<PAGE>
Acorn
The Acorn Family of Funds
Third Quarter Report
---------------------------------------------------
September 30, 1997
Managed by Wanger Asset Management, L.P.
<PAGE>
Acorn Family of Funds Third Quarter Report 1997
.Table of Contents
Squirrel Chatter
.Markets Unleashed 2
Acorn USA
.In a Nutshell 4
.Performance at a Glance 5
.Major Portfolio Changes 10
.Statement of Investments 11
Acorn Fund
.In a Nutshell 6
.Performance at a Glance 7
.Major Portfolio Changes 13
.Statement of Investments 15
.Foreign Portfolio Diversification 21
Acorn International
.In a Nutshell 8
.Performance at a Glance 9
.Major Portfolio Changes 22
.Statement of Investments 25
.Portfolio Diversification 32
<PAGE>
[AIU LOGO APPEARS HERE]
.Squirrel Chatter: Markets Unleashed
[PHOTO APPEARS HERE]
You've certainly noticed the stock market has started having bigger day to day
swings than it did a couple of years ago. A statistical study of the market
shows that from 1992 to 1995 the U.S. stock market had unusually low volatility,
but lately, market volatility has moved to levels above the long-term average.
How can you manage your investments when the stock market gets wild?
A Day In The Park
Last week I watched a lady walking her golden retriever in the park. The dog
romped all over the park. The dog chased a squirrel 50 yards to the north (the
squirrel was too smart for him and got away). Then the dog ran the opposite
direction to interview a little boy with an ice-cream cone. After that, another
dog showed up and they chased each other in circles for awhile. In ten minutes
the golden retriever had run a mile in all directions. If you tried to guess
where that dog was going to run next, it would be a very difficult forecasting
problem! You would have to know where every squirrel, child and dog was in the
whole park and then guess what the retriever's response would be. However, there
is a simpler way to solve this problem.
The dog's owner entered the park at the south entrance. She then walked 3
miles an hour down the sidewalk and left the park at the west entrance after 30
minutes. The dog came in with its owner and left with its owner. You know where
the dog started and where the dog ended up, even though for the half-hour in the
park the dog's motion was unpredictable. You can think about the stock market in
the same way. If you read the morning newspaper or watch the stock market on TV,
the journalists will stress the short-term movements of the market in order to
deliver an exciting story (and it has been exciting recently!), but all they are
doing is recording the random romping of the retriever. However, if you
concentrate on the long-term basic economic trends that move smoothly and
steadily over multi-year time spans, you know where the lady is going and
therefore where the market dog will end up eventually.
So Where Is The Lady Going?
The market lady is affected by two big trends. First, inflation is dead.
Consumer Price Index (CPI) in the U.S. is being reported around 2%. This is just
as true in the rest of the world. Over the last 40 years, the poster boy for
inflation in Europe was Italy. This is why a plate of pasta in Pisa costs 17,000
lira. The latest CPI figures for Italy are 1.6%, lower than in the U.S. The same
dramatic drop in inflation has occurred in almost every other country. This
means that long-term bond rates will go down. Japan, which has had falling
prices over the last few years, has a long-term government bond rate that just
dropped below 2%. I don't think that the U.S. will get to 2%, but 5% is
plausible (the U.S. long-term bond rate is currently 6.2%).
Consumer Price Index (Italy)
[CHART APPEARS HERE]
2
<PAGE>
[AIU LOGO APPEARS HERE]
Why is inflation dead? Over the very long-term, inflation has been
associated with wars while during peace time, prices were stable. The cold war
era (1945-89) counted as a war because it forced the U.S. and other countries to
spend trillions on military preparedness.
A decade ago, many socialist economies were military threats but counted for
little in world trade. Russia, Eastern Europe, China, India and Argentina made
little the rest of the world wanted to buy (except arms), and didn't have enough
hard currency to buy what the rest of the world wanted to sell. Now all of these
more-or-less ex-socialist countries are back in the economic world. They have
well-educated, motivated workers who are willing to work for a fraction of U.S.
or European wages. The cold war is over, we won, and inflation has gone away.
The Privatization of Pension Plans
A second great trend in the world is the privatization of pension schemes. In
the March 31, 1996 shareholder report we knocked "pay-as-you-go" funding for
social security: The state systems work only as long as the promised benefits
are modest, and the pool of people who "pay" grows at about the same rate as the
people who "go." Unfortunately, the promised benefits are in fact fairly
extravagant, and the "go" pool is growing while the "pay" pool is shrinking.
Both politicians and would-be pensioners are worried they will wake up one day
to a giant sucking sound coming from the benefits department of their national
retirement administration.
This is why we believe that individually funded pension plans will replace
pay-as-you go state run social security systems. Social security privatization
has been denounced as "radical", but lots of countries have made the switch.
Chile was first, followed by Argentina, Mexico, Australia, and the U.K. The USA
has been running a large pilot program, in the form of your 401(k) or 403(b)
plan. The 401(k) system has been a big hit, partly by producing good investment
returns, and also by changing John Doe from the client of a bureaucracy into a
free citizen investing his money in a funded program.
These new pension plans will demand vast quantities of long duration, high
quality assets, so that bonds and high-grade stocks will be in strong demand.
The 401(k) system has been a big hit, partly by producing good investment
returns, and also by changing John Doe from the client of a bureaucracy into a
free citizen investing his money in a funded program.
Because these individually funded pension plans start off with buying big
company stocks, we have seen blue-chip indexes outperform small-cap stock
averages in the U.S. and the rest of the world, too. This relative price
movement against small-cap stocks has created an enormous disparity. The
valuation gap is now starting to close in the U.S. Since May 1997, small-cap
stocks have been outperforming the S&P 500 index. This trend change has not yet
spread around the world, but it is likely to. If this unfolds as we hope, the
Acorn Family of Funds will be rewarding investments over the next several years.
Best Regards,
/s/ Ralph Wanger
- ------------------------
President and Lead Portfolio Manager, Acorn Fund
3
<PAGE>
Acorn USA
.In a Nutshell
[U--TAB]
[PHOTO OF ROBERT A. MOHN APPEARS HERE]
It was good to be a small-cap last quarter. Just as soon as the last Wall Street
strategist pronounced big-caps to be the better-caps, bigger suddenly became
badder. Acorn USA's 15.2% third-quarter return whipped Saint S&P 500 (+7.5%) and
beat the Russell small-caps (+14.9%). Over the past 12 months, Acorn USA's
sparkling 43.1% gain beat both the biggies (S&P 500: +40.4%) and our pint-sized
peers, topping 80% of the 433 funds in Lipper's small-cap growth fund universe.
Our spunkiest stock was C-Tec, a truffle uncovered by one of our ace
analysts, Mark Yost. C-Tec is a telecommunications conglomerate that underwent
stock fission on October 1, splitting into 3 isotopes--RCN Corp (bundles cable,
phone and internet service to downtown apartment tower dwellers), Commonwealth
Telephone (Pennsylvanian local phone company) and Cable Michigan (eponymous).
Telecom deregulation and fiber optic fever have put some pizzazz back into the
stodgy old phone business, sending C-Tec's stock up 110% over the first nine
months of the year. A week later, C-Tec had broken itself into three parts, and
the three offsprung stocks had gained another 35%, proof that on Wall Street,
the sum of the parts can indeed be worth more than the whole.
Other winners last quarter were J Ray McDermott (constructs offshore oil
platforms), United Video (cable's Prevue channel), and Wonderware (PC software
for controlling factory machinery).
We will continue to keep your Fund well stocked with these and other
innovative, niche-living, reasonably-priced small company stocks.
/s/ Robert A. Mohn
Robert A. Mohn
Lead Portfolio Manager
<TABLE>
<CAPTION>
Fund Assets as of 9/30/97: $159.2 million
.Acorn USA Top 10 Holdings
<S> <C>
CalEnergy 5.4%
Power Plants
Coast Savings 5.2%
California Savings & Loan
HealthCare Compare 4.6%
PPO Network
C-Tec 4.2%
Cable TV/Local Telephone
Data Transmission 3.9%
Data Services for Farmers
United Video Satellite 3.7%
CATV & Satellite Dish Programming
Wackenhut 3.4%
Prison Management
Royal Caribbean Cruise 3.2%
Cruises to Caribbean and Alaska
Wonderware 3.2%
Industrial Control Software
Tesoro Petroleum 3.2%
Oil Refinery/Gas Reserves
</TABLE>
The Fund's top 10 holdings and portfolio diversification vary with changes
in portfolio investments. See the Statement of Investments for a complete list
of the Fund's holdings.
IRA
The new Education and Roth IRAs will be available to shareholders on January
1, 1998. If you would like more information, including an application, please
call 1-800-922-6769. We'll send materials as soon as they are available.
4
<PAGE>
[U LOGO APPEARS HERE]
.Performance at a Glance
The Value of a $10,000 Investment in Acorn USA
.September 4, 1996 through September 30, 1997
[GRAPH APPEARS HERE]
Average Annual Total Return
1 Year Life of Fund
43.1% 49.2%
This graph compares the results of $10,000 invested in Acorn USA on September 4,
1996 (the date Fund shares were first offered to the public), with the Russell
2000 Stock Index with dividends reinvested. Past performance does not guarantee
future results. The investment return and principal value of an investment in
the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or
less than their original cost.
<TABLE>
<CAPTION>
Acorn USA Portfolio Diversification
.as a % of net assets, as of 9/30/97
[PIE CHART APPEARS HERE]
<S> <C>
Information 25.3%
Health Care 10.2%
Consumer Goods/Services 8.0%
Finance/Real Estate 13.9%
Industrial Goods/Services/Transportation 19.4%
Energy/Minerals 18.6%
Cash 4.6%
------
100.0%
</TABLE>
<TABLE>
<CAPTION>
Relative Performance
- ----------------------------------------------------------------
3rd quarter Last 9 mos. Last 12 mos.
1997
<S> <C> <C> <C>
Acorn USA 15.2% 31.7% 43.1%
Russell 2000 14.9% 26.6% 33.2%
Lipper Small Cap
Funds Avg. 16.6% 27.0% 29.8%
S&P MidCap 400 16.1% 31.2% 39.1%
S&P 500 7.5% 29.6% 40.4%
Dow-Jones 4.0% 24.9% 37.7%
</TABLE>
The Russell 2000 is formed by taking the 3,000 largest companies and then
eliminating the largest 1,000 leaving a good small company index. The Lipper
Small Cap Funds Avg. is an average of all U.S. small-cap funds tracked by
Lipper, which consisted of 510, 468, and 433 funds for the 3rd qtr., 9-mos., and
12 mos. periods above. The S&P MidCap 400 is a market value-weighted index of
400 stocks that are in the next tier down from the S&P 500. The S&P 500 is a
broad market-weighted average of U.S. blue-chip companies. The Dow Jones
Industrial Average includes 30 large companies. The beginning value used to
compute the Dow Jones "since inception" return in the chart above is as of
8/31/96. All indexes are unmanaged and returns include reinvested dividends.
