<PAGE>
Acorn
The Acorn Family of Funds
First Quarter Report
-----------------------------------
March 31, 1998
Managed by Wanger Asset Management, L.P.
<PAGE>
[ORANGE BAR]
Wanger Asset Management, L.P. ("WAM") is one of the leading global small-cap
equity managers in the U.S., with over 27 years of small-cap investment
experience. WAM manages over $7 billion in equities and is also the investment
advisor for Wanger Advisors Trust, Wanger Investment Company, PLC, and
separately managed accounts for institutions and high net worth individuals.
<PAGE>
Acorn Family of Funds First Quarter Report 1998
.Table of Contents
Squirrel Chatter
.Wealth and Poverty 2
Acorn USA
.In a Nutshell 4
.Performance at a Glance 5
.Major Portfolio Changes 10
.Statement of Investments 11
Acorn Fund
.In a Nutshell 6
.Performance at a Glance 7
.Major Portfolio Changes 14
.Statement of Investments 16
.Foreign Portfolio Diversification 22
Acorn International
.In a Nutshell 8
.Performance at a Glance 9
.Major Portfolio Changes 23
.Statement of Investments 25
.Portfolio Diversification 31
<PAGE>
. Squirrel Chatter: Wealth and Poverty
How does one invest? You must decide whether a prospective investment is going
to be a long-term winner or loser, using the lessons of the past as a guide.
There is an excellent new book out demonstrating how a top historian can do
this. When our own Leah Zell got her Ph.D. in History at Harvard, her thesis
advisor was Professor David Landes. His latest book is The Wealth and Poverty of
Nations: Why Some are So Rich and Some So Poor. That is a long title, but it is
a long book, since it covers 500 years of world economic history. The major
players (Spain, Netherlands, Great Britain, Japan, USA) are discussed in detail
and some unexpected minor leaguers (Egypt, Paraguay) get their stories told,
too.
Medieval Europe had a fractured political system that allowed both invention and
enterprise. Two major inventions in Europe were eyeglasses and the clock.
Climate has a lot to do with energy level; most of the poor nations are in
the tropics, and substantial populations cannot live in deserts or tundra.
Today, of course, we have air conditioning, so Singapore and Hong Kong found
comfort and economic success. More important are cultural, governmental, and
religious factors. Imperial China had a strong bureaucratic government that
suppressed technology and entrepreneurship, while medieval Europe had a
fractured political system that allowed both invention and enterprise. The two
early European inventions that Landes likes best were eyeglasses and the clock.
Professor Landes spent much of his career studying the Industrial
Revolution, so Great Britain bulks large in his book. The Brits hustled their
way past the bigger and richer countries such as Spain and France, who were
hampered by aristocratic disdain for manufacturing and religious intolerance.
Great Britain built the first modern industrial country, accumulated an empire,
and was then passed in turn by Germany and America.
Why did Britain lose leadership at the end of the 19th century?
"Part of the difficulty lay in British schooling: the continental countries had
created technical and scientific institutions as a matter of policy, whereas
Britain had let this kind of education grow like a weed and had treated it, once
grown, like a poor relation of 'proper' schools and universities."/1/
In 1869, an English chemist, William H. Perkin, created a synthetic mauve
dye, initiating the organic chemical industry. However, Britain soon lost its
pioneering edge to the Germans, so that by 1900, 80-90% of the world's
artificial dyes were from Germany. Why did chemistry become a German discipline?
Education was key. Apart from Perkin and a few others, Britain did not train
gifted chemists and Germany did. As a result, the major chemical companies a
century ago were Hoechst, BASF, Bayer, and Agfa, all German corporations built
around Nobel-class chemists with first-rate laboratories./2/
Most Englishmen were not concerned about chemistry. The English had solid
steel and machinery expertise, allowing them to build railways, ships, machine
tools, and cannon. If synthetic dyes gave Germany an edge in ladies ready-to-
wear, that was of no concern to English men of affairs. Events proved otherwise.
The first half of the twentieth century was dominated by chemical and electrical
advance; chemists produced drugs, plastics, synthetic fibers, and through Fritz
Haber's nitrogen fixation process, fertilizers and explosives. Almost all of
these were German inventions.
In 1942, American chemists were able to duplicate the German process for
making synthetic rubber. At this time the Japanese had captured all the natural
rubber plantations. Without synthetic rubber, Germany might not have dared to
start the war, and the U.S. couldn't have won it.
2
<PAGE>
When Japan had a great bull market in the 1980's, everyone thought that the
Japanese would take over the world.
What about us?
Professor Landes' book describes how the Spanish went from the richest and most
powerful country to a middling power, as did the Portuguese, the Dutch, the
English, and the Germans. If British schooling spent too much time on Latin and
Greek and not enough on calculus and chemistry in the last century, and
therefore lost world leadership to ungentlemanly Germans and Americans, can the
same thing happen to the United States? How is our educational system preparing
us for the new century?
F's for U.S. Schools: Results from the latest and most comprehensive
comparison of education in 23 nations showed that American high school seniors
fall further behind their foreign counterparts than anyone thought. In tests of
general mathematics, students from only two nations--Cyprus and South Africa--
fared worse than U.S. 12th graders. And no country performed more poorly on
tests of advanced mathematics and physics. Only those American students taking
advanced placement calculus ranked higher than the average in that field./3/
Perhaps the 1990's grand bull market in the U.S. has made us complacent.
Historical precedent suggests that we should be a lot more worried. When Japan
had a great bull market in the 1980's, everyone thought that the Japanese would
take over the world./4/ The Tokyo bull market ended, and Japanese triumphalism
has vanished. It can happen here.
The moral for investors? Today's leader may be an also-ran tomorrow. If
American industry has some special magic, why are we running a $200 billion
trade deficit with the rest of the world? Historical precedent suggests that a
prudent long-term investor should have a meaningful part of his or her portfolio
diversified outside of the United States. Investing in Acorn International is
one way to accomplish this.
Best Regards,
/s/Ralph Wanger
- ---------------
Ralph Wanger
Chief Investment Officer, Wanger Asset Management
Lead Portfolio Manager, Acorn Fund
. Press Recognition
In the February 1998 issue, Worth Magazine editors chose Acorn Fund as one of
their 20 favorite top-performing equity funds. Funds were chosen for their
combination of superior returns and relatively low risk.
In Bottom Line Personal (March 1, 1998), A. Michael Lipper, president of
Lipper Analytical Services, Inc. observed that shrewd investors select mutual
fund investments based on a fund's clear and consistent buy/sell strategies,
rather than simply on a fund's performance. Acorn International was highlighted
as one such shrewd fund investment.
- --------------------------------------------------------------------------------
/1/ The Wealth and Poverty of Nations: Why Some are So Rich and Some So
Poor, p. 458.
/2/ Ibid, p. 289.
/3/ Scientific American, May 1998.
/4/ Michael Crichton's Rising Sun, a Japan-is-taking-over novel, came out in
early 1992.
3
<PAGE>
Acorn USA
. In a Nutshell
[Photo]
The good times kept rolling last quarter. Acorn USA gained +12.9%, more than
most other small-cappers (Russell 2000 index rose +10.1%), and a little less
than the mega-cap S&P 500 (+14.0%). Over the past year, Acorn USA has returned
an astonishing +51.6%, beating the S&P's +48.0%, as well as all of our other
benchmarks.
Our stocks seduced several suitors last quarter. Five of our 56 companies
received takeover proposals--four said "I do" and one demurred (Data
Transmission). Three of the newlyweds (Wonderware, Computer Language and
ForeFront) were niche technology companies discovered by our tech wiz, Laura
McKenna. Both she and the Acquirers were smitten with the three companies' heady
growth prospects and bargain stock prices...but Laura got there first. Our other
takeover was California banker H.F. Ahmanson, which became the latest notch in
the money belt for merger-addict Washington Mutual.
Cable television stocks were the blockbusters of the quarter. Our
headliners included Liberty Media (Discovery Channel, SportsChannels), United
Video (on-screen TV guides), Cablevision (New York cable system) and RCN
(bundles cable, phone and internet services). A year ago, TV know-it-alls bashed
cable TV as a has-been technology for half-baked couch potatoes. A year later,
it's the experts who are abashed. Cable's entrenched customer base, abundance of
channels and speedy internet access are making it a multimedia king.
It's been nothing but fun owning stocks in the Nineties (the decade, not
the p/e). Wall Street's direction arrow has been stuck on UP. Physicists are
baffled and old-timers babble on about bubbles and tulip bulbs, but the
investing public parties on. So is the market too high or not too high? That's
not our question. Rather than gawk at the market, we zero in on individual
companies, hunting for dynamic firms with stocks trading at prices below what we
believe to be their worth. Those are the stocks of Acorn USA.
/s/ Robert A. Mohn
- ------------------
Robert A. Mohn
Lead Portfolio Manager
Fund Assets as of 3/31/98: $249.9 million
. Acorn USA Top 10 Holdings
Lincare Holdings 5.6%
Home Health Care Services
CalEnergy 4.7%
Power Plants
H.F. Ahmanson (formerly Coast Savings) 4.0%
California Savings & Loan
Micros Systems 3.9%
Information Systems for Restaurants & Hotels
Acceptance Insurance 3.5%
Crop Insurance
Wonderware 3.3%
Industrial Control Software
United Video Satellite 3.2%
CATV & Satellite Dish Programming
Host Marriott 3.0%
Fast Food Kiosks in Airports
Data Transmission 2.9%
Data Services for Farmers
Atmos Energy 2.9%
Natural Gas Utility
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
Deep
Breathing
Lincare Holdings is the leading home health care provider of oxygen therapy for
patients with respiratory diseases such as emphysema. Respiratory care is a
rapidly growing, highly profitable business. Too profitable, according to
Federal health care regulators, who this year slashed oxygen reimbursement rates
by 30%. The Big Cut will temporarily sting Lincare's earnings (one step back),
but will murder smaller, higher-cost competitors and bequeath their market share
to Lincare (two steps forward). When the stock market misdiagnosed the Cut's
benevolent side effect, analyst John Park began buying shares on the cheap.
Since John's masterful call, Lincare has surged +85% to become the largest
position in the Fund.
4
<PAGE>
Performance at a Glance
The Value of a $10,000 Investment in Acorn USA
. September 4, 1996 through March 31, 1998
Acorn USA($) Russsell 2000($)
09/04/96 10,000 10,000
09/30/96 10,720 10,360
12/31/96 11,650 10,899
03/31/97 11,480 10,335
06/30/97 13,320 12,011
09/30/97 15,340 13,798
12/31/97 15,413 13,335
03/31/98 17,401 14,678 +12.9%
Average Annual Total Return
1 Year Life of Fund
51.6% 42.3%
This graph compares the results of $10,000 invested in Acorn USA on September 4,
1996 (the date Fund shares were first offered to the public), with the Russell
2000 Stock Index with dividends reinvested. Past performance does not guarantee
future results. The investment return and principal value of an investment in
the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or
less than their original cost.
