-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N2FudYd31x/IaCKU9zGfLEslnRVfZ+c3RVWq0tQWenjnQ4CoybvuEB9cVT+JhVlo 1nA/BHy4qwA3DfoIfNVzKg== 0000891804-01-000430.txt : 20010307 0000891804-01-000430.hdr.sgml : 20010307 ACCESSION NUMBER: 0000891804-01-000430 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WANGER ADVISORS TRUST CENTRAL INDEX KEY: 0000929521 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08748 FILM NUMBER: 1559341 BUSINESS ADDRESS: STREET 1: 227 WEST MONROE STREET STE 3000 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126349200 FORMER COMPANY: FORMER CONFORMED NAME: WANGER ADVISORS TRUT DATE OF NAME CHANGE: 19940902 N-30D 1 0001.txt WANGER ADVISORS TRUST 2000 Annual Report Wanger U.S. Small Cap Wanger International Small Cap Wanger Twenty Wanger Foreign Forty photo: of numbers cover logo: squirrel title: Wanger Advisors Funds. managed by Liberty Wanger Asset Management, L.P. inside cover, no type logo: squirrel Wanger Advisors Trust 2000 Annual Report Contents 2 The Bubble Popped 4 Funds at a Glance 6 Performance Review Wanger U.S. Small Cap 8 Performance Review Wanger International Small Cap 10 Performance Review Wanger Twenty 12 Performance Review Wanger Foreign Forty 14 Statement of Investments Wanger U.S. Small Cap 18 Statement of Investments Wanger International Small Cap 22 Portfolio Diversification Wanger International Small Cap 23 Statement of Investments Wanger Twenty 25 Statement of Investments Wanger Foreign Forty 27 Portfolio Diversification Wanger Foreign Forty 28 Statements of Assets and Liabilities 29 Statements of Operations 30 Statements of Changes in Net Assets 32 Financial Highlights Wanger U.S. Small Cap 33 Financial Highlights Wanger International Small Cap 34 Financial Highlights Wanger Twenty 35 Financial Highlights Wanger Foreign Forty 36 Notes to Financial Statements 39 Report of Independent Auditors Liberty Wanger Asset Management, L.P. ("WAM") is one of the leading global small-cap equity managers in the U.S. with 30 years of small-cap investment experience. WAM manages over $9 billion in equities and is the investment adviser to Wanger U.S. Small Cap, Wanger International Small Cap, Wanger Twenty, Wanger Foreign Forty and the Liberty Acorn Family of Funds. WAM uses a unique style of catching trends with small, attractively priced niche companies. For more complete information about our funds, including the Liberty Acorn funds, or our fees and expenses, call 1-800-4-WANGER for a prospectus. Read it carefully before you invest or send money. Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- logo: squirrel Squirrel Chatter: The Bubble Popped A year ago in our annual report, I made an unpopular prediction amid investors' love affair with technology stocks: "Many of the new Internet companies will suffer the biggest massacre of naifs since the Children's Crusade." The forecast was correct. Technology charts went vertical in early 2000 as IPO salesmen and day traders watched, hoping to keep living in their hand-to-mouse fashion. But the sector then spun downward and crashed. Energy in the '80s The Internet stocks were a spectacular example of a market mania followed by a debacle. While this latest cycle was dramatic, it was not unique. In 1980, the #1 growth stock was oil-service company Schlumberger. From 1968 to 1980, energy stocks went from 14% to 27% of the S&P 500. During the period, every portfolio manager was an amateur geologist, with a four-color map of the Overthrust Belt pinned to his wall. Private investors lined up to buy tax-shelter drilling partnerships from good ol' Billy Bob in San Antonio because we all knew that crude oil would be $100 per barrel in 2000. S&P Sector Weight: 1968 1980 1992 1999 2000 - --------------------------------------------------------------- Energy 14% 27% 10% 5% 6% - --------------------------------------------------------------- Technology 7% 10% 7% 30% 22% - --------------------------------------------------------------- Source: Tom Galvin, "Inside the Index," Credit Suisse First Boston. This seemed like a good idea since oil and gas was a giant, profitable, necessary industry. Energy consumption increased steadily between 1980 and 2000. However, crude oil prices did not go up as hoped; oil stocks were a bad idea for the next 20 years. By 1999, energy stocks dropped from 27% of the S&P 500 to a measly 5%. In comparison, technology stocks, only 7% of the S&P 500 in 1992, had a terrific run, peaking at 30% of the S&P in 1999. Private investors lined up to buy venture capital partnerships from Yoshi and Deepak in Sunnyvale because we all knew that everyone would spend $100 per day on the Internet in 2020. Are technology stocks going back down from 30% to 10% of the S&P 500? We don't know but this example suggests that may be a likely outcome. Honeyfugling Technology mania caused many to turn a blind eye to Old Economy issues including the amount of energy required to keep all this technology up and running. The good citizens of California have enjoyed enormous growth in population as New Economy companies grew in the Silicon Valley. They also kept their environment in good condition by stopping construction of smelly, ugly industrial facilities such as refineries and electrical generating plants. The Greens started with the anti-growth acronym NIMBY ("Not in my back yard") but have now raised the level to BANANA ("Build absolutely nothing anywhere near anybody!"). Total victory. No new large utility plants have been built in California for 12 years while electric consumption has increased by over 28% during this same period. "Suddenly" we have a shortage of electricity in California, with blackouts, soaring prices, nearly bankrupt utilities, and embarrassed regulators and politicians. Who could not have predicted that if you increase demand without increasing supply that would lead to a bust? California is now wallowing in the worst regulatory mess in recent history as long-term, fixed price sales contracts are leaving suppliers short as they are forced to buy fuel in a more expensive energy market. But even utility goof-ups are nothing new. Electric utilities began in the 1900-1910 era, and took off in the 1920s. Utility stocks were a good idea; demand was soaring as households bought electric lights, irons and laundry machines; stores and theaters put in elevators and air conditioners; and factories switched to electric motors from shaft-and-belt power systems. Electric power consumption grew at 7% per year from 1910 to 1970, new generating technology allowed steady price reductions, and utilities were great stable growth companies. How could utility investors miss? One word converted a good idea into a bad one: leverage. Insull Utility Investments, United Corporation and Standard Gas and Electric built complex holding companies with very high debt loads, a precedent for Long Term Capital Management in 1998. 