Net Asset Value Per Share 9/30/97: $15.34
- -----------------------------------------
5
<PAGE>
Acorn Fund
.In a Nutshell
[A--TAB]
[PHOTO OF RALPH WANGER AND CHARLES P. MCQUAID APPEARS HERE]
Acorn Fund jumped 13.7% in the third quarter, continuing to ride the wild bull
market. As the indexes on page 7 indicate, small-cap stocks outperformed large-
caps in the quarter. Acorn Fund landed in the middle, handily beating the Dow
and S&P 500 indexes, but slightly lagging the S&P MidCap and the Russell 2000.
Through nine months, your fund jumped 25.9%, tracking closely the small-cap
Russell 2000 index.
Our oil service stocks pumped out huge profits in the quarter. Veritas rose
89%, J Ray McDermott jumped 81%, Atwood Oceanics floated a 68% gain, Shaw
Industries serviced a 55% boost, and EVI Inc. ventured a 52% rise. Selected
technology stocks also did well. IFR Systems transmitted a 76% return, Systems &
Computer Technology outsourced a 68% move, and American Power Conversion surged
48 percent. Our cable software theme again topped the ratings, as BET Holdings
scored a 61% gain on a buy-out proposal.
Special situations research unearthed a trio of golden acorns: Expeditors
International delivered a 48% return, Applied Industrial Technologies
distributed a 43% profit, and C-TEC showed a 43% rise.
Acorn's losers were relatively few in number and small in size. American
Management System mismanaged its way to a 28% loss, Bisys Group processed a 23%
decline and Medeva took ill, dropping 21%.
Acorn's foreign holdings were not immune to currency and market turmoil
overseas. Our names held up fairly well. We have reduced our foreign holdings to
14.3% of Acorn, retaining our most compelling long-term investments.
/s/ Ralph Wanger /s/ Charles P. McQuaid
- ------------------ -------------------------
Ralph Wanger Charles P. McQuaid
Lead Portfolio Manager Co-Portfolio Manager
Fund Assets as of 9/30/97: $3,731.9 million
.Acorn Fund Top 10 Holdings
AES Corporation 2.6%
Global Power Producer
Liberty Media 1.9%
CATV Programming
HealthCare Compare 1.8%
PPO Network
Carnival 1.7%
Cruise Ship Line
Harley-Davidson 1.7%
Motorcycle Manufacturer
Borders Group 1.4%
Bookstores
Lincare Holdings 1.4%
Home Health Care Services
Solectron 1.3%
Electronics Contract Manufacturer
EVI 1.2%
Oil Services
International Game Technology 1.1%
Gaming Equipment
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
Shareholder News
To better serve our shareholders, we are working to create consolidated
account statements. Watch your mail for upcoming information on the new
statements, which will list activity for all of your Acorn accounts on one
statement.
In response to shareholder requests, monthly automatic investment plan
purchases will now be confirmed on a quarterly basis. This cost savings effort
will go into effect January 1, 1998.
6
<PAGE>
[A LOGO APPEARS HERE]
.Performance at a Glance
The Value of a $10,000 Investment in Acorn Fund
.June 10, 1970 through September 30, 1997
[GRAPH APPEARS HERE]
Average Annual Total Return
------------------------------------------
1 Year 5 Years 10 Years Life of Fund
31.2% 21.5% 15.6% 17.2%
This graph compares the results of $10,000 invested in Acorn Fund on June 10,
1970 (the date Fund shares were first offered to the public), with all dividends
and capital gains reinvested, with the Standard & Poor's 500 Stock Index with
dividends reinvested. Past performance does not guarantee future results. The
investment return and principal value of an investment in the Fund will
fluctuate so that Fund shares, when redeemed, may be worth more or less than
their original cost.
Acorn Fund Portfolio Diversification
.as a % of net assets, as of 9/30/97
[PIE CHART APPEARS HERE]
Information 22.9 %
Health Care 8.9 %
Consumer Goods/Services 7.8 %
Finance/Real Estate 14.7 %
Industrial Goods/Services/Transportation 9.7 %
Energy/Minerals 11.6 %
Foreign 14.3 %
Cash less liabilities 10.1 %
-----
100.0 %
Relative Performance
- -----------------------------------------------------------------
3rd quarter Last 9 mos. Last 12 mos.
1997
Acorn Fund 13.7% 25.9% 31.2%
S&P 500 7.5% 29.6% 40.5%
Russell 2000 14.9% 26.6% 33.2%
S&P MidCap 400 16.1% 31.2% 39.1%
Dow-Jones 4.0% 24.9% 37.7%
The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The
Russell 2000 is formed by taking the 3,000 largest companies and then
eliminating the largest 1,000 leaving a good small company index. The S&P MidCap
400 is a market value-weighted index of 400 stocks that are in the next tier
down from the S&P 500. The Dow Jones Industrial Average includes 30 large
companies. All indexes are unmanaged and returns include reinvested dividends.
Net Asset Value Per Share 9/30/97: $18.67
- -----------------------------------------
7
<PAGE>
[I LOGO APPEARS HERE]
Acorn International
.In a Nutshell
[PHOTO OF LEAH JOY ZELL APPEARS HERE]
Acorn International finished the third quarter down less than 1%, after a
rollercoaster ride that saw losses of 6.6% through Labor Day. However, September
was a strong month in which sensible values re-emerged, bringing our portfolio
back to where we started.
As I write, world equity markets have turned volatile again, unnerved by the
same crisis in Southeast Asia that sparked the retreat last summer. Sharp equity
market swings can be scary even without Halloween. What enables us to stay the
course through such periods is confidence in the companies we own. We decided
early in the second quarter to concentrate on those names we knew and liked
best. This review resulted in 20% fewer positions and higher cash levels. The
process of pruning the portfolio has given our analysts more time to identify
long-term values.
What made us cautious was watching blue chip stocks soar while prices of
high-quality smaller companies lagged. To provide our shareholders with better
guidance, we would like to introduce the Salomon Brothers Extended Market Index
(World ex-U.S.) as an additional benchmark for the fund (see box). While EAFE
and the Lipper International Fund Average track the large-caps, EMI shows the
dramatic degree to which small-caps have missed the party. Ralph Wanger notes in
his letter that he sees small-cap stocks coming back into favor in the U.S. We
are beginning to see signs of the same trend overseas. We are also beginning to
see real bargains in our markets.
Long-term performance is excellent. This quarter marks our fifth anniversary
and the inauguration of the Fund's five-year return. We are pleased that Acorn
International's average annual total return for five years is 16.7%. We will
continue to work hard to find the best small-cap international stocks for you.
/s/ Leah Joy Zell
- ----------------------
Leah Joy Zell
Lead Portfolio Manager
Fund Assets as of 9/30/97: $1,876.3 million
.Acorn International Top 10 Holdings
T T Tieto Finland 3.0%
Computer Services/Consulting
WM Data Sweden 2.4%
Computer Services/Consulting
Rhoen Klinikum Germany 1.7%
Hospital Management
Banca Fideuram Italy 1.5%
Life Insurance/Mutual Funds
Serco Group United Kingdom 1.4%
Facilities Management
Kempen Netherlands 1.3%
Stock Brokerage/
Investment Management
Venture Manufacturing Singapore 1.3%
Contract Electronics Manufacturing
Atos (formerly known as
Axime Ex Segin) France 1.2%
Computer Services
Genting International Singapore 1.1%
Cruise Line
Shaw Industries Canada 1.1%
Oil Field Services
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
A New Benchmark
The Salomon Brothers Extended Market Index (World ex-U.S.) tracks the
performance of the bottom quintile of stocks by investable market
capitalization by country worldwide (excluding the U.S.). Currently, large-cap
stocks make up 80% of the value of what investors can buy around the world, but
represent only 25% of the number of publicly traded companies. The EMI measures
the performance of that 75% portion of stocks outside the United States from
which we choose our investments. It has become the benchmark most widely used
by consultants and our competitors to measure international small-cap
performance.
8
<PAGE>
[I LOGO]
. Performance at a Glance
The Value of a $10,000 Investment in Acorn International
.September 23, 1992 through September 30, 1997
[GRAPH APPEARS HERE]
Average Annual Total Return
1 Year 5 Years Life of Fund
11.9% 16.7% 16.6%
This graph compares the results of $10,000 invested in Acorn International on
September 23, 1992 (the date Fund shares were first offered to the public), with
all dividends and capital gains reinvested, with Morgan Stanley's Europe,
Australasia Far East Index (EAFE). The beginning value of EAFE is as of 9/30/92.
Past performance does not guarantee future results. The investment return and
principal value of an investment in the Fund will fluctuate so that Fund shares,
when redeemed, may be worth more or less than their original cost.
Acorn International Portfolio Diversification
.as a % of net assets, as of 9/30/97
[PIE CHART APPEARS HERE]
Information 23.8%
Health Care 6.6%
Consumer Goods/Services 20.6%
Finance/Real Estate 17.6%
Industrial Goods/Services/Transportation 14.5%
Energy/Minerals 5.8%
Cash less liabilities 11.1%
------
100.0%
Relative Performance
- ----------------------------------------------------------------
3rd quarter Last 9 mos. Last 12 mos.
1997
Acorn International -0.7% 7.5% 11.9%
EAFE -0.7% 10.4% 12.2%
EMI (world ex-U.S.) -4.0% 1.0% 0.3%
Lipper Int'l Small Cap
Funds Avg. -0.1% 10.9% 15.8%
Lipper Int'l Funds Avg. 1.2% 14.0% 18.6%
EAFE is Morgan Stanley's Europe, Australasia and Far East Index, an unmanaged
index of companies throughout the world in proportion to world stock market
capitalization, excluding the U.S. and Canada. The EMI is Salomon Brothers'
index of the bottom 20% of institutionally investable capital of countries, as
selected by Salomon, excluding the U.S. The Lipper Int'l Small Cap Funds Avg. is
calculated from the performance of a group of small-cap int'l funds, including
Acorn Int'l. For the 3rd qtr., 9-mos. and 12-mos. periods above, the group
consisted of 31, 28 and 25 funds, respectively. The Lipper Int'l Funds Avg. is
an average of all int'l funds tracked by Lipper, excluding the Int'l Small Cap
Funds group. This group consisted of 463, 424 and 397 funds for the 3rd qtr.,
9-mos. and 12-mos. periods above, respectively. All indexes are unmanaged and
returns include reinvested dividends.