Acorn USA Portfolio Diversification
. as % of net assets, at 3/31/98
[Pie chart appears here]
Information 38.3%
Finance 14.7%
Energy/Minerals 14.6%
Industrial Goods/Services 9.8%
Health Care 11.1%
Consumer Goods/Services 6.1%
Other Industries 2.1%
Cash and other assets less liabilities 3.3%
-----
100.0%
Relative Performance
- ------------------------------------------------
1st quarter Last 12 mos.
1998
Acorn USA 12.9% 51.6%
Russell 2000 10.1% 42.0%
Lipper Small Cap
Funds Avg. 10.9% 43.5%
S&P MidCap 400 11.0% 49.0%
S&P 500 14.0% 48.0%
Dow-Jones 11.8% 36.1%
The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then
eliminating the largest 1,000 leaving a good small company index. The Lipper
Small Cap Funds Avg. is an average of all U.S. small-cap funds tracked by
Lipper, which consisted of 583 and 493 funds for the 1st qtr. and 12-mos.
periods above. The S&P MidCap 400 is a market value-weighted index of 400 stocks
that are in the next tier down from the S&P 500. The S&P 500 is a broad market-
weighted average of U.S. blue-chip companies. The Dow Jones Industrial Average
includes 30 large companies. All indexes are unmanaged and returns include
reinvested dividends.
Net Asset Value Per Share 3/31/98: $17.07
5
<PAGE>
Acorn Fund
. In a Nutshell
Acorn Fund surged 12.0% in the first quarter, beating many of its peers and the
small-cap Russell 2000's gain of 10.1%. Large-cap stocks continued to outperform
small-caps; the S&P 500 was up 14.0%.
Media stocks remained hot as programmers continued to prosper and the cable
industry rolled out new services. Liberty Media showed a 43% rise, United Video
Satellite Group beamed a 48% boost, RCN wired a 46% jolt, and Cablevision
exhibited a 37% gain. International cable stocks finally joined the party, as
NTL jumped 55%, United International Holdings 46%, and Comcast UK Cable 42%.
Our wares were wonderful. Wonderware returned a 69% gain as it agreed to be
acquired, and Compuware jumped 54% on the year 2000 computer bug mania. Although
Acorn Fund co-manager Chuck McQuaid is from Ware (MA), our technology analyst
Laura McKenna warehoused these stocks for Acorn.
SEI Investments returned a 63% gain as its investments in mutual fund
marketing and pension administration boosted earnings. Italy's Banca Fideuram
took in lots of mutual fund money and provided a 59% return to its shareholders.
Other European stocks did well. Britain's Serco Group and Sweden's WM Data
computed 54% and 46% gains. Aeroporti di Roma landed a 66% return.
As pages 14-15 indicate, we swapped several technology positions and began
to take some gains on media stocks during the quarter. We believe the stocks we
purchased are more attractive, given current valuations.
/s/ Ralph Wanger
Ralph Wanger
Lead Portfolio Manager
/s/ Charles P. McQuaid
Charles P. McQuaid
Co-Portfolio Manager
Fund Assets as of 3/31/98: $4,023.9 million
. Acorn Fund Top 10 Holdings
Liberty Media 3.0%
CATV Programming
AES Corporation 2.9%
Global Power Producer
Carnival 2.4%
Cruise Ship Line
Lincare Holdings 2.2%
Home Health Care Services
Harley Davidson 1.8%
Motorcycle Manufacturer
Borders Group 1.7%
Bookstores
National Data 1.6%
Credit Card Processing
HBO and Company 1.5%
Health Care Information Systems
International Game Technology 1.3%
Gaming Equipment
People's Bank Bridgeport 1.2%
Consumer Finance
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
Prime Time
Liberty Media was Acorn's largest dollar winner in the 1st quarter, gaining over
$36 million as it rose 42% to become Acorn's biggest investment. We like CATV
programmers--subscribership and advertising both provide revenues. Mature
channel cash flows have been climbing over 15% a year, and Liberty is adding new
channels. While value grows consistently, Liberty stock has been volatile. It
jumped over 100% in each of 1991, 1992, 1993 and 1997, but underperformed when
CATV was out of favor. We bought more shares when Liberty stock was
disappointing, correctly believing that growth would eventually be rewarded.
6
<PAGE>
Performance at a Glance
The Value of a $10,000 Investment in Acorn Fund
June 10, 1970 through March 31, 1998
[Pie chart appears here]
Acorn S&P
Date Fund ($) ($)
- ---- -------- ------
6/10/70 10,000 10,000
1970 13,587 12,676
1971 17,828 14,490
1972 19,368 17,242
1973 14,765 14,709
1974 10,691 10,816
1975 13,945 14,842
1976 23,045 18,394
1977 27,168 17,077
1978 31,777 18,200
1979 47,790 21,586
1980 62,594 28,602
1981 58,005 27,195
1982 68,208 33,054
1983 85,389 40,510
1984 89,045 43,051
1985 117,142 56,710
1986 136,843 67,295
1987 142,923 70,828
1988 178,370 82,591
1989 222,681 108,761
1990 183,674 105,386
1991 270,641 137,492
1992 336,210 147,928
1993 444,889 162,882
1994 411,750 165,932
1995 497,407 227,047
1996 609,569 279,177
1997 761,852 372,320
3/31/98 853,328 424,257 +12.0%
Average Annual Total Return
----------------------------------------
1 Year 5 Years 10 Years Life of Fund
43.5% 18.3% 18.3% 17.3%
This graph compares the results of $10,000 invested in Acorn Fund on June 10,
1970 (the date Fund shares were first offered to the public), with all dividends
and capital gains reinvested, with the Standard & Poor's 500 Stock Index with
dividends reinvested. Past performance does not guarantee future results. The
investment return and principal value of an investment in the Fund will
fluctuate so that Fund shares, when redeemed, may be worth more or less than
their original cost.
Acorn Fund Portfolio Diversification
as a % of net assets, at 3/31/98
[Pie chart appears here]
Information 29.4%
Finance 12.3%
Energy/Minerals 10.1%
Industrial Goods/Services 10.4%
Health Care 8.1%
Consumer Goods/Services 9.2%
Other Industries 3.1%
Foreign 11.9%
Cash and other assets less liabilities 5.5%
-----
100.0%
Relative Performance
- --------------------------------------------
1st quarter Last 12 mos.
1998
Acorn Fund 12.0% 43.5%
S&P 500 14.0% 48.0%
Russell 2000 10.1% 42.0%
Lipper Small Cap
Funds Avg. 10.9% 43.5%
S&P MidCap 400 11.0% 49.0%
Dow-Jones 11.8% 36.1%
The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The
Russell 2000 is formed by taking the 3,000 largest U.S. companies and then
eliminating the largest 1,000 leaving a good small company index. The Lipper
Small Cap Funds Avg. is an average of all U.S. small-cap funds tracked by
Lipper, which consisted of 583 and 493 funds for the 1st qtr. and 12-mos.
periods above. The S&P MidCap 400 is a market value-weighted index of 400 stocks
that are in the next tier down from the S&P 500. The Dow Jones Industrial
Average includes 30 large companies. All indexes are unmanaged and returns
include reinvested dividends.
Net Asset Value Per Share 3/31/98: $19.03
- -----------------------------------------
7
<PAGE>
Acorn International In a Nutshell
[Photo]
Acorn International rose 18.2% in the first quarter, exceeding all of our
benchmarks. It was the highest return the Fund has achieved in any one quarter
since inception.
Being small-cap and heavily invested in Europe has paid off handsomely so
far in 1998. The European stock markets have risen sharply. International small-
cap stocks outperformed their large-cap brethren by more than 3% over the
quarter, as measured by the relative performance of their respective Lipper
averages. Five countries alone--Italy, UK, Netherlands, Finland and Sweden--
contributed over 80% of our total gain for the three months. The remaining 20%
came mainly from Singapore, Australia and Hong Kong, where our names did much
better than the local indexes.
We also marked a milestone of another sort this quarter. Redemptions in
January hit a record monthly high of $59 million. Fortuitously, the withdrawals
meant that we reduced our cash at the bottom, which is positive for returns.
It's no surprise that redemptions peak when prices are low, because they are
part of what makes a market bottom.
What is worth some thought is the nature of investor psychology, which
tempts us to sell when at market bottoms. Behavioral studies show that
individuals take credit (or assign blame) for investment results that can
depend, to a large degree, on market forces beyond their control. This leads
them to feel great about investment decisions that exceed expectations and feel
badly about those that disappoint. As prices sink, the psychological pressure to
"get rid of the dogs" mounts, often to the detriment of investment results. One
way to counterbalance the alternating emotions of fear and greed is to practice
patience, which is the hallmark of the truly long-term investor. Your patience
finally paid off in the first quarter.
Congratulations on your success!
/s/ Leah Joy Zell
- ----------------------
Leah Joy Zell
Lead Portfolio Manager
Fund Assets as of 3/31/98: $1,816.9 million
Acorn International Top 10 Holdings
T T Tieto Finland 4.7%
Computer Services/Consulting
WM Data Sweden 3.1%
Computer Services/Consulting
Serco Group United Kingdom 2.4%
Facilities Management
Banca Fideuram Italy 2.3%
Life Insurance/Mutual Funds
Kempen Netherlands 2.1%
Stock Brokerage/
Investment Management
Rhoen Klinikum Germany 1.9%
Hospital Management
Atos France 1.6%
Computer Services/
Transactions Processing
Venture Manufacturing Singapore 1.4%
Contract Electronics Manufacturer
Getronics Netherlands 1.3%
Computer Services
Li and Fung Hong Kong 1.2%
Sourcing of Consumer Goods
The Fund's top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statement of Investments for a complete list of
the Fund's holdings.
Baker's Dozen
While "sifting" for bargains in Mexico after the tequila crisis, analyst
Margaret Forster found a bakery named Bimbo. It has $2.2 billion in sales and
one of the best brands in Latin America. Trucks bearing the company logo, a
pudgy white bear, deliver bread daily to nearly every bodega in Mexico. This
national distribution system gives Bimbo dominance in the marketplace that few
U.S. companies can match. Its financials are equally impressive, as all
transactions are for cash. Yet when we added Bimbo to our portfolio, no broker
followed it. Since our purchase, Bimbo has appreciated 130%. This March, the
company bought Mrs. Baird, a Texas bakery with $300 million in sales, making it
the largest bakery in North America.