2 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- When depression struck in 1930, the local utility companies still produced and sold electricity, but not enough to keep paying dividends1 on their stock. That meant no cash went to the holding companies, so the holding companies went broke. The writings of the 1920s and '30s showed a general distrust for this thing called leverage: "A further serious defect of overdeveloped holding company organization is the temptation afforded to prestidigitation, double shuffling, honeyfugling, hornswoggling, and skullduggery ... all sorts of nefarious dealings."2 Congress passed the Utility Holding Company Act of 1935 to prevent anybody from trying such foolishness again. What Now? Internet stocks collapsed in 2000. That doesn't mean that technological change has stopped. It does mean that technology stocks are going to be valued by the same rules as the rest of the market. What this demystification of technology means to us is that a balanced approach to investing -- one that includes exposure to many different areas of the market -- continues to make the most sense. Additionally, two very positive economic changes are in the pipeline: 1) Bush's proposed tax cut may help the economy and the stock market; 2) Financial Accounting Standards Board (FASB) amortization rules are likely to change, which may make corporate acquisitions even more popular.3 photo of: Ralph Wanger Ralph Wanger Chief Investment Officer, Liberty Wanger Asset Management, L.P. - -------------------------------------------------------------------------------- 1 A "dividend" was some sort of payment companies mailed to their shareholders in the olden days. Nobody remembers why they did that. Today, companies only send money to shareholders as a result of a class action suit. 2 Ripley, William Z., Main Street and Wall Street, Little Brown, Boston, 1927. Honeyfugle: To dupe, deceive or swindle (OED). 3 Goodwill won't have to be amortized. Some have dubbed the FASB rule change, "The Investment Banker Relief Act of 2001." 3 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- logo: squirrel Funds at a Glance - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Results to December 31, 2000 4th Last 12 quarter months Wanger U.S. Small Cap 2.72% -8.16% Russell 2000 -6.91% -3.02% S&P MidCap 400 -3.85% 17.51% S&P 500 -7.82% -9.10% Wanger U.S. Small Cap N.A.V. as of 12/31/00: $19.99 The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then eliminating the largest 1,000, leaving a mainly small-company index. The S&P MidCap 400 is a market value-weighted index of 400 U.S. stocks that are in the next tier down from the S&P 500. The S&P 500 is a broad market-weighted average of blue-chip U.S. companies. All indexes are unmanaged and include reinvested dividends. It is not possible to invest directly in an index. - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Top 5 Industries As a % of net assets, as of 12/31/00 Information Group 36.0% Health Care 14.4% Finance 14.2% Energy/Minerals 13.0% Consumer Goods/Services 5.8% - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Top 10 Holdings 1. Lincare Holdings 6.3% Home Health Care Services 2. Dynegy 5.9% Natural Gas & Electric Processing, Production and Marketing 3. SEI Investments 4.2% Mutual Fund Administration 4. First Health Group3.9% PPO Network 5. Conectiv 3.3% Electric Utility in New Jersey, Delaware & Maryland 6. AmeriCredit 3.3% Auto Lending 7. Acxiom 3.1% Database Marketing Services 8. Telephone and 2.9% Data Systems Cellular & Telephone Services 9. National Data 2.8% Credit Card & Health Claims Processor 10. Perkin Elmer 2.7% Analytical Instruments for Biotech/Telecom - -------------------------------------------------------------------------------- Wanger International Small Cap Results to December 31, 2000 4th Last 12 quarter months Wanger International Small Cap -19.27% -27.84% EMI World ex-U.S. -5.56% -10.31% EAFE -2.68% -14.17% Lipper International Small Cap Funds Index -10.37% -14.52% Wanger International Small Cap N.A.V. as of 12/31/00: $28.53 The EMI is Salomon Smith Barney's index of the bottom 20% of institutionally investable capital of non-U.S. countries, as selected by Salomon. EAFE is Morgan Stanley's Europe, Australasia and Far East Index, an index of companies throughout the world in proportion to world stock market capitalization, excluding the U.S. and Canada. Lipper Indexes include the largest funds tracked by Lipper, Inc. in the named category. The Lipper International Small Cap Funds Index is made up of the 10 largest non-U.S. funds investing in small-cap companies. The Lipper International Funds Index consists of the 30 largest non-U.S. funds, not including non-U.S. small cap funds. All indexes are unmanaged and returns include reinvested dividends. It is not possible to invest directly in an index. - -------------------------------------------------------------------------------- Wanger International Small Cap Top 5 Countries As a % of net assets, as of 12/31/00 United Kingdom 13.3% Netherlands 12.7% Canada 8.6% France/Belgium 7.7% Japan 7.5% - -------------------------------------------------------------------------------- Wanger International Small Cap Top 10 Holdings 1. Kempen 2.3% Stock Brokerage/Investment Management-Netherlands 2. Patheon 2.3% Pharmaceuticals-Canada 3. Omni Industries 2.2% Contract Electronics Manufacturer-Singapore 4. St. James Place 1.8% Capital Life Insurance-United Kingdom 5. Penn West Petroleum 1.8% Oil & Gas Producer-Canada 6. Selecta Group 1.8% Vending Machine Owner/Operator-Switzerland 7. Prosodie 1.8% Automated Call Centers-France 8. Hunter Douglas 1.7% Decorative Window Coverings-Netherlands 9. Taylor Nelson 1.7% Market Research Services - United Kingdom 10. Fininfo 1.7% Data Feeds for French Banks & Brokers-France 4 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Funds at a Glance - -------------------------------------------------------------------------------- Wanger Twenty Results to December 31, 2000 4th Last 12 quarter months Wanger Twenty -2.43% 9.45% Russell 2000 -6.91% -3.02% S&P MidCap 400 -3.85% 17.51% S&P 500 -7.82% -9.10% Wanger Twenty N.A.V. as of 12/31/00: $14.08 The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then eliminating the largest 1,000, leaving a mainly small-company index. The S&P MidCap 400 is a market value-weighted index of 400 U.S. stocks that are in the next tier down from the S&P 500. The S&P 500 is a broad market-weighted average of blue-chip U.S. companies. The Lipper Mid Cap Funds Index measures the performance of the 30 largest mid-cap funds tracked by Lipper. All indexes are unmanaged and include reinvested dividends. It is not possible to invest directly in an index. - -------------------------------------------------------------------------------- Wanger Twenty Top 5 Industries As a % of net assets, as of 12/31/00 Information Group 40.0% Consumer Goods/Services 15.9% Health Care 14.0% Finance 11.3% Energy/Minerals 9.5% Industrial Goods/Services 3.1% - -------------------------------------------------------------------------------- Wanger Twenty Top 10 Holdings 1. SEI Investments 