combined in varying proportions to determine various volatility/return
relationships. This showed that the least volatile portfolio would have been
composed of 70% U.S. equities and 30% foreign equities. The results reflect the
importance of balancing a portfolio between U.S. and foreign securities.
(source: Morgan Stanley Capital International)
Point 1 represents an entirely U.S. stock portfolio. Point 11 is a pure
foreign portfolio. In between is a mixture: point 2 is 90% domestic and 10%
foreign, point 3 is an 80-20% mix, and so on. If U.S. and foreign markets were
perfectly correlated, the mixed portfolios would fall on a straight line between
point 1 and point 11. Because the U.S. and foreign markets are only partially
correlated, the straight line becomes a parabola. The payoff shows up when we
compare point 1 (100% U.S.) with point 4 (70% U.S., 30% foreign). Point 4 has a
higher return than point 1 (17.0% vs. 16.4%) but lower volatility. Clearly, the
Morgan Stanley study shows that investing outside the U.S. can be an easy yet
powerful way to reduce your volatility and potentially increase your return at
the same time.
Half of the total assets managed by Wanger Asset Management are invested
outside the United States. We have made a major commitment to international
investing and are finding interesting small companies abroad to buy for you.
.Knowledge is Power
We strive to provide our shareholders with information that is useful in
making personal investment decisions. Each quarterly report provides commentary
on fund performance, compares fund returns with appropriate relative indexes,
shows the value of compounding via mountain charts, breaks out industry
diversification in easy-reference pie charts, and lists fund holdings,
including the ten largest holdings for each fund and major portfolio changes
within the quarter.
Our annual Acorn Investment Trust Informational Shareholder Meeting has
proved a popular way for our investors to learn more about the Acorn investment
philosophy, hear from the funds' portfolio managers, and ask questions of the
investment team. We encourage you to join us in Chicago on September 10, and
learn more about your investments in the Acorn funds. Come and meet our team!
Happy Investing!
/s/ Ralph Wanger
Ralph Wanger
President
2
<PAGE>
.More Squirrel Chatter
[PHOTO OF LEAH ZELL APPEARS HERE]
Leah Zell is Co-Portfolio Manager of Acorn International. Ms. Zell has
worked with Acorn since 1984. She has a BA from Radcliffe, a Ph.D from Harvard
and is a C.F.A.
Q. You have a Ph.D in History. Isn't that an unusual background for an
investment professional?
A. It is unusual but not inappropriate. History is about explaining the past and
making investments is about anticipating the future. Security analysis is really
history turned inside out. Both rely on a common set of research and analytic
skills. A history background teaches you (1) to think dynamically about change;
and (2) to be comfortable with a long-term time horizon. Having gone from
history to security analysis, I moved from thinking about centuries to thinking
about decades.
Q. How did you get into the investment business?
A. I started out a plain-vanilla European historian, then I met a professor at
Harvard named David Landes who taught me about industrialization. By the time I
got my degree, I had one advisor in the economics department, one at the
business school, and a job on Wall Street.
Q. The other members of your team also seem to have eclectic backgrounds. Do
you recruit for diversity?
A. Absolutely. We have six full-time international analysts, all of whom are
foreign nationals or have spent significant periods of their lives overseas. Our
varied backgrounds give us a wealth of expertise on which to draw for investment
decisions. But what we all have in common is something you might call "dual
vision."
Q. What do you mean by "dual vision?"
A. "Dual vision" is the ability to view a stock both as an Anglo-Saxon security
analyst and as a local investor. We want to combine the best of the U.S.
market's discipline with the sensitivity of the cultural insider.
Q. What do you believe distinguishes your team's investment approach from other
international funds?
A. Remember that we are an international small cap fund. Stockpicking will
always be more important to us than country allocation. Our challenge is finding
good stocks before they become household names. The solution we have adopted is
to do our own research. All of us travel extensively, talk to company
managements, and follow up with industry checks. Running Acorn International is
very labor-intensive but worth the effort, because our shareholders cannot
replicate our portfolio for themselves. Finally, we hold good ideas for years.
Q. Why do you hold stocks for such a long time?
A. Have you ever tried to ski down a slalom course? The temptation is to look at
the next gate, but it slows your pace. Experienced skiers learn to look downhill
two or three gates to pick the best "line". At Acorn International, we focus
three to six quarters ahead, to get a better perspective on a company's fair
value. Besides, trading is expensive.
Q. What can Acorn shareholders learn from this approach as it relates to their
own personal investment goals?
A. There are a lot of stories in the press about the hottest funds and markets,
whereas investing is a game of patience and focus. I am often asked what is the
right amount of international equity exposure for individuals. International
stocks are 66% of the investment world, so an American investor could allocate
10-30% overseas. But to me, the percentage allocation you choose is less
important than staying the course.
Q. Acorn International is up 17.3% year to date. Can this performance be
sustained?
A. Markets are unpredictable and equity returns are uneven. Although a 17%
return in six months is unlikely to be repeated often, I am bullish on
international small cap stocks. They are like U.S. small caps twenty years ago--
underresearched and underowned. To the extent that the U.S. leads global trends,
I often feel I am able to understand businesses abroad because I know where they
lie along the development curve. The best recommendation I can make for Acorn
International is that I buy it for my own children.
3
<PAGE>
Acorn Fund
.In a Nutshell
Acorn Fund finished the second quarter up 7.0%, beating all of the indexes
listed on page 5. Year-to-date, the Fund also bettered the market measures,
posting a 15.2% return.
Our energy stocks, fueled by their first quarter success, provided lots of
second quarter winners. United Meridian was pumped up when it announced an oil
discovery off Equatorial Guinea, Tesoro Petroleum topped Tenneco in a key court
case, and Atwood Oceanics rose due to higher deep-sea drilling rig rates. Other
big energy gainers included Digicon, J. Ray McDermott and Global Natural
Resources.
In a sickly market for healthcare stocks, HBO & Co. and Lincare Holdings
came out of the second quarter hale and hearty. HBO dominates its market for
healthcare information systems, with CEO Charlie McCall and his team exceeding
even our optimistic expectations. Lincare, a leader in oxygen therapy, gained
altitude as concerns over Medicare cuts declined.
Some of our larger long-time holdings notched nice gains. Kronos proved a
timely pick; the Massachusetts manufacturer of shopclocks has replaced
mechanical parts with microprocessors and is developing new software
applications. Lilly Industries' core business improved and was helped by the
acquisition of Guardsman Products, which greatly expands Lilly's share of
industrial coatings.
Acorn's foreign portfolio generated a 7.9% return in the quarter, with a
year-to-date return of 16.5%. Overseas performance was led by Italy's Banca
Fideuram, whose mutual fund sales rose rapidly. Stronger housing demand helped
Spanish property developer Vallehermoso, while computer services stalwart WM
Data Nordic continued to soar.
After three years in hiding, normal volatility has returned to the U.S.
market. We at the Acorn Fund welcome the fluctuations, since it affords us the
opportunity to do what we do best--invest in outstanding businesses at
reasonable prices.
/s/ Charles P. McQuaid /s/ Terence M. Hogan
- ---------------------- --------------------
Charles P. McQuaid Terence M. Hogan
Co-Portfolio Manager Co-Portfolio Manager
<TABLE>
<CAPTION>
Fund Net Assets as of 6/30/96: $2,805.4 million
.Acorn Fund Top 10 Holdings
<S> <C>
ADVANTA 2.2%
Credit Cards
Newell 1.8%
Consumer Goods
Thermo Electron 1.7%
Energy Systems & Processing Equipment
Harley Davidson 1.6%
Recreational Vehicles Manufacturer
TCI Liberty Media Group 1.5%
CATV Programming
Carnival 1.4%
Cruise Ship Line
Lincare Holdings 1.4%
Home Health Care Services
Solectron 1.3%
Electronics Contract Manufacturer
Tele Communications 1.3%
Cable TV
HBO&Company 1.2%
Health Care Services
</TABLE>
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments.
<TABLE>
<CAPTION>
Acorn Fund Semiannual Distribution
- -------------------------------------------------------------------------
Ex-Dividend Reinvestment
Per Share Date Price
<S> <C> <C> <C>
Long-Term Capital Gains $0.14 7/23/96 $14.48
Income Dividend $0.07 7/23/96 $14.48
</TABLE>
Fund
facts
Q. Why does share price drop when the Fund pays a dividend?
A. As the Fund accumulates net income from investments and realizes capital
gains, the amounts become part of the Fund's assets and are included in the NAV.
When the Fund pays those amounts to shareholders as dividends and capital gains,
the assets of the Fund are reduced and the value of each Fund share falls by the
amount of the distribution. But that value isn't lost. If you reinvest your
distribution, you get more shares (at the lower price). If you elect to receive
cash, the amount of your check will be equal to the drop in share price
multiplied by the number of Fund shares you own.
4
<PAGE>
.Performance at a Glance
The Value of a $10,000 Investment in Acorn Fund
.June 10, 1970 through June 30, 1996
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Date Acorn Fund S&P 500
- ---- ---------- -------
<S> <C> <C>
1970 10,000 10,000
1971 17,828 14,756
1972 19,368 17,558
1973 14,765 14,978
1974 10,691 11,015
1975 13,945 15,115
1976 23,045 18,732
1977 27,168 17,391
1978 31,777 18,533
1979 47,790 21,982
1980 62,594 29,127
1981 58,005 27,694
1982 68,208 33,660
1983 85,389 41,253
1984 89,045 43,841
1985 117,142 57,751
1986 136,843 68,529
1987 142,923 72,128
1988 178,370 84,107
1989 222,681 110,757
1990 183,674 107,319
1991 270,641 140,015
1992 336,210 150,642
1993 444,889 165,870
1994 411,750 168,060
1995 497,407 231,213
6/30/96 572,749 254,556
</TABLE>
Average Annual Total Return
---------------------------------------
1 Year 5 Years 10 Years Life of Fund
24.8% 20.3% 15.0% 16.8%
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 6/30/96
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Information 18.9%
Health Care 10.5%
Consumer Goods/Services 9.9%
Finance 14.8%
Industrial Goods/Services 9.7%
Energy/Minerals 8.0%
Real Estate 1.9%
Foreign 21.2%
Cash less liabilities 5.1%
-----
100.0%
</TABLE>
<TABLE>
<CAPTION>
Relative Performance
- ---------------------------------------------------------------------
<S> <C> <C> <C>
2nd quarter Last 6 mos. Last 12 mos.
Acorn Fund 7.0% 15.2% 24.8%
Dow-Jones 1.8% 11.8% 27.1%
Standard & Poor's 500 4.5% 10.1% 26.0%
Standard & Poor's
MidCap 400 2.9% 9.2% 21.6%
Russell 2000 5.0% 10.4% 23.9%
</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 6/30/96: $15.66
- -----------------------------------------
5
<PAGE>
Acorn International
.In a Nutshell
Acorn International had another fine quarter, returning 7.6%. This is a
particularly strong result in comparison to EAFE, which rose 1.6% over the same
timeframe.
Owning good companies once again made the difference. The single biggest
winner for the second quarter, in percentage terms, was Raision Tehtaat in
Finland, which jumped 90% after doubling in the first quarter. The European
outsourcing theme made us the most money in dollar terms, with 40%+ gains in WM
Data and TT Tieto, and 20%+ gains in Getronics and Capita. Outside Europe,
Noritsu Koki and Hokuto in Japan both picked up 40%+, as did Nadro in Mexico.
Southeast Asian markets were quiet this quarter, but Taiwan broke ranks with a
28% rise, matched by our holdings there.
Good portfolios, like fine wines, mature over time. Our returns in 1996
reflect decisions made going back to 1993. As we get to know our companies
better, our level of confidence grows. This enables us to make informed
decisions when emotions grip the markets, whether up or down. Good teams also
mature over time. We have doubled the number of international analysts since the
Fund began. Our hires have been successfully trained and we are doing a better
job of covering the world. It is gratifying to see the Fund's returns exceed its
benchmarks. The Acorn investment process and philosophy is working for you.
Cash flows have been modestly positive so far this year, adding about 1% to
the size of the Fund per month. Our team of regional and industry specialists
are working hard to find new ideas for you.