Net Asset Value Per Share 9/30/97: $20.86
- -----------------------------------------
9
<PAGE>
[U LOGO APPEARS HERE]
Acorn USA
. Major Portfolio Changes in the Third Quarter
<TABLE>
<CAPTION>
Number of Shares
-------------------
6/30/97 9/30/97
Additions
- ------------------------------------------------------------
<S> <C> <C>
Information
Aspect Telecommunications 0 149,000
Cablevision Systems 0 24,000
COMARCO 62,800 97,800
Data Transmission Network 189,100 209,100
Gaylord Entertainment 62,000 103,000
Mecklermedia 0 6,200
National Data 0 39,000
United Video Satellite Group 133,000 213,000
Wonderware 230,700 278,700
- ------------------------------------------------------------
Health Care
HealthCare Compare 94,000 114,000
Lincare Holdings 57,000 85,000
- ------------------------------------------------------------
Consumer Goods/Services
Oshkosh B'Gosh 0 27,000
- ------------------------------------------------------------
Finance
Acceptance Insurance 76,100 178,100
Leucadia National 23,000 52,000
- ------------------------------------------------------------
Industrial Goods/Services
Insurance Auto Auctions 0 229,600
Schnitzer Steel 111,000 138,300
Vallen 0 37,000
Wackenhut, Cl. B 234,900 262,900
- ------------------------------------------------------------
Energy/Minerals
Atmos Energy 27,000 187,000
(includes effect of merger with
United Cities Natural Gas)
CalEnergy 224,000 259,000
J Ray McDermott 54,600 88,600
Tesoro Petroleum 165,700 282,700
- ------------------------------------------------------------
Transportation
Trailer Bridge 0 40,000
</TABLE>
<TABLE>
<CAPTION>
Number of Shares
-------------------
6/30/97 9/30/97
<S> <C> <C>
Sales
- ------------------------------------------------------------
Information
ACT Manufacturing 7,100 0
BDM International 11,800 0
- ------------------------------------------------------------
Health Care
United Payors & Providers 22,400 0
- ------------------------------------------------------------
Consumer Goods/Services
Borders 14,000 0
Showboat 15,800 0
- ------------------------------------------------------------
Finance
Phoenix Duff & Phelps 55,000 0
- ------------------------------------------------------------
Industrial Goods/Services
Applied Industrial Technologies 108,200 138,000
(includes effect of 3 for 2 stock split)
Steel Dynamics 88,300 57,000
- ------------------------------------------------------------
Energy/Minerals
United Meridian 6,700 0
</TABLE>
10
<PAGE>
Acorn USA
.Statement of Investments (unaudited) September 30, 1997
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------
Common Stocks: 95.4%
- --------------------------------------------------------------
<S> <C> <C>
Information: 25.3%
.CATV/TV/Satellites: 14.1%
133,000 C-Tec $ 6,650
Cable TV/Local Telephone
209,100 Data Transmission Network 6,168
Data Services for Farmers
213,000 United Video Satellite Group 5,911
CATV & Satellite Dish Programming
73,000 Tele-Communications,
Liberty Media Group 2,185
Cable Channels
24,000 Cablevision Systems 1,506
Cable TV
- --------------------------------------------------------------
22,420
.Mobile Communications: 1.8%
97,800 COMARCO 2,170
Wireless Network Testing
41,000 Centennial Cellular 702
Cellular Franchises
- --------------------------------------------------------------
2,872
.Telecommunications Equipment: 2.2%
149,000 Aspect Telecommunications 3,483
Call Center Equipment
- --------------------------------------------------------------
.Computer Software/Services: 3.8%
278,700 Wonderware 5,121
Industrial Control Software
74,300 Computer Language Research 929
Commercial Tax Software
- --------------------------------------------------------------
6,050
.Transaction Processors: 1.0%
39,000 National Data 1,599
Credit Card Processing
- ---------------------------------------------------------------
.Business Information: 0.5%
26,000 American Business Information 705
Small Business Data
6,200 Mecklermedia 144
Internet Trade Shows & Magazines
- --------------------------------------------------------------
849
.Computer Systems: 1.9%
118,000 Kronos 3,053
Time Accounting Software & Clocks
------
Information: Total 40,326
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------
<S> <C> <C>
Health Care: 10.2%
.Medical Equipment: 2.9%
128,000 Respironics $ 3,520
Sleep Apnea Products
44,000 Kinetic Concepts 820
Hospital Beds
40,000 Cardiac Pathways 335
Heart Surgery Device
- --------------------------------------------------------------
4,675
.Services: 7.3%
114,000 HealthCare Compare 7,282
PPO Network
85,000 Lincare Holdings 4,287
Home Health Care Services
- --------------------------------------------------------------
11,569
------
Health Care: Total 16,244
- --------------------------------------------------------------
Consumer Goods/Services: 8.0%
.Retail: 3.1%
288,200 Host Marriott Services 4,287
Fast Food Kiosks in Airports,
Rest Stops & Malls
27,000 Oshkosh B'Gosh 705
Children's Clothing
- --------------------------------------------------------------
4,992
.Entertainment/Leisure: 4.9%
117,700 Royal Caribbean Cruises 5,149
Cruises to Caribbean & Alaska
103,000 Gaylord Entertainment 2,659
Opryland Hotel & Other Assets
- --------------------------------------------------------------
7,808
------
Consumer Goods/Services: Total 12,800
- --------------------------------------------------------------
Finance: 11.9%
.Savings & Loans: 5.2%
159,000 Coast Savings 8,338
California Savings & Loan
- --------------------------------------------------------------
.Insurance: 6.3%
178,100 Acceptance Insurance 4,675
Crop Insurance
59,500 Amerus Life Holdings 1,952
Annuities/Life Insurance
52,000 Leucadia National 1,788
Insurance Holding Company
51,000 Penn Treaty American 1,683
Nursing Home Insurance
- --------------------------------------------------------------
10,098
</TABLE>
[U LOGO APPEARS HERE]
11
<PAGE>
Acorn USA
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------
<S> <C> <C>
.Money Management: 0.4%
17,000 SEI Investments $ 561
Mutual Fund Administration --------
Finance: Total 18,997
- --------------------------------------------------------------
Industrial Goods/Services: 19.0%
.Steel: 5.6%
138,300 Schnitzer Steel 4,650
Scrap Steel Processor
77,000 Atchison Casting 1,636
Steel Foundries
57,000 Steel Dynamics 1,340
Steel Mini-Mill
53,000 Gibraltar Steel 1,292
Steel Processing
- --------------------------------------------------------------
8,918
.Industrial Distribution: 3.5%
138,000 Applied Industrial Technologies 4,752
Industrial Components Distribution
37,000 Vallen 722
Safety Products Distribution
- --------------------------------------------------------------
5,474
.Machinery: 1.4%
125,000 Farr Company 2,250
Filters
.Industrial Suppliers: 1.4%
109,000 Lilly Industries, Cl. A 2,289
Industrial Coatings
.Services: 7.1%
262,900 Wackenhut, Cl. B 5,455
Prison Management
100,000 World Color Press 3,019
Printing
229,600 Insurance Auto Auctions 2,870
Auto Salvage Services
- --------------------------------------------------------------
11,344
--------
Industrial Goods/Services: Total 30,275
- --------------------------------------------------------------
Energy/Minerals: 18.6%
.Independent Power: 5.4%
259,000 CalEnergy 8,612
Power Plants
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------
<S> <C> <C>
.Oil/Gas Producers: 4.2%
282,700 Tesoro Petroleum 5,106
Oil Refinery/Gas Reserves
59,100 Seagull Energy 1,507
Oil & Gas Producer
6,613
- --------------------------------------------------------------
.Distribution/Marketing/Refining: 4.4%
187,000 Atmos Energy 4,652
Natural Gas Distributor
131,400 NGC 2,332
Gas Processing/Marketing
- --------------------------------------------------------------
6,984
.Oil Services: 4.6%
88,600 J Ray McDermott 4,341
Offshore Construction Company
252,000 GeoScience 2,961
Offshore Seismic Equipment Company
- --------------------------------------------------------------
7,302
--------
Energy/Minerals: Total 29,511
- --------------------------------------------------------------
Other Industries: 2.4%
.Real Estate: 2.0%
40,700 Forest City Enterprises, Cl. A 2,340
Shopping Centers
45,000 Cornerstone Properties 861
Downtown Office Buildings
- --------------------------------------------------------------
3,201
.Transportation: 0.4%
40,000 Trailer Bridge 530
Tug & Barge Transportation
--------
Other Industries: Total 3,731
--------
Total Common Stocks: 95.4% 151,884
--------
Short-Term Obligations: 4.3% 6,772
--------
Total Investments: 99.7% 158,656
--------
Cash and Other Assets Less Liabilities: 0.3% 507
--------
Total Net Assets: 100% $159,163
==============================================================
</TABLE>
12
<PAGE>
[A LOGO]
Acorn Fund
.Major Portfolio Changes in the Third Quarter
<TABLE>
<CAPTION>
Number of Shares
------------------
6/30/97 9/30/97
Additions
- --------------------------------------------------------
<S> <C> <C>
Information
ACT Manufacturing 325,000 360,000
Aspect Telecommunications 0 714,000
ACNielsen 0 1,015,000
Altron 357,000 450,000
American Management Systems 294,000 495,000
Cablevision Systems 80,000 311,000
Cellular Communications
International 300,000 400,000
Coherent Communications 0 115,000
Electronic Arts 150,000 250,000
Getty Communications, Cl. A 350,000 700,000
HSN 600,000 750,000
International Game Technology 1,800,000 1,880,000
Itron 200,000 300,000
Kronos 600,000 650,000
Larscom 0 236,000
Mecklermedia 0 100,000
Micros Systems 279,000 330,000
National Data 575,000 729,000
Thermo Optek 165,000 265,000
Thermoquest 293,000 613,000
United Video Satellite Group 810,000 850,000
Verilink 0 393,000
- --------------------------------------------------------
Health Care
Kinetic Concepts 1,115,000 1,179,000
Lincare Holdings 1,000,000 1,040,000
Magellan Health Services 528,000 1,000,000
Medeva 3,270,000 3,700,000
- --------------------------------------------------------
Consumer Goods/Services
Bally Total Fitness 0 185,000
Binding-Brauerei 8,000 23,000
Cie Fin Richemont 2,500 4,500
Quality Food Centers 313,000 490,000
- --------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Number of Shares
------------------
6/30/97 9/30/97
<S> <C> <C>
Finance
Acceptance Insurance 229,000 612,000
ASR Verzekeringsgrp (formerly
known as Stad Rotterdam) 25,000 160,000
Genting International 5,100,000 7,250,000
Highlands Insurance 0 210,000
Leucadia National 396,000 444,000
Pioneer Group 181,000 620,000
Shohkoh Fund 9,000 16,000
- --------------------------------------------------------
Industrial Goods/Services
Aeroporti di Roma 0 500,000
AirNet Systems 174,000 280,000
H B Fuller 0 150,000
Intermet 0 175,000
MA Hanna 0 176,000
Societe Generale de Surveillance 6,050 9,000
Worthington Industries 1,210,000 1,260,000
Zoltek 0 72,000
- --------------------------------------------------------
Energy/Minerals
Atmos Energy 303,000 553,000
(includes effect of Merger with
United Cities Natural Gas)
CalEnergy 950,000 1,200,000
Equitable Resources 0 401,000
J Ray McDermott 505,000 555,000
KN Energy 150,000 190,000
Perez Companc 0 600,000
PetSec Energy ADR 0 210,000
Pride International 550,000 600,000
Ranger Oil 800,000 1,200,000
Saipem 1,000,000 1,855,000
- --------------------------------------------------------
Real Estate
Homestead Village 619,000 741,000
Security Capital Atlantic 0 250,000
Security Capital Group, Cl. B 0 101,000
- --------------------------------------------------------
Transportation
Trailer Bridge 0 320,000
</TABLE>
13
<PAGE>
[A LOGO APPEARS HERE]
Acorn Fund
.Major Portfolio Changes in the Third Quarter
<TABLE>
<CAPTION>
Number of Shares
-----------------
6/30/97 9/30/97
Sales
- ----------------------------------------------------------------
<S> <C> <C>