8.0% Mutual Fund Administration 2. Dynegy 6.3% Natural Gas & Electric Processing, Production and Marketing 3. Boston Scientific 5.6% Stents & Catheters 4. Tektronix 5.6% Analytical Instruments 5. H&R Block 5.5% Tax Preparation 6. First Health Group 5.4% PPO Network 7. Jones Apparel 5.3% Women's Apparel 8. Telephone and Data 5.2% Systems Cellular and Telephone Services 9. Herman Miller 5.0% Office Furniture 10. Getty Images 3.7% Photographs for Publications & Electronic Media - -------------------------------------------------------------------------------- Each fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statements of Investments for complete lists of a fund's holdings, including those described under Performance Review. Past performance does not guarantee future results. The investment return and principal value of an investment in the Funds will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Wanger Foreign Forty Results to December 31, 2000 4th Last 12 quarter months Wanger Foreign Forty -8.71% -1.58% EAFE -2.68% -14.17% SSB World ex-U.S. Cap Range $2-10B -1.40% -6.05% Wanger Foreign Forty N.A.V. as of 12/31/00: $17.29 EAFE is Morgan Stanley's Europe, Australasia and Far East Index, an index of companies throughout the world in proportion to world stock market capitalization, excluding the U.S. and Canada. The SSB World ex-U.S. Cap Range $2-10B is a subset of Salomon Smith Barney's Broad Market Index, representing a mid-cap developed market index excluding the U.S. All indexes are unmanaged and returns include reinvested dividends. It is not possible to invest directly in an index. - -------------------------------------------------------------------------------- Wanger Foreign Forty Top 5 Countries As a % of net assets, as of 12/31/00 United Kingdom/Ireland 25.8% Canada 9.2% Italy 7.1% Australia 6.4% Israel 6.3% - -------------------------------------------------------------------------------- Wanger Foreign Forty Top 10 Holdings 1. Fortis-Netherlands 5.7% Financial Services Conglomerate 2. Talisman Energy- 5.2% Canada Oil & Gas Producer 3. Irish Life & 4.4% Permanent-Ireland Savings Products 4. Celestica-Canada 3.9% Electronic Manufacturing Services 5. Computershare- 3.7% Australia Financial Software Services 6. Saipem-Italy 3.5% Offshore Construction and Drilling 7. Comverse 3.4% Technology-Israel Voicemail & Related Systems 8. Hays-United Kingdom3.4% Outsourcing Services Conglomerate 9. Venture 3.1% Manufacturing-Singapore Electronic Manufacturing Services 10. Serco Group- 3.0% United Kingdom Facilities Management 5 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- logo: squirrel Performance Review Wanger U.S. Small Cap Wanger U.S. Small Cap was up 7.5% for the six-month period ended December 31, 2000, strongly outperforming the Russell 2000's 5.9% decline. For the year, the Fund was down 8.2%, underperforming the Russell 2000 Index, down 3.0%. The year 2000 consisted of two very distinct six-month periods for the Fund. At June 30, the Fund was down 14.6% due largely to the mid-March Nasdaq collapse that sent tech stocks reeling. But the Fund regained its footing in early July and posted a 7.5% return for the second six-month period of the year. We believe the Fund is well positioned to benefit from the current market environment. SEI Investments was a big winner for the Fund in 2000. This fund administrator finally got investor attention as it blew past earnings estimates. Dynegy was another top performer for the year. Natural gas prices are more than triple what they were last year and electricity prices are also on the rise. As an electricity and natural gas marketer, Dynegy is a beneficiary of these trends. Its stock tripled in 2000. Two health-care stocks also topped the portfolio performance list. First Health Group operates the largest national Preferred Provider Organization (PPO) network and while it operates very differently than an HMO, it tends to follow the HMO market cycle. In 2000, the HMO sector nearly doubled returns. Our other health-care winner was Lincare Holdings, a leading provider of respiratory-care equipment. Favorable rulings that eased some of the regulatory pressure on the company breathed new life into the stock mid-year, causing it to triple. Underperformers were -- no surprise -- largely technology and telecommunication names. While Micros Systems, a developer of systems used in restaurants and hotels, went up in the fourth quarter it was not enough to offset earlier losses. Other stocks that hurt the Fund's performance included Sykes (call center services), RCN (local market telecom services) and Aspect Communications (call center equipment). The Fund sold Sykes and RCN mid-year. We do continue to own select tech and telecom stocks. We kept names that we feel control a specific market niche. As long-term investors, we will keep stocks that are temporarily down as long as the original reason for the purchase still holds true. Going forward, we are optimistic about the prospects for the Fund and small caps in general. Small stocks have finally started to outperform large stocks* and we believe valuations in smaller company growth names continue to be very attractive. We feel that these factors, combined with more stable market conditions, could lead to improved results in 2001. *From 12/31/99 through 12/31/00, the Russell 2000 was down 3.02% while the S&P 500 was down 9.10% for the same period. Small-cap stocks are often more volatile and less liquid than the stocks of larger companies. Small companies may have a shorter history of operations than larger companies and may have a less diversified product line, making them more susceptible to market pressure. As of 12/31/00, the Fund's positions in the holdings mentioned were: SEI Investments, 4.2%; Dynegy, 5.9%; First Health Group, 3.9%; Lincare Holdings, 6.3%; Micros Systems, 1.9%; Sykes, 0.0%; RCN, 0.0%; Aspect Communications, 0.7%. Photo of Robert A. Mohn Robert A. Mohn Portfolio Manager 6 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Results to December 31, 2000 - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Wanger U.S. Small Cap Total Return for Each Period May 3, 1995 through December 31, 2000 chart: Wanger U.S. Small Cap: $27,469 Russell 2000: $19,636 Wanger U.S. Russell Small Cap: 2000: 5/3/95 10000 10000 6/30/95 10770 10707 9/30/95 12060 11765 12/31/95 11600 12020 3/31/96 13297 12633 6/30/96 15351 13265 9/30/96 15792 13310 12/31/96 17004 14003 3/31/97 16366 13279 6/30/97 19093 15431 9/30/97 22395 17728 12/31/97 22005 17134 3/31/98 24865 18858 6/30/98 25361 17978 9/30/98 20875 14365 12/31/98 23916 16697 3/31/99 22388 15792 6/30/99 26375 18248 9/30/99 25389 17094 12/31/99 29909 20247 3/31/00 29077 21682 6/30/00 25545 20862 9/30/00 26741 21093 12/31/00 27469 19636 Average Annual Total Return 1 Year: -8.16% 3 Years: 7.67% 5 Years: 18.82% Life: 19.52% - -------------------------------------------------------------------------------- This graph compares the results of $10,000 invested in Wanger U.S. Small Cap on May 3,1995 (the date the Fund began operations) through December 31, 2000 with the Russell 2000. Dividends and capital gains are reinvested. The performance data quoted is past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. Due to ongoing market volatility, performance is subject to substantial short-term fluctuations. Wanger U.S. Small Cap is a diversified fund that invest primarily in the stocks of small- and medium-size U.S. companies. Smaller company stocks are often more volatile or less liquid than the stocks of larger companies. 