/s/ Leah Joy Zell
Leah Joy Zell
Co-Portfolio Manager
Fund Net Assets as of 6/30/96: $1,624.8 million
.Acorn International Top 10 Holdings
WM Data Nordic Sweden 3.1%
Computer Services/Consulting
Rhoen Klinikum Germany 1.7%
Hospital Management
Fresenius Germany 1.5%
Dialysis Equipment & Solutions
Korea Mobile Telecom Korea 1.5%
Mobile Communications
T T Tieto Finland 1.5%
Computer Services/Consulting
Getronics Netherlands 1.4%
Computer Consulting
Raision Tehtaat Finland 1.2%
Foodstuffs & Specialty Chemicals
Village Roadshow Australia 1.1%
Film Distribution/Exhibition/Production
Banca Fideuram Italy 1.1%
Life Insurance & Mutual Funds
Hennes & Mauritz Sweden 1.1%
Apparel Stores
The Fund's top 10 holdings and portfolio diversification vary with changes
in portfolio investments.
Acorn International Semiannual Distribution
- --------------------------------------------------------------------------------
Per Share Ex-Dividend Reinvestment
Date Price
Long-Term Capital Gains $0.00 -- --
Income Dividend $0.05 7/23/96 $18.97
Fund
facts
The No-Load Advantage:
The Acorn funds are 100% no-load, which means that all of your money goes to
work for you immediately. There are no sales charges, and no 12b-1 fees or back-
end load fees, so all of your dollars are invested at net asset value.
6
<PAGE>
.Performance at a Glance
The Value of a $10,000 Investment in Acorn International
.September 23, 1992 through June 30, 1996
[GRAPH APPEARS HERE]
Date Acorn International EAFE
---- ------------------- ----
09/23/92 10,000 10,000
09/30/92 10,010 10,000
12/31/92 10,690 9,614
03/31/93 12,000 10,767
06/30/93 12,920 11,849
09/30/93 13,910 12,635
12/31/93 15,940 12,745
03/31/94 15,850 13,190
06/30/94 15,550 13,864
09/30/94 16,491 13,877
12/31/94 15,334 13,736
03/31/95 14,811 13,992
06/30/95 15,727 14,093
09/30/95 16,824 14,681
12/31/95 16,703 15,275
03/31/96 18,203 15,717
06/30/96 19,593 15,965
Average Annual Total Return
1 Year Life of Fund
24.6% 19.5%
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 6/30/96
<TABLE>
<CAPTION>
[PIE CHART APPEARS HERE]
<S> <C>
Information 24.9%
Health Care 7.7%
Consumer Goods/Services 28.5%
Finance 20.2%
Industrial Goods/Services 9.4%
Energy/Minerals 5.7%
Real Estate 1.6%
Cash less liabilities 2.0%
-------
100.0%
</TABLE>
<TABLE>
<CAPTION>
Relative Performance
- --------------------------------------------------------------------------
<S> <C> <C> <C>
2nd quarter Last 6 mos. Last 12 mos.
Acorn International 7.6% 17.3% 24.6%
EAFE 1.6% 4.5% 13.3%
Lipper International Small
Company Funds Average 7.1% 13.5% 20.0%
Lipper International
Fund Index 3.9% 8.5% 16.4%
</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 twelve 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 6/30/96: $19.46
- -----------------------------------------
7
<PAGE>
Acorn Fund
.Major Portfolio Changes in the Second Quarter
<TABLE>
<CAPTION>
Number of Shares
-----------------------
3/31/96 6/30/96
Additions
- --------------------------------------------------------------------------------
<S> <C> <C>
Information
ACT Manufacturing 275,000 470,000
Actvision 0 180,000
American Business Information 400,000 500,000
Analysts International 0 130,000
CACI International 436,000 600,000
Cellular Communications
International 150,000 300,000
Comcast UK Cable Partners 600,000 730,000
Compuware 0 153,000
Data Transmission Network 0 250,000
In Focus Systems 210,000 256,000
Keane 0 105,000
Korea Mobile Telecom GDS 0 260,000
(includes elect of 3 for 1 stock conversion)
Nintendo 0 120,000
NTT Data 0 100
Palmer Wireless 200,000 350,000
Providence Journal 0 360,000
Sanmina 70,000 180,000
Softkey International 0 300,000
Solectron 900,000 950,000
Source Informatics Cv. Pfd. 0 208,333
(spin-of from Walsh International)
Sysdeco 100,000 175,000
TCI Liberty Media Group 1,500,000 1,600,000
United Video Satellite 465,000 550,000
Varitronix International 3,500,000 4,300,000
Village Roadshow Pfd. 0 750,000
- --------------------------------------------------------------------------------
Health Care
Andrx 0 43,000
CIMA Labs 0 280,000
Genome Therapeutics 0 200,000
Innovasive Devices 0 267,000
Invacare 580,000 650,000
Lincare Holdings 967,000 1,000,000
Medeva 2,230,000 2,695,000
Paramount Bed 56,100 100,000
Trex Medical 50,000 125,000
Watson Pharmaceuticals 280,000 320,000
- --------------------------------------------------------------------------------
Consumer Goods/Services
Esselte, Series A 10,000 180,000
Toy Biz 0 251,000
- --------------------------------------------------------------------------------
Finance
Americredit 879,000 1,049,000
Foremost 127,000 162,000
Imperial Thrift & Loan 0 280,000
Jayhawk 0 375,000
SEI 434,000 618,000
Texas Regional Bancshares 309,000 380,000
- --------------------------------------------------------------------------------
Industrial Goods/Services
Atchison Casting 264,000 354,000
Bearings 180,000 250,000
Gibraltar Steel 300,000 440,000
Hunter Douglas 0 40,000
Material Sciences 0 225,000
Sensonor 600,000 725,000
Siderca 0 2,000,000
Wackenhut, Cl. B 444,000 562,000
World Color Press 0 100,000
- --------------------------------------------------------------------------------
Energy/Minerals
Barrett Resources 0 103,000
CalEnergy 475,000 850,000
Carbo Ceramics 0 56,000
Devon Energy 300,000 350,000
Forest Oil 400,000 500,000
NGC 510,000 679,000
Seagull Energy 0 300,000
Tesoro Petroleum 600,000 800,000
Thermo Optek 0 85,000
Tipperary 0 770,000
- --------------------------------------------------------------------------------
Real Estate
Tokyu Land 0 720,000
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
---------------------------
3/31/96 6/30/96
Sales
- ---------------------------------------------------------------------------
<S> <C> <C>
Information
Blonder Tongue Labs 205,000 0
Cellular Communications Cv. Pfd. 180,000 0
Continuum 94,000 0
DMX 270,000 0
InterTAN 150,000 0
International Game Technology 2,040,000 1,830,000
Pittencrief Communications 400,000 0
Sierra On-Line 300,000 0
Systems & Computer Technology 775,000 480,000
Thermo Instrument Systems 635,000 535,000
Tripos 100,000 0
Universal Electronics 110,000 0
- ---------------------------------------------------------------------------
Health Care
Anesta 63,800 0
Apria Healthcare Group 366,000 316,000
Chr. Hansen Holding, Cl. B 29,000 0
Fresenius USA 48,000 0
North American Biologicals 562,000 0
Renal Treatment Centers 582,000 462,000
Sepracor 280,000 150,000
Steris 340,000 684,000
(includes effect of merger
with Amsco International)
Thermotrex 150,000 100,000
Vertex Pharmaceuticals 100,000 0
- ---------------------------------------------------------------------------
Consumer Goods/Services
American Media 1,235,000 0
Anchor Gaming 200,000 0
Cato 440,000 191,000
First Brands 475,000 300,000
Flughafen Wien 50,000 30,000
Kian Joo Can Warrants 5/22/99 168,000 0
Lands' End 215,000 0
Mikasa 275,000 0
Morton Restaurant Group 325,000 125,000
(formerly known as Quantum
Restaurant Group)
O'Sullivan Industries 700,000 0
Playboy Enterprises, Cl. B 200,000 0
Players International 250,000 0
Resorts World 1,950,000 1,450,000
Sony Music Entertainment 33,000 0
Station Casinos 188,000 0
St. John Knits 147,000 60,000
(includes effect of 2 for 1 split)
Tostem 110,000 0
Tsutsumi Jewelry 46,000 0
- ---------------------------------------------------------------------------
Finance
Aames Financial 237,000 295,000
(includes effect of 3 for 2 split)
Arab Malaysian Finance 220,000 0
ADVANTA, Cl. A 842,000 767,000
BayBanks 96,000 46,000
Bell Bancorp 162,000 0
Cash America 1,220,000 620,000
First Commerce 206,000 73,000
First USA Paymentech 15,000 0
Mercury Finance 1,393,000 898,000
North American Gas
Investors Trust 995,000 0
Thailand Fund 100,000 78,000
- ---------------------------------------------------------------------------
Industrial Goods/Services
Ecco 14,000 0
Ecco Travail Temporaire 70,000 0
Loral 215,000 0
Myers Industries 180,000 0
Sealed Air 540,000 240,000
Superior Services 70,000 0
Teleflex 120,000 0
Thermo Electron 800,000 1,125,000
(includes effect of 3 for 2 split)
Thermo Fibertek 600,000 675,000
(includes effect of 3 for 2 split)
Thermo Sentron 34,000 0
Zoltek 110,000 0
- ---------------------------------------------------------------------------
Energy/Minerals
Basin Exploration 100,000 0
Digicon 809,000 400,000
Landmark Graphics 335,000 0
Seacor Holdings 20,000 0
Thermo Ecotek 500,000 390,000
</TABLE>
9
<PAGE>
Acorn Fund
.Statement of Investments (unaudited) June 30, 1996
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 94.9%
- --------------------------------------------------------------------------------
<S> <C> <C>
Information: 18.9%
.Broadcasting/CATV: 3.0%
1,800,000 Tele-Communications,
Series A TCI Group (b) $32,625
50,000 Tele-Communications, Cum. Pfd. 3,087
300,000 TCA Cable TV 9,075
300,000 Silver King Communications (b) 9,000
277,000 Argyle Television (b) 6,925
440,000 Jones Intercable, Cl. A (b) 5,885
22,500 Jones Intercable (b) 323
360,000 Providence Journal (b) 5,535
500,000 Century Communications, Cl. A (b) 4,250
80,000 Cablevision Systems (b) 3,700
300,000 Granite Broadcasting (b) 3,881
- --------------------------------------------------------------------------------
84,286
.Programming for CATV/TV: 3.2%
1,600,000 TCI Liberty Media Group (b) 42,400
250,000 Data Transmission Network (b) 15,200
700,000 International Family Entertainment (b) 12,950
550,000 United Video Satellite (b) 11,550
300,000 BET Holdings (b) 7,913
- --------------------------------------------------------------------------------
90,013
.Mobile Communications: 3.1%
500,000 Telephone and Data Systems 22,500
450,000 Cellular Communications of Puerto Rico (b) 14,625
800,000 Mobile Telecommunication Technologies (b) 11,700
500,000 Vanguard Cellular Systems (b) 10,875
350,000 Palmer Wireless (b) 7,000