Information
Activision 460,000 0
Analysts International 360,000 285,000
BCE Mobile Communications 125,000 0
Broderbund Software 200,000 100,000
Canal Plus 20,000 0
Cognos 150,000 0
Concord EFS 275,000 225,000
Compuware 240,000 200,000
Getronics 207,000 167,000
Grupo Radio Centro 225,000 0
International Family Entertainment 700,000 0
Oak Industries 250,000 200,000
Shaw Communications, Cl. B 500,000 0
Tele-Communications,
Series A TCI Group 1,000,000 0
Vanguard Cellular Systems 465,000 300,000
Village Roadshow 800,000 0
Village Roadshow Pfd. 550,000 0
- ----------------------------------------------------------------
Health Care
Cofar B 170,000 0
Gedeon Richter 20,000 0
Paramount Bed 110,000 20,000
Trex Medical 29,000 0
- ----------------------------------------------------------------
Consumer Goods/Services
Body Shop International 1,200,000 0
Capital 899,900 0
Carmike Cinemas 276,000 0
GC Companies 215,000 0
Guilbert 24,000 12,000
Hennes & Mauritz, Cl. B 50,000 0
President Enterprises 460,000 453,620
(includes effect of 12 for 10 stock split)
Resorts World 800,000 0
Royal Caribbean Cruises 235,000 140,000
Secom 75,000 0
Tigaraksa Satria 1,700,000 0
Unilever Indonesia 195,501 0
Wolverine World Wide 450,000 0
Number of Shares
-----------------
6/30/97 9/30/97
- ----------------------------------------------------------------
Finance
ADVANTA, Cl. B 93,000 0
Banc One 1,151,909 412,000
Formosa Fund 115,000 0
JCG Holdings 7,318,000 0
Kookmin Bank 170,707 0
Korea-Europe Fund 300,000 0
Liechtenstein Global Trust 14,000 6,000
PXRE 145,000 0
Sinpinyo Fund V 3,300,000 0
T. Rowe Price 64,000 0
- ----------------------------------------------------------------
Industrial Goods/Services
Metal Management 120,000 0
Mine Safety Appliances 96,000 0
Pameco 65,000 0
Pec Israel Economic 200,000 0
US Can 244,000 0
- ----------------------------------------------------------------
Energy/Minerals
KCS Energy 320,000 0
Seagull Energy 1,500,000 1,300,000
Siderca 3,000,000 2,800,000
(includes effect of 7.3% stock dividend)
United Meridian 400,000 275,000
Veritas DGC 400,000 300,000
- ----------------------------------------------------------------
Real Estate
Homestead Village Warrants 125,000 0
Tokyu Land 720,000 0
</TABLE>
14
<PAGE>
[A LOGO APPEARS HERE]
Acorn Fund
.Statement of Investments (unaudited) September 30, 1997
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 89.9%
- --------------------------------------------------------
Information: 22.9%
<C> <S> <C>
.Broadcasting/CATV: 1.7%
560,000 C-Tec $ 28,000
311,000 Cablevision Systems 19,515
300,000 TCA Cable TV 11,700
370,000 Granite Broadcasting 4,394
- --------------------------------------------------------
63,609
.Programming for CATV/TV/
Satellites: 4.7%
2,400,000 Tele-Communications,
Liberty Media Group 71,850
750,000 HSN 30,469
819,000 Data Transmission Network 24,160
850,000 United Video Satellite Group 23,588
420,000 BET Holdings, Cl. A 22,207
280,000 Macrovision 4,340
- --------------------------------------------------------
176,614
.Mobile Communications: 1.6%
500,000 Telephone and Data Systems 22,500
865,000 Mobile Telecommunication
Technologies 14,002
355,000 COMARCO 7,877
400,000 Centennial Cellular 6,850
300,000 Vanguard Cellular Systems 4,725
450,000 PriCellular 4,472
- --------------------------------------------------------
60,426
.Telecommunications Equipment: 0.7%
714,000 Aspect Telecommunications 16,690
393,000 Verilink 3,635
115,000 Coherent Communications 3,263
236,000 Larscom 2,389
- --------------------------------------------------------
25,977
.Business Software: 1.6%
505,000 Systems & Computer Technology 22,757
200,000 Compuware 12,100
650,000 Wonderware 11,944
160,000 Sterling Commerce 5,750
400,000 Computer Language Research 5,000
- --------------------------------------------------------
57,551
</TABLE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------
<C> <S> <C>
.Consumer Software: 0.5%
250,000 Electronic Arts $ 9,656
1,100,000 Spectrum HoloByte 6,806
100,000 Broderbund Software 3,400
- --------------------------------------------------------
19,862
.Computer Services: 1.9%
350,000 Premiere Technologies 11,944
285,000 Analysts International 11,044
330,000 Keane 10,477
405,000 BDM International 10,176
254,000 BRC Holdings 9,716
495,000 American Management Systems 9,467
418,000 CACI International 8,360
- --------------------------------------------------------
71,184
.Gaming Equipment: 1.3%
1,880,000 International Game Technology 42,770
370,000 Acres Gaming 4,186
- --------------------------------------------------------
46,956
.Business Information: 1.5%
1,015,000 ACNielsen 24,360
830,000 American Business Information 22,514
885,714 GIGA Cv. Pfd. 3,100
208,333 Source Informatics Cv. Pfd. 2,360
100,000 Mecklermedia 2,319
- --------------------------------------------------------
54,653
.Contract Manufacturing: 1.8%
1,090,000 Solectron 48,505
360,000 ACT Manufacturing 11,970
450,000 Altron 7,481
- --------------------------------------------------------
67,956
.Instrumentation: 2.3%
865,000 Thermo Instrument Systems 36,438
613,000 Thermoquest 12,260
300,000 IFR Systems 9,900
300,000 Itron 7,425
$5,000,000 Thermo Optek, 5% Note Due 10/15/00 6,350
265,000 Thermo Optek 4,919
232,500 Metrika Systems 3,674
200,000 Thermo Bio Analysis 3,425
$1,500,000 Thermoquest, 5% Note Due 8/15/00 1,849
73,684 Onix Systems 700
- --------------------------------------------------------
86,940
</TABLE>
15
<PAGE>
Acorn Fund
.Statement of Investments (unaudited)
[A LOGO APPEARS HERE]
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<C> <S> <C>
.Electronics Distribution: 0.9%
1,090,000 Pioneer-Standard Electronics $ 18,734
300,000 Kent Electronics 11,850
450,000 Richey Electronics 4,612
- --------------------------------------------------------------------------------
35,196
.Transaction Processors: 1.0%
729,000 National Data 29,889
225,000 Concord EFS 6,075
- --------------------------------------------------------------------------------
35,964
.Computer Systems: 0.9%
650,000 Kronos 16,819
330,000 Micros Systems 16,500
- --------------------------------------------------------------------------------
33,319
.Components/Peripherals: 0.5%
425,000 American Power Conversion 11,953
200,000 Oak Industries 5,425
- --------------------------------------------------------------------------------
17,378
--------
Information: Total 853,585
- --------------------------------------------------------------------------------
Health Care: 8.9%
.Biotechnology/Drug Delivery: 0.9%
260,000 RP Scherer 16,104
450,000 Inhale Therapeutic Systems 14,119
800,000 Corvas International 4,100
800,000 Corvas International Warrants 800
- --------------------------------------------------------------------------------
35,123
.Medical Equipment: 1.9%
1,162,000 Respironics 31,955
1,179,000 Kinetic Concepts 21,959
300,000 Affymetrix 13,800
275,000 Innovasive Devices 2,630
- --------------------------------------------------------------------------------
70,344
.Hospital/Laboratory Supplies: 0.7%
322,000 Sybron International 13,826
273,000 Hillenbrand Industries 12,302
- --------------------------------------------------------------------------------
26,128
</TABLE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<C> <S> <C>
.Services: 5.4%
1,026,000 HealthCare Compare $ 65,536
1,040,000 Lincare Holdings 52,455
996,000 HBO & Company 37,599
1,000,000 Magellan Health Services 31,750
505,000 United Payors and Providers 8,711
300,000 Walsh International 3,750
- --------------------------------------------------------------------------------
199,801
--------
Health Care: Total 331,396
- --------------------------------------------------------------------------------
Consumer Goods/Services: 7.8%
.Retail: 2.3%
1,960,000 Borders Group 53,900
490,000 Quality Food Centers 20,059
731,000 Host Marriott Services 10,874
- --------------------------------------------------------------------------------
84,833
.Recreational Vehicles: 2.0%
2,200,000 Harley-Davidson 64,212
320,000 Thor Industries 9,800
- --------------------------------------------------------------------------------
74,012
.Food: 0.2%
634,000 Au Bon Pain 5,706
.Entertainment/Leisure: 2.7%
1,400,000 Carnival 64,750
300,000 Gaylord Entertainment 7,744
392,000 Hollywood Park 7,423
140,000 Royal Caribbean Cruises 6,125
210,000 Rio Hotel & Casino 4,397
535,000 Monarch Casino & Resort 3,678
185,000 Bally Total Fitness 3,191
124,000 Showboat 2,527
$6,250,000 Grand Palais Casino
14% Note Due 2/25/98 313
- --------------------------------------------------------------------------------
100,148
.Manufacturers: 0.6%
600,000 Newell 24,000
--------
Consumer Goods/Services: Total 288,699
</TABLE>
16
<PAGE>
[A LOGO APPEARS HERE]
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------
<C> <S> <C>
Finance: 11.5%
.Banks: 2.1%
412,000 Banc One $ 22,995
570,000 Texas Regional Bancshares 17,813
285,000 Union Planters 15,924
260,000 TCF Financial 15,194
156,000 Pinnacle Financial 5,470
- ----------------------------------------------------
77,396
.Savings & Loans: 3.3%
1,267,000 Peoples Bank Bridgeport 40,623
538,000 Coast Savings 28,211
297,000 Washington Mutual 20,716
671,000 Washington Federal 19,878
538,000 Commonwealth Bancorp 9,684
280,000 Imperial Thrift & Loan 5,670
- ----------------------------------------------------
124,782
.Insurance: 2.2%
836,000 Baldwin & Lyons, Cl. B 17,033
612,000 Acceptance Insurance 16,065
444,000 Leucadia National 15,262
247,000 Foremost 14,573
351,000 United Fire & Casualty 14,435
210,000 Highlands Insurance 5,119
- ----------------------------------------------------
82,487
.Money Management: 2.8%
862,000 United Asset Management 24,729
618,000 SEI Investments 20,394
620,000 Pioneer Group 19,840
865,000 Baker Fentress 18,111
1,723,000 Phoenix Duff & Phelps 13,353
231,000 BISYS Group 7,421
- ----------------------------------------------------
103,848
.Other: 1.1%
935,000 Americredit 26,647
1,390,000 World Acceptance 9,209
340,000 DVI 5,674
- ----------------------------------------------------
41,530
-------
Finance: Total 430,043
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ----------------------------------------------------
<C> <S> <C>
Industrial Goods/Services: 9.6%
.Steel: 2.1%
1,260,000 Worthington Industries 25,515
540,000 Gibraltar Steel 13,162
350,000 Schnitzer Steel 11,769
405,000 Atchison Casting 8,606
340,000 Steel Dynamics 7,990
295,000 A M Castle 7,670
175,000 Intermet 3,062
- ----------------------------------------------------
77,774
.Machinery: 2.6%
900,000 Thermo Electron 36,000
800,000 Baldor Electric 24,350
535,000 Applied Industrial
Technologies 18,424
98,000 Applied Power 6,168
270,000 Valmont Industries 5,754
75,000 Nordson 4,397
189,000 Hein-Werner 1,441
500,000 Stevens International, Cl. A 1,125
34,000 Stevens International, Cl. B 128
- ----------------------------------------------------
97,787
.Industrial Suppliers: 0.8%
625,000 Unifi 25,586
72,000 Zoltek 4,581
- ----------------------------------------------------
30,167
.Specialty Chemicals: 0.8%
775,000 Lilly Industries, Cl. A 16,275
150,000 H B Fuller 8,128
176,000 MA Hanna 4,675
12,000 Cambrex 559
- ----------------------------------------------------
29,637
</TABLE>
17
<PAGE>
[A LOGO APPEARS HERE]
Acorn Fund
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<C> <S> <C>
.Services: 3.3%
1,185,000 World Color Press $ 35,772
800,000 Expeditors International
of Washington 33,500
901,000 Wackenhut, Cl. B 18,696
45,000 Wackenhut, Cl. A 1,001
430,000 Hub Group 15,964
280,000 AirNet Systems 6,755
210,000 HA.LO Industries 6,011
310,000 National Patent Development 3,739
$2,900,000 Western Water, 9% Cv.