7 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- logo: squirrel Performance Review Wanger International Small Cap Wanger International Small Cap was down 25.51% for the six-month period ended December 31, 2000 and finished the year off 27.84%. The Fund underperformed the EMI World ex-US and the EAFE Indexes for both periods. After a 1999 boom year in which many investors indiscriminately piled into the stocks we held, the U.S. bear market caused many of these same investors to head for the exit simultaneously. Forgotten during the selling panic of the fourth quarter was the fact that these companies are reporting good earnings and anticipate further strong growth in 2001. Swedish Internet consulting company Adcore, for example, dropped dramatically on reports of slowing demand for U.S. peers' services from dot.com companies. Yet Adcore has long relations with brick-and-mortar companies, which provide nearly all of its revenues. We are maintaining the Fund's exposure to stocks that make recurrent profits from the technology field, names that we believe are leading companies in their industry. These stocks have strong fundamentals that we believe may lead to improved performance in the coming months. Of the four best performers in the portfolio, two were long-term holdings bought when the stocks were not popular, but that finally got recognized by the market. The other two were companies that were bought out at substantial premiums to the Fund's purchase price. The Fund purchased Micronic, a Swedish semiconductor equipment maker, in a private placement and sold it soon after its initial IPO "pop". Li & Fung, a Hong Kong exporter of consumer products, went up on strong results, bucking the trend of weak Asian markets. We took our profits of that position. Media companies Lusomundo and Endemol were acquired by large telecom operators. Looking at the final three months of the year, the Fund's top names came from a variety of industries. St. James Place Capital, a life insurance company based in the United Kingdom, sold lots of policies as Europeans continued to clamor for savings products to make up for under-funded state pensions. Also based in the UK, Regus was another year-end winner that is part of the Fund's outsourcing theme. Regus leases office space furnished with desks, supplies and even support staff. Norddeutsche and Fugro were winning energy-related stocks. Germany's Norddeutsche operates a refinery while Fugro in the Netherlands offers consulting services and offshore surveys. Both stocks increased thanks to a general pick-up in energy pricing. We are optimistic about the prospects for international markets. Demographic and economic factors point to a highly favorable international investing climate: Foreign currencies are strengthening. Companies are becoming more productive through use of technology, restructuring, and outsourcing. Many foreign countries are in a different economic cycle than ours, and are earlier in the growth phase. And most importantly, Europe is in the middle of a big shift in favor of equity investing. Part of the performance shown is due to the Fund's purchase of securities in IPOs. Some of those securities were held as investments in the Fund and others were sold soon after purchase. It is anticipated that the Fund's purchases of securities in IPOs may continue in the future, but continuation is not certain and the impact of IPO purchases is likely to decline as the Fund grows larger. Small-cap stocks tend to be more volatile and may be less liquid than the stocks of larger companies. Investments in foreign securities have special risks, including political or economic instability, higher costs, different regulations, accounting standards, trading practices and levels of information, and currency exchange rate fluctuations. As of 12/31/00, the Fund's positions in the holdings mentioned were: Adcore, 0.7%; Micronic, 0.0%; Li & Fung, 0.0%; Lusomundo, 0.0%; Endemol, 0.0%; St. James Place Capital, 1.8%; Regus, 0.8%; Norddeutsche, 1.3%; Fugro, 1.5%. photo of: Marcel P. Houtzager Marcel P. Houtzager Lead Portfolio Manager photo of: Peter Zaldivar Peter Zaldivar Co-Portfolio Manager 8 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Results to December 31, 2000 - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Wanger International Small Cap Total Return for Each Period May 3, 1995 through December 31, 2000 chart: Wanger International Small Cap: $33,244 EMI World ex-U.S.: $12,217 Wanger International EMI World Small Cap: ex-U.S.: 5/3/95 10000 10000 6/30/95 10970 9556 9/30/95 12910 9857 12/31/95 13450 10123 3/31/96 15499 10704 6/30/96 17183 11177 9/30/96 17023 10924 12/31/96 17755 10855 3/31/97 18357 10656 6/30/97 19568 11422 9/30/97 19363 10960 12/31/97 17496 9835 3/31/98 21307 11526 6/30/98 21410 11485 9/30/98 17437 9747 12/31/98 20352 11030 3/31/99 21564 11187 6/30/99 25404 11875 9/30/99 29266 12481 12/31/99 46072 13619 3/31/00 54789 13896 6/30/00 44628 13653 9/30/00 41179 12936 12/31/00 33244 12217 Average Annual Total Return 1 Year: -27.84% 3 Years: 23.86% 5 Years: 19.84% Life: 23.62% - -------------------------------------------------------------------------------- This graph compares the results of $10,000 invested in Wanger International Small Cap on May 3,1995 (the date the Fund began operations) through December 31, 2000 with the EMI World ex-U.S. Dividends and capital gains are reinvested. The performance data quoted is past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. Due to ongoing market volatility, performance is subject to substantial short-term fluctuations. Wanger International Small Cap is a diversified fund that invests primarily in the stocks of non-U.S. companies with capitalizations of less than $2 billon. Smaller company stocks are often more volatile or less liquid than the stocks of larger companies. Wanger International Small Cap invests in foreign securities, which involve risks including currency fluctuation, lower liquidity, economic and political risks and different accounting methods. 