355,000 COMARCO (b) (c) 6,523
468,000 PriCellular (b) 5,675
300,000 Centennial Cellular (b) 5,063
246,000 Shared Technologies (b) 1,783
- --------------------------------------------------------------------------------
85,744
.Computer Software/Services: 1.9%
266,000 BRC Holdings (b) 9,576
600,000 CACI International (b) (c) 9,450
480,000 Systems & Computer Technology (b) 6,960
153,000 Compuware (b) 6,043
130,000 Analysts International 5,460
104,000 BDM International (b) 4,836
105,000 Keane 3,872
125,000 American Management Systems (b) 3,656
208,333 Source Informatics Cv. Pfd. (b) 2,360
118,000 Computer Language Research 1,475
170,000 Kurzweil Applied Intelligence (b) 510
- --------------------------------------------------------------------------------
54,198
.Gaming Equipment: 1.1%
1,830,000 International Game Technology 30,881
.Computer Game Software: 0.4%
300,000 Softkey International (b) 5,681
180,000 Activision (b) 2,340
350,000 Spectrum HoloByte (b) 2,012
- --------------------------------------------------------------------------------
10,033
.Business Information: 0.4%
500,000 American Business Information (b) 9,125
600,000 GIGA Cv. Pfd. (b) 2,100
- --------------------------------------------------------------------------------
11,225
.Computer Systems: 2.1%
950,000 Solectron (b) 35,981
470,000 ACT Manufacturing (b) (c) 6,874
332,000 Altron (b) 6,723
180,000 Sanmina (b) 4,860
700,000 Triad Systems (b) 4,463
- --------------------------------------------------------------------------------
58,901
.Instrumentation: 1.0%
535,000 Thermo Instrument Systems (b) 17,254
$5,000 Thermo Optek, 5% Note Due 10/15/00 5,350
85,000 Thermo Optek (b) 1,105
228,000 IFR Systems (b) 2,793
$1,500 Thermoquest, 5% Note Due 8/15/00 1,620
20,000 Thermoquest (b) 278
85,000 Datum (b) 903
- --------------------------------------------------------------------------------
29,303
.Distribution: 1.1%
1,000,000 Pioneer-Standard Electronics 13,250
334,000 Kent Electronics (b) 10,437
470,000 Bell Microproducts (b) (c) 3,584
300,000 Richey Electronics (b) 3,525
- --------------------------------------------------------------------------------
30,796
.Components/Peripherals: 1.6%
457,000 Kronos (b) (c) 16,223
500,000 Oak Industries (b) 14,813
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
256,000 In Focus Systems (b) $ 6,208
325,000 Planar Systems (b) 4,631
350,000 Exide Electronics Group (b) 3,325
80,000 Daktronics (b) 360
- --------------------------------------------------------------------------------
45,560
-----------
Information: Total 530,940
- --------------------------------------------------------------------------------
Health Care: 10.5%
.Biotechnology/Drug Delivery: 2.3%
320,000 Watson Pharmaceuticals (b) 12,120
260,000 RP Scherer (b) 11,797
450,000 Inhale Therapeutic Systems (b) 8,325
120,000 Human Genome Sciences (b) 4,410
800,000 Corvas International (b) (c) 3,900
800,000 Corvas International Warrants (b) 800
70,000 Biogen (b) 3,841
155,000 Protein Design Labs (b) 3,488
163,000 TheraTech (b) 3,138
133,000 CellPro (b) 2,394
60,000 Incyte Pharmaceutical (b) 2,314
150,000 Sepracor (b) 2,250
145,000 Cygnus Therapeutic Systems (b) 2,211
280,000 CIMA Labs (b) 2,100
200,000 Genome Therapeutics (b) 1,800
43,000 Andrx (b) 650
- --------------------------------------------------------------------------------
65,538
.Medical Equipment: 3.5%
684,000 Steris (b) 21,888
650,000 Invacare 15,275
930,000 Kinetic Concepts 14,415
552,000 Thermedics (b) 13,800
582,000 Respironics (b) 10,767
345,000 SpaceLabs Medical (b) 8,021
350,000 Affymetrix (b) 4,514
89,000 Boston Scientific (b) 4,005
267,000 Innovasive Devices (b) 2,670
125,000 Trex Medical (b) 2,359
- --------------------------------------------------------------------------------
97,714
.Hospital/Laboratory Supplies: 0.7%
273,000 Hillenbrand Industries 10,169
322,000 Sybron International (b) 8,050
- --------------------------------------------------------------------------------
18,219
- --------------------------------------------------------------------------------
.Services: 4.0%
1,000,000 Lincare Holdings (b) 39,250
498,000 HBO & Company 33,739
462,000 Renal Treatment Centers (b) 13,283
316,000 Apria Healthcare Group (b) 9,915
185,000 MDL Information Systems (b) 5,504
100,000 ThermoTrex (b) 4,925
450,000 Pharmaceutical Marketing Services (b) 4,387
300,000 Walsh International (b) 2,525
- --------------------------------------------------------------------------------
113,528
-----------
Health Care: Total 294,999
- --------------------------------------------------------------------------------
Consumer Goods/Services: 9.9%
.Retail: 1.7%
980,000 Borders Group (b) 31,605
295,000 Quality Food Centers (b) 7,596
200,000 Duckwall Alco Stores (b) 2,950
50,000 Nine West (b) 2,556
70,000 Dave & Buster's (b) 1,873
191,000 Cato 1,146
- --------------------------------------------------------------------------------
47,726
.Recreational Vehicles: 1.8%
1,100,000 Harley-Davidson 45,238
320,000 Thor Industries 6,560
- --------------------------------------------------------------------------------
51,798
.Food: 0.3%
634,000 Au Bon Pain (b) (c) 4,755
125,000 Morton Restaurant Group
(formerly known as Quantum
Restaurant Group) (b) 2,188
- --------------------------------------------------------------------------------
6,943
.Entertainment/Leisure: 3.3%
1,400,000 Carnival 40,425
2,000,000 Alliance Entertainment (b) (c) 13,750
215,000 GC Companies (b) 8,009
265,000 Royal Caribbean Cruises 7,553
276,000 Carmike Cinemas (b) 7,452
251,000 Toy Biz (b) 5,083
472,000 Hollywood Park, Cv. Pfd. 4,720
180,000 Rio Hotel & Casino (b) 2,768
</TABLE>
11
<PAGE>
Acorn Fund
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
<S> <C> <C>
- -------------------------------------------------------------------------------
535,000 Monarch Casino & Resort (b) (c) $ 2,140
$6,250 Grand Palais Casino 14%
Note Due 2/25/98 (b) 313
- -------------------------------------------------------------------------------
92,213
.Manufacturers: 2.8%
1,650,000 Newell 50,531
375,000 Wolverine World Wide 12,187
300,000 First Brands 8,100
232,000 Norwood Promotional (b) 5,220
60,000 St. John Knits 2,678
- -------------------------------------------------------------------------------
78,716
-------
Consumer: Total 277,396
- -------------------------------------------------------------------------------
Finance: 14.8%
.Banks: 1.1%
380,000 Texas Regional Bancshares (c) 9,500
285,000 Union Planters 8,657
46,000 BayBanks 4,956
105,000 First American 4,423
73,000 First Commerce 2,582
104,000 Riverside National Bank 1,378
- -------------------------------------------------------------------------------
31,496
.Savings/Loans: 2.6%
700,000 Peoples Bank Bridgeport 15,575
756,000 Washington Federal 15,498
400,000 Coast Savings (b) 13,100
390,000 Washington Mutual 11,651
260,000 TCF 8,645
280,000 Imperial Thrift & Loan (b) 4,130
156,000 Indiana Federal 3,140
- -------------------------------------------------------------------------------
71,739
.Insurance: 2.0%
836,000 Baldwin & Lyons, Cl. B (c) 17,243
351,000 United Fire & Casualty 10,705
162,000 Foremost 9,193
331,000 Transnational Re 8,151
318,000 ALLIED Life Financial (c) 6,360
216,000 Leucadia National 5,292
- -------------------------------------------------------------------------------
56,944
.Money Management: 2.8%
880,000 United Asset Management 21,560
784,000 Baker Fentress 14,994
618,000 SEI 13,055
1,621,000 Phoenix Duff and Phelps 12,157
241,000 BISYS (b) 9,098
254,000 T. Rowe Price 7,811
- -------------------------------------------------------------------------------
78,675
.Credit Cards: 4.4%
767,000 ADVANTA, Cl. A 39,117
520,000 ADVANTA, Cl. B 23,530
600,000 First USA 33,000
575,000 National Data 19,694
220,000 Concord EFS (b) 7,810
- -------------------------------------------------------------------------------
123,151
.Other: 1.9%
1,049,000 Americredit (b) 16,391
898,000 Mercury Finance 11,450
295,000 Aames Financial 10,583
375,000 Jayhawk (b) 5,109
320,000 DVI Health Services (b) 5,040
620,000 Cash America 4,030
- -------------------------------------------------------------------------------
52,603
-------
Finance: Total 414,608
- -------------------------------------------------------------------------------
Industrial Goods/Services: 9.7%
.Steel: 1.5%
1,110,000 Worthington Industries 23,171
440,000 Gibraltar Steel (b) 8,910
354,000 Atchison Casting (b) (c) 5,575
200,000 Schnitzer Steel 5,350
- -------------------------------------------------------------------------------
43,006
.Machinery: 4.3%
1,125,000 Thermo Electron 46,828
800,000 Baldor Electric 18,000
675,000 Thermo Fibertek (b) 11,391
150,000 Nordson 8,475
240,000 Sealed Air (b) 8,070
250,000 Bearings 6,750
135,000 Valmont Industries 4,590
300,000 Douglas & Lomason (c) 4,275
96,000 Mine Safety Appliances 3,936
110,000 Applied Power 3,080
174,000 U.S. Can (b) 2,828
180,000 Hein-Werner (b) (c) 1,440
500,000 Stevens International, Cl. A (b) (c) 1,250
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
<S> <C> <C>
- -------------------------------------------------------------------------------
34,000 Stevens International, Cl. B (b) (c) $ 90
- -------------------------------------------------------------------------------
121,003
.Furniture/Textiles: 1.1%
600,000 Unifi 16,875
750,000 Lilly Industries, Cl. A 12,750
- -------------------------------------------------------------------------------
29,625
.Services: 2.8%
600,000 Expeditors International of
Washington 18,600
562,000 Wackenhut, Cl. B 10,327
58,000 Wackenhut, Cl. A 1,428
384,000 HA.LO Industries (b) (c) 9,984
430,000 Hub Group (b) 8,761
374,000 Thomas Group (b) (c) 6,919
530,000 Thermo Terratech (b) 6,360
154,000 Unitog 4,351
$2,900 Western Water, 9% Cv.