8
<PAGE>
Performance at a Glance
[GRAPH APPEARS HERE]
The Value of a $10,000 Investment in Acorn International
September 23, 1992 through March 31, 1998
Acorn International Performance History
<TABLE>
<CAPTION>
Year AI Return AI$ EAFE Return EAFE$
<S> <C> <C> <C> <C>
$10,000 $10,000
1992* 6.79% $10,679 -3.86% $ 9,614
1993 49.11% $15,924 32.56% $12,745
1994 -3.80% $15,319 7.78% $13,736
1995 8.93% $16,686 11.21% $15,275
1996 20.65% $20,133 6.05% $16,199
1997 0.19% $20,170 1.78% $16,487
3/31/98 18.16% $23,833 14.71% $18,912
</TABLE>
*Since inception (9/23/92) through 12/31/92. The beginning value used for EAFE
is as of 9/30/92.
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
1 Year 5 Years Life of Fund
<S> <C> <C>
15.9% 14.7% 17.0%
</TABLE>
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.
<TABLE>
<CAPTION>
Acorn International Portfolio Diversification
as a % of net assets, at 3/31/98
[PIE CHART APPEARS HERE]
<S> <C>
Information 26.4%
Finance 14.4%
Energy/Minerals 4.4%
Industrial Goods/Services 17.0%
Health Care 5.8%
Consumer Goods/Services 19.6%
Other Industries 5.2%
Cash and other assets less liabilities 7.2%
-----
100.0%
</TABLE>
<TABLE>
<CAPTION>
Relative Performance
- ---------------------------------------------------------------------
1st quarter Last 12 mos.
1998
<S> <C> <C>
Acorn International 18.2% 15.9%
EAFE 14.7% 18.6%
EMI (World ex-U.S.) 17.2% 8.2%
Lipper Int'l Small Cap
Funds Avg. 18.0% 14.4%
Lipper Int'l Funds Avg. 14.7% 19.5%
</TABLE>
EAFE is Morgan Stanley's Europe, Australasia and Far East Index, an unmanaged
index of companies throughout the world in proportion to world stock market
capitalization, excluding the U.S. and Canada. The EMI is Salomon Brothers'
index of the bottom 20% of institutionally investable capital of countries, as
selected by Salomon, excluding the U.S. The Lipper Int'l Small Cap Funds Avg. is
calculated from the performance of a group of small-cap int'l funds, including
Acorn Int'l. For the 1st qtr. and 12-mos. periods above, the group consisted of
50 and 33 funds, respectively. The Lipper Int'l Funds Avg. is an average of all
int'l funds tracked by Lipper, excluding the Int'l Small Cap Funds Avg. This
group consisted of 519 and 459 funds for the 1st qtr. and 12-mos. periods above,
respectively. All indexes are unmanaged and returns include reinvested
dividends.
Net Asset Value Per Share 3/31/98: $21.73
- -----------------------------------------
9
<PAGE>
Acorn USA
Major Portfolio Changes in the First Quarter
Number of Shares
------------------
12/31/97 3/31/98
Additions
- -----------------------------------------------------------
Information
Centennial Cellular 162,000 254,000
IntelliQuest Information 0 124,000
Kronos 134,000 149,500
Mecklermedia 109,300 285,000
Micros Systems 0 160,600
National Data 86,000 144,100
Thermoquest 0 95,400
Wonderware 278,700 346,100
- -----------------------------------------------------------
Health Care
Lincare Holdings 147,000 197,000
Magellan Health Services 0 196,000
- -----------------------------------------------------------
Consumer Goods/Services
Host Marriott Services 342,500 523,200
Windmere Durable Holdings 0 25,000
- -----------------------------------------------------------
Finance
Acceptance Insurance 231,900 362,100
AmerUs Life Holdings 121,300 187,500
Leucadia National 57,000 93,000
World Acceptance 0 590,000
- -----------------------------------------------------------
Industrial Goods/Services
Compass International Services 0 68,000
Hub Group 0 19,000
Labor Ready 0 21,000
Lilly Industries, Cl. A 162,800 205,000
Wackenhut, Cl. B 263,000 298,400
- -----------------------------------------------------------
Energy/Minerals
Atmos Energy 219,000 242,000
CalEnergy 297,000 419,000
Tesoro Petroleum 296,700 367,700
- -----------------------------------------------------------
Other Industries
Gaylord Entertainment 35,000 55,000
Sales
- -----------------------------------------------------------
Information
Computer Language Research 74,300 0
ForeFront Group 40,000 0
United Video Satellite Group 213,000 189,000
Young Broadcasting 3,200 0
- -----------------------------------------------------------
Health Care
Respironics 128,000 107,000
- -----------------------------------------------------------
Industrial Goods/Services
Applied Industrial Technologies 63,000 0
- -----------------------------------------------------------
Energy/Minerals
Seagull Energy 82,100 0
NGC 270,600 228,400
10
<PAGE>
Acorn USA
Statement of Investments (unaudited) March 31, 1998
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks: 96.7%
- --------------------------------------------------------------------------------
Information: 38.3%
<C> <S> <C>
Broadcasting: 2.9%
209,100 Data Transmission Network $ 7,214
Data Services for Farmers
Television Programming: 4.9%
189,000 United Video Satellite Group 8,033
CATV & Satellite Dish Programming
120,000 Liberty Media Group,
Tele-Communications 4,125
Cable Programming
- --------------------------------------------------------------------------------
12,158
Cable Television: 3.5%
106,000 Cablevision Systems 6,969
Cable TV
73,300 Cable Michigan 1,869
Cable TV
- --------------------------------------------------------------------------------
8,838
Telephone Services: 4.1%
133,100 RCN 6,672
Metro Market: Voice, Video & Data Services
87,000 Startec Global Communications 2,175
International Telecommunications
54,000 Commonwealth Telephone 1,519
Rural Market: Local, Long Distance &
Internet Access
- --------------------------------------------------------------------------------
10,366
Mobile Communications: 3.7%
254,000 Centennial Cellular 6,675
Cellular Franchises
121,800 COMARCO 2,626
Wireless Network Testing
- --------------------------------------------------------------------------------
9,301
Telecommunications Equipment: 1.7%
156,000 Aspect Telecommunications 4,183
Call Center Equipment
Business Software: 3.3%
346,100 Wonderware 8,263
Industrial Control Software
Transaction Processors: 2.4%
144,100 National Data 5,989
Credit Card & Health Claims Processor
Instrumentation: 0.7%
95,400 Thermoquest 1,717
Mass Spectrometry
Business Information/
Marketing Services: 5.1%
285,000 Mecklermedia 6,876
Internet Trade Shows & Magazines
100,000 World Color Press 3,475
Consolidating Commercial Printing Industry
124,000 IntelliQuest Information 1,411
Market Research
16,000 Harte Hanks Communications 380
Direct Marketing Services
26,000 American Business Information, Cl. B 370
26,000 American Business Information, Cl. A 341
Small Business Data
- --------------------------------------------------------------------------------
12,853
Computer Hardware/
Related Systems: 6.0%
160,600 Micros Systems 9,656
Information Systems for Restaurants & Hotels
149,500 Kronos 5,251
Time Accounting Software & Clocks
- -------------------------------------------------------------------------------
14,907
------
Information: Total 95,789
- -------------------------------------------------------------------------------
Health Care: 11.1%
Biotechnology/Drug Delivery: 0.4%
78,000 Synaptic Pharmaceuticals 995
Receptor Targeted Drug Design
Medical Equipment: 1.4%
107,000 Respironics 3,096
Sleep Apnea Products
45,100 Cardiac Pathways 417
Heart Surgery Device
3,513
Services: 9.3%
197,000 Lincare Holdings 13,913
Home Health Care Services
196,000 Magellan Health Services 5,096
Mental Health Services
76,000 First Health Group 4,123
PPO Network
- -------------------------------------------------------------------------------
23,132
------
Health Care: Total 27,640
</TABLE>
11
<PAGE>
<TABLE>
Acorn USA
Statement of Investments (unaudited)
<S> <C>
Number of Shares Value (000)
- ---------------------------------------------------------------------------
Consumer Goods/Services: 6.1%
Retail: 3.0%
523,200 Host Marriott Services $ 7,390
Fast Food Kiosks in Airports
Durable Goods: 0.3%
25,000 Windmere Durable Holdings 650
Household Appliances
Cruise Lines: 2.8%
101,000 Royal Caribbean Cruises 7,076
Cruises to Caribbean & Alaska
--------
Consumer Goods/Services: Total 15,116
- -------------------------------------------------------------------------
Finance: 14.7%
Savings & Loans: 5.0%
128,000 H.F. Ahmanson 9,920
California Savings & Loan
159,000 Coast Contingency Rights 2,584
Litigation Claims Against US
Government
- -------------------------------------------------------------------------
12,504
Finance Companies: 1.6%
590,000 World Acceptance 3,909
Small Consumer Loans
Insurance: 8.1%
362,100 Acceptance Insurance 8,623
Crop Insurance
187,500 AmerUs Life Holdings 6,070
Annuities/Life Insurance
93,000 Leucadia National 3,662
Insurance Holding Company
69,000 Penn Treaty American 2,018
Nursing Home Insurance
- -------------------------------------------------------------------------
20,373
--------
Finance: Total 36,786
- -------------------------------------------------------------------------
Industrial Goods/Services: 9.8%
Steel: 1.8%
97,300 Schnitzer Steel 2,378
Scrap Steel Processor
88,000 Atchison Casting 1,375
Consolidating Foundry Industry
28,000 Gibraltar Steel 599
Steel Processing
- -------------------------------------------------------------------------
4,352
Industrial Distribution: 0.4%
51,000 Vallen 1,046
Safety Products Distribution
Machinery: 1.3%
167,500 Farr Company 3,224
Filters
Specialty Chemicals: 1.6%
205,000 Lilly Industries, Cl. A 4,049
Industrial Coatings
Outsourcing Services: 0.3%
21,000 Labor Ready 676
Temporary Manual Labor
Other Industrial Services: 4.4%
298,400 Wackenhut, Cl. B 6,322
Prison Management
245,100 Insurance Auto Auctions 2,696
Auto Salvage Services
68,000 Compass International Services 1,012
Collection Agencies
19,000 Hub Group 531
Truck & Rail Freight Forwarder
51,000 Trailer Bridge 507
Tug & Barge Transportation
- -------------------------------------------------------------------------