9 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- log: squirrel Performance Review Wanger Twenty Wanger Twenty finished 2000 up 9.45%. This return lagged behind the S&P MidCap 400's 17.50% gain but beat the S&P 500's 9.10% decline. Since inception, the Fund had a cumulative return of 46.99% vs. the S&P MidCap 400's 40.27% and the S&P 500's 5.61% over the same period. We are pleased with the performance since inception and remain optimistic about the Fund's future prospects. Winners in the year 2000 came from many different areas of the market. SEI Investments gained 182% as tremendous asset growth during the year translated into stellar revenue and earnings increases. Waters returned 101% as biotech and drug companies increased protein research following the sequencing of the human genome. Waters' mass spectrometry analytical instruments are key components for protein analysis and characterization. First Health Group rose 74% as business in its key PPO line reaccelerated following a major new client addition. Other big drivers for the Fund included Tektronix, Perkin Elmer, Dynegy, Expeditors International of Washington and TCF Financial. All of these stocks gained at least 40% for the year. There were some losers in 2000 as well. Wanger Twenty's holdings in telecom and technology stocks were not immune to the market's disdain for such issues. Liberty Media, a standout for Wanger Twenty last year, fell 52%. Plagued by poor investments in public securities dealing with the Internet, Liberty Media's stock was under pressure as the Internet bubble burst. Another 1999 standout, Telephone and Data Systems, lost 35% as cash flow growth fell short of expectations. Jabil Circuit fell 34% following a disappointing earnings announcement in December, and McLeod USA fell 29% as comparable firms in its industry reported poor results. In each case, our analysts believe the long-term outlook remains sound and the Fund has held or added to its positions. Finally, I wish to acknowledge the Liberty Wanger Asset Management domestic research team. We have had a number of new people join our group, including Susie Pinsky (consumer products and services), Harold Lichtenstein (real estate and insurance), Grant McKay (technology hardware), and Rob Chalupnik (industrial goods and services). I want to offer my personal thanks to this fine group of people as well as to Ralph Wanger (chief investment officer), Chuck McQuaid (telecommunications and media), Rob Mohn (financial services), Jason Selch (energy), and Ben Andrews (technology software) for making 2000 a successful year for Wanger Twenty. Wanger Twenty is a non-diversified fund. The performance of each of its holdings will have a greater impact on the Fund's total return, and may make the Fund's returns more volatile than a more diversified fund. Mid-cap stocks tend to be more volatile and may be less liquid than the stocks of larger companies. As of 12/31/00, the Fund's positions in the holdings mentioned were: SEI Investments, 8.0%; Waters, 3.2%; First Health Group, 5.4%; Tektronix, 5.6%; Perkin Elmer, 3.5%; Dynegy, 6.3%; Expeditors International of Washington, 3.1%; TCF Financial, 3.3%; Liberty Media, 2.8%; Telephone and Data Systems, 5.2%; Jabil Circuit, 2.5%; McLeod USA, 1.7%. photo of: John H. Park John H. Park Portfolio Manager 10 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger Twenty Results to December 31, 2000 - -------------------------------------------------------------------------------- The Value of a $10,000 investment in Wanger Twenty Total Return for the Period February 1, 1999 through December 31, 2000 chart: Wanger Twenty: $14,699 S&P MidCap 400: $14,027 Wanger Twenty: S&P MidCap 400: 2/1/99 10000 10000 3/31/99 10530 9741 6/30/99 12530 11120 9/30/99 11410 10186 12/31/99 13430 11937 3/31/00 13697 13451 6/30/00 13822 13008 9/30/00 15064 14588 12/31/00 14699 14027 Average Annual Total Return 1 Year: 9.45% Life: 22.28% - -------------------------------------------------------------------------------- This graph compares the results of $10,000 invested in Wanger Twenty on February 1, 1999 through December 31, 2000, to the S&P MidCap 400 Index, with dividends and capital gains reinvested. The performance data quoted is past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. Due to ongoing market volatility, performance is subject to substantial short-term fluctuations. Part of the performance shown is due to the Fund's purchase of securities in IPOs. The impact of IPO purchases declines as a Fund grows large. Wanger Twenty is a non-diversified fund that invests primarily in the stocks of medium- to larger-size U.S. companies. Each stock may represent a significant part of its overall portfolio. The performance of each of these larger holdings will have a greater impact on Wanger Twenty's total return and may make the fund's returns more volatile than a more diversified fund. Mid-cap stocks are more volatile and may be less liquid than large-cap stocks. Performance results reflect any voluntary waivers or reimbursements of Fund expenses by the Advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. 11 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- logo: squirrel Performance Review Wanger Foreign Forty Wanger Foreign Forty ended 2000 off 1.58%, strongly outperforming the EAFE, down 14.17%. While the Fund proved its ability to outperform on the bull market side in 1999, this year gave the Fund a chance to test its bear market strength. We believe the final scores for 2000 suggest the Fund can outperform in down cycles as well. The bear market in technology and Internet stocks was not just a U.S. phenomenon. Technology and telecom stocks around the world mimicked the Nasdaq's 39% drop. Computer service company United Microelectronics (Taiwan), electronic manufacturing company Venture Manufacturing (Singapore), and telecoms BellSystem24 (Japan) and MobilCom (Germany) were among the hardest hit stocks in the portfolio. While the Fund sold BellSystem24 and MobilCom, we maintained exposure to tech and telecom names in what we believe are world-class companies. Some of the strain put on the Fund's returns by technology stock underperformance was mitigated by the stellar performance of stocks under our pension theme and by our participation in two initial public offerings (IPOs). ASR Verzekeringsgroep, a Netherlands auto and life insurance company, was acquired by Fortis, driving in some nice gains for the Fund. Irish Life & Permanent also saw strong returns on news of continued earnings growth. Bookham Technology, a UK manufacturer of optical components used in telecom networks, and Gamesa, a Spanish manufacturer of windmill turbines and airplane parts, were purchased as IPOs and sold after they reached unreasonably high valuations. The Fund made nice profits on both. A boost at year-end came from our energy stocks. We raised our exposure to energy during the fourth quarter, getting the Fund in early on the energy upswing. Lastly, the euro, which had been on a downward slide all year, rallied suddenly in December, gaining 8%. The Fund has seen a substantial recovery in prices of many stocks that lagged in 2000 and our long-standing policy of being fully invested (no more than 5% in cash) is paying off. Having swung too far in both the positive and negative directions, we believe the markets have reached a sustainable level. Given that the companies in the Fund's portfolio continue to see