Note Due 9/25/05 4,251
225,000 Material Sciences (b) 3,881
100,000 World Color Press (b) 2,538
115,000 AG Services of America (b) 1,466
43,000 Worker's Compensation Medical
Centers (b) 22
- -------------------------------------------------------------------------------
78,888
-------
Industrial: Total 272,522
- -------------------------------------------------------------------------------
Energy/Minerals: 8.0%
.Independent Power: 2.3%
995,000 The AES Corporation (b) 28,109
850,000 CalEnergy (b) 21,675
390,000 Thermo Ecotek (b) 9,457
285,000 Thermo Power (b) 3,563
- -------------------------------------------------------------------------------
62,804
.Oil/Gas Producers: 3.0%
440,000 United Meridian (b) 15,840
770,000 Global Natural Resources (b) 12,609
800,000 Tesoro Petroleum (b) 9,200
350,000 Devon Energy 8,575
300,000 Seagull Energy (b) 7,500
500,000 Forest Oil (b) 6,812
427,000 Louis Dreyfus Natural Gas (b) 6,405
550,000 Coho Resources (b) 3,781
770,000 Tipperary (b) (c) 3,369
200,000 St. Mary Land & Exploration 3,350
103,000 Barrett Resources (b) 3,064
360,000 Abraxas Petroleum (b) (c) 2,453
110,000 Abraxas Petroleum CVRs (b) 1,015
- -------------------------------------------------------------------------------
83,973
.Distribution/Marketing/Refining: 1.1%
606,000 Southern Union (b) 13,332
679,000 NGC 10,185
143,000 KN Energy 4,790
53,000 Atmos Energy 1,623
- -------------------------------------------------------------------------------
29,930
.Oil Services: 1.3%
320,000 Atwood Oceanics (b) 14,320
255,000 Energy Ventures (b) 8,287
400,000 Digicon (b) 6,700
201,000 J Ray McDermott (b) 5,025
56,000 Carbo Ceramics 1,232
- -------------------------------------------------------------------------------
35,564
.Mining: 0.3%
300,000 Zeigler Coal Holding 4,800
250,000 Coeur D'Alene Mines 4,594
- -------------------------------------------------------------------------------
9,394
-------
Energy: Total 221,665
- -------------------------------------------------------------------------------
Real Estate: 1.9%
829,000 The Rouse Company 21,450
210,000 Equity Residential Properties Trust 6,904
155,000 Forest City Enterprises, Cl. B 6,452
123,000 Forest City Enterprises, Cl. A 5,043
165,000 Weingarten Realty Investors 6,394
120,000 First Washington Realty Trust,
Cv. Pfd. 3,030
80,000 First Washington Realty Trust 1,600
243,000 Sunstone Hotel Investors 2,643
-------
Real Estate: Total 53,516
- -------------------------------------------------------------------------------
Foreign Securities: 21.2%
.Canada: 0.7%
800,000 Shaw Communications, Cl. B 5,653
125,000 BCE Mobile Communications (b) 4,059
235,000 Veritas Energy Services (b) 3,054
400,000 Ranger Oil 2,950
</TABLE>
13
<PAGE>
Acorn Fund
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
<S> <C> <C>
- --------------------------------------------------------------------------------
200,000 Shaw Industries $ 2,643
200,000 Cogeco Cable 1,208
- --------------------------------------------------------------------------------
19,567
.United Kingdom/Ireland: 3.5%
400,000 International CableTel (b) 11,800
2,695,000 Medeva 10,511
1,200,000 Serco Group 10,106
730,000 Comcast UK Cable Partners (b) 9,308
450,000 ADT (b) 8,494
2,000,000 Securicor Group, Cl. A 8,142
1,150,000 N. Brown Group 6,236
1,700,000 Invesco 6,102
68,000 Invesco ADS 2,380
700,000 Powerscreen International 4,960
3,800,000 Waterford Wedgwood (Ireland) 4,960
580,000 Oriflame 4,569
1,000,000 Capital 3,574
345,000 Ethical Holdings (b) 3,364
1,200,000 Body Shop International 3,319
4,500,000 Rhino Group (b) 1,119
700,000 Pittencrieff Resources 489
- --------------------------------------------------------------------------------
99,433
.Germany/Austria: 0.5%
425,000 United International Holdings
(Austria) (b) 5,844
20,000 Escada 3,607
8,000 Binding-Brauerei 3,022
30,000 Flughafen Wien (Austria) 2,060
- --------------------------------------------------------------------------------
14,533
.Nordic Countries: 2.5%
460,000 WM Data Nordic (Sweden) 29,114
110,000 Hennes & Mauritz, Cl. B (Sweden) 10,194
240,000 Autoliv (Sweden) 7,306
725,000 SensoNor (Norway) (b) 6,361
150,000 Huhtamaki (Finland) 5,004
220,571 Pricer, Cl. B (Sweden) (b) 4,620
180,000 Esselte, Series A (Sweden) 3,635
50,000 Sentra, Cl. A (Finland) (b) 1,560
90,000 Benefon (Finland) 1,483
175,000 Sysdeco Group (Norway) (b) 1,212
- --------------------------------------------------------------------------------
70,489
.Netherlands: 0.5%
300,000 Getronics 6,643
22,000 Telegraaf Holdings 3,692
40,000 Hunter Douglas 2,730
- --------------------------------------------------------------------------------
13,065
.Switzerland: 1.0%
6,000 Societe Generale de Surveillance 14,356
14,000 Liechtenstein Global Trust 6,823
13,200 Sece Cortaillod Holdings 6,327
- --------------------------------------------------------------------------------
27,506
.France: 0.7%
50,000 Guilbert 7,284
63,000 Sligos 5,874
26,000 Cetelem 5,843
- --------------------------------------------------------------------------------
19,001
.Spain/Portugal: 0.4%
300,000 Vallehermoso 5,920
375,000 Filmes Lusomundo (Portugal) (b) 2,324
70,000 Cortefiel 1,597
- --------------------------------------------------------------------------------
9,841
.Italy/Greece: 1.2%
300,000 Cellular Communications
International (b) 10,125
4,500,000 Banca Fideuram 9,787
200,000 Hellenic Bottling (Greece) 6,637
85,000 Industrie Natuzzi 4,356
1,100,000 Tecnost 1,826
1,200,000 Costa Crociere 1,738
- --------------------------------------------------------------------------------
34,469
.Israel: 0.1%
200,000 Pec Israel Economic (b) 3,625
- --------------------------------------------------------------------------------
3,625
.India: 0.3%
300,000 IS Himalaya Fund (b) 4,290
39,393 Housing Development Finance 3,285
298,700 Industrial Credit & Investment
Corp. of India (b) 763
- --------------------------------------------------------------------------------
8,338
.Hong Kong: 0.5%
4,300,000 Varitronix International 8,971
7,000,000 JCG Holdings 5,697
- --------------------------------------------------------------------------------
14,668
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
<S> <C> <C>
- --------------------------------------------------------------------------------
.China: 0.4%
810,000 AES China Generating (b) (c) $ 8,556
200,000 The Investment Company of
China (b) 1,430
111,275 The China Investment Company (b) 821
- --------------------------------------------------------------------------------
10,807
.Singapore: 0.3%
5,100,000 Genting International 8,925
- --------------------------------------------------------------------------------
8,925
.Malaysia: 0.7%
1,450,000 Resorts World 8,310
1,125,000 Kian Joo Can Factory 6,177
400,000 O.Y.L. Industries 4,168
40,000 O.Y.L. Industries Rights (b) 176
- --------------------------------------------------------------------------------
18,831
.Thailand: 0.4%
78,000 The Thailand Fund 7,897
3,300,000 Sinpinyo Fund V 2,355
200,000 Thai President Foods 1,378
59,600 International Cosmetics 476
- --------------------------------------------------------------------------------
12,106
.Korea/Taiwan: 1.8%
120,000 Formosa Fund (b) 10,440
134,956 Shinsegae 9,150
15,043 Shinsegae (new) 936
320,000 President Enterprises (Taiwan) (b) 6,760
5,000 Korea Mobile Telecom 6,114
260,000 Korea Mobile Telecom GDS 4,452
255,000 Kookmin Bank 5,517
80,000 Seoul International Trust 3,440
300,000 Korea-Europe Fund 2,475
- --------------------------------------------------------------------------------
49,284
.Indonesia/Philippines: 0.6%
6,000,000 PILTEL (Philippines) (b) 9,160
1,728,000 Tigaraksa Satria 4,455
195,501 Unilever Indonesia 2,889
2,400,000 Mayora Indah 1,340
- --------------------------------------------------------------------------------
17,844
.Japan: 2.2%
120,000 Nintendo 8,927
175,000 Noritsu Koki 8,839
100,000 Paramount Bed 6,828
75,000 Secom 4,950
132,000 Royal 4,128
90,000 Aucnet 4,020
720,000 Tokyu Land (b) 3,814
209,000 Mr. Max 3,811
160,000 Heiwa 3,690
90,000 Sankyo 3,446
100 NTT Data 2,990
60,000 Promise 2,954
40,000 Nichiei 2,662
- --------------------------------------------------------------------------------
61,059
.Australia/New Zealand: 0.8%
1,700,000 Sky City (New Zealand) (b) 7,396
1,600,000 Village Roadshow 7,267
750,000 Village Roadshow Pfd. 2,568
2,500,000 Burswood Property Trust 3,404
700,000 Petroleum Securities 2,727
- --------------------------------------------------------------------------------
23,362
.Mexico: 0.7%
400,000 Kimberly Clark de Mexico 7,309
2,000,000 Nadro, Series L (c) 5,976
300,000 Grupo Radio Centro 2,962
4,200,000 Grupo Herdez, Series B 1,413
600,000 Fondo Opcion, Series B (b) 570
170,000 Cofar, Series B 171
- --------------------------------------------------------------------------------
18,401
.Brazil: 0.4%
15,000,000 Itau Banco PN 6,095
190,000,000 Cemig 5,052
- --------------------------------------------------------------------------------
11,147
.Other Latin America: 1.0%
170,000 Panamerican Beverages (Panama) 7,608
130,000 Banco Latinoamericano de
Export (Panama) 7,312
300,000 Credicorp (Peru) 5,962
160,000 IRSA (Argentina) 5,400
2,000,000 Siderca (Argentina) 2,724
- --------------------------------------------------------------------------------
29,006
-------
Foreign: Total 595,307
</TABLE>
15
<PAGE>
Acorn Fund
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Principal Amount Value (000)
<S> <C> <C>
- --------------------------------------------------------------------------------
Total Common Stocks and Other ---------
Equity-Like Securities: 94.9% $2,660,953
(Cost: $1,592,256)
Money Market Instruments: 5.6%
Yield 4.9%-5.4% Due July 1996
$ 12,839 Union Pacific 12,835
3,066 Prudential Funding 3,065
13,463 General Motors Acceptance Corp 13,457
12,737 Travelers Insurance 12,730
17,880 Aetna Property & Casualty 17,864
8,262 IBM Credit 8,251
13,905 American General Finance 13,884
13,731 Aetna Property & Casualty 13,709
11,000 General Motors Acceptance Corp 10,980
10,575 Cargill 10,555
15,905 General Motors Acceptance Corp 15,867
14,660 Prudential Funding 14,623
10,000 U.S. Treasury Bill 9,964
- --------------------------------------------------------------------------------
(Cost: $157,784) 157,784
Total Investments: 100.5% 2,818,737
(Cost: $1,750,040)
---------
Cash and Other Assets Less Liabilities: (0.5%) (13,302)
----------
Total Net Assets: 100% $2,805,435
================================================================================
</TABLE>
.Notes to Statement of Investments
(a) At June 30, 1996, for federal income tax purposes cost of investments was
$1,762,550,000 and net unrealized appreciation was $1,056,187,000, consisting of
gross unrealized appreciation of $1,139,002,000 and gross unrealized
depreciation of $82,815,000.
(b) Non-income producing security.
(c) On June 30, 1996, the Fund held the following percentages of the
outstanding voting shares of the companies listed below:
<TABLE>
<S> <C>
COMARCO................................................................... 7.63%
Douglas & Lomason......................................................... 7.07%
ALLIED Life Financial..................................................... 6.87%
Tipperary................................................................. 6.87%
Hein-Werner............................................................... 6.86%
Atchison Casting.......................................................... 6.41%
Corvas International...................................................... 6.35%
Abraxas Petroleum......................................................... 6.21%
HA.LO Industries.......................................................... 6.11%
Texas Regional Bancshares................................................. 6.04%
Thomas Group.............................................................. 5.95%
CACI International........................................................ 5.94%
Stevens International Cl. A & B........................................... 5.68%
Baldwin & Lyons........................................................... 5.67%
Monarch Casino & Resort................................................... 5.61%
Bell Microproducts........................................................ 5.58%
Au Bon Pain............................................................... 5.45%
Kronos.................................................................... 5.45%
ACT Manufacturing......................................................... 5.24%
Alliance Entertainment.................................................... 5.20%
AES China Generating...................................................... 5.13%
</TABLE>
The aggregate cost and value of investments in these companies at June 30, 1996,
was $110,420,000 and $144,212,000, respectively. The market value of these
securities represents 5.14% of the total net assets at June 30, 1996. During the
period ended June 30, 1996, dividends received from these companies amounted to
$287,400 and the net realized gain on sales of investments in such companies
amounted to $401,300.