11,068
--------
Industrial Goods/Services: Total 24,415
- -------------------------------------------------------------------------
Energy/Minerals: 14.6%
Independent Power: 4.7%
419,000 CalEnergy 11,837
Power Plants
Oil/Gas Producers: 2.6%
367,700 Tesoro Petroleum 6,573
Oil Refinery/Gas Producer
Distribution/Marketing/Refining: 5.3%
242,000 Atmos Energy 7,169
Natural Gas Utility
228,400 NGC 3,340
Gas Processing/Marketing
81,000 Equitable Resources 2,693
Gas Utility & Gas Producer
- -------------------------------------------------------------------------
13,202
</TABLE>
12
<PAGE>
<TABLE>
Number of Shares Value (000)
- ------------------------------------------------------------------------
<S> <C> <C>
Oil Services: 2.0%
252,000 GeoScience $ 2,583
Offshore Seismic Equipment Company
54,500 J Ray McDermott 2,296
Offshore Construction Company
- ------------------------------------------------------------------------
4,879
--------
Energy/Minerals: Total 36,491
- ------------------------------------------------------------------------
Other Industries: 2.1%
Real Estate: 2.1%
50,700 Forest City Enterprises Cl. A 2,861
Shopping Centers
55,000 Gaylord Entertainment 1,966
Opryland Hotel & Other Assets
22,000 Cornerstone Properties 400
Downtown Office Buildings
- ------------------------------------------------------------------------
5,227
--------
Other Industries: Total 5,227
Total Common Stocks : 96.7% 241,464
--------
Short-Term Obligations: 4.8% 12,103
--------
Total Investments: 101.5% 253,567
--------
Cash and Other Assets Less Liabilities: (1.5%) (3,715)
--------
Total Net Assets: 100% $249,852
========================================================================
</TABLE>
13
<PAGE>
<TABLE>
Acorn Fund
Major Portfolio Changes in the First Quarter
Number of Shares
---------------------
12/31/97 3/31/98
<S> <C> <C>
Additions
- -----------------------------------------------------------------------
Information
Acxiom 0 290,000
American Power Conversion 453,000 503,000
Bigfoot International 0 1,350
Centennial Cellular 400,000 600,000
Choicepoint 174,000 411,000
Harte Hanks Communications 205,000 600,000
(includes effect of 2 for 1 stock split)
International Game Technology 2,050,000 2,110,000
Jabil Circuit 0 300,000
Mecklermedia 248,000 300,000
Micros Systems 375,000 450,000
National Data 1,292,000 1,510,000
Onix Systems 0 234,122
Rohm (Japan) 0 60,000
Sanmina 0 100,000
TVB (Hong Kong) 0 1,800,000
- -----------------------------------------------------------------------
Health Care
Ethical Holdings
(United Kingdom) 530,000 1,200,000
Magellan Health Services 1,000,000 1,220,000
Microcide Pharmaceuticals 0 683,000
- -----------------------------------------------------------------------
Consumer Goods/Services
Amway Asia Pacific (Hong Kong) 0 185,000
Berjaya Sports Toto (Malaysia) 0 2,150,000
Cie Fin Richemont (Switzerland) 10,000 11,000
Royal Olympic Cruise 0 120,000
Windmere Durable Holdings 0 228,000
- -----------------------------------------------------------------------
Finance
AmerUs Life Holdings 170,000 460,000
Formosa Growth Fund (Taiwan) 0 150,000
Leucadia National 444,000 511,000
World Acceptance 1,390,000 1,820,000
- -----------------------------------------------------------------------
Industrial Goods/Services
Cambrex 120,000 305,000
Clarcor 0 181,000
Compass International Services 0 591,000
Gibraltar Steel 540,000 805,000
H B Fuller 250,000 295,000
Hub Group 482,000 709,000
Labor Ready 0 385,000
Metal Management 27,000 400,000
Powerscreen International
(United Kingdom) 700,000 1,050,000
Steven Myers & Associates 0 350,000
Unifi 800,000 900,000
Wackenhut, Cl. B 901,000 1,051,000
- -----------------------------------------------------------------------
Energy/Minerals
CalEnergy 1,355,000 1,420,000
KN Energy 190,000 240,000
Pride International 900,000 1,000,000
Seagull Energy 1,450,000 1,550,000
Tesoro Petroleum 1,300,000 1,600,000
Zeigler Coal Holding 700,000 800,000
- -----------------------------------------------------------------------
Other Industries
Homestead Village 754,000 945,000
</TABLE>
14
<PAGE>
<TABLE>
Principal Amount or
Number of Shares
----------------------
12/31/97 3/31/98
<S> <C> <C>
Sales
- ------------------------------------------------------------------------
Information
ACT Manufacturing 137,000 0
Activision,
6.75% Note Due 1/1/05 $13,000,000 $6,500,000
CACI International 249,000 83,000
Cellular Communications
International (Italy) 400,000 300,000
Cogeco Cable (Canada) 200,000 0
Coherent Communications 178,000 0
Computer Language Research 400,000 0
Getty Images 700,000 500,000
(formerly known as
Getty Communications)
Liberty Media Group,
Tele-Communications 2,400,000 3,500,000
(includes effect of 3 for 2 stock split)
NTT Data (Japan) 200 0
Pricer, Cl. B (Sweden) 50,000 0
Sensonor (Norway) 590,000 0
Solectron 1,220,000 1,025,000
TCA Cable TV 300,000 180,000
Thermo Vision 37,100 0
USA Networks 350,000 500,000
(includes effect of 2 for 1 stock split)
- ------------------------------------------------------------------------
Health Care
R P Scherer 64,000 0
Respironics 1,162,000 812,000
United Payors and Providers 485,000 0
- ------------------------------------------------------------------------
Consumer Goods/Services
Genting International
(Singapore) 7,250,000 0
Hellenic Bottling (Greece) 400,000 250,000
Newell 600,000 540,000
Royal Caribbean Cruises 140,000 120,000
- ------------------------------------------------------------------------
Finance
United Asset Management 712,000 641,000
Amvescap (United Kingdom) 960,000 445,000
Nichiei (Japan) 45,000 27,500
(includes effect of 10% stock dividend)
- ------------------------------------------------------------------------
Industrial Goods/Services
Applied Industrial Technologies 535,000 365,000
Nanophase 550,000 0
Schnitzer Steel 250,000 190,000
Societe Generale
de Surveillance (Switzerland) 6,000 0
- ------------------------------------------------------------------------
Energy/Minerals
Equitable Resources 600,000 500,000
Forest Oil 460,000 0
NGC 820,000 520,000
Perez Companc (Argentina) 710,000 510,000
Ranger Oil (Canada) 1,500,000 0
Saipem (Italy) 2,355,000 1,800,000
Southern Union 550,000 400,000
United Meridian 222,000 0
Veritas DGC 100,000 0
Veritas Energy Services (Canada) 80,000 0
</TABLE>
15
<PAGE>
<TABLE>
Acorn Fund
Statement of Investments (unaudited) March 31, 1998
Number of Shares Value (000)
- -------------------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 94.5%
- -------------------------------------------------------------------------------
Information: 29.4%
Media
<S> <C> <C>
Broadcasting: 1.4%
819,000 Data Transmission Network $ 28,256
465,000 Young Broadcasting 23,250
370,000 Granite Broadcasting 4,278
- -------------------------------------------------------------------------------
55,784
Cable Television: 1.6%
700,000 Cablevision Systems 46,025
100,000 Cablevision Systems, Pfd. 5,138
180,000 TCA Cable TV 10,643
140,000 Cable Michigan 3,570
- -------------------------------------------------------------------------------
65,376
Television Programming: 5.0%
3,500,000 Liberty Media Group,
Tele-Communications 120,313
850,000 United Video Satellite Group 36,125
420,000 BET Holdings, Cl. A 25,673
500,000 USA Networks 13,625
280,000 Macrovision 5,145
50,000 Playboy Enterprises 875
- -------------------------------------------------------------------------------
201,756
Telecommunications
Telephone Services: 1.0%
564,000 RCN 28,271
374,000 Commonwealth Telephone 10,519
- -------------------------------------------------------------------------------
38,790
Mobile Communications: 1.9%
500,000 Telephone and Data Systems 23,750
865,000 Mobile Telecommunication
Technologies 19,354
600,000 Centennial Cellular 15,769
355,000 COMARCO 7,655
450,000 PriCellular 5,738
200,000 Vanguard Cellular Systems 3,638
- -------------------------------------------------------------------------------
75,904
Principal Amount or
Number of Shares Value (000)
- -------------------------------------------------------------------------------
Telecommunications Equipment: 0.7%
714,000 Aspect Telecommunications 19,144
393,000 Verilink 4,323
500,000 Larscom 4,141
- -------------------------------------------------------------------------------
27,608
Computer Related Hardware
Computer Hardware/
Related Systems: 1.6%
450,000 Micros Systems 27,056
650,000 Kronos 22,831
503,000 American Power Conversion 14,430
- -------------------------------------------------------------------------------
64,317
Semiconductors/
Related Equipment: 0.4%
350,000 Oak Industries 11,375
125,000 Electro Scientific Industries 4,828
- -------------------------------------------------------------------------------
16,203
Gaming Equipment: 1.4%
2,110,000 International Game Technology 52,750
406,000 Acres Gaming 1,979
- -------------------------------------------------------------------------------
54,729
Contract Manufacturing: 1.6%
1,025,000 Solectron 43,306
300,000 Jabil Circuit 9,994
100,000 Sanmina 6,994
285,000 Altron 4,346
- -------------------------------------------------------------------------------
64,640
Instrumentation: 2.2%
1,085,000 Thermo Instrument Systems 35,941
613,000 Thermoquest 11,034
$1,500,000 Thermoquest, 5% Note Due 8/15/00 1,688
450,000 IFR Systems 10,013
330,000 Itron 6,414
$5,000,000 Thermo Optek, 5% Note Due 10/15/00 6,275
265,000 Thermo Optek 4,638
200,000 Thermo Bio Analysis 4,200
232,000 Metrika Systems 3,451
234,122 Onix Systems 3,395
- -------------------------------------------------------------------------------
87,049
</TABLE>
16
<PAGE>
<TABLE>
Principal Amount or
Number of Shares Value (000)
- -----------------------------------------------------------
<S> <C> <C>
Business Software: 1.8%
400,000 Compuware $ 19,750