strong earnings growth and remain reasonably priced, we believe they should outperform in this type of environment. Looking forward, we are optimistic about the prospects for international markets. We believe demographic and economic factors point to a favorable international investing climate: Foreign currencies are strengthening. Companies are becoming more productive through use of technology, restructuring and outsourcing. Many foreign countries are in a different economic cycle than ours and are earlier in the growth phase. And most importantly, Europe is in the middle of a big shift in favor of equity investing. Part of the performance shown is due to the Fund's purchase of securities in IPOs. Some of those securities were held as investments in the Fund and others were sold soon after purchase. It is anticipated that the Fund's purchases of securities in IPOs may continue in the future, but continuation is not certain and the impact of IPO purchases is likely to decline as the Fund grows larger. Wanger Foreign Forty is a non-diversified fund. The performance of its holdings will have a greater impact on the Fund's total return, and may make the Fund's returns more volatile than a more diversified fund. Mid-cap stocks tend to be more volatile and may be less liquid than the stocks of larger companies. Investments in foreign securities have special risks, including political or economic instability, higher costs, different regulations, accounting standards, trading practices and levels of information, and currency exchange rate fluctuations. As of 12/31/00, the Fund's positions in the holdings mentioned were: United Microelectronics, 2.4%; Venture Manufacturing, 3.1%; BellSystem24, 0.0%; MobilCom, 0.0%; ASR Verzekeringsgroep, 0.0%; Irish Life & Permanent, 4.4%; Bookham Technology, 0.0%; Gamesa, 0.0%. photo of: Marcel P. Houtzager Marcel P. Houtzager Co-Portfolio Manager photo of: Roger D. Edgley Roger D. Edgley Co-Portfolio Manager 12 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger Foreign Forty Results to December 31, 2000 - -------------------------------------------------------------------------------- The Value of a $10,000 investment in Wanger Foreign Forty Total Return for the Period February 1, 1999 through December 31, 2000 chart: Wanger Foreign Forty: $18,100 EAFE: $10,930 Wanger Foreign Forty: EAFE: 2/1/99 10000 10000 3/31/99 10190 10169 6/30/99 11350 10428 9/30/99 11650 10885 12/31/99 18390 12734 3/31/00 20853 12721 6/30/00 20193 12217 9/30/00 19827 11231 12/31/00 18100 10930 Average Annual Total Return 1 Year: -1.58% Life: 36.32% - -------------------------------------------------------------------------------- This graph compares the results of $10,000 invested in Wanger Foreign Forty on February 1, 1999 through December 31, 2000, to the EAFE Index, with dividends and capital gains reinvested. The performance data quoted is past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. Due to ongoing market volatility, performance is subject to substantial short-term fluctuations. Wanger Foreign Forty is a non-diversified fund that invest in the stocks of medium- to larger-size companies with market capitalizations of $5 billion to $15 billion. Each stock may represent a significant part of its overall portfolio. The performance of each of these larger holdings will have a greater impact on Wanger Foreign Forty's total return and may make the fund's returns more volatile than a more diversified international fund. Mid-cap stocks are more volatile and may be less liquid than large-cap stocks. Wanger Foreign Forty invests in foreign securities, which involve risks including currency fluctuation, sometimes lower liquidity, economic and political risks and different accounting methods. Performance results reflect any voluntary waivers or reimbursements of Fund expenses by the Advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. 13 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares Common Stocks-90.3% Information-36.0% - -------------------------------------------------------------------------------- Broadcasting-0.2% 18,000 Young Broadcasting (b) $602,719 Television Stations - -------------------------------------------------------------------------------- Television Programming-1.3% 305,000 Mediacom Communications (b) 5,242,187 Cable Television Franchises 65,000 Classic Communications (b) 142,188 Cable Television in Rural Areas - -------------------------------------------------------------------------------- 5,384,375 - -------------------------------------------------------------------------------- Radio-1.5% 395,900 Salem Communications (b) 5,913,756 Radio Stations for Religious Programming - -------------------------------------------------------------------------------- Telecommunications/Wireline Communications-2.0% 235,300 Commonwealth Telephone (b) 8,235,500 Rural Phone Franchises & CLEC - -------------------------------------------------------------------------------- Mobile Communications-4.9% 128,000 Telephone and Data Systems 11,520,000 Cellular & Telephone Services 351,750 Comarco 4,748,624 Wireless Network Testing 141,000 Price Communications (b) 2,370,563 Cellular Telephone Services 65,000 Pinnacle Holdings (b) 589,062 Towers for Cellular, PCS & Paging 162,000 Diversinet (b) 364,500 Wireless PKI Security - -------------------------------------------------------------------------------- 19,592,749 - -------------------------------------------------------------------------------- Telecommunications Equipment-0.8% 347,800 Aspect Communications (b) 2,798,703 Call Center Equipment 168,100 Ezenia (b) 189,113 Video Servers - -------------------------------------------------------------------------------- 2,987,816 - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Business Information/Marketing Services-6.1% 319,000 Acxiom (b) $12,421,064 Database Marketing Services 133,700 Getty Images (b) 4,278,400 Photographs for Publications & Electronic Media 147,900 CACI International (b) 3,404,011 Technology Services for Government 151,000 PRIMEDIA (b) 1,802,561 Specialty Magazines & Other Publications 58,400 Information Holdings (b) 1,368,750 Scientific & Medical Publications, Patent Information 20,000 ChoicePoint (b) 1,311,250 Fraud Protection Information - -------------------------------------------------------------------------------- 24,586,036 - -------------------------------------------------------------------------------- Business Software-2.7% 620,000 JDA Software Group (b) 8,098,750 Applications/Software & Services for Retailers 300,000 Mapics (b) 1,500,000 Mid Market ERP Software 76,000 Project Software (b) 815,811 Enterprise Maintenance Software 25,000 Hyperion Solutions (b) 385,938 Application Software - -------------------------------------------------------------------------------- 10,800,499 - -------------------------------------------------------------------------------- Transaction Processors-4.6% 309,300 National Data 11,328,113 Credit Card & Health Claims Processor 164,500 Concord EFS (b) 7,227,719 Credit Card Processor - -------------------------------------------------------------------------------- 18,555,832 - -------------------------------------------------------------------------------- Computer Hardware/Related Systems-5.1% 285,900 Kronos (b) 8,845,031 Labor Management Solutions 424,900 Micros Systems (b) 7,754,425 Information Systems for Restaurants & Hotels 64,000 Zebra Technologies (b) 2,611,000 Bar Code Printing Hardware, Supplies & Software See accompanying notes to financial statements. 