Note Due 9/25/05 2,926
- --------------------------------------------------------------------------------
124,364
--------
Industrial Goods/Services: Total 359,729
- --------------------------------------------------------------------------------
Energy/Minerals: 11.6%
.Independent Power: 3.7%
2,230,000 AES Corporation 97,562
1,852 AES Corporation Warrants 111
1,200,000 CalEnergy 39,900
- --------------------------------------------------------------------------------
137,573
.Oil/Gas Producers: 2.3%
1,300,000 Seagull Energy 33,150
1,300,000 Tesoro Petroleum 23,481
275,000 United Meridian 10,106
475,000 Forest Oil 8,669
350,000 Costilla Energy 4,987
1,031,000 Tipperary 4,640
- --------------------------------------------------------------------------------
85,033
.Distribution/Marketing/Refining: 1.7%
820,000 NGC 14,555
553,000 Atmos Energy 13,756
530,000 Southern Union 12,919
401,000 Equitable Resources 12,631
190,000 KN Energy 8,692
- --------------------------------------------------------------------------------
62,553
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<C> <S> <C>
.Oil Services: 3.7%
700,000 EVI $ 44,800
288,000 Atwood Oceanics 32,436
555,000 J Ray McDermott 27,195
600,000 Pride International 20,400
300,000 Veritas DGC 12,769
- --------------------------------------------------------------------------------
137,600
.Mining: 0.2%
400,000 Zeigler Coal Holding 9,350
--------
Energy/Minerals: Total 432,109
- --------------------------------------------------------------------------------
Other Industries: 3.3%
.Real Estate: 3.2%
829,000 The Rouse Company 25,699
260,000 Equity Residential Properties Trust 14,186
233,000 Forest City Enterprises, Cl. B 13,339
185,000 Forest City Enterprises, Cl. A 10,637
741,000 Homestead Village 13,153
400,000 Macerich Company 11,550
350,000 Cornerstone Properties 6,694
165,000 Weingarten Realty Investors 6,590
250,000 Security Capital Atlantic 5,594
101,000 Security Capital Group, Cl. B 3,472
17,761 Security Capital Warrants 142
190,000 First Washington Realty Trust 4,679
120,000 First Washington Realty Trust, Cv. Pfd. 3,570
- --------------------------------------------------------------------------------
119,305
.Transportation: 0.1%
320,000 Trailer Bridge 4,240
--------
Other Industries: Total 123,545
- --------------------------------------------------------------------------------
Foreign Securities: 14.3%
.Canada: 0.7%
1,200,000 Ranger Oil 11,250
200,000 Shaw Industries, Cl. A 7,854
115,000 Veritas Energy Services 4,932
200,000 Cogeco Cable 1,750
- --------------------------------------------------------------------------------
25,786
</TABLE>
18
<PAGE>
[A LOGO APPEARS HERE]
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -----------------------------------------------------------------
<C> <S> <C>
.United Kingdom: 3.0%
1,200,000 Serco Group $16,089
700,000 Getty Communications, Cl. A 12,950
3,700,000 Medeva 12,492
400,000 NTL 10,550
1,270,000 Amvescap 8,504
81,000 Amvescap ADR 5,467
700,000 Powerscreen International 8,379
1,100,000 N. Brown Group 7,472
1,700,000 Securicor Group, Cl. A 7,415
650,000 Comcast UK Cable Partners 6,662
330,000 Airtours 5,611
580,000 Oriflame 4,497
600,000 Edinburgh Fund Managers 4,386
530,000 Ethical Holdings 2,418
- -----------------------------------------------------------------
112,892
.Germany/Austria: 0.6%
180,000 Flughafen Wien (Austria) 7,444
552,000 United International Holdings (Austria) 6,762
23,000 Binding-Brauerei 6,186
- -----------------------------------------------------------------
20,392
.Nordic Countries: 1.8%
1,500,000 WM Data Nordic (Sweden) 25,122
650,000 Getinge Industrier (Sweden) 12,215
254,000 Autoliv (Sweden) 10,795
260,000 Esselte, Series A (Sweden) 7,509
180,000 Pricer, Cl. B (Sweden) 5,246
625,000 SensoNor (Norway) 4,671
- -----------------------------------------------------------------
65,558
.Netherlands: 0.7%
270,000 Hunter Douglas 11,563
160,000 ASR Verzekeringsgrp (formerly known
as Stad Rotterdam) 8,083
167,000 Getronics 5,230
- -----------------------------------------------------------------
24,876
.Switzerland: 0.7%
9,000 Societe Generale de Surveillance 15,772
4,500 Cie Fin Richemont 5,872
6,000 Liechtenstein Global Trust 3,264
- -----------------------------------------------------------------
24,908
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -----------------------------------------------------------------
<C> <S> <C>
.France: 0.6%
128,000 Atos (formerly known
as Axime Ex Segin) 13,853
70,000 Cetelem 7,977
12,000 Guilbert 1,659
- -----------------------------------------------------------------
23,489
.Spain/Portugal: 0.2%
185,000 Vallehermoso 5,103
375,000 Filmes Lusomundo (Portugal) 3,023
- -----------------------------------------------------------------
8,126
.Italy/Greece: 1.7%
400,000 Cellular Communications International 16,600
3,795,000 Banca Fideuram 15,834
234,000 Hellenic Bottling (Greece) 12,164
1,855,000 Saipem 11,179
500,000 Aeroporti di Roma 4,856
170,000 Industrie Natuzzi 4,027
- -----------------------------------------------------------------
64,660
.India: 0.2%
300,000 IS Himalaya Fund 3,870
39,383 Housing Development Finance 3,553
- -----------------------------------------------------------------
7,423
.Hong Kong: 0.2%
4,500,000 Varitronix International 8,606
.China: 0.0%
200,000 The Investment Company of China 994
.Singapore: 0.5%
7,250,000 Genting International 18,052
.Taiwan: 0.2%
453,620 President Enterprises 6,974
.Japan: 1.2%
266 NTT Data 12,052
110,000 Nintendo 10,296
174,000 Noritsu Koki 7,134
16,000 Shohkoh Fund 4,466
33,000 Nichiei 3,143
130,000 Heiwa 2,487
90,000 Sankyo 1,864
520,000 Orient 1,146
20,000 Paramount Bed 800
- -----------------------------------------------------------------
43,388
</TABLE>
19
<PAGE>
[A LOGO APPEARS HERE]
Acorn Fund
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------
<S> <C> <C>
.Australia/New Zealand: 0.4%
1,700,000 Sky City (New Zealand) $ 7,302
210,000 PetSec Energy ADR 5,407
600,000 PetSec Energy 3,129
- --------------------------------------------------------------
15,838
.Mexico: 0.6%
3,000,000 Kimberly Clark de Mexico 15,683
6,000,000 Nadro, Series L 6,528
- --------------------------------------------------------------
22,211
.Brazil: 0.3%
10,000,000 Itau Banco PN 6,462
115,000,000 Cemig 6,424
- --------------------------------------------------------------
12,886
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------
<S> <C> <C>
.Other Latin America: 0.7%
2,800,000 Siderca (Argentina) 8,374
165,000 Banco Latinoamericano
de Export (Panama) 7,384
160,000 IRSA (Argentina) 7,080
600,000 Perez Companc (Argentina) 4,837
- --------------------------------------------------------------
27,675
----------
Foreign: Total 534,734
55,200 Miscellaneous Securities: 0.0% 189
Total Common Stocks and Other ----------
Equity-Like Securities: 89.9% 3,354,029
----------
Short-Term Obligations: 10.4% 388,794
----------
Total Investments: 100.3% 3,742,823
----------
Cash and Other Assets Less Liabilities: (0.3%) (10,895)
----------
Total Net Assets: 100% $3,731,928
- --------------------------------------------------------------
</TABLE>
20
<PAGE>
[LOGO APPEARS HERE]
Acorn Fund
.Foreign Portfolio Diversification
At September 30, 1997, the Fund's foreign portfolio of investments as a percent
of net assets was diversified as follows:
<TABLE>
<CAPTION>
Value (000) Percent
- -----------------------------------------------------
<S> <C> <C>
.Information
Computer Systems $ 51,010 1.4%
Software/Services 37,099 1.0
Broadcasting/CATV 25,724 0.7
Mobile Communications 24,015 0.6
- -----------------------------------------------------
137,848 3.7
.Health Care
Biotechnology/Drug Delivery 24,461 0.7
Equipment 12,215 0.3
Hospital/Laboratory Supplies 800 0.0
- -----------------------------------------------------
37,476 1.0
.Consumer Goods/Services
Manufacturers 58,130 1.5
Entertainment/Leisure 33,452 0.9
Food 25,324 0.7
Retail 13,628 0.4
- -----------------------------------------------------
130,534 3.5
</TABLE>
<TABLE>
<CAPTION>
Value (000) Percent
- -----------------------------------------------------
<S> <C> <C>
.Finance
Money Management $ 39,055 1.0%
Banks 21,576 0.6
Insurance 8,083 0.2
Other 31,908 0.9
- -----------------------------------------------------
100,622 2.7
.Industrial Goods/Services
Services 44,882 1.2
Machinery Processing 13,050 0.3
- -----------------------------------------------------
57,932 1.5
.Energy/Minerals
Oil/Gas Producers 24,718 0.7
Oil Services 19,553 0.5
Independent Power 6,424 0.2
- -----------------------------------------------------
50,695 1.4
.Real Estate 12,183 0.3
.Transportation 7,444 0.2
-------------------
Total Foreign Portfolio $534,734 14.3%
=====================================================
</TABLE>
21
<PAGE>
Acorn International
.Major Portfolio Changes in the Third Quarter
<TABLE>
<CAPTION>
Number of Shares
-------------------