430,000 Systems & Computer Technology 17,738
608,000 Wonderware 14,516
266,000 National Instruments 9,077
160,000 Sterling Commerce 7,420
355,000 Walsh International 5,503
- -----------------------------------------------------------
74,004
Consumer Software: 0.6%
350,000 Electronic Arts 16,428
$6,500,000 Activision, 6.75% Note Due 1/1/05 5,655
1,100,000 MicroProse 2,338
- -----------------------------------------------------------
24,421
Computer Services: 1.4%
340,000 Computer Task Group 14,004
427,000 Analysts International 12,490
200,000 Keane 11,300
254,000 BRC Holdings 9,970
225,000 American Management Systems 6,188
83,000 CACI International 1,826
- -----------------------------------------------------------
55,778
Software/Services
Business Information/
Marketing Services/Publishing: 4.3%
1,185,000 World Color Press 41,179
1,300,000 ACNielsen 34,369
411,000 Choicepoint 22,374
600,000 Harte Hanks Communications 14,250
1,035,000 American Business Information, Cl. A 13,584
945,000 American Business Information, Cl. B 13,446
500,000 Getty Images 12,563
(formerly known as Getty Communications)
290,000 Acxiom 7,431
300,000 Mecklermedia 7,238
885,714 GIGA Cv. Pfd. 3,100
208,333 Source Informatics Cv. Pfd. 2,361
1,350 Bigfoot International 2,025
50,000 Peterson Companies 1,250
- -----------------------------------------------------------
175,170
Number of Shares Value (000)
- -----------------------------------------------------------
Electronics Distribution: 0.8%
1,090,000 Pioneer-Standard Electronics 13,353
600,000 Kent Electronics 12,638
450,000 Richey Electronics 4,444
- -----------------------------------------------------------
30,435
Transaction Processors: 1.7%
1,510,000 National Data 62,759
200,000 Concord EFS 6,913
- -----------------------------------------------------------
69,672
---------
Information: Total 1,181,636
- -----------------------------------------------------------
Health Care: 8.1%
Biotechnology/Drug Delivery: 0.8%
450,000 Inhale Therapeutic Systems 12,206
680,000 Synaptic Pharmaceutical 8,670
683,000 Microcide Pharmaceuticals 5,891
800,000 Corvas International 4,000
800,000 Corvas International Warrants 800
- -----------------------------------------------------------
31,567
Medical Equipment: 0.9%
812,000 Respironics 23,497
300,000 Affymetrix 10,444
275,000 Innovasive Devices 2,750
- -----------------------------------------------------------
36,691
Hospital/Laboratory Supplies: 0.8%
644,000 Sybron International 16,825
273,000 Hillenbrand Industries 16,807
- -----------------------------------------------------------
33,632
Services: 5.6%
1,235,000 Lincare Holdings 87,222
996,000 HBO & Company 60,134
850,000 First Health Group 46,113
1,220,000 Magellan Health Services 31,720
43,000 Spectrum Health Solutions 11
- -----------------------------------------------------------
225,200
---------
Health Care: Total 327,090
</TABLE>
17
<PAGE>
Acorn Fund
Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- -------------------------------------------------------------------------------
Consumer Goods/Services: 9.2%
Goods
<C> <S> <C>
Leisure Vehicles: 2.1%
2,200,000 Harley-Davidson $ 72,600
320,000 Thor Industries 13,100
- -------------------------------------------------------------------------------
85,700
Hardware/Appliances: 0.7%
540,000 Newell 26,156
228,000 Windmere Durable Holdings 5,928
- -------------------------------------------------------------------------------
32,084
Services
Retail: 3.1%
1,960,000 Borders Group 66,763
911,000 Fred Meyer 42,077
731,000 Host Marriott Services 10,325
634,000 Au Bon Pain 5,349
- -------------------------------------------------------------------------------
124,514
Fitness Centers: 0.2%
200,000 Bally Total Fitness 6,300
Casinos: 0.4%
290,000 Rio Hotel & Casino 7,522
392,000 Hollywood Park 4,606
535,000 Monarch Casino & Resort 3,177
$6,250,000 Grand Palais Casino
14% Note Due 2/25/98 313
- --------------------------------------------------------------------------------
15,618
Cruise Lines: 2.7%
1,400,000 Carnival 97,650
120,000 Royal Caribbean Cruises 8,408
120,000 Royal Olympic Cruise 2,010
- -------------------------------------------------------------------------------
108,068
-------
Consumer Goods/Services: Total 372,284
- -------------------------------------------------------------------------------
Finance: 12.3%
Banks: 1.6%
570,000 Texas Regional Bancshares 19,131
285,000 Union Planters 17,723
510,000 TCF Financial 17,308
156,000 Pinnacle Financial 7,751
- -------------------------------------------------------------------------------
61,913
Savings & Loans: 3.4%
1,267,000 Peoples Bank Bridgeport 48,106
447,000 H. F. Ahmanson 34,643
738,000 Washington Federal 20,480
538,000 Commonwealth Bancorp 11,466
554,000 Coast Contingency Rights 9,003
116,000 Washington Mutual 8,319
277,000 Imperial Thrift & Loan 5,886
- -------------------------------------------------------------------------------
137,903
Insurance: 3.0%
511,000 Leucadia National 20,121
741,000 Foremost 18,155
823,000 Baldwin & Lyons, Cl. B 17,695
351,000 United Fire & Casualty 15,312
460,000 AmerUs Life Holdings 14,893
200,000 Protective Life 14,600
612,000 Acceptance Insurance 14,573
210,000 Highlands Insurance 5,644
- -------------------------------------------------------------------------------
120,993
Money Management: 3.1%
618,000 SEI Investments 42,179
620,000 Pioneer Group 19,375
974,000 Baker Fentress 18,263
641,000 United Asset Management 17,467
1,723,000 Phoenix Duff & Phelps 16,153
231,000 BISYS 8,143
60,000 Affiliated Managers Group 2,093
- -------------------------------------------------------------------------------
123,673
Finance Companies: 1.2%
935,000 Americredit 25,713
1,820,000 World Acceptance 12,058
340,000 DVI Health Services 7,799
345,000 Capital Trust 3,364
- -------------------------------------------------------------------------------
48,934
-------
Finance: Total 493,416
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
Industrial Goods/Services: 10.4%
<C> <S> <C>
Steel: 2.0%
1,295,000 Worthington Industries $ 23,472
805,000 Gibraltar Steel 17,207
500,000 Steel Dynamics 10,625
350,000 A M Castle 8,094
405,000 Atchison Casting 6,328
400,000 Metal Management 5,750
190,000 Schnitzer Steel 4,643
200,000 Intermet 4,500
- --------------------------------------------------------------------------------
80,619
Machinery: 1.5%
1,071,000 Baldor Electric 28,850
365,000 Applied Industrial Technologies 9,832
196,000 Applied Power 7,546
270,000 Valmont Industries 6,548
181,000 Clarcor 6,018
198,000 Hein-Werner 1,386
410,000 Stevens International, Cl. A 718
19,000 Stevens International, Cl. B 64
- --------------------------------------------------------------------------------
60,962
Conglomerates: 0.9%
900,000 Thermo Electron 36,338
Specialty Chemicals/Materials: 2.5%
900,000 Unifi 33,525
900,000 Lilly Industries, Cl. A 17,775
295,000 H B Fuller 17,663
305,000 Cambrex 15,364
600,000 M A Hanna 14,663
- --------------------------------------------------------------------------------
98,990
Electrical Components: 0.1%
223,000 Spectra Physics Lasers 3,540
Outsourcing Services/Training: 0.6%
385,000 Labor Ready 12,392
350,000 Steven Myers & Associates 6,213
350,000 GP Strategies 6,059
- --------------------------------------------------------------------------------
24,664
Logistics: 1.7%
775,000 Expeditors International
of Washington 33,228
709,000 Hub Group 19,808
400,000 C H Robinson 10,400
200,000 Airnet Systems 5,800
- --------------------------------------------------------------------------------
69,236
Other Industrial Services: 1.1%
1,051,000 Wackenhut, Cl. B 22,268
45,000 Wackenhut, Cl. A 1,074
591,000 Compass International Services 8,791
210,000 HA(Yen)LO Industries 7,337
406,000 Trailer Bridge 4,034
- --------------------------------------------------------------------------------
43,504
-------
Industrial Goods/Services: Total 417,853
- --------------------------------------------------------------------------------
Energy/Minerals: 10.1%
Independent Power: 3.9%
2,230,000 AES Corporation 116,936
1,853 AES Corporation Warrants 145
1,420,000 CalEnergy 40,115
- --------------------------------------------------------------------------------
157,196
Oil/Gas Producers: 1.6%
1,550,000 Seagull Energy 29,741
1,600,000 Tesoro Petroleum 28,600
1,031,000 Tipperary 3,995
165,000 Costilla Energy 1,650
- --------------------------------------------------------------------------------
63,986
Distribution/Marketing/Refining: 1.6%
500,000 Equitable Resources 16,625
560,000 Atmos Energy 16,590
240,000 KN Energy 14,175
400,000 Southern Union 9,600
520,000 NGC 7,605
- --------------------------------------------------------------------------------
64,595
Oil Services: 2.6%
700,000 EVI 32,419
516,000 Atwood Oceanics 27,896
1,000,000 Pride International 23,875
500,000 J Ray McDermott 21,063
- --------------------------------------------------------------------------------
105,253
</TABLE>
19
<PAGE>
Acorn Fund
Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ---------------------------------------------------------------
<S> <C>
Mining: 0.4%
800,000 Ziegler Coal Holding $ 13,700
----------
Energy/Minerals: Total 404,730
- ---------------------------------------------------------------
Other Industries: 3.1%
Real Estate: 3.1%
829,000 The Rouse Company 26,114
945,000 Homestead Village 14,293
233,000 Forest City Enterprises, Cl. B 13,150
185,000 Forest City Enterprises, Cl. A 10,441
260,000 Equity Residential Properties Trust 13,065
400,000 Macerich Company 11,900
165,000 Weingarten Realty Investors 7,384
350,000 Security Capital Atlantic 7,350
350,000 Cornerstone Properties 6,366
190,000 First Washington Realty Trust 5,142
120,000 First Washington Realty Trust, Cv. Pfd. 3,979
100,000 Gaylord Entertainment 3,575
101,000 Security Capital Group, Cl. B 3,106