14 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Computer Hardware/Related Systems-5.1% (cont) 111,000 American Power Conversion (b) $1,373,625 Uninterruptible Power Systems - -------------------------------------------------------------------------------- 20,584,081 - -------------------------------------------------------------------------------- Semiconductors/Related Equipment-0.6% 122,900 DSP Group (b) 2,586,661 Telecom Semiconductors - -------------------------------------------------------------------------------- Instrumentation-5.1% 105,000 Perkin Elmer 11,025,000 Analytical Instruments for Biotech/Telecom 288,000 Tektronix 9,702,000 Analytical Instruments - -------------------------------------------------------------------------------- 20,727,000 - -------------------------------------------------------------------------------- Computer Services-1.1% 170,000 Pomeroy Computer Resources (b) 2,592,500 Network Integration Services 301,800 RCM Technologies (b) 1,094,025 Technology Staffing Services 100,000 Meta Group (b) 650,000 IT Publications & Consulting Services 535,000 Aztec Technology Partners (b) 117,031 Technology Staffing Services - -------------------------------------------------------------------------------- 4,453,556 - -------------------------------------------------------------------------------- Internet Related-0.1% 205,000 Online Resources (b) 410,000 Internet Banking Technology 116,666 Aperian (b) 76,562 Web Hosting - -------------------------------------------------------------------------------- 486,562 - -------------------------------------------------------------------------------- Information-Total 145,497,142 - -------------------------------------------------------------------------------- Number of Value Shares Health Care-14.4% - -------------------------------------------------------------------------------- Biotechnology/Drug Delivery-1.1% 42,000 Myriad Genetics $3,475,500 Gene Discovery & Diagnostic Products 55,000 Genzyme Molecular Oncology Division (b) 505,313 Gene Expression Technology & Cancer Drugs 26,000 Genset (b) 328,250 Genomics - -------------------------------------------------------------------------------- 4,309,063 - -------------------------------------------------------------------------------- Medical Equipment-1.3% 255,200 Steris (b) 4,115,100 Sterilization Devices 73,000 Edwards Lifesciences (b) 1,295,750 Heart Valves - -------------------------------------------------------------------------------- 5,410,850 - -------------------------------------------------------------------------------- Services-12.0% 448,000 Lincare Holdings (b) 25,564,000 Home Health Care Services 339,000 First Health Group (b) 15,784,688 PPO Network 86,000 Syncor International 3,128,250 Nuclear Pharmacy for Radiopharmaceuticals 592,700 Magellan Health Services (b) 2,630,106 Mental Health Services 73,900 Serologicals Corporation (b) 1,113,119 Blood Collection & Antibody Production - -------------------------------------------------------------------------------- 48,220,163 - -------------------------------------------------------------------------------- Health Care-Total 57,940,076 Consumer Goods/Services-5.8% - -------------------------------------------------------------------------------- Retail-3.2% 220,000 Callaway Golf 4,097,500 Premium Golf Clubs & Balls 60,500 Whole Foods Market (b) 3,698,063 Natural Food Supermarkets 79,000 Zale Corp (b) 2,295,938 Specialty Retailer of Jewelry 120,000 Gadzooks (b) 1,770,000 Teen Apparel Retailer See accompanying notes to financial statements. 15 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Retail-3.2% (cont) - -------------------------------------------------------------------------------- 90,000 Borders (b) $1,051,875 Bookstores - -------------------------------------------------------------------------------- 12,913,376 - -------------------------------------------------------------------------------- Casinos-0.1% 107,700 Monarch Casino & Resort (b) 511,575 Casino/Hotel in Reno - -------------------------------------------------------------------------------- Consumer Services-2.5% 451,000 ITT Educational Services (b) 9,922,000 Technology Oriented Post Secondary Degree Programs - -------------------------------------------------------------------------------- Consumer Goods/Services-Total 23,346,951 Finance-14.2% - -------------------------------------------------------------------------------- Banks/Savings & Loans-2.1% 99,000 Texas Regional Bancshares 3,217,500 TexMex Bank 84,400 Chittenden 2,558,374 Vermont & Western Massachusetts Bank 46,000 TCF Financial 2,049,875 Great Lakes Bank 26,500 Peoples Bank Bridgeport 685,688 Connecticut Savings & Loan - -------------------------------------------------------------------------------- 8,511,437 - -------------------------------------------------------------------------------- Finance Companies-3.6% 489,400 AmeriCredit (b) 13,336,150 Auto Lending 232,000 World Acceptance (b) 1,276,000 Personal Loans - -------------------------------------------------------------------------------- 14,612,150 - -------------------------------------------------------------------------------- Insurance-2.6% 586,600 UICI (b) 3,482,938 Insurance/Specialty Finance 92,000 Leucadia National (b) 3,260,250 Insurance Holding Company 403,900 Acceptance Insurance (b) 2,120,475 Crop Insurance - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Insurance-2.6% (cont) 8,000 Markel (b) $1,448,000 Specialty Insurance - -------------------------------------------------------------------------------- 10,311,663 - -------------------------------------------------------------------------------- Money Management-5.9% 153,000 SEI Investments 17,136,000 Mutual Fund Administration 74,600 Neuberger Berman 6,047,263 Major Asset Management Company 27,900 BKF Capital Group 509,175 Institutional Money Manager - -------------------------------------------------------------------------------- 23,692,438 - -------------------------------------------------------------------------------- Finance-Total 57,127,688 Industrial Goods/Services-3.2% - -------------------------------------------------------------------------------- Steel-0.0% 53,400 Atchison Casting (b) 150,188 Steel Foundries - -------------------------------------------------------------------------------- Industrial Goods-0.2% 110,000 Advanced Lighting Technologies (b) 728,750 Metal Halide Lighting - -------------------------------------------------------------------------------- Other Industrial Services-3.0% 412,100 Insurance Auto Auctions (b) 4,945,200 Auto Salvage Services 516,400 Wackenhut, Cl. B (b) 4,453,950 Prison Management 174,000 Hub Group (b) 1,566,000 Truck & Rail Freight Forwarder 40,000 EGL (b) 957,500 Domestic Freight Forwarder - -------------------------------------------------------------------------------- 11,922,650 - -------------------------------------------------------------------------------- Industrial Goods/Services-Total 12,801,588 See accompanying notes to financial statements. 