16
<PAGE>
.Portfolio Diversification
At June 30, 1996, Acorn Fund's foreign portfolio of investments as a percentage
of net assets was diversified as follows:
Value (000) Percent
- ---------------------------------------------------------------------------
.Information
Mobile Communications $ 43,535 1.5%
Broadcasting/CATV 43,102 1.5
Computer Systems 38,747 1.4
Software/Services 16,013 0.6
Distribution 13,527 0.5
Consumer Electronics 8,971 0.3
- ---------------------------------------------------------------------------
163,895 5.8
.Health Care
Biotechnology/Drug Delivery 22,346 0.8
Hospital/Laboratory Supplies 6,828 0.2
- ---------------------------------------------------------------------------
29,174 1.0
.Consumer Goods/Services
Retail 74,867 2.7
Manufacturers 48,248 1.7
Entertainment/Leisure 37,037 1.3
Food 33,162 1.2
Transportation 2,060 0.1
- ---------------------------------------------------------------------------
195,374 7.0
.Finance
Money Management 51,417 1.8
Banks 32,472 1.2
Other 30,547 1.1
- ---------------------------------------------------------------------------
114,436 4.1
.Industrial Goods/Services
Services 38,025 1.3
Machinery Processing 13,147 0.5
- ---------------------------------------------------------------------------
51,172 1.8
.Energy/Minerals
Independent Power 13,608 0.5
Oil/Gas Producers 9,220 0.3
Oil Services 2,724 0.1
- ---------------------------------------------------------------------------
25,552 0.9
.Real Estate 15,704 0.6
----------------------
Total Foreign Portfolio $595,307 21.2%
===========================================================================
17
<PAGE>
Acorn International
.Major Portfolio Changes in the Second Quarter
<TABLE>
<CAPTION>
Number of Shares
---------------------------
3/31/96 6/30/96
Additions
- -------------------------------------------------------------
<S> <C> <C>
Europe
.Germany
Biotest 0 9,000
.Switzerland
Societe Generale d'Affichage 0 6,500
.Italy
Editoriale L'Espresso 1,000,000 2,000,000
Mediolanum 0 100,000
.Greece
Attica Enterprises 0 200,000
.Sweden
Esselte 10,000 225,000
Frontec B 0 400,000
(includes effect of 4 for 1 split)
.France
Technip 0 50,000
.United Kingdom
Bluebird Toys 460,000 1,100,000
Comcast UK Cable Partners 450,000 580,000
HALMA 270,000 1,400,000
Medeva 2,034,000 2,790,000
Premier Oil 0 7,100,000
Securicor 0 1,700,000
(received 1,649,050 additional
shares in recapitalization)
Tunstall 550,000 750,000
.Hungary
Cofinec 0 65,000
.Netherlands
Hunter Douglas 0 40,000
Kempen 410,000 620,000
Toolex Alpha 0 55,000
Wegener 20,000 30,000
.Spain
Zardoya Otis 0 10,000
- -------------------------------------------------------------
Asia
.India
Zee Telefilms 597,800 847,800
.Malaysia
Arab Malaysian Finance 930,000 1,200,000
Malaysian Assurance Alliance 1,799,500 2,200,000
Malaysian Oxygen 1,400,000 1,600,000
.Philippines
Int'l Container Terminal
Services 14,000,000 16,500,000
PILTEL 7,000,000 8,000,000
.Singapore
Want Want Holdings 0 840,000
.Thailand
Shinawatra Satellite 0 4,200,000
.Japan
Aucnet 143,000 165,000
Cats 0 200,000
Central Uni 117,000 175,000
Chuo Trust & Banking 0 274,000
Daimon 0 70,000
HIS 37,000 84,000
Hokuto 208,000 250,000
Itariyard 0 120,000
Konami 0 79,000
Lasertec 0 165,000
Mars Engineering 13,000 113,000
Meitec 0 45,000
Nanto Bank 0 385,000
Nemic Lambda 0 135,000
Nihon Jumbo 43,720 85,720
Nintendo 0 120,000
Noritsu Koki 200,000 275,000
NTT Data 0 200
Ryohin Keikaku 34,600 49,600
Sari 0 70,000
Tokyu Land 0 1,130,000
.Korea/Taiwan
Daehan City 85,000 95,000
Korea Mobile Telecom 19,000 19,970
Dongbu Insurance 0 157,284
- -------------------------------------------------------------
Latin America
.Argentina
Siderca 0 5,000,000
.Chile
Banco BHIF 0 260,000
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
-----------------------
3/31/96 6/30/96
<S> <C> <C>
.Brazil
White Martins 0 2,000,000
- --------------------------------------------------------------------------------
Other Countries
.Canada
Cinar Films 0 100,000
.Australia
Burswood Property Trust 2,700,000 3,700,000
Skilled Engineering 0 1,200,000
Sonic Healthcare 0 4,605,000
Tyndall Australia 0 3,000,000
(includes effect of 10% stock bonus)
Village Roadshow Pfd. Cl. B 0 750,000
Sales
- --------------------------------------------------------------------------------
Europe
.Austria
Flughafen Wien 145,000 80,000
.Italy
Banca Fideuram 8,500,000 8,000,000
.Sweden
Allgon, Series B 575,000 500,000
Althin Medical AB 130,000 0
.France
Axime Ex Segin 80,000 70,000
Ecco SA 14,000 0
Ecco Travail Temporaire 56,000 0
Guilbert 60,000 50,000
.United Kingdom
Edinburgh Fund Managers 850,000 710,000
Invesco 2,000,000 90,000
North American Gas
Investors Trust 1,000,000 0
.Netherlands
Getronics 260,000 1,000,000
(includes effect of 4 for 1 split)
Telegraaf Holdings 43,000 35,000
.Denmark
Chr. Hansen Holding, Cl. B 47,000 0
.Switzerland
Bobst 5,000 3,900
Zehnder Holding 5,000 0
Principal Amount
of Number of Shares
-------------------------
3/31/96 6/30/96
<S> <C> <C>
.Spain
Marco Iberica Midesa 65,000 0
- --------------------------------------------------------------------------------
Asia
.Hong Kong
ABC Communication Holdings 4,500,000 0
First Sign International
Holdings 24,000,000 5,000,000
.Pakistan
Adamjee Insurance 14,900 0
.Japan
Homac 141,000 0
Promise 250,000 220,000
Sony Music Entertainment 50,000 0
Tostem 240,000 0
Tsutsumi Jewelry 85,000 0
.Malaysia
New Straits Times Press 500,000 0
O.Y.L. Industries 850,000 700,000
.Philippines
Universal Robina 12,000,000 0
- --------------------------------------------------------------------------------
Latin America
.Peru
Tele 2000 9.75%
Cv. Note 4/5/97 $1,252 $0
.Argentina
Quilmes Industrial Pfd. 150,000 0
Quilmes Industrial 300,000 0
.Bolivia
Compania Boliviana de
Energia Electrica 105,000 0
- --------------------------------------------------------------------------------
Other Countries
.Canada
Tesco 300,000 0
.Australia
Petroleum Securities Australia 2,500,000 1,700,000
.Israel
Ampal American Israel 260,000 0
</TABLE>
19
<PAGE>
Acorn International
.Statement of Investments (unaudited) June 30, 1996
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 98.0%
- --------------------------------------------------------------------------------
<S> <C> <C>
Europe: 49.6%
.Germany/Austria: 6.4%
120,000 Fresenius $ 21,994
14,000 Fresenius Pfd. 2,532
Dialysis Equipment and Solutions
135,000 Rhoen Klinikum Pfd. 15,565
90,000 Rhoen Klinikum 11,825
Hospital Management
21,000 Cewe Color Holding 7,657
Photographic Developing & Printing
40,000 Escada 7,213
Designer Fashions
15,000 Binding-Brauerei 5,666
Brewer
5,000 Marschollek Lautenschlager 5,584
Financial Planning
400,000 United International Holdings (b) 5,500
Cable Television for Austria and Other
Countries (Austria)
80,000 Flughafen Wien 5,492
Vienna Airport Authority (Austria)
15,000 Pfleiderer 4,119
Construction Materials
30,000 BWT 3,822
Water Filtration Systems (Austria)
35,000 VAE Eisenbahnsysteme 3,300
Railroad Switches (Austria)
9,000 Biotest 2,868
Immunoglobulins
- --------------------------------------------------------------------------------
103,137
.Denmark: 0.3%
31,000 Kompan International (c) 4,201
Playground Equipment
- --------------------------------------------------------------------------------
4,201
.Finland: 4.2%
500,000 TT Tieto, Cl. B (c) 23,891
Computer Services/Consulting
300,000 Raision Tehtaat, Series V 17,886
300,000 Raision Tehtaat, Rights (b) 2,454
Foodstuffs & Specialty Chemicals
370,000 Benefon (c) 6,096
Mobile Telephones
170,000 Huhtamaki 5,671
Confectionery & Contraceptives
100,000 Vaisala, Cl. A 5,036
Meteorological Instruments
80,000 Fiskars, Series A 4,477
Scissors & Gardening Tools
105,000 Sentra, Cl. A (b) (c) 3,277
Convenience Stores, Restaurants
- --------------------------------------------------------------------------------
68,788
.Norway: 1.7%
1,000,000 SensoNor (b) 8,773
Electronic Sensors for Airbags
250,000 Maritime Group 6,311
Oil Field Equipment & Services
300,000 Elkjoeb Norge 6,187
Consumer Electronics Retailer
840,000 Sysdeco (b) (c) 5,818
Software Tool Sets & Systems
- --------------------------------------------------------------------------------
27,089
.Sweden: 7.2%
800,000 WM Data Nordic (c) 50,633
Computer Services/Consulting
185,000 Hennes & Mauritz, Cl. B 17,145
Apparel Stores
645,000 Getinge Industrier (c) 12,150
Sterilization & Disinfection Equipment
320,000 Autoliv 9,741
Seatbelts & Airbags
457,142 Pricer, Cl. B (b) 9,575
Electronic Shelf Labels for Supermarkets
500,000 Allgon, Series B 8,326
Mobile Telephone Antennae & Systems
400,000 Frontec, Series B (b) 4,913
Computer Software & Services
225,000 Esselte, Series A 4,543
Office Supplies & Related Equipment
- --------------------------------------------------------------------------------
117,026
.France: 4.2%
70,000 Axime Ex Segin (b) 9,790
Computer Services/Consulting
42,000 Cetelem 9,439
Consumer Loans
95,000 Sligos 8,857
Computer Services/Credit Card Processing
62,000 NRJ 8,189
Radio Network
50,000 Guilbert 7,284
Office Supplies Distributor
65,000 Spir Communication 6,401
Newspaper Publisher & Printer
42,000 Virbac 5,898
Veterinary Pharmaceuticals Manufacturer
50,000 Technip 4,603
Construction
52,000 CEP Communications 4,394
Trade Magazines & Book Publishing
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
39,000 Fininfo $ 4,068
Financial Data Feeds
- --------------------------------------------------------------------------------
68,923
.United Kingdom: 11.2%
1,800,000 Serco Group 15,159
Facilities Management
1,800,000 Oriflame International 14,180
Natural Cosmetics
467,000 International CableTel (b) 13,777
Cable TV & Telephone System
2,000,000 Capita Group 11,685
Outsourcing Government Services
1,600,000 Powerscreen International 11,337
Mobile Crushing & Screening Equipment
2,790,000 Medeva 10,881
Pharmaceuticals
1,650,000 N. Brown Group 8,948
Mail Order Women's Clothing
2,500,000 Capital 8,934
Casinos
710,000 Edinburgh Fund Managers 7,557
Investment Management
580,000 Comcast UK Cable Partners (b) 7,395
Cable TV & Telephone System
3,700,000 City Centre Restaurants 7,014
Fast Food Restaurants
1,700,000 Securicor Group, Cl. A 6,921
Mobile Communications
670,000 Ethical Holdings (b) (c) 6,533
Drug Delivery
1,700,000 Rotork 6,472
Valve Actuators
1,330,000 Ivory & Sime 5,559
Investment Management
410,000 Vosper Thornycroft Holdings 5,224
Military Shipbuilding
1,800,000 Body Shop International 4,978
Natural Cosmetics & Toiletries
640,000 Seton Healthcare Group 4,922
Pharmaceuticals
500,000 Dorling Kindersley 4,646
Reference Book & CD-ROM Publisher
750,000 Tunstall 4,393
Monitoring Equipment
1,100,000 Bluebird Toys 3,982
Toy Manufacturer
1,400,000 HALMA 3,829
Fire Detection Devices & Burglar Alarms
7,100,000 Premier Oil (b) 3,365
Oil & Gas Producer
- --------------------------------------------------------------------------------
13,000,000 Rhino Group (c) 3,232
Video Game Stores