18,000 Security Capital Group Warrants 59
- ---------------------------------------------------------------
125,924
--------
Other Industries: Total 125,924
- ---------------------------------------------------------------
Foreign Securities: 11.9%
Canada: 0.2%
200,000 Shaw Industries, Cl. A 6,912
United Kingdom: 2.5%
1,200,000 Serco Group 26,124
400,000 NTL 17,300
3,300,000 Medeva 9,173
650,000 Comcast UK Cable Partners 8,694
990,000 Airtours 8,264
1,100,000 N. Brown Group 7,810
600,000 Edinburgh Fund Managers 5,325
700,000 Oriflame 5,064
445,000 Amvescap 4,814
1,050,000 Powerscreen International 4,088
1,200,000 Ethical Holdings 3,600
- ---------------------------------------------------------------
100,256
Germany/Austria: 0.6%
552,000 United International
Holdings (Austria) 9,246
180,000 Flughafen Wien (Austria) 8,126
23,000 Binding-Brauerei 5,161
- ---------------------------------------------------------------
22,533
Sweden: 1.5%
1,340,000 WM Data Nordic 35,534
650,000 Getinge Industrier 12,480
254,000 Autoliv 7,890
260,000 Esselte, Series A 5,594
- ---------------------------------------------------------------
61,498
Netherlands: 0.8%
270,000 Hunter Douglas 12,304
160,000 ASR Verzekeringsgroep 11,482
167,000 Getronics 7,170
- ---------------------------------------------------------------
30,956
Switzerland: 0.4%
11,000 Cie Fin Richemont 14,792
France: 0.5%
115,000 Atos 19,117
Portugal: 0.2%
375,000 Filmes Lusomundo 5,764
Italy/Greece: 1.9%
3,325,000 Banca Fideuram 23,146
300,000 Cellular Communications
International 20,400
1,800,000 Saipem 10,714
500,000 Aeroporti di Roma 8,613
250,000 Hellenic Bottling (Greece) 7,192
260,000 Industrie Natuzzi 7,183
- ---------------------------------------------------------------
77,248
India: 0.1%
39,373 Housing Development Finance 3,170
Malaysia: 0.1%
2,150,000 Berjaya Sports Toto 5,848
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- ---------------------------------------------------------------
<S> <C> <C>
Hong Kong: 0.2%
4,500,000 Varitronix International $ 9,031
1,800,000 TVB 4,739
185,000 Amway Asia Pacific 2,995
- ---------------------------------------------------------------
16,765
China: 0.0%
200,000 The Investment Company of China 1,116
Taiwan: 0.1%
150,000 Formosa Growth Fund 3,206
Singapore: 0.4%
7,250,000 Star Cruises 14,494
Japan: 0.8%
145,000 Nintendo 12,504
20,000 Shohkoh Fund 6,674
60,000 Rohm 5,489
174,000 Noritsu Koki 5,102
27,500 Nichiei 2,433
- ---------------------------------------------------------------
32,202
Australia/New Zealand: 0.3%
260,000 PetSec Energy ADR 4,875
600,000 PetSec Energy 2,264
1,700,000 Sky City (New Zealand) 4,277
- ---------------------------------------------------------------
11,416
Mexico: 0.5%
3,100,000 Kimberly Clark de Mexico 16,013
5,960,000 Nadro, Series L 4,380
- ---------------------------------------------------------------
20,393
Other Latin America: 0.8%
250,000 IRSA (Argentina) 9,578
2,800,000 Siderca (Argentina) 7,449
175,000 Banco Latinoamericano
de Export (Panama) 6,584
115,000,000 Cemig (Brazil) 5,583
510,000 Perez Companc (Argentina) 3,453
- ---------------------------------------------------------------
32,647
---------
Foreign: Total 480,812
345 Miscellaneous Securities: 0.0% 479
Total Common Stocks and Other
---------
Equity-Like Securities: 94.5% 3,803,745
---------
Short-Term Obligations: 5.3% 211,503
---------
Total Investments: 99.8% 4,015,248
---------
Cash and Other Assets Less Liabilities: 0.2% 8,697
---------
Total Net Assets: 100% $4,023,945
===============================================================
</TABLE>
21
<PAGE>
Acorn Fund
Foreign Portfolio Diversification
At March 31, 1998 Acorn Fund's foreign portfolio of investments as a percent of
net assets was diversified as follows:
<TABLE>
<CAPTION>
Value (000) Percent
- ----------------------------------------------------------
<S> <C> <C>
Information
Computer Services $ 61,821 1.5%
Cable Television 35,240 0.9
Semiconductors/Related Equipment 31,613 0.8
Mobile Communications 20,400 0.5
Business Information/Publishing 5,764 0.1
Broadcasting 4,739 0.1
- ----------------------------------------------------------
159,577 3.9
Health Care
Hospital/Laboratory Supplies 12,480 0.3
Pharmaceuticals 9,173 0.2
Biotechnology/Drug Delivery 3,600 0.1
- ----------------------------------------------------------
25,253 0.6
Consumer Goods/Services
Nondurable Goods 26,671 0.7
Travel 22,758 0.6
Consumer Software 12,504 0.3
Beverages 12,353 0.3
Gaming 10,125 0.3
Retail 7,810 0.2
Furniture & Textiles 7,183 0.2
Consumer Goods Distribution 4,380 0.1
Consumer Services 2,995 0.1
Other Durable Goods 20,194 0.5
Other Entertainment 14,792 0.4
- ----------------------------------------------------------
141,765 3.7
Finance
Money Management 33,285 0.8
Finance Companies 12,277 0.3
Insurance 11,482 0.3
Banks 6,584 0.2
Closed-End Funds 4,801 0.1
- ----------------------------------------------------------
68,429 1.7
Industrial Goods/Services
Machinery 9,190 0.2
Electrical Components 9,031 0.2
Steel 7,449 0.2
- ----------------------------------------------------------
25,670 0.6
Energy/Minerals
Oil Services 17,626 0.4
Oil/Gas Producers 10,592 0.3
- ----------------------------------------------------------
28,218 0.7
Other Industries
Transportation 16,739 0.4
Real Estate 9,578 0.2
Utilities 5,583 0.1
- ----------------------------------------------------------
31,900 0.7
----------------------
Total Foreign Portfolio $480,812 11.9%
==========================================================
</TABLE>
22
<PAGE>
Acorn International
Major Portfolio Changes in the First Quarter
<TABLE>
<CAPTION>
Number of Shares
-----------------------
12/31/97 3/31/98
<S> <C> <C>
Additions
- --------------------------------------------------------------------------------
Europe
Germany/Austria
Rhoen Klinikum 125,000 135,000
Rhoen Klinikum Pfd. 180,000 200,000
Finland
Elcoteq Network 245,000 507,000
KCI Konecranes International 0 55,000
Sweden
Segerstrom & Svensson 0 90,000
WM Data Nordic 1,985,000 2,100,000
France
Penauille Polyservice 0 9,500
United Kingdom
AEA Technology 250,000 565,000
Atkins 500,000 900,000
Dialog Corporation 0 1,200,000
Euro Money Publications 150,000 510,000
Switzerland
Julius Baer Holdings 0 1,000
Cie Fin Richemont 12,000 13,000
Phoenix Mecano 28,000 33,000
Prodega 10,000 12,500
Italy/Greece
Ergo Bank 0 20,000
Industrie Natuzzi ADR 245,000 300,000
- --------------------------------------------------------------------------------
Asia
Hong Kong
Dickson Concepts 0 1,400,000
TVB 3,100,000 3,500,000
Vanda Systems 8,896,000 16,000,000
Japan
Aiful 60,000 90,000
Asatsu 0 10,000
Jafco 0 99,000
Jusco 0 200,000
Orix Corporation 40,000 90,000
Rohm 0 40,000
Taiwan
Chroma Ate 0 250,000
</TABLE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares
---------------------
12/31/97 3/31/98
<S> <C> <C>
Malaysia
Berjaya Sports Toto 0 1,400,000
Oriental Holdings 0 265,000
Technology Resources 0 1,000,000
Philippines
Int'l Container Terminal
Services Cv. 1.75% 3/13/04 $5,000,000 $ 8,750,000
Singapore
Datacraft Asia 0 3,300,000
Genting International 8,300,000 16,900,000
Natsteel Electronics 1,916,000 4,400,000
Venture Manufacturing 4,056,000 6,850,000
Thailand
Telecom Asia 0 12,800,000
- --------------------------------------------------------------------------------
Latin America
Mexico
Corp Interamericana
de Entretenimiento 0 700,000
Grupo Continental 1,140,000 1,570,000
Tubos de Acero de Mexico ADR 460,000 510,000
Peru
Telefonica del Peru 0 250,000
Panama
Panamerican Beverage 0 120,000
- --------------------------------------------------------------------------------
Other Countries
Australia
Coca Cola Amatil 0 900,000
Canada
Dundee Realty 0 400,000
Dundee Realty Special Warrants 0 1,600,000
LGS Group 0 170,000
Power Financial 0 150,000
Israel
Orbotech 0 100,000
</TABLE>
23
<PAGE>
Acorn International
Major Portfolio Changes in the First Quarter
<TABLE>
<CAPTION>
Number of Shares
---------------------
12/31/97 3/31/98
<S> <C> <C>
Sales
- --------------------------------------------------------------------------------
Europe
Germany
Fresenius 7,000 0
Schaltbau 30,000 7,000
Finland
Vaisala, Cl. A 88,000 0
Norway
SensoNor 800,000 0
Sweden
Pricer, Cl. B 50,000 0
United Kingdom
Aberdeen Asset Management 1,600,000 0
Comcast UK Cable Partners 500,000 0
Ethical Holdings ADR 670,000 0
Expro International Group 790,000 0
Ivory & Sime 1,200,000 0
Vitec 50,000 0
Vosper Thornycroft Holdings 800,000 700,000
Switzerland
PubliGroupe 45,000 40,000
Societe Generale de Surveillance 6,000 0
Italy/Greece
Banca Fideuram 6,340,000 6,025,000
Cellular Communications
International 160,000 120,000
Danieli 130,000 0
Hellenic Bottling 400,000 250,000
Saipem SPA 3,300,000 1,800,000
Netherlands
Fugro NV 310,000 200,000
Telegraaf Holdings 300,000 240,000
- --------------------------------------------------------------------------------
Asia
Hong Kong
China HK Photo Products 20,000,000 5,200,000
Golden Harvest Entertainment 16,525,000 0
India
Max India 389,450 0
Japan
Amway Japan 300,000 0
Chuo Trust & Banking 555,000 0
Konami 143,000 0
Nichiei 140,000 68,000
(includes effect of 10% stock dividend)
Nihon Unisys 152,000 0
NTT Data 250 0
Tiemco 49,500 0
Indonesia
Modern Photo Film 2,985,000 0
Tunas Ridean 6,166,000 0
Philippines
Ionics Circuits 9,398,000 0
- --------------------------------------------------------------------------------
Latin America
Argentina
Perez Companc 1,650,000 1,200,000
Brazil
Telemig 23,000,000 0
Chile
Embotelladora Andina,
Series A ADR 120,000 0
Embotelladora Andina,
Series B ADR 120,000 0
Genesis Chile Fund 150,000 0
Santa Isabel ADR 220,000 0
- --------------------------------------------------------------------------------
Other Countries
Australia
Publishing & Broadcasting 2,200,000 1,000,000
Siddons Ramset 1,000,000 690,000