6/30/97 9/30/97
<S> <C> <C>
Additions
Europe
.Germany/Austria
Rhoen Klinikum 100,000 122,500
Schaltbau 0 40,000
.Denmark
Kompan International 31,000 44,000
.Sweden
Atle 400,000 525,000
Autoliv 320,000 350,000
.France
Assystem 30,000 50,000
.United Kingdom
Euro Money Publications 0 110,000
Medeva 3,170,000 3,600,000
Serco Group 1,800,000 2,000,000
Shanks & McEwan 125,000 2,000,000
.Switzerland
Cie Fin Richemont 6,000 9,000
Phoenix Mecano 25,000 28,000
Publicitas Holding 30,000 45,000
Selecta Group 40,000 60,000
Societe Generale de Surveillance 6,550 9,000
.Italy
Aeroporti di Roma 0 500,000
Autogrill (includes effect of merger) 0 2,750,000
Banco Pop Commercia
e Industria 400,000 500,000
Cellular Communications
International 80,000 160,000
Dalmine 0 20,000,000
Saes Getters 125,000 300,000
.Spain
Mapfre Vida 100,000 140,000
.Netherlands
ASR Verzekeringsgrp (formerly
known as Stad Rotterdam) 75,000 160,000
.Hungary
Gedeon Richter 20,000 40,000
</TABLE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares
------------------------
6/30/97 9/30/97
Asia
<S> <C> <C>
.Hong Kong
TVB 2,300,000 3,500,000
Varitronix International 7,500,000 8,500,000
.Japan
Aderans 330,000 440,000
Aeon Credit Service 0 140,000
Keyence 0 35,000
Long Term Credit Bank 0 1,500,000
Nihon Unisys 0 350,000
Shinki 240,000 290,000
Shohkoh Fund 35,000 39,000
Softbank Corporation 95,000 120,000
.Indonesia
Medco Energi 220,000 2,000,000
.Philippines
Int'l Container Terminal Services 27,000,000 50,000,000
(includes effect of 50% stock bonus)
Int'l Container Terminal Services
Cv. 1.75% 3/31/04 $ 3,000,000 $ 5,000,000
Ionics Circuits 0 12,000,000
.Singapore
Genting International 6,124,600 8,300,000
Venture Manufacturing 3,500,000 3,800,000
.Thailand
BEC World Public 450,000 815,000
- ----------------------------------------------------------------
Latin America
.Mexico
Corp Interamericana
de Entretenimiento 100,000 600,000
Tubos de Acero de Mexico 400,000 460,000
.Brazil
Bompreco 100,000 150,000
.Argentina
Perez Companc 1,000,000 1,400,000
.Peru
Enrique Ferreyros 4,200,000 6,000,000
(includes effect of 18% stock bonus)
- ----------------------------------------------------------------
Other Countries
.Australia
Anaconda Nickel 2,500,000 3,200,000
.Canada
Bracknell 1,100,000 1,600,000
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
------------------
<S> <C> <C>
6/30/97 9/30/97
Sales
- ---------------------------------------------------------
Europe
.Germany/Austria
Binding-Brauerei 15,000 0
Fresenius 60,000 50,000
KTM-Motorradholding 29,000 0
.Denmark
Falck 125,000 70,000
.Finland
Benefon 200,000 25,000
.Sweden
Hennes & Mauritz, Cl. B 440,000 0
Hexagon 175,000 0
Micronic Laser Systems 225,000 0
Oresa Ventures 96,000 0
Pricer, Cl. B 350,000 180,000
WM Data Nordic 3,000,000 2,700,000
.France
Canal Plus 27,000 0
Guilbert 30,000 15,000
Technip 50,000 0
.United Kingdom
Body Shop International 1,800,000 0
Capita Group 3,000,000 2,750,000
Capital 2,200,000 0
Peek 4,000,000 0
Premier Oil 12,000,000 6,000,000
Securicor Group, Cl. A 1,700,000 0
Spirax Sarco 100,000 0
.Switzerland
Liechtenstein Global Trust 13,000 5,000
Suedelektra Holding 8,000 0
.Italy/Greece
Banca Di Legnano 1,100,000 0
Banca Fideuram 7,100,000 6,730,000
Ergo Bank 228 0
Fila Holdings 100,000 0
Pininfarina 30,000 0
Unipol 1,000,000 0
.Spain/Portugal
Cortefiel 160,000 110,000
Investec 24,800 0
Zardoya Otis 16,000 0
</TABLE>
<TABLE>
<CAPTION>
Number of Shares
------------------
6/30/97 9/30/97
<S> <C> <C>
.Netherlands
Getronics 700,000 560,000
.Hungary
Cofinec 145,000 0
.Poland
Amica Wronki 210,000 0
- ---------------------------------------------------------
Asia
.Hong Kong
Innovative International
Holdings 12,000,000 0
JCG Holdings 11,000,000 0
Pacific Ports 2,000,000 0
Regent Pacific 8,910,000 0
.India/Pakistan
Mirc Electronics 500 0
Pakistan State Oil 59,035 0
.Japan
Belluna 249,700 0
HIS 115,000 0
Mars Engineering 142,000 0
Nanto Bank 415,000 135,000
Nidec 120,000 0
Orix Corporation 140,000 100,000
Paramount Bed 110,000 20,000
Secom 163,000 0
Shochiku 165,000 0
Tokyu Land 1,330,000 0
Xebio 135,000 0
.Korea
Dongbu Fire & Marine Insurance 233,330 0
Kookmin Bank 319,387 0
S1 Corporation 26,265 0
.Taiwan
Baring Taiwan Fund 150,000 0
Formosa Fund 80,000 0
Formosa Growth Fund 230,000 0
President Enterprises 480,000 473,380
(includes effect of 20% stock
dividend)
Taipei Fund 70,000 0
</TABLE>
23
<PAGE>
Acorn International
.Major Portfolio Changes in the Third Quarter
<TABLE>
<CAPTION>
Number of Shares
-------------------
6/30/97 9/30/97
<S> <C> <C>
.Malaysia
AMFB 3,230,000 0
Malaysian Assurance Alliance 1,210,000 0
.Indonesia
Tigaraksa Satria 2,900,900 0
Unilever Indonesia 230,000 0
.Philippines
Mondragon International 14,100,000 0
.Thailand
Shinawatra Satellite 4,470,100 500,000
Sinpinyo Fund V 2,600,000 0
- ------------------------------------------------------
Latin America
.Mexico
Bufete Industrial 450,000 200,000
Cofar 107,000 0
Grupo Accion 2,100,000 0
Grupo Radio Centro 263,000 0
Kimberly Clark de Mexico 3,600,000 3,200,000
.Brazil
Brazilian Smaller Companies
Warrants 1,000,000 0
Banco Itau Pfd. 20,000,000 18,000,000
White Martins 2,250,000 310,000
.Argentina
Cresud 1,400,000 0
Siderca 4,000,000 3,600,000
(includes effect of 7.3%
stock dividend)
- ------------------------------------------------------
Other Countries
</TABLE>
<TABLE>
<CAPTION>
Number of Shares
-------------------
6/30/97 9/30/97
<S> <C> <C>
.Australia/New Zealand
Hudson Conway 420,000 240,000
PDL Holdings 600,000 0
Skilled Engineering 1,800,000 175,000
Village Roadshow Pfd., Cl. A 3,000,000 0
.Canada
Fundy Cable 250,000 0
Pan East Petroleum 1,700,000 0
Shaw Communications 600,000 0
Shermag 300,000 0
Veritas Energy Services 395,000 0
.Israel
Pec Israel Economic 200,000 0
</TABLE>
24
<PAGE>
[I LOGO APPEARS HERE]
Acorn International
.Statement of Investments (unaudited) September 30, 1997
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 88.9%
- --------------------------------------------------------------------------------
<C> <S> <C>
Europe: 51.2%
.Germany/Austria: 4.8%
170,000 Rhoen Klinikum Pfd. $ 18,192
122,500 Rhoen Klinikum 13,664
Hospital Management
330,000 Pfleiderer 9,230
Construction Materials
50,000 Fresenius 8,436
Dialysis Equipment & Solutions
290,000 IVG Holdings 8,243
Real Estate & Logistics
190,000 Flughafen Wien 7,858
Vienna Airport Authority (Austria)
473,000 United International Holdings 5,794
Cable Television for Austria &
Other Countries (Austria)
40,000 Schaltbau 5,549
Railcar Components
21,000 Cewe Color Holding 5,113
Photographic Developing & Printing
90,000 Boewe Systec 2,956
Envelope Stuffing Machines
200,000 Berzelius Umwelt - Service 2,888
Industrial Waste Recycling
229,860 Scala Business Solutions (formerly
known as Scala International) 2,071
95,775 Scala Business Solutions
Warrants 3/31/99 235
95,775 Scala Business Solutions
Warrants 3/31/01 196
Financial Accounting Software (Austria)
- --------------------------------------------------------------------------------
90,425
.Denmark: 0.5%
44,000 Kompan International 5,398
Playground Equipment
70,000 Falck 3,279
Ambulance, Firefighting & Security Services
- --------------------------------------------------------------------------------
8,677
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<C> <S> <C>
.Finland: 4.6%
500,000 TT Tieto, Cl. B 56,276
Computer Services/Consulting
80,000 Fiskars, Series A 8,399
Scissors & Gardening Tools
100,000 Vaisala, Cl. A 7,567
Meteorological Instruments
550,000 Talentum 6,555
Trade Journals
100,000 Sentra, Cl. A 6,432
Grocery Wholesaling & Retailing
25,000 Benefon 364
Mobile Telephones
- --------------------------------------------------------------------------------
85,593
.Norway: 0.4%
855,000 SensoNor 6,391
Electronic Sensors for Airbags
500,000 Atex Media Solutions 1,410
Print Media Software
- --------------------------------------------------------------------------------
7,801
.Sweden: 5.9%
2,700,000 WM Data Nordic 45,220
Computer Services/Consulting
1,005,000 Getinge Industrier 18,886
Sterilization & Disinfection Equipment
350,000 Autoliv 14,875
Seatbelts & Airbags
315,000 Esselte, Series A 9,097
Office Supplies & Related Equipment
665,000 Bure Investment 8,638
Health Care Services & Investments
525,000 Atle 7,927
Investment Company
180,000 Pricer, Cl. B 5,246
Electronic Shelf Labels for Supermarkets
- --------------------------------------------------------------------------------
109,889
</TABLE>
25
<PAGE>
Acorn International
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -----------------------------------------------------------------
<S> <C> <C>
.France: 3.7%
200,000 Atos (formerly known as
Axime Ex Segin) 21,645
Computer Services
94,000 Cetelem 10,712
Consumer Financing
62,000 NRJ 8,413
Radio Network
60,000 Fininfo 7,323
Data Feeds for French Banks & Brokers
85,000 Spir Communications 6,048
Regional Newspapers
55,000 Virbac 4,895
Drugs for Animals