1,750,000 Pittencrieff Resources 1,224
Oil & Gas Producer
90,000 Invesco 323
Investment Management
- --------------------------------------------------------------------------------
182,470
.Switzerland: 3.8%
6,500 Societe Generale de Surveillance 15,553
Inspection/Testing of Trade Goods
25,500 Phoenix Mecano 12,590
Electrical Components Manufacturer
21,600 Sece Cortaillod Holdings 10,354
Cable TV
13,000 Liechtenstein Global Trust 6,335
Banking & Investment Management
3,900 Bobst 5,624
Packaging Machinery
7,000 Suedelektra Holding (b) 5,425
Diversified Pool of Commodity-Related Projects
6,500 Societe Generale d'Affichage 3,324
Billboard Advertising
10,000 Prodega 2,836
Cash-and-Carry Retailer
- --------------------------------------------------------------------------------
62,041
.Italy/Greece: 5.1%
8,000,000 Banca Fideuram 17,399
Life Insurance & Mutual Funds
2,200,000 Saipem SPA 9,242
Pipeline Construction & Drilling Contractor
600,000 Gewiss 9,002
Electrical Components Manufacturer
550,000 Banca Popolare Di Bergamo 8,477
Regional Bank
120,000 Ergo Bank 6,604
Bank (Greece)
170,000 Hellenic Bottling 5,642
Coca-Cola Bottler (Greece)
2,000,000 Editoriale L'Espresso (b) 5,577
Newspaper & Magazine Publisher
100,000 Industrie Natuzzi 5,125
Leather Furniture Manufacturer
3,100,000 Costa Crociere 4,489
Cruise Ship Line
1,100,000 Banca Di Legnano 3,832
Regional Bank
80,000 Cellular Communications
International (b) 2,700
Mobile Communications
</TABLE>
21
<PAGE>
Acorn International
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
1,600,000 Tecnost $ 2,656
ATM, Lotto, Toll Collection Equipment
Manufacturer
200,000 Attica Enterprises (b) 1,337
Ferry Line (Greece)
100,000 Mediolanum 992
Life Insurance & Mutual Funds
- --------------------------------------------------------------------------------
83,074
.Turkey: 0.4%
90,000,000 Sabah Yayincilik 2,503
Newspapers, Magazines
5,999,850 Tat Konservcelik Sanayii 1,412
4,500,000 Tat Konservcelik Sanayii Rights (b) 669
Tomato Paste
62,000,000 Medya Holdings 1,364
Newspapers, Magazines, Television
30,000,000 Hurriyet Gazetecilik 1,302
Newspapers, Magazines
- --------------------------------------------------------------------------------
7,250
.Spain/Portugal: 1.8%
350,000 Vallehermoso 6,906
Residential Property Developer & Landlord
100,000 Mapfre Vida 5,615
Life Insurance & Mutual Funds
110,000 Conservera Campofrio 4,152
Sausage Maker
160,000 Cortefiel 3,650
Apparel Retailing
170,000 Lusotur (b) 2,929
Real Estate/Resort Developer (Portugal)
235,000 Estoril Sol (b) (c) 1,455
Casino Resort (Portugal)
375,000 Oscar Mayer S.A. 1,263
Sausage Maker
350,000 Televisao Independente (b) 1,046
Television Station (Portugal)
10,000 Zardoya Otis 957
10,000 Zardoya Otis Rights (b) 95
Elevator Maintenance
140,200 Filmes Lusomundo (b) 869
Newspapers, Radio, Video, Film
Distribution (Portugal)
- --------------------------------------------------------------------------------
28,937
.Netherlands: 3.0%
1,000,000 Getronics 22,144
Computer Consulting
620,000 Kempen (c) 9,407
Stock Brokerage/Investment Management
35,000 Telegraaf Holdings 5,874
Newspaper Publisher
225,000 Fugro McClelland 3,453
Engineering, Consulting & Surveying
30,000 Wegener 3,179
Newspaper Publisher
40,000 Hunter Douglas 2,730
Window Coverings
55,000 Toolex Alpha 1,320
Compact Disc Manufacturing Equipment
- --------------------------------------------------------------------------------
48,107
.Hungary: 0.2%
65,000 Cofinec 3,112
Consumer Goods Packaging
- --------------------------------------------------------------------------------
3,112
.Poland: 0.1%
180,813 Bank Komunalny 964
Bank
- --------------------------------------------------------------------------------
964
-----------
Europe: Total 805,119
- --------------------------------------------------------------------------------
Asia: 31.1%
.China: 0.3%
390,000 AES China Generating (b) 4,119
Independent Power
111,275 The China Investment Company (b) 821
Closed-End Fund
- --------------------------------------------------------------------------------
4,940
.Hong Kong: 3.1%
5,000,000 Varitronix International 10,431
LCD Manufacturer
10,000,000 Li and Fung 9,430
Sourcing of Consumer Goods
10,000,000 JCG Holdings 8,138
Consumer Finance
20,000,000 Golden Harvest Entertainment 7,234
Movie Distribution & Exhibition
15,000,000 Vitasoy International Holdings 5,474
Soya Milk Manufacturer
11,000,000 Manhattan Card 5,258
Chase's Local Credit Card
7,500,000 Chen Hsong Holdings 4,021
Plastic Injection Moulding Machines
5,000,000 First Sign International Holdings 1,066
Brand Name Apparel
- --------------------------------------------------------------------------------
51,052
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
.India/Pakistan: 1.7%
82,702 Housing Development Finance $ 6,897
Mortgage Lender
300,000 IS Himalaya Fund (b) 4,290
Closed-End Fund
847,800 Zee Telefilms 3,525
Hindi Television Programming & Broadcasting
221,785 Pakistan State Oil 2,617
Oil Distribution (Pakistan)
810,000 Tube Investment GDR 2,531
Bicycle Manufacturer
987,800 Industrial Credit & Investment
Corporation of India (b) 2,523
Bank/Financial Services
193,850 Max India 1,761
Rs 50,000 Max India Zero Coupon (b) 710
Mobile Communications
342,100 Kotak Mahindra Finance 859
Consumer Finance Company
525,000 Business India TV (b) 858
Satellite Television Broadcasting Network
2,000,000 Centurion Quantum Growth (b) 284
Closed-End Fund
34,800 Mirc Electronic 62
Consumer Electronics
- --------------------------------------------------------------------------------
26,917
.Japan: 11.3%
275,000 Noritsu Koki 13,889
Photo Processing Lab Manufacturer
200,000 Secom 13,201
Security Alarm Systems
250,000 Hokuto 11,988
Mushroom Grower
220,000 Promise 10,831
Consumer Finance
120,000 Nintendo 8,927
Video Games
113,000 Mars Engineering 8,911
Gaming Systems & Machinery
130,000 Nichiei 8,652
Lender to Small & Medium Size Businesses
195,000 Sankyo 7,466
Pachinko Machine Manufacturer
114,000 Sanyo Shinpan 7,285
Consumer Finance
165,000 Aucnet 7,371
Used Auto Auctions Via Satellite
100,000 Paramount Bed 6,828
Hospital Bed Manufacturer
295,000 Heiwa 6,804
Pachinko Machine Manufacturer
1,130,000 Tokyu Land (b) 5,985
Real Estate
200 NTT Data 5,980
Data Communications
120,000 Itariyard 5,743
Women's Apparel
165,000 Royal 5,160
Retail Auto Parts
165,000 Lasertec 5,144
Manufacturer of Defect Detectors
84,000 HIS 5,108
Travel Agent
135,000 Nemic Lambda 5,021
Power Sources
175,000 Central Uni 4,834
Health Care/Medical Equipment
49,600 Ryohin Keikaku 4,468
Specialty Consumer Goods Retailer
198,000 Mr. Max 3,610
Household Goods & Appliance Retailer
70,000 Daimon 3,510
Discount Liquor Retailer
85,720 Nihon Jumbo 3,438
Photo Processing Lab
200,000 Cats 3,282
Pest Control
385,000 Nanto Bank 2,769
Banking
274,000 Chuo Trust & Banking 2,698
Banking
79,000 Konami 2,636
Entertainment Software/Hardware
45,000 Meitec 1,022
Engineering Outsourcing
70,000 Sari 817
Discount Liquor Retailer
- --------------------------------------------------------------------------------
183,378
.Korea/Taiwan: 5.7%
19,970 Korea Mobile Telecom 24,421
Mobile Communications
440,000 Kookmin Bank 9,519
Retail Bank
95,000 Daehan City Gas 8,666
Gas Utility
157,284 Dongbu Fire & Marine Insurance (b) 8,510
Non-Life Insurance
400,000 President Enterprises (b) 8,450
Food Manufacturer & Distributor (Taiwan)
80,000 Formosa Fund (b) 6,960
Closed-End Fund (Taiwan)
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Acorn International
.Statement of Investments (unaudited)
Number of Shares Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
90,161 Shinsegae $ 6,113
9,839 Shinsegae (New) (b) 613
Department Stores
70,000 Taipei Fund (b) 6,020
Closed-End Fund (Taiwan)
225,000 Daehan Blue Chip Index Trust (b) 4,805
Closed-End Fund
230,000 Formosa Growth Fund (b) 3,393
Closed-End Fund (Taiwan)
83,250 Korea Housing Bank Old (b) 1,940
48,740 Korea Housing Bank New (b) 1,272
Bank
150,000 Baring Taiwan Fund (b) 1,444
Closed-End Fund (Taiwan)
- -------------------------------------------------------------------------------
92,126
.Malaysia: 2.0%
2,200,000 Malaysian Assurance Alliance 11,638
Insurance
1,600,000 Malaysian Oxygen 8,656
Industrial Gases
700,000 O.Y.L. Industries 7,294
70,000 O.Y.L. Industries Rights (b) 309
Air Conditioners
1,200,000 Arab Malaysian Finance 5,242
Consumer Finance
- -------------------------------------------------------------------------------
33,139
.Indonesia: 2.1%
2,939,400 Tigaraksa Satria (c) 7,577
Distributor of Consumer Goods
1,470,000 Modern Photo Film 6,316
Fuji Film Distributor
2,500,000 Bank Niaga (b) 6,230
Banking
3,000,000 Mustika Ratu 5,671
Traditional Cosmetics
6,500,000 Mayora Indah 3,631
Baked Goods/Candy
230,000 Unilever 3,399
Consumer Goods
1,200,000 Suba Indah (c) 928
Beverage & Food
- -------------------------------------------------------------------------------
33,752
.Philippines: 1.9%
8,000,000 PILTEL (b) 12,214
Mobile Communications
16,500,000 Int'l Container Terminal Services (b) 11,178
Container Handling Terminals &
Port Management
3,000,000 Philippine Savings Bank (b) 7,385
Banking
- -------------------------------------------------------------------------------
30,777
.Singapore: 1.1%
5,400,000 Genting International 9,450
Cruise Line
1,900,000 Venture Manufacturing 3,500
2,401,674 Venture Manufacturing Warrants
7/26/99 (b) 2,467
475,000 Venture Manufacturing Rights (b) 337
Contract Electronics Manufacturer
840,000 Want Want Holdings 2,260
- -------------------------------------------------------------------------------
18,014
.Thailand: 1.9%
4,200,000 Shinawatra Satellite 7,606
Satellite Leasing
200,000 Serm Suk 6,142
Pepsi Bottler
320,000 Bangkok Insurance 5,997
Finance/Insurance
600,000 Srithai Superware 3,874
Plastic/Melamine Tableware & Containers
300,000 Thai President Foods 2,067
Instant Noodles & Cookies
201,512 Singer Thailand 1,968
Consumer Goods Distributor
2,600,000 Sinpinyo Fund V 1,855
Closed-End Fund
183,800 International Cosmetics 1,469
Consumer Goods Distribution
- -------------------------------------------------------------------------------
30,978
--------
Asia: Total 505,073
- -------------------------------------------------------------------------------
Latin America: 9.1%
.Mexico: 2.5%
600,000 Kimberly Clark de Mexico 10,963
Paper Products
3,000,000 Nadro, Series L 8,964
Pharmaceutical Distributor
380,000 Bufete Industrial (b) 6,603
Engineering & Construction
1,000,000 Grupo Industrial Bimbo 4,631
Radio Stations & Networks
Bread, Baked Goods & Snacks
400,000 Grupo Radio Centro 3,950
Radio Stations & Networks
5,500,000 Grupo Herdez, Series B 1,850
Sauces & Condiments
24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
600,000 GBM Atlantico (b) $ 1,425
Bank & Brokerage
1,500,000 Fondo Opcion, Series B (b) (c) 1,425
Real Estate Investment Fund
3,000,000 Grupo Fernandez Editores (b) 1,205
Textbook Publisher
107,000 Cofar 108