Canada
Cinar Films 150,000 0
Cogeco 500,000 0
Cogeco Cable 300,000 0
Pangea Goldfields 900,000 0
Ranger Oil 1,200,000 0
</TABLE>
24
<PAGE>
Acorn International
Statement of Investments (unaudited) March 31, 1998
Number of Shares Value (000)
- ----------------------------------------------------------------------
Common Stocks and Other
Equity-Like Securities: 92.8%
- ----------------------------------------------------------------------
Europe: 60.4%
Germany/Austria: 4.7%
200,000 Rhoen Klinikum Pfd. $ 20,763
135,000 Rhoen Klinikum 14,380
Hospital Management
375,000 IVG Holdings 11,000
Real Estate & Logistics
190,000 Flughafen Wien (Austria) 8,578
Vienna Airport Authority
473,000 United International Holdings (Austria) 7,923
Cable Television for Austria &
Other Countries
21,000 Cewe Color Holding 5,280
Photographic Developing & Printing
260,000 Pfleiderer 5,033
Construction Materials
100,000 Boewe Systec 4,218
Envelope Stuffing Machines
212,000 Berzelius Umwelt 3,313
Industrial Waste Recycling
250,000 Scala Business Solutions 2,267
95,775 Scala Business Solutions
Warrants 3/31/99 221
95,775 Scala Business Solutions
Warrants 3/31/01 (Austria) 162
Financial Accounting Software
110,000 Rofin Sinar 2,117
Lasers
7,000 Schaltbau 719
Railcar Components
- ----------------------------------------------------------------------
85,974
Denmark: 0.2%
44,000 Kompan International 4,525
Playground Equipment
Finland: 6.6%
500,000 TT Tieto, Cl. B 84,630
Computer Services/Consulting
80,000 Fiskars, Series A 9,835
Scissors & Gardening Tools
550,000 Talentum 8,721
Trade Journals
100,000 Spar Finland 8,374
(formerly known as Sentra)
Grocery/Convenience Stores
507,000 Elcoteq Network 6,097
Contract Electronics Manufacturer
55,000 KCI Konecranes International 2,528
Industrial Equipment
- ----------------------------------------------------------------------
120,185
Norway: 0.1%
500,000 Atex Media Solutions 1,164
Print Media Software
Sweden: 6.4%
2,100,000 WM Data Nordic 55,688
Computer Services/Consulting
1,000,000 Getinge Industrier 19,201
Sterilization & Disinfection Equipment
350,000 Autoliv 10,872
Seatbelts & Airbags
525,000 Atle 10,113
Investment Company
665,000 Bure Investment 10,065
Health Care Services & Investments
315,000 Esselte, Series A 6,777
Office Supplies & Related Equipment
90,000 Segerstrom & Svensson 2,803
Contract Electronics Manufacturer
- ----------------------------------------------------------------------
115,519
France: 3.8%
180,000 Atos 29,923
Computer Services/Transaction Processing
62,000 NRJ 10,707
Radio Network
60,000 Fininfo 8,715
Data Feeds for French Banks & Brokers
95,000 Spir Communications 7,130
Regional Newspapers
55,000 Virbac 4,927
Drugs for Animals
50,000 Groupe Partouche 3,235
Casinos
50,000 Assystem 2,565
Consultants on Nuclear Power Plants
9,500 Penauille Polyservice 2,254
Industrial Cleaning
- ----------------------------------------------------------------------
69,456
25
<PAGE>
<TABLE>
<CAPTION>
Acorn International
Statement of Investments (unaudited)
Number of Shares Value (000)
================================================================================
<S> <C> <C>
United Kingdom: 15.1%
2,000,000 Serco Group 43,540
Facilities Management
467,000 NTL 20,198
Cable TV & Telephone System
510,000 Euro Money Publications 18,682
Financial Publications
4,000,000 St. James Place 18,287
Life Insurance
1,450,000 Seton Healthcare Group 15,261
Pharmaceuticals
2,000,000 Capita Group 15,055
Outsourcing Government Services
2,000,000 Oriflame International 14,469
Natural Cosmetics Sold Door-to-Door
13,000,000 Electronics Boutique 14,042
Videogame/Computer Software Stores
1,500,000 N. Brown Group 10,650
Mail Order Clothing in Large Sizes
1,700,000 Rotork 9,864
Valve Actuators for Oil & Water Pipelines
4,400,000 City Centre Restaurants 9,579
Fast Food Restaurants
700,000 Vosper Thornycroft Holdings 8,979
Naval Shipbuilding
3,200,000 Medeva 8,895
Drugs for Hyperactive Children
950,000 Edinburgh Fund Managers 8,432
Investment Management
900,000 Atkins 7,664
Outsourcing Services
3,400,000 HALMA 7,117
Fire Detection Devices
565,000 AEA Technology 6,987
Nuclear Energy Consulting
2,000,000 Shanks & McEwan 6,246
Landfills & Waste Incinerators
600,000 Fairey Group 5,923
Electronic Products
1,500,000 Powerscreen International 5,840
Mobile Crushing & Screening Equipment
1,300,000 Dorling Kindersley 4,822
Reference Books & CD-ROMs
1,000,000 Hogg Robinson 4,664
Corporate Travel Management
600,000 Eurotherm 3,502
Instruments & Measuring Devices
1,200,000 Dialog Corporation 3,366
Online Business Information
450,000 Hozelock Group 2,555
Garden Hoses
- ------------------------------------------------------------------------
274,619
Switzerland: 4.4%
33,000 Phoenix Mecano 18,616
Electrical Components Manufacturer
13,000 Cie Fin Richemont 17,481
Luxury Goods & Tobacco
60,000 Selecta Group 9,997
Vending Machines
40,000 PubliGroupe 8,921
Advertising
12,000 Hero 7,596
Packaged Foods
12,500 Prodega 7,388
Cash-and-Carry Retailer
18,000 Societe Generale d'Affichage 7,143
Billboard Advertising
1,000 Julius Baer Holdings 2,427
International Bank
- ------------------------------------------------------------------------
79,569
Italy/Greece: 11.0%
6,025,000 Banca Fideuram 41,942
Life Insurance & Mutual Funds
2,750,000 Autogrill Finanziari 19,687
Tollway Restaurants
650,000 Mediolanum 19,504
Life Insurance & Mutual Funds
2,000,000 Editoriale L'Espresso 17,203
Newspapers & Magazines
600,000 Gewiss 16,622
Electrical Plugs & Switches
700,000 Banca Popolare Di Bergamo 16,013
Regional Bank
1,800,000 Saipem SPA 10,714
Pipeline Construction & Drilling Contractor
500,000 Banco Pop Commercia e Industria 10,697
Regional Bank
500,000 Aeroporti di Roma 8,613
Airport Management
300,000 Industrie Natuzzi ADR 8,288
Leather Couches
120,000 Cellular Communications
International 8,160
Mobile Communications
</TABLE>
26
<PAGE>
Number of Shares Value (000)
- -------------------------------------------------------------------
250,000 Hellenic Bottling (Greece) $ 7,192
Coca-Cola Bottler
480,000 Attica Enterprises 7,130
480,000 Attica Enterprises GRD (Greece) 437
Ferry Line
325,000 Saes Getters 6,169
Getters used in TV's/PC's
20,000 Ergo Bank (Greece) 1,432
Commercial Bank
- -------------------------------------------------------------------
199,803
Spain/Portugal: 1.6%
290,000 Mapfre Vida 14,295
Life Insurance & Mutual Funds
220,000 Cortefiel 5,289
Apparel Retailer
150,000 Estoril Sol (Portugal) 3,864
Casino Resort
180,000 Lusotur (Portugal) 2,777
Real Estate/Resort Developer
150,000 Filmes Lusomundo (Portugal) 2,305
Newspapers, Radio, Video,
Film Distribution
87,500 Televisao Independente (Portugal) 111
Television Station
- -------------------------------------------------------------------
28,641
Netherlands: 6.2%
570,000 Kempen 37,295
Stock Brokerage/Investment Management
558,000 Getronics 23,956
Computer Services
270,000 Hunter Douglas 12,304
Decorative Window Coverings
150,000 ASR Verzekeringsgroep 10,764
Insurance
320,000 DOCdata 9,133
Audio CD & CD-Rom Replication
200,000 Fugro NV 7,867
Consulting & Surveying
310,000 Wegener Arcade NV 6,008
Newspaper Publisher
240,000 Telegraaf Holdings 5,089
Newspaper Publisher
- -------------------------------------------------------------------
112,416
Hungary: 0.2%
40,000 Gedeon Richter 4,209
Generic Drugs
Poland: 0.1%
200,000 Best Company Series D 1,077
Electronics Retailer
140,000 Bank Komunalny 482
Gdansk-Area Bank
- -------------------------------------------------------------------
1,559
---------
Europe: Total 1,097,639
- -------------------------------------------------------------------
Asia: 17.9%
Hong Kong: 3.2%
14,020,000 Li and Fung 22,256
Sourcing of Consumer Goods
8,500,000 Varitronix International 17,059
LCD Manufacturer
3,500,000 TVB 9,215
Television Broadcasting
16,000,000 Vanda Systems 5,730
Systems Integrator
1,400,000 Dickson Concepts 2,439
Retailer
5,200,000 China HK Photo Products 1,154
Fuji Film Distributor
- -------------------------------------------------------------------
57,853
India: 0.4%
82,682 Housing Development Finance 6,657
Mortgage Lender
810,000 Tube Investment GDR 648
Bicycle Manufacturer
2,000,000 Centurion Quantum Growth 215
Closed-End Fund
- -------------------------------------------------------------------
7,520
Japan: 8.1%
40,000 Shohkoh Fund 13,348
Short-Term Loans for Small Businesses
390,000 Meitec 12,195
Engineering Outsourcing
130,000 Nintendo 11,211
Video Games
370,000 Aderans 8,712
Hairpieces & Wigs
250,000 Fuji Software ABC 8,174
Computer Services/Consulting
270,000 Noritsu Koki 7,916
Photo Processing Lab Manufacturer
300,000 Hokuto 7,795
Mushroom Grower
27
<PAGE>
Acorn International
Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C>
165,000 Aeon Credit Service $ 7,659
Credit Cards
85,000 Ryohin Keikaku 6,565
Designer & Retailer of Muji Brand
Specialty Consumer Goods
90,000 Orix Corporation 6,115
Leasing Company
68,000 Nichiei 6,017
Short-Term Loans for Small Businesses
125,000 Nidec 5,812
Spindle Motor Manufacturer
90,000 Aiful 5,669
Consumer Lending
40,000 Keyence 5,519
Sensors
310,000 Shinki 4,556
Corporate & Consumer Lending
204,000 People 4,283
Sports Clubs
160,000 NuSkin Asia Pacific 4,120
Direct Consumer Goods Sales
165,000 Lasertec 3,823
LCD & Photomask Defect Detectors
40,000 Rohm 3,659
Semiconductors & Electronic
Components
200,000 Jusco 3,584
Retail Stores
275,000 Mirai Industry 3,464
Manufacturer of Plastic Housing
Components
99,000 Jafco 3,341
Venture Capital Investments
210,000 Arrk Corporation 2,992
Industrial Modeling
130,000 Central Uni 634
Health Care/Medical Equipment
10,000 Asatsu 175
Advertising
- --------------------------------------------------------------------------------
147,338
Taiwan: 0.1%
250,000 Chroma Ate 913
Measuring Instruments Manufacturer
</TABLE>