50,000 Groupe Partouche 3,178
Casinos
350,000 Groupe AB 2,931
Television Programming
50,000 Assystem 2,461
Consultants on Nuclear Power Plants
15,000 Guilbert 2,073
Office Supplies Distribution
- -----------------------------------------------------------------
69,679
.United Kingdom: 12.1%
2,000,000 Serco Group 26,816
Facilities Management
1,600,000 Powerscreen International 19,152
Mobile Crushing & Screening Equipment
1,950,000 Oriflame International 15,120
Natural Cosmetics Sold Door-to-Door
2,750,000 Capita Group 12,638
Outsourcing Government Services
467,000 NTL 12,317
Cable TV & Telephone System
3,600,000 Medeva 12,154
Drugs for Hyperactive Children
1,450,000 Seton Healthcare Group 10,716
Pharmaceuticals
800,000 Vosper Thornycroft Holdings 10,545
Naval Shipbuilding
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- -----------------------------------------------------------------
<S> <C> <C>
4,500,000 City Centre Restaurants 10,250
Fast Food Restaurants
1,500,000 N. Brown Group 10,189
Mail Order Clothing in Large Sizes
4,000,000 St. James Place 9,272
Life Insurance
1,700,000 Rotork 8,582
Valve Actuators for Oil & Water Pipelines
13,000,000 Electronics Boutique 7,980
Videogame/Computer Software Stores
800,000 Expro International Group 6,979
Oil Field Services
950,000 Edinburgh Fund Managers 6,944
Investment Management
2,950,000 HALMA 6,433
Fire Detection Devices & Burglar Alarms
1,300,000 Dorling Kindersley 5,985
Reference Books & CD-ROMs
500,000 Comcast UK Cable Partners 5,125
Cable TV & Telephone System
2,000,000 Shanks & McEwan 5,008
Landfills & Waste Incinerators
6,000,000 Premier Oil 4,967
Oil & Gas Producer
1,200,000 Ivory & Sime 4,003
Investment Management
2,000,000 Aberdeen Trust 3,360
Money Management
670,000 Ethical Holdings 3,057
Drug Delivery
110,000 Euro Money Publications 2,994
Press Printing
600,000 Hozelock Group 2,903
Garden Hoses
400,000 Eurotherm 2,633
Instruments & Measuring Devices
250,000 Gentia Software 1,000
Computer Software
230,000 Tunstall 279
"I've fallen and I can't get up" Monitors
- -----------------------------------------------------------------
227,401
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
>Switzerland: 4.5%
9,000 Societe Generale de Surveillance $ 15,772
Inspection/Testing of Trade Goods
28,000 Phoenix Mecano 15,192
Electrical Components Manufacturer
9,000 Cie Fin Richemont 11,743
Luxury Goods & Tobacco
45,000 Publicitas Holding 10,566
Print Advertising Broker
60,000 Selecta Group 8,717
Vending Machines
18,000 Societe Generale d'Affichage 7,120
Billboard Advertising
12,000 Hero 6,652
Packaged Foods
10,000 Prodega 4,992
Cash-and-Carry Retailer
5,000 Liechtenstein Global Trust 2,720
Banking & Investment Management
- ------------------------------------------------------------------------------
83,474
>Italy/Greece: 8.0%
6,730,000 Banca Fideuram 28,079
Life Insurance & Mutual Funds
2,500,000 Saipem SPA 15,066
Pipeline Construction & Drilling Contractor
250,000 Hellenic Bottling 12,996
Coca-Cola Bottler (Greece)
600,000 Gewiss 11,595
Electrical Plugs & Switches
2,750,000 Autogrill 11,466
Tollway Restaurants
650,000 Mediolanum 10,546
Life Insurance & Mutual Funds
700,000 Banca Popolare Di Bergamo 10,344
Regional Bank
2,000,000 Editoriale L'Espresso 8,182
Newspapers & Magazines
500,000 Banco Pop Commercia e Industria 7,128
Regional Bank
160,000 Cellular Communications International 6,640
Mobile Communications
480,000 Attica Enterprises 6,023
Ferry Line (Greece)
300,000 Saes Getters 5,667
Getters used in TVs/PCs
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
20,000,000 Dalmine 5,157
Seamless Steel Pipes
500,000 Aeroporti di Roma 4,856
Airport Management
200,000 Industrie Natuzzi 4,738
Leather Couches
175,000 Danieli 1,398
Steel-making Machinery
- ------------------------------------------------------------------------------
149,881
>Spain/Portugal: 1.4%
140,000 Mapfre Vida 8,541
Life Insurance & Mutual Funds
200,000 Vallehermoso 5,517
Residential Property Developer & Landlord
110,000 Cortefiel 4,668
Apparel Retailer
214,000 Estoril Sol 3,551
Casino Resort (Portugal)
200,000 Lusotur 2,780
Real Estate/Resort Developer (Portugal)
150,000 Filmes Lusomundo 1,209
Newspapers, Radio, Video, Film Distribution (Portugal)
350,000 Televisao Independente 642
Television Station (Portugal)
- ------------------------------------------------------------------------------
26,908
>Netherlands: 4.8%
630,000 Kempen 24,986
Stock Brokerage/Investment Management
560,000 Getronics 17,537
Computer Services
270,000 Hunter Douglas 11,563
Decorative Window Coverings
310,000 Fugro McClelland 10,830
Engineering, Consulting & Surveying
160,000 ASR Verzekeringsgrp (formerly known as Stad Rotterdam) 8,083
Insurance
300,000 Telegraaf Holdings 6,334
Newspaper Publisher
310,000 Wegener Arcade NV 6,233
Newspaper Publisher
320,000 DOC Data 5,228
Audio CD & CD-Rom Replication
- ------------------------------------------------------------------------------
90,794
</TABLE>
27
<PAGE>
[I]
Acorn International
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<C> <S> <C>
.Hungary: 0.2%
40,000 Gedeon Richter $ 4,244
Generic Drugs
.Poland: 0.3%
2,500,000 Bank Inicjatyw Gospodarczych 3,217
Warsaw Bank
200,000 Best Company, Series D 1,416
Electronics Retailer
200,000 Bank Komunalny 971
Gdansk-Area Bank
- --------------------------------------------------------------------------------
5,604
--------
Europe: Total 960,370
- --------------------------------------------------------------------------------
Asia: 20.9%
.Hong Kong: 3.2%
8,500,000 Varitronix International 16,255
LCD Manufacturer
13,810,000 Li and Fung 16,149
Sourcing of Consumer Goods
3,500,000 TVB 12,392
Television Broadcasting
21,000,000 China HK Photo Products 6,920
Fuji Film Distributor
8,500,000 Vanda Systems 4,970
Systems Integrator
20,000,000 Golden Harvest Entertainment 3,308
Movie Distribution & Exhibition
- --------------------------------------------------------------------------------
59,994
.India/Pakistan: 0.9%
82,692 Housing Development Finance 7,460
Mortgage Lender
300,000 IS Himalaya Fund 3,870
Closed-End Fund
1,047,200 Zee Telefilms 3,170
Hindi Television Programming & Broadcasting
349,450 Max India 1,560
50,000 Max India New Shares 223
Penicillin & Mobile Phones
810,000 Tube Investment GDR 810
Bicycle Manufacturer
2,000,000 Centurion Quantum Growth 307
Closed-End Fund
- --------------------------------------------------------------------------------
17,400
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<C> <S> <C>
.Japan: 10.7%
350 NTT Data $ 15,858
Computer Services/Consulting
440,000 Aderans 11,735
Hairpieces & Wigs
350,000 Meitec 11,219
Engineering Outsourcing
270,000 Noritsu Koki 11,070
Photo Processing Lab Manufacturer
39,000 Shohkoh Fund 10,886
Short-Term Loans for Small Business
112,600 Nichiei 10,726
Short-Term Loans for Small Business
110,000 Nintendo 10,296
Video Games
300,000 Amway Japan 8,598
Direct Consumer Goods Sales
140,000 Aeon Credit Service 8,465
Credit Cards
300,000 Hokuto 8,200
Mushroom Grower
100,000 Orix Corporation 7,604
Leasing Company
235,000 Konami 7,202
Entertainment Software/Hardware
216,840 Fuji Software ABC 7,148
Computer Services/Consulting
1,500,000 Long Term Credit Bank 6,548
Bank
290,000 Shinki 5,885
Corporate & Consumer Lending
80,000 Ryohin Keikaku 5,188
Designer & Retailer of Muji Brand
Specialty Consumer Goods
120,000 Softbank Corporation 4,900
Publisher/Software Distributor
35,000 Keyence 4,899
Detection Devices
255,000 Heiwa 4,879
Pachinko Machine Manufacturer
165,000 Lasertec 4,852
Manufacturer of LCD &
Photomask Defect Detectors
170,000 People 4,534
Sports Clubs
900,000 Chuo Trust & Banking 4,324
Bank
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ---------------------------------------------------------------------
<S> <C> <C>
195,000 Sankyo $ 4,038
Pachinko Machine Manufacturer
275,000 Mirai Industry 3,963
Manufacturer of Plastic Housing Components
1,760,000 Orient Corporation 3,878
Credit Cards
210,000 Arrk Corporation 3,496
Industrial Modeling
160,000 NuSkin Asia Pacific 3,090
Direct Consumer Goods Sales
350,000 Nihon Unisys 2,319
Data Communications
213,500 Central Uni 1,547
Health Care/Medical Equipment
55,000 Tiemco 920
Fishing Equipment
20,000 Paramount Bed 800
Hospital Bed Manufacturer
135,000 Nanto Bank 694
Bank
65,020 Nihon Jumbo 641
Photo Processing Lab
- ---------------------------------------------------------------------
200,402
.Taiwan: 0.4%
473,380 President Enterprises 7,278
Food Manufacturer & Distributor
.Malaysia: 0.4%
2,000,000 Malaysian Oxygen 7,404
Industrial Gases
.Indonesia: 0.9%
11,400,000 Bank Niaga 5,578
Banking
3,200,000 Modern Photo Film 4,159
Fuji Film Distributor
2,000,000 Medco Energi 2,599
Oil & Gas Drilling & Production
3,000,000 Mustika Ratu 2,500
Traditional Cosmetics
2,700,000 Tunas Ridean 1,858
Auto Retailing
- ---------------------------------------------------------------------
16,694