Drug Stores
- --------------------------------------------------------------------------------
41,124
.Brazil: 1.6%
28,000,000 Banco Itau Pfd. 11,377
Bank
200,000,000 Cemig Pfd. 5,318
Electric Utility
35,000,000 Telemig Pfd. 3,608
35,000,000 Telemig (b) 2,858
Telecommunications
2,000,000 White Martins 2,809
Industrial Gases
1,000,000 Brazilian Smaller Companies
Warrants (b) 665
Closed-End Fund
- --------------------------------------------------------------------------------
26,635
.Argentina: 1.2%
280,000 IRSA 9,450
Real Estate Management & Development
5,000,000 Siderca 6,810
Steel Pipe Producer
1,400,000 Cresud (b) 2,804
Agriculture
229,500 Cerveceria Biekert (b) 294
Brewer
- --------------------------------------------------------------------------------
19,358
.Chile: 1.4%
240,000 Santa Isabel 6,660
Retail
150,000 Genesis Chile Fund 6,225
Closed-End Fund
260,000 Banco BHIF 5,233
Financial Services
200,000 Banco De A Edwards 4,200
Bank
- --------------------------------------------------------------------------------
22,318
.Peru: 0.9%
370,000 Credicorp 7,354
Universal Bank
2,200,000 Banco Wiese 3,964
Bank
2,000,000 Enrique Ferreyros 2,867
Heavy Machinery Dealer
- --------------------------------------------------------------------------------
14,185
.Other Latin America: 1.5%
150,000 Banco Latinoamericano
de Exportaciones 8,438
Trade Financing (Panama)
170,000 Panamerican Beverages 7,608
Coca-Cola Bottler (Panama)
100,000 Ceteco Holdings 5,448
White Goods Retail
405,714 Banco de Bogota 2,147
Bank (Colombia)
450,000 Global Casinos Cv. Pfd. (b) 600
225,000 Global Casinos (b) 169
Worldwide Casino Operator (Aruba)
- --------------------------------------------------------------------------------
24,410
-------
Latin America: Total 148,030
- --------------------------------------------------------------------------------
Other Countries: 7.4%
.Australia/New Zealand: 4.5%
4,250,000 Village Roadshow Pfd. Cl. A 14,886
750,000 Village Roadshow Pfd. Cl. B 2,568
Film Distribution, Exhibition & Production
2,000,000 Publishing & Broadcasting 8,816
Media & TV Broadcasting
1,750,000 Sky City (b) 7,613
Casino & Hotel (New Zealand)
14,500,000 Command Petroleum Holdings (b) 7,418
Oil & Gas Producer
1,700,000 Petroleum Securities Australia (b) 6,623
Oil & Gas Producer
4,000,000 Austereo 6,423
Media - Radio
3,700,000 Burswood Property Trust 5,038
Perth Casino & Resort
4,605,000 Sonic Healthcare 4,277
Pathology Labs
3,000,000 Tyndall Australia 3,660
Money Management & Insurance
1,200,000 Skilled Engineering 3,353
Temporary Skilled Labor
560,000 PDL Holdings 2,340
Electrical Equipment Manufacturer &
Distributor (New Zealand)
- --------------------------------------------------------------------------------
73,015
.Canada: 2.3%
575,000 Veritas Energy Services (b) (c) 7,473
Geophysical Contractor
</TABLE>
25
<PAGE>
Acorn International
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
1,000,000 Shaw Communications $ 7,066
Cable TV
800,000 Ranger Oil 5,900
Oil & Gas Producer
435,000 Shaw Industries 5,749
Oil Field Services
500,000 Cogeco 2,398
Cable TV
100,000 Cinar Films 2,175
Children's Television Programming
700,000 Pan East Petroleum Warrants (b) 1,871
700,000 Pan East Petroleum (b) 1,871
Oil & Gas Producer
300,000 Cogeco Cable 1,812
Cable TV
250,000 Fundy Cable 1,098
Cable TV
- ------------------------------------------------------------------------------
37,413
.Israel: 0.3%
200,000 Pec Israel Economic (b) 3,625
Industrial Holdings
447,736 Alliance Tire (b) 1,003
Off-the-Road Tires
- ------------------------------------------------------------------------------
4,628
.South Africa: 0.3%
460,000 Kersaf Investments 4,716
Casino Resorts
---------
Other: Total 119,772
Principal Amount or
Number of Shares Value (000)
- ------------------------------------------------------------------------------
Foreign Corporations, Operations in the U.S.: 0.8%
500,000 ADT (b) $ 9,438
Alarm Systems & Auto Auctions (Bermuda)
161,000 Carnival 4,649
Cruise Ship Line (Panama)
Foreign Corporations, ---------
Operations in the U.S.: Total 14,087
2,344 Miscellaneous Securities: 0.0% 10
Total Common Stocks and Other ---------
Equity-Like Securities: 98.0% 1,592,091
(Cost: $1,205,661)
Money Market Instruments: 2.2%
Yield 5.36%-5.42% Due July 1996
$10,000 Aetna Property 9,994
7,676 Capital Services 7,673
9,632 Ford Motor Credit 9,629
7,921 Travelers Insurance 7,918
- ------------------------------------------------------------------------------
(Cost: $35,214) 35,214
---------
Total Investments: 100.2% 1,627,305
(Cost: $1,240,875)
---------
Cash and Other Assets Less Liabilities: (0.2%) (2,513)
Total Net Assets: 100% $1,624,792
- ------------------------------------------------------------------------------
</TABLE>
.Notes to Statement of Investments
(a) At June 30, 1996, for federal income tax purposes cost of investments
was $1,252,995,000 and net unrealized appreciation was $374,310,000, consisting
of gross unrealized appreciation of $473,863,000 and gross unrealized
depreciation of $99,553,000.
(b) Non-income producing security.
(c) On June 30, 1996, the Fund held the following percentages of the
outstanding voting shares of the companies listed below:
Getinge Industrier (Sweden)....................9.31%
Sentra "A" (Finland)...........................9.21%
Estoril Sol (Portugal).........................9.12%
Fondo Opcion (Mexico)..........................8.13%
Benefon (Finland)..............................7.96%
Tigaraksa Satria (Indonesia)...................7.09%
Veritas Energy Services (Canada)...............6.76%
Sysdeco Group (Norway).........................5.75%
TT Tieto (Finland).............................5.70%
Kempen (Netherlands)...........................6.35%
WM Data Nordic (Sweden)........................5.42%
Suba Indah (Indonesia).........................5.33%
Kompan International (Denmark).................5.25%
Ethical Holdings PLC (United Kingdom)..........5.14%
Rhino Group (United Kingdom)...................5.04%
The aggregate cost and value of investments in these companies at June 30, 1996,
was $78,031,000 and $144,096,000 respectively. The market value of these
securities represents 8.87% of the total net assets at June 30, 1996. During the
period ended June 30, 1996, dividends received from these companies amounted to
$1,682,000 and the net realized gain on sales of investments in such companies
amounted to $109,000.
26
<PAGE>
.Portfolio Diversification
At June 30, 1996, the Fund's portfolio of investments as a percentage of net
assets was diversified as follows:
<TABLE>
<CAPTION>
Value (000) Percent
- --------------------------------------------------------------------------------
<S> <C> <C>
.Information
Computer Systems $ 90,442 5.6%
Broadcasting/CATV 84,382 5.2
Distribution 83,794 5.2
Software/Services 59,110 3.6
Mobile Communications 52,800 3.2
Consumer Electronics 29,270 1.8
Instrumentation 5,036 0.3
- --------------------------------------------------------------------------------
404,834 24.9
.Health Care
Biotechnology/Drug Delivery 45,068 2.8
Hospital/Laboratory Supplies 35,631 2.2
Services 27,390 1.7
Equipment 16,984 1.0
- --------------------------------------------------------------------------------
125,073 7.7
.Consumer Goods/Services
Retail 183,003 11.3
Manufacturers 115,329 7.1
Food 84,142 5.2
Entertainment/Leisure 69,948 4.3
Transportation 6,829 0.4
Recreational Vehicles 3,534 0.2
- --------------------------------------------------------------------------------
462,785 28.5
.Finance
Banks 99,453 6.1
Money Management 98,211 6.0
Insurance 25,706 1.7
Other 104,613 6.4
- --------------------------------------------------------------------------------
327,983 20.2
.Industrial Goods/Services
Services 84,543 5.2
Machinery Processing 58,330 3.6
Steel 5,224 0.3
Forest Products/Construction 4,119 0.3
- --------------------------------------------------------------------------------
152,216 9.4
.Energy/Minerals
Oil/Gas Producers 37,778 2.3
Independent Power 23,124 1.4
Oil Services 22,363 1.4
Mining 6,623 0.4
Refining/Marketing 2,617 0.2
- --------------------------------------------------------------------------------
92,505 5.7
.Real Estate 26,695 1.6
.Money Market Instruments 35,214 2.2
---------------------------------
Total Investments $1,627,305 100.2%
================================================================================
</TABLE>
27
<PAGE>
Acorn Fund and Acorn International
.Financial Highlights (unaudited)
<TABLE>
<CAPTION>
Acorn Fund 6 mos. ended 6/30, Years ended 12/31,
- -------------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period 1996 1995
<S> <C> <C>
Net Asset Value, beginning of period $13.60 $12.24
Income From Investment Operations
Net investment income .04 .11
Net realized and unrealized gain (loss) on investments and foreign currency 2.02 2.42
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.06 2.53
Less Distributions
Dividends from net investment income .00 (.09)
Distributions from net realized and unrealized gains reportable
for federal income taxes .00 (1.08)
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions .00 (1.17)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $15.66 $13.60
===============================================================================================================================
Total Return 15.2% 20.8%
Ratios/Supplemental Data
Ratio of expenses to average net assets .56%* .57%
Ratio of net investment income to average net assets .61%* .89%
Portfolio turnover rate 39%* 29%
Net assets at end of period (in millions) $2,805 $2,399
(a) Average commission rate paid per share on stock transactions for the six months ended June 30, 1996 was $.0226.
Acorn International 6 mos. ended 6/30, Years ended 12/31,
- -------------------------------------------------------------------------------------------------------------------------------
For a share outstanding throughout each period 1996 1995
Net Asset Value, beginning of period $16.59 $15.24
Income From Investment Operations
Net investment income .09 .16
Net realized and unrealized gain (loss) on investments and foreign currency 2.78 1.20
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.87 1.36
Less Distributions
Dividends from net investment income -- --
Distributions from net realized -- (.01)
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.01)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $19.46 $16.59
===============================================================================================================================
Total Return 17.3% 8.9%
Ratios/Supplemental Data
Ratio of expenses to average net assets 1.16%* 1.22%
Ratio of net investment income to average net assets 1.03%* .90%
Portfolio turnover rate 37%* 26%
Net assets at end of period (in millions) $1,625 $1,276
(a) Average commission rate paid per share on stock transactions for the six months ended June 30, 1996 was $.0005.