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C>
Malaysia: 0.7%
2,350,000 Malaysian Oxygen 7,102
Industrial Gases
1,400,000 Berjaya Sports Toto 3,808
Lottery/Gaming
1,000,000 Technology Resources 1,143
Cellular Provider
265,000 Oriental Holdings 553
Honda Equipment Distributor
- --------------------------------------------------------------------------------
12,606
Indonesia: 0.1%
3,000,000 Mustika Ratu 798
Traditional Cosmetics
1,750,000 Medco Energi 718
Oil & Gas Drilling & Production
- --------------------------------------------------------------------------------
1,516
Philippines: 0.9%
52,840,000 Int'l Container Terminal Services 7,668
$8,750,000 Int'l Container Terminal Services
Cv. 1.75% 3/13/04 7,481
Container Handling Terminals &
Port Management
4,375,000 Philippine Savings Bank 2,049
Banking
- --------------------------------------------------------------------------------
17,198
Singapore: 4.0%
6,850,000 Venture Manufacturing 25,449
Contract Electronics Manufacturer
8,300,000 Star Cruises 16,593
Asian Cruise Line
3,300,000 Datacraft Asia 10,692
Network Integrator
4,400,000 Natsteel Electronics 8,555
Contract Electronics Manufacturer
4,000,000 Electronic Resources 4,384
5,015,000 Electronic Resources
Warrants 7/17/01 3,105
Distribution of Electronic Components
16,900,000 Genting International 4,056
Investment Holding
- --------------------------------------------------------------------------------
72,834
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<C> <S> <C>
Thailand: 0.4%
12,800,000 Telecom Asia $ 5,055
Telecommunications
320,000 Bangkok Insurance 2,894
Finance/Insurance
- --------------------------------------------------------------------------------
7,949
--------
Asia: Total 325,727
- --------------------------------------------------------------------------------
Latin America: 8.2%
Mexico: 3.3%
3,300,000 Kimberly Clark de Mexico 17,046
Paper Products
6,000,000 Grupo Industrial Bimbo 15,919
Bread, Baked Goods & Snacks
510,000 Tubos de Acero de Mexico ADR 9,531
Seamless Pipe for Oil Wells
8,940,000 Nadro, Series L 6,570
Pharmaceutical Distributor
1,570,000 Grupo Continental 5,529
Beverages
700,000 Corp Interamericana
de Entretenimiento 5,424
Special Events & Live Entertainment
- --------------------------------------------------------------------------------
60,019
Brazil: 1.0%
150,000,000 Cemig Pfd. 7,282
Electric Utility
420,000 Elevadores Atlas 6,094
Elevator Services
200,000 Bompreco GDS 3,950
Supermarket Chain
- --------------------------------------------------------------------------------
17,326
Argentina: 2.0%
500,000 IRSA GDS 19,156
Real Estate Management & Development
3,600,000 Siderca 9,577
Steel Pipe Producer
1,200,000 Perez Companc 8,125
Oil & Gas Producer
- --------------------------------------------------------------------------------
36,858
Peru: 0.6%
6,000,000 Enrique Ferreyros 6,516
Heavy Machinery Dealer
250,000 Telefonica del Peru 5,391
Telecommunications
- --------------------------------------------------------------------------------
11,907
Panama: 1.3%
161,000 Carnival $ 11,230
Cruise Ship Line
195,000 Banco Latinoamericano
de Exportaciones 7,337
Trade Financing
120,000 Panamerican Beverage 4,815
Coca-Cola Bottler
- --------------------------------------------------------------------------------
23,382
--------
Latin America: Total 149,492
- --------------------------------------------------------------------------------
Other Countries: 6.3%
Australia/New Zealand: 2.7%
4,600,000 Tyndall Australia 8,328
Money Management & Insurance
5,200,000 Sonic Healthcare 7,553
Pathology Labs
3,200,000 Anaconda Nickel 7,534
Nickel Mining
900,000 Coca Cola Amatil 7,073
Coca-Cola Bottler
1,400,000 PetSec Energy 5,283
Oil & Gas Producer
1,000,000 Publishing & Broadcasting 5,206
Media & TV Broadcasting
1,750,000 Sky City (New Zealand) 4,402
Casino & Hotel
690,000 Siddons Ramset 3,478
Manufacturer & Distributor of
Construction Materials
- --------------------------------------------------------------------------------
48,857
Canada: 2.1%
520,000 Shaw Industries 17,971
Oil Field Services
1,700,000 Bracknell 7,172
Electrical Contractor &
Facilities Management
150,000 Power Financial 5,753
Financial Services Holding Company
1,600,000 Dundee Realty Special
Warrants 3,600
400,000 Dundee Realty 900
Real Estate
170,000 LGS Group 2,271
Computer Systems Integration
- --------------------------------------------------------------------------------
37,667
</TABLE>
29
<PAGE>
Acorn International
Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Principal Amount or
Number of Shares Value (000)
- --------------------------------------------------------------------------------
<C> <S> <C>
Israel: 0.6%
350,000 Blue Square Israel ADR $ 4,681
Supermarkets & Department Stores
350,000 ZAG Industries 3,981
Plastic Hardwares
100,000 Orbotech 3,238
Printed Circuit Board Manufacturing
Equipment
- --------------------------------------------------------------------------------
11,900
South Africa: 0.2%
930,000 Energy Africa 3,341
Oil & Gas Producer
United States: 0.7%
203,000 AES Corporation 10,645
Electric Generating Plants
$1,500,000 Khanty Mansiysk 10% Notes 1,500
70 Khanty Mansiysk 32
Oil Production in Russia
- --------------------------------------------------------------------------------
12,177
----------
Other: Total 113,942
Number of Shares Value (000)
- --------------------------------------------------------------------------------
340 Miscellaneous Securities: 0.0% $ 1
Total Common Stocks and Other ----------
Equity-Like Securities: 92.8% 1,686,801
----------
Short-Term Obligations: 6.6% 119,316
----------
Total Investments: 99.4% 1,806,117
----------
Cash and Other Assets Less Liabilities: 0.6% 10,808
----------
Total Net Assets: 100% $1,816,925
================================================================================
</TABLE>
30
<PAGE>
Acorn International
Portfolio Diversification
At March 31, 1998, the Fund's portfolio of investments as a percent of net
assets was diversified as follows:
<TABLE>
<CAPTION>
Value (000) Percent
- ------------------------------------------------------------------------
<S> <C> <C>
Information
Computer Services $ 221,064 12.1%
Publishing 69,960 3.9
Contract Manufacturing 43,137 2.4
CATV 28,121 1.5
Advertising 16,239 0.9
Broadcasting 14,532 0.8
Business Information 12,081 0.7
Semiconductors 10,720 0.6
Radio 10,707 0.6
Instrumentation 10,584 0.6
Telephone Services 10,446 0.6
Mobile Communications 9,303 0.5
Electronics Distribution 7,489 0.4
Computer Hardware 5,812 0.3
Marketing 5,424 0.3
Business Software 3,814 0.2
- ------------------------------------------------------------------------
479,433 26.4
Health Care
Hospital Management 35,143 1.9
Pharmaceuticals 33,292 1.8
Medical Equipment 19,835 1.1
Services 10,065 0.6
Hospital/Laboratory Supplies 7,553 0.4
- ------------------------------------------------------------------------
105,888 5.8
Consumer Goods/Services
Retail 59,665 3.3
Nondurables 42,148 2.3
Food 31,310 1.7
Restaurants 29,266 1.6
Travel 25,313 1.4
Beverages 24,609 1.4
Consumer Goods Distribution 19,617 1.1
Consumer Software 11,211 0.6
Leisure Products 9,456 0.5
Furniture & Textiles 8,288 0.5
Gaming 8,210 0.5
Other Entertainment 31,946 1.7
Other Durable Goods 29,712 1.6
Other Consumer Services 25,143 1.4
- ------------------------------------------------------------------------
355,894 19.6
Finance
Money Management 83,974 4.6
Insurance 51,993 2.9
Banks 38,010 2.1
Brokerage 37,295 2.1
Finance Companies 36,693 2.0
Credit Cards 7,659 0.4
Savings & Loans 5,669 0.3
Closed-End Funds 215 0.0
- ------------------------------------------------------------------------
261,508 14.4
Industrial Goods/Services
Outsourcing Services 110,136 6.0
Electrical Components 69,836 3.8
Machinery Processing 58,959 3.2
Industrial Services 21,441 1.2
Steel 19,108 1.1
Conglomerates 10,113 0.6
Construction 8,497 0.5
Speciality Chemicals 7,102 0.4
Industrial Materials 3,478 0.2
- ------------------------------------------------------------------------
308,670 17.0
Energy/Minerals
Oil Services 36,552 2.0
Oil/Gas Producers 25,776 1.4
Independent Power 10,645 0.6
Non-Ferrous Metals 7,534 0.4
- ------------------------------------------------------------------------
80,507 4.4
Other Industries
Transportation 40,626 2.2
Real Estate 37,433 2.1
Waste Management 9,559 0.5
Regulated Utilities 7,283 0.4
- ------------------------------------------------------------------------
94,901 5.2
Total Common Stocks and ----------------------
Other Equity-Like Securities 1,686,801 92.8
Short-Term Obligations 119,316 6.6
----------------------
Total Investments 1,806,117 99.4
Cash and Other Assets less
Liabilities 10,808 0.6
----------------------
Net Assets $1,816,925 100.0%
========================================================================
</TABLE>
31
<PAGE>
The Acorn
- ------------------------
Family of Funds
Trustees
Irving B. Harris
Chairman
James H. Lorie
Vice Chairman
Leo A. Guthart
Jerome Kahn, Jr.
David C. Kleinman
Charles P. McQuaid
Roger S. Meier
Adolph Meyer, Jr.
Ralph Wanger
Officers
Ralph Wanger
President
Marcel P. Houtzager
Vice President
Kenneth A. Kalina
Assistant Treasurer
Merrillyn J. Kosier
Senior Vice President and Secretary
Bruce H. Lauer
Vice President and Treasurer
Charles P. McQuaid
Senior Vice President
Robert A. Mohn
Vice President
John H. Park
Vice President
Leah J. Zell
Vice President
Investment Advisor
Wanger Asset Management, L.P.
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
1-800-9-ACORN-9
(1-800-922-6769)
e-mail: [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.
32
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[PICTURE]
The Acorn
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Family of Funds
WAM Brokerage Services, L.L.C.
P.O. Box 8502
Boston, MA 02266-8502