</TABLE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- ---------------------------------------------------------------------
<S> <C> <C>
.Philippines: 1.3%
50,000,000 Int'l Container Terminal Services $ 10,335
$5,000,000 Int'l Container Terminal Services
Cv. 1.75% 3/13/04 4,450
Container Handling Terminals &
Port Management
12,000,000 Ionics Circuits 8,035
Computers
3,500,000 Philippine Savings Bank 1,707
Banking
- ---------------------------------------------------------------------
24,527
.Singapore: 2.4%
8,300,000 Genting International 20,667
Cruise Line
3,800,000 Venture Manufacturing 16,144
2,500,000 Venture Manufacturing
Warrants 7/26/99 8,464
Contract Electronics Manufacturer
- ---------------------------------------------------------------------
45,275
.Thailand: 0.7%
815,000 BEC World Public 5,658
Television/Radio Broadcasting
320,000 Bangkok Insurance 4,478
Finance/Insurance
200,000 Serm Suk 2,796
Pepsi Bottler
500,000 Shinawatra Satellite 258
Satellite Leasing
- ---------------------------------------------------------------------
13,190
--------
Asia: Total 392,164
</TABLE>
29
<PAGE>
[I]
Acorn International
.Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ---------------------------------------------------------------
Latin America: 9.6%
.Mexico: 3.1%
<S> <C> <C>
3,200,000 Kimberly Clark de Mexico $ 16,728
Paper Products
1,500,000 Grupo Industrial Bimbo 13,696
Bread, Baked Goods & Snacks
460,000 Tubos de Acero de Mexico 10,666
Seamless Pipe for Oil Wells
9,000,000 Nadro, Series L 9,792
Pharmaceutical Distributor
200,000 Bufete Industrial 3,775
Engineering & Construction
600,000 Corp Interamericana
de Entretenimiento 3,627
Management of Live Entertainment
- ---------------------------------------------------------------
58,284
.Brazil: 2.1%
18,000,000 Banco Itau Pfd. 11,632
Bank
165,000,000 Cemig Pfd. 9,217
Electric Utility
350,000 Elevadores Atlas 5,559
Elevator Services
30,000,000 Telemig 4,655
30,000,000 Telemig Pfd. 4,422
Telecommunications
150,000 Bompreco 3,863
Supermarket Chain
310,000 White Martins 722
Industrial Gases
- ---------------------------------------------------------------
40,070
.Argentina: 1.9%
320,000 IRSA 14,160
Real Estate Management & Development
1,400,000 Perez Companc 11,286
Oil & Gas Producer
3,600,000 Siderca 10,766
Steel Pipe Producer
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ---------------------------------------------------------------
<S> <C> <C>
36,212
.Chile: 1.3%
150,000 Genesis Chile Fund 7,425
Closed-End Fund
260,000 Banco BHIF 5,298
Financial Services
220,000 Santa Isabel 5,129
Supermarket Chain
120,000 Embotelladora Andina, Series A 3,090
120,000 Embotelladora Andina, Series B 2,910
Coca-Cola Bottler
- ---------------------------------------------------------------
23,852
.Peru: 0.4%
6,000,000 Enrique Ferreyros 6,561
Heavy Machinery Dealer
.Panama: 0.8%
185,000 Banco Latinoamericano
de Exportaciones 8,279
Trade Financing (Panama)
161,000 Carnival 7,446
Cruise Ship Line (Panama)
- ---------------------------------------------------------------
15,725
--------
Latin America: Total 180,704
- ---------------------------------------------------------------
Other Countries: 7.2%
.Australia/New Zealand: 3.2%
2,200,000 Publishing & Broadcasting 14,498
Media & TV Broadcasting
4,500,000 Tyndall Australia 8,636
Money Management & Insurance
3,200,000 Anaconda Nickel 8,343
Nickel Mining
1,750,000 Sky City 7,516
Casino & Hotel (New Zealand)
1,400,000 PetSec Energy 7,300
Oil & Gas Producer
5,200,000 Sonic Healthcare 6,854
Pathology Labs
1,000,000 Siddons Ramset 5,866
Manufacturer & Distributor of
Construction Materials
240,000 Hudson Conway 1,642
Casino Managers
175,000 Skilled Engineering 264
Temporary Skilled Labor
- ---------------------------------------------------------------
60,919
</TABLE>
30
<PAGE>
[I]
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ---------------------------------------------------------------------
<C> <S> <C>
.Canada: 2.8%
520,000 Shaw Industries $ 20,419
Oil Field Services
250,000 Cinar Films 9,531
Children's Television Programming
1,000,000 Ranger Oil 9,375
Oil & Gas Producer
1,600,000 Bracknell 5,612
Speciality Contractor
500,000 Cogeco 3,580
Cable TV
300,000 Cogeco Cable 2,625
Cable TV
900,000 Pangea Goldfields 2,083
Gold Mining Exploration
- ---------------------------------------------------------------------
53,225
.Israel: 0.4%
325,000 Blue Square Israel 4,225
Supermarkets & Department Stores
310,000 ZAG Industries 3,720
Plastic Hardwares
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ---------------------------------------------------------------------
<C> <S> <C>
7,945
.South Africa: 0.3%
780,000 Energy Africa 4,517
Oil & Gas Producer
.United States: 0.5%
203,000 AES Corporation 8,881
Worldwide Electric Generating Plants
----------
Other Countries: Total 135,487
3,444 Miscellaneous Securities: 0.0% 14
Total Common Stocks and Other ----------
Equity-Like Securities: 88.9% 1,668,739
----------
Short-Term Obligations: 9.8% 183,773
----------
Total Investments: 98.7% 1,852,512
----------
Cash and Other Assets Less Liabilities: 1.3% 23,809
----------
Total Net Assets: 100% $1,876,321
- ---------------------------------------------------------------------
</TABLE>
31
<PAGE>
[I]
Acorn International
.Portfolio Diversification
At September 30, 1997, the Fund's portfolio of investments as a percent of net
assets was diversified as follows:
<TABLE>
<CAPTION>
Value (000) Percent
- -------------------------------------------------------------
<S> <C> <C>
.Information
Software/Services $150,186 8.0%
Computer Systems 99,288 5.3
Broadcasting/CATV 91,576 4.9
Consumer Electronics 38,091 2.0
Distribution 32,782 1.7
Mobile Communications 18,122 1.0
Instrumentation 15,867 0.9
- -------------------------------------------------------------
445,912 23.8
.Health Care
Biotechnology/Drug Delivery 46,067 2.5
Services 40,494 2.1
Equipment 20,433 1.1
Hospital/Laboratory Supplies 16,090 0.9
- -------------------------------------------------------------
123,084 6.6
.Consumer Goods/Services
Retail 126,619 6.8
Manufacturers 114,365 6.1
Food 79,334 4.2
Entertainment/Leisure 65,807 3.5
Recreational Vehicles 810 0.0
- -------------------------------------------------------------
386,935 20.6
.Finance
Money Management 116,501 6.2
Banks 74,028 4.0
Credit Cards 23,055 1.2
Insurance 21,102 1.1
Other 66,432 3.5
- -------------------------------------------------------------
301,118 16.0
</TABLE>
<TABLE>
<CAPTION>
Value (000) Percent
- -------------------------------------------------------------
<S> <C> <C>
.Industrial Goods/Services
Services 148,182 7.9%
Machinery Processing 68,997 3.7
Steel 26,368 1.4
Forest Products/Construction 9,230 0.5
- -------------------------------------------------------------
252,777 13.5
.Energy/Minerals
Oil/Gas Producers 47,448 2.5
Oil Services 32,811 1.7
Independent Power 18,098 1.0
Mining 10,426 0.6
- -------------------------------------------------------------
108,783 5.8
.Real Estate 30,700 1.6
.Transportation 19,430 1.0
Total Common Stocks and
Other Equity-Like Securities 1,668,739 88.9
Short-Term Obligations 183,773 9.8
---------------------
Total Investments 1,852,512 98.7
Cash and Other Assets
less Liabilities 23,809 1.3
---------------------
Net Assets $1,876,321 100.0%
- -------------------------------------------------------------
</TABLE>
32
<PAGE>
The Acorn
- ------------------------
Family of Funds
.Trustees
Irving B. Harris
Chairman
James H. Lorie
Vice Chairman
Leo A. Guthart
Jerome Kahn, Jr.
David C. Kleinman
Charles P. McQuaid
Roger S. Meier
Adolph Meyer, Jr.
Ralph Wanger
.Officers
Ralph Wanger
President
Charles P. McQuaid
Senior Vice President
Terence M. Hogan
Vice President
Leah J. Zell
Vice President
Robert A. Mohn
Vice President
Marcel P. Houtzager
Vice President
Merrillyn J. Kosier
Vice President and Secretary
Bruce H. Lauer
Vice President and Treasurer
Kenneth A. Kalina
Assistant Treasurer
.Investment Advisor
Wanger Asset Management, L.P.
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
1-800-9-ACORN-9
(1-800-922-6769)
e-mail: [email protected]
web site: www.wanger.com
.Distributor
WAM Brokerage Services, L.L.C.
P.O. Box 8502
Boston, Massachusetts 02266-8502
.Transfer Agent, Dividend Disbursing Agent
and Custodian
State Street Bank and Trust Company
Attention: Acorn Family of Funds
P.O. Box 8502
Boston, Massachusetts 02266-8502
1-800-962-1585
.Legal Counsel
Bell, Boyd & Lloyd
Chicago, Illinois
This report, including the unaudited schedules of investments, is submitted for
the general information of the shareholders of Acorn Investment Trust. This
report is not authorized for distribution unless preceded or accompanied by a
prospectus.
<PAGE>
---------------
The Acorn FIRST CLASS
- ------------------------ PRE-SORT
Family of Funds U.S. POSTAGE
PAID
WAM Brokerage Services, L.L.C. CHICAGO,IL
P.O. Box 8502 PERMIT NO. 1200
Boston, MA 02266-8502 ---------------