</TABLE>
*Annualized
See accompanying notes to financial statements
28
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C>
$13.95 $11.06 $ 9.32 $ 6.51 $ 8.58 $ 7.27 $ 6.48 $ 7.45
.06 .04 .07 .11 .12 .13 .12 .14
(1.10) 3.50 2.16 2.95 (1.62) 1.65 1.47 .12
- -----------------------------------------------------------------------------------------------------
(1.04) 3.54 2.23 3.06 (1.50) 1.78 1.59 .26
(.11) (.06) (.08) (.10) (.13) (.11) (.16) (.15)
(.56) (.59) (.41) (.15) (.44) (.36) (.64) (1.08)
- -----------------------------------------------------------------------------------------------------
(.67) (.65) (.49) (.25) (.57) (.47) (.80) (1.23)
- -----------------------------------------------------------------------------------------------------
$12.24 $13.95 $11.06 $ 9.32 $ 6.51 $ 8.58 $ 7.27 $ 6.48
=====================================================================================================
-7.4% 32.3% 24.2% 47.3% -17.5% 24.8% 24.8% 4.4%
.62% .65% .67% .72% .82% .73% .80% .82%
.55% .30% .72% 1.30% 1.60% 1.59% 1.52% 1.85%
18% 20% 25% 25% 36% 26% 36% 52%
$1,983 $2,035 $1,449 $1,150 $ 767 $ 855 $ 563 $ 418
Inception 9/23
through 12/31,
- ----------------------------------
<S> <C> <C>
1994 1993 1992
$15.94 $10.69 $10.00
.07 .00 (.03)
(.67) 5.25 .72
- ----------------------------------
(.60) 5.25 .69
-- -- --
(.10) -- --
- ----------------------------------
(.10) -- --
- ----------------------------------
$15.24 $15.94 $10.69
==================================
-3.8% 49.1% 6.9%
1.24% 1.21% 2.35% *
.48% .06% (1.37%)*
20% 19% 20% *
$1,363 $ 907 $ 30
</TABLE>
29
<PAGE>
Acorn Fund and Acorn International
Statements of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
(in thousands) Acorn Fund Acorn International
- -------------------------------------------------------------------------------------------------------------------------------
6/30/96
<S> <C> <C>
Assets
Investments, at value (cost: Acorn Fund $1,750,040; Acorn International $1,240,875) $2,818,737 $1,627,305
Cash 648 2,057
Organization costs -- 19
Receivable for:
Securities sold 9,244 5,588
Dividends and Interest 2,319 4,920
Fund shares sold 2,167 4,847
- -------------------------------------------------------------------------------------------------------------------------------
Total assets 2,833,115 1,644,736
Liabilities and Net Assets
Unrealized depreciation on foreign forward currency contracts -- 12
Payable for:
Securities purchased 18,147 14,781
Fund shares redeemed 9,209 4,583
Organization costs -- 19
Other 324 549
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities 27,680 19,944
Net assets applicable to Fund shares outstanding $2,805,435 $1,624,792
===============================================================================================================================
Fund shares outstanding 179,120 83,499
===============================================================================================================================
Pricing of Shares
Net asset value, offering price and redemption price per share $ 15.66 $ 19.46
===============================================================================================================================
Analysis of Net Assets
Paid-in capital $1,540,690 $1,222,333
Undistributed net realized gain on sales of investments and foreign currency
transactions 195,219 19,913
Net unrealized appreciation of investments and other assets (net of unrealized PFIC
gains of $12,510 for Acorn Fund and $12,120 for Acorn International) 1,056,181 374,301
Undistributed net investment income 13,345 8,245
- -------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Fund shares outstanding $2,805,435 $1,624,792
===============================================================================================================================
</TABLE>
See accompanying notes to financial statements
30
<PAGE>
.Statements of Operations (unaudited)
<TABLE>
<CAPTION>
Acorn Fund Acorn International
(in thousands) 6 mos. ended, Year ended, 6 mos. ended, Year ended,
- ----------------------------------------------------------------------------------------------------------------------------------
6/30 1996 12/31 1995 6/30 1996 12/31 1995
<S> <C> <C> <C> <C>
Investment Income:
Dividends $ 12,710 $ 23,864 $ 16,418 $ 26,345
Interest 3,231 9,264 1,383 3,969
- ----------------------------------------------------------------------------------------------------------------------------------
15,941 33,128 17,801 30,314
Foreign taxes withheld (531) (916) (1,772) (2,816)
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment income 15,410 32,212 16,029 27,498
Expenses:
Investment advisory fee 5,805 10,429 6,049 11,667
Custodian fees and expenses 510 737 1,056 1,804
Transfer and dividend disbursing agent fees and expenses 494 733 807 1,360
Reports to shareholders 278 331 371 431
Legal and audit fees and expenses 86 118 81 119
Registration and blue sky expenses 81 26 8 92
Trustees' fees and other 99 239 105 383
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses 7,353 12,613 8,477 15,856
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income 8,057 19,599 7,552 11,642
Net realized and unrealized gain (loss) on investments
and foreign currency:
Net realized gain (loss) on sales of investments 175,308 198,606 27,095 (1,937)
Net realized gain (loss) on foreign currency transactions -- (118) 15 (16,959)
Net realized loss on futures (4,811) (12,798) -- --
Change in net unrealized appreciation 186,376 211,069 194,865 114,583
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and
foreign currency 356,873 396,759 221,975 95,687
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 364,930 $ 416,358 $ 229,527 $ 107,329
==================================================================================================================================
</TABLE>
See accompanying notes to financial statements
31
<PAGE>
Acorn Fund and Acorn International
.Statements of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
Acorn Fund Acorn International
(in thousands) 6 mos. ended, Year ended, 6 mos. ended, Year ended,
- ------------------------------------------------------------------------------------------------------------------------------------
6/30 1996 12/31 1995 6/30 1996 12/31 1995
<S> <C> <C> <C> <C>
From operations:
Net investment income $ 8,057 $ 19,599 $ 7,552 $ 11,642
Net realized gain (loss) on sales of investments,
foreign currency transactions and futures 170,497 185,690 27,110 (18,896)
Change in net unrealized appreciation 186,376 211,069 194,865 114,583
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 364,930 416,358 229,527 107,329
Distributions to shareholders from:
Net investment income - (14,810) - -
Net realized gain (a) - (177,941) - (1,050)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders - (192,751) - (1,050)
From Fund share transactions:
Reinvestment of dividends and capital gain distributions - 173,543 - 1,001
Proceeds from other shares sold 184,718 292,683 200,029 147,138
- ------------------------------------------------------------------------------------------------------------------------------------
184,718 466,226 200,029 148,139
Payments for shares redeemed (142,808) (274,314) (81,008) (340,704)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions 41,910 191,912 119,021 (192,565)
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 406,840 415,519 348,548 (86,286)
Net Assets:
Beginning of period 2,398,595 1,983,076 1,276,244 1,362,530
- ------------------------------------------------------------------------------------------------------------------------------------
End of period (b) $2,805,435 $2,398,595 $1,624,792 $1,276,244
====================================================================================================================================
(a) Includes distribution of unrealized PFIC gains of $592 in 1995 for Acorn Fund.
(b) Includes undistributed net investment income of $13,345 in 1996 and $5,288 in 1995 for Acorn Fund and $8,245 in 1996 and $693
in 1995 for Acorn International.
See accompanying notes to financial statements
</TABLE>
32
<PAGE>
.NOTES TO FINANCIAL STATEMENTS
1. Nature of Operations
Acorn Fund and Acorn International (the "Funds") are series of Acorn Investment
Trust (the "Trust"), an open-end management investment company organized as a
Massachusetts business trust. The investment objective of each Fund is to seek
long-term growth of capital.
2. Significant Accounting Policies
.Security valuation
Investments are stated at current value. Securities traded on securities
exchanges or in over-the-counter markets in which transaction prices are
reported are valued at the last sales price at the time of valuation. Securities
for which there are no reported sales on the valuation date are valued at the
mean of the latest bid and ask quotation or, if there is no ask quotation, at
the most recent bid quotation. Money market instruments having a maturity of 60
days or less from the valuation date are valued on an amortized costs basis.
Securities for which quotations are not available and any other assets are
valued at a fair value as determined in good faith by the Board of Trustees.
.Foreign currency translations
Values of investments denominated in foreign currencies are converted into U.S.
dollars using the spot market rate of exchange at the time of valuation.
Purchases and sales of investments and dividend and interest income are
translated into U.S. dollars using the spot market rate of exchange prevailing
on the respective dates of such transactions. The gain or loss resulting from
changes in foreign exchange rates is included with net realized and unrealized
gain or loss from investments, as appropriate.
.Security transactions and investment income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as soon as
the information is available to the Funds. Interest income is recorded on the
accrual basis and includes amortization of discounts on money market instruments
and long-term debt instruments when required for federal income tax purposes.
Realized gains and losses from security transactions are reported on an
identified cost basis. For Acorn Fund, net realized gains include distributions
of realized gains from other investment companies of $877,200 in 1995.
.Financial instruments
Each Fund may purchase or sell exchange-traded financial futures contracts that
obligate that Fund to make or take delivery of a financial instrument or the
cash value of a securities index at a specified future date at a specified
price. The Fund enters into such contracts to hedge a portion of its portfolio.
Gains and losses are reflected as "Net Realized Gain (Loss) on Futures" in the
Statements of Operations. Additionally, each Fund may engage in portfolio
hedging with respect to changes in currency exchange rates by entering into
forward foreign currency contracts to purchase or sell foreign currencies. The
Statements of Operations reflect gains and losses as realized for closed forward
foreign currency contracts and unrealized for open contracts. A Fund bears the
market risk that arises from changes in the value of financial instruments and
securities indices (future contracts) or from changes in foreign currency rates
(forward foreign currency contracts) and the credit risk should a counterparty
fail to perform under such contracts.
There were no futures contracts or forward foreign currency contracts open
at June 30, 1996 in Acorn Fund. There were no futures contracts open at June
30, 1996 in Acorn International. Acorn International entered into one forward
contract to sell foreign currency, settling December 19, 1996, as described
below:
<TABLE>
<CAPTION>
Foreign U.S. Dollar Unrealized
Amount Currency Proceeds(000) Loss (000)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
200,000,000 Hong Kong Dollar $25,808 $12
</TABLE>
33
<PAGE>
ACORN FUND AND ACORN INTERNATIONAL
.NOTES TO FINANCIAL STATEMENTS
.Fund share Valuation
Fund shares are sold and redeemed on a continuing basis at net asset value. Net
asset value per share is determined daily as of the close of trading on the New
York Stock Exchange on each day the Exchange is open for trading by dividing the
total value of each Fund's investments and other assets, less liabilities, by
the respective number of Fund shares outstanding.
.Federal income taxes, dividends and distributions to shareholders
Each Fund intends to comply with the special provisions of the Internal Revenue
Code available to investment companies.
The Funds have elected to mark-to-market their investments in Passive
Foreign Investment Companies (PFICs") for federal income tax purposes. In
accordance with this election, for the year ended December 31, 1995, Acorn Fund
recognized unrealized appreciation on PFICs of $592,000 and recorded net
realized losses of $295,000 on sales of PFICs. Cumulative net unrealized
appreciation recognized in prior years on PFICs sold in 1995 amounted to
$2,498,000 and distributions to shareholders from net realized gains included
$592,000 relating to PFICs, which are treated as ordinary income for federal
income tax purposes. For the year ended December 31, 1995, Acorn International
recognized cumulative net unrealized PFIC gains of $11,427,000, which were
offset by accumulated net realized losses on foreign currency transactions and
therefore will not be distributed. In addition, undistributed net investment
income of Acorn International at December 31, 1995 of $17,521,000 was offset
against a portion of the accumulated not realized loss on sales of investments
and foreign currency transactions and therefore will not be distributed. Acorn
International had an accumulated net realized loss on sales of investments for
federal income tax purposes at December 31, 1995 of $7,197,000. This loss is
available to offset future taxable gains and if not applied, will expire in
2003.
Dividends payable to shareholders are recorded by the Funds on the
ex-dividend date.
3. Transactions with Affiliates
The Funds' investment advisor, Wanger Asset Management, L.P. ("WAM") furnishes
continuing investment supervision to the Funds and is responsible for the
overall management of the Funds' business affairs.
Under the Funds' investment management agreement with WAM, each fund pays
the Advisor an annual management fee, payable monthly, at the rates set forth
below, which are determined at the beginning of each calendar quarter:
<TABLE>
<CAPTION>
Acorn Fund Acorn International
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value:
For the first $100 million .75% For the first $100 million 1.25%
Next $1.4 billion .50% Next $400 million 1.00%
Net assets in excess of Net assets in excess of
$1.5 billion .40% $500 million .80%
</TABLE>
Certain officers and trustees of the Trust are also principals of WAM. The
Trust makes no direct payments to its officers and trustees who are affiliated
with WAM. Acorn Fund paid trustees' fees and expenses of $50,000 in 1996 and
$134,000 in 1995 and Acorn International paid $51,000 in 1996 and $89,000 in
1995 to trustees not affiliated with WAM. Included in these fees are amounts
paid to the Chairman of the Board of $20,000 and $49,000 by Acorn Fund and
$20,000 and $32,000 by Acorn International for 1996 and 1995, respectively.
WAM advanced Acorn International $71,000 in connection with the
organization and initial registration of the Fund. These costs are being
amortized and reimbursed to WAM over the period January, 1993 through September,
1997.
WAM Brokerage Services, L.L.C., a wholly-owned subsidiary of WAM, is the
distributor of the Funds' shares and receives no compensation for its services.
34
<PAGE>
4. Fund Share Transactions
Proceeds and payments of Fund shares as shown in Statements of Changes in Net
Assets are in respect of the following numbers of shares:
<TABLE>
<CAPTION>
Acorn Fund 6 mos. ended 6/30,
- --------------------------------------------------------------------------------
(in thousands) 1996 1995
<S> <C> <C>
Shares sold 12,502 21,831
Shares issued in reinvestments of dividends
and capital gain distributions -- 12,817
- --------------------------------------------------------------------------------
12,502 34,648
Less shares redeemed 9,697 20,322
- --------------------------------------------------------------------------------
Net increase in shares outstanding 2,805 14,326
================================================================================
Acorn International 6 mos. ended 6/30,
- --------------------------------------------------------------------------------
(in thousands) 1996 1995
Shares sold 11,080 9,482
Shares issued in reinvestment of dividends
and capital gain distributions -- 62
- --------------------------------------------------------------------------------
11,080 9,544
Less shares redeemed 4,493 22,013
- --------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding 6,587 (12,469)
================================================================================
5. Investment Transactions
Acorn Fund 6 mos. ended 6/30,
- --------------------------------------------------------------------------------
(In thousands) 1996 1995
Investment securities (excluding
money market instruments):
Purchases $494,726 $636,015
Proceeds from sales 493,997 584,550
================================================================================
Acorn International 6 mos. ended 6/30,
- --------------------------------------------------------------------------------
(In thousands) 1996 1995
Investments securities (excluding
money market instruments):
Purchases $387,415 $318,862
Proceeds from sales 285,486 416,451
================================================================================
</TABLE>
35
<PAGE>
Acorn Fund
- --------------------------------------------------------------------------------
Acorn International
.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
.Transfer Agent, Dividend Disbursing Agent and Custodian
State Street Bank and Trust Company
Attention: Acorn Funds
P.O. Box 8502
Boston, Massachusetts 02266-8502
1-800-962-1585
.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
.Legal Counsel
Bell, Boyd & Lloyd
Chicago, Illinois
This report, including the unaudited schedules of investments and financial
statements, 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.
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Acorn Fund
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Acorn International
WAM Brokerage Services, L.L.C.
P.O. Box 8502
Boston, MA 02266-8502