16 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares Energy/Minerals-13.0% - -------------------------------------------------------------------------------- Independent Power-0.4% 32,000 AES Corporation $1,772,000 Global Electric Producer - -------------------------------------------------------------------------------- Oil/Gas Producers-2.2% 700,900 Tesoro Petroleum (b) 8,147,963 Oil Refinery/Gas Producer 20,000 Evergreen Resources (b) 772,500 Coal Seam Gas Producer - -------------------------------------------------------------------------------- 8,920,463 - -------------------------------------------------------------------------------- Oil Services-1.4% 401,000 Newpark Resources (b) 3,834,560 Oilfield Fluid Management & Equipment Rental 31,300 Carbo Ceramics 1,171,794 Manufacturer of Ceramic Pellets for Gas Wells 20,000 Maverick Tube (b) 452,500 Steel Pipes for Oil & Gas Wells - -------------------------------------------------------------------------------- 5,458,854 - -------------------------------------------------------------------------------- Distribution/Marketing/Refining-9.0% 423,400 Dynegy 23,736,863 Natural Gas & Electric Processing, Production & Marketing 128,000 Equitable Resources 8,544,000 Natural Gas Utility & Producer 168,000 Atmos Energy 4,095,000 Natural Gas Utility - -------------------------------------------------------------------------------- 36,375,863 - -------------------------------------------------------------------------------- Energy/Minerals-Total 52,527,180 Other Industries-3.7% - -------------------------------------------------------------------------------- Real Estate-0.4% 47,000 The Rouse Company 1,198,500 Regional Shopping Malls 21,400 Consolidated Tomoka 254,125 Real Estate Holdings in Florida - -------------------------------------------------------------------------------- 1,452,625 - -------------------------------------------------------------------------------- Principal Amount or Value Number of Shares - -------------------------------------------------------------------------------- Regulated Utilities-3.3% 672,000 Conectiv $13,482,000 Electric Utility in New Jersey, Delaware & Maryland - -------------------------------------------------------------------------------- Other Industries-Total 14,934,625 Total Common Stocks-90.3% 364,175,250 - -------------------------------------------------------------------------------- (Cost: $312,011,271) Preferred Stock-0.3% - -------------------------------------------------------------------------------- 301,205 SensAble Technologies (b) 1,000,001 Sensory Devices for Computer Based Sculpting - -------------------------------------------------------------------------------- (Cost: $1,000,001) Short-Term Obligations-9.7% - -------------------------------------------------------------------------------- Yield 6.40%-6.55 Due 1/02-1/04/01 $14,442,000 General Electric 14,436,865 14,218,000 Citicorp 14,215,425 10,530,000 Ford Motor 10,524,252 - -------------------------------------------------------------------------------- (Amortized Cost: $ 39,176,542) 39,176,542 Total Investments-100.3% 404,351,793 - -------------------------------------------------------------------------------- (Cost: $352,187,814) Cash and Other Assets Less Liabilities-(0.3%) (1,046,271) - -------------------------------------------------------------------------------- Total Net Assets-100% $403,305,522 - -------------------------------------------------------------------------------- Notes to Statement of Investments: (a)At December 31, 2000, for federal income tax purposes cost of investments was $353,066,856 and net unrealized appreciation was $51,284,937 consisting of gross unrealized appreciation of $123,687,969 and gross unrealized depreciation of $72,403,032. (b)Non-income producing security. See accompanying notes to financial statements. 17 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares Common Stocks-93.8% Europe-59.2% - -------------------------------------------------------------------------------- Germany/Austria-6.5% 135,000 GFK $3,981,055 Market Research Services 296,500 Norddeutsche Affinerie (b) 3,575,648 Copper Smelter 98,000 Austria Technologies 2,862,252 Printed Circuit Board Manufacturer 70,000 Teleplan International 2,341,243 Warranty Repair Services 60,000 Flughafen Wien (Austria) 2,278,119 Vienna Airport Manager 47,556 Brainpool TV (b) 851,293 Comedy Television Programming 10,000 Lion Bioscience 810,249 Bioinformatics 14,000 MIS (b) 685,885 Decision Support Software 23,500 Dialog Semiconductor 225,832 Custom Semiconductors for Cell Phones - -------------------------------------------------------------------------------- 17,611,576 - -------------------------------------------------------------------------------- Denmark-1.3% 26,000 Kobenhavns Lufthavne 2,233,748 Copenhagen Airport Manager 140,000 Sondagavisen 1,273,539 Free Sunday Newspaper - -------------------------------------------------------------------------------- 3,507,287 - -------------------------------------------------------------------------------- Netherlands-12.7% 115,748 Kempen 6,379,541 Stock Brokerage/Investment Management 170,000 Hunter Douglas 4,676,833 Decorative Window Coverings 61,200 Fugro 3,964,096 Survey & GPS Services 175,000 Computer Service Solutions 3,627,278 Computer Services 153,333 Unique International 3,467,104 Human Resources - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Netherlands-12.7% (cont) 120,000 Buhrmann (b) $3,227,806 Office Supplies 59,000 Pink Roccade (b) 3,224,037 Computer Services/Outsourcing 45,000 ICT Automatisering 1,636,514 Business Software 60,000 SNT Group (b) 1,557,374 Call Center Operator 125,000 Fox Kids Europe (b) 1,466,220 Cartoons 70,000 OCE 1,121,159 Manufacturer of High Speed Copiers - -------------------------------------------------------------------------------- 34,347,962 - -------------------------------------------------------------------------------- Finland-1.0% 260,000 Talentum 1,604,481 Trade Journals & Internet Services 35,000 Elcoteq Network 1,104,671 Electrical Components - -------------------------------------------------------------------------------- 2,709,152 - -------------------------------------------------------------------------------- Norway-0.6% 300,000 Visma (b) 1,641,821 Business Software - -------------------------------------------------------------------------------- Sweden-5.2% 250,000 Semcon 3,318,467 Technical Consultant 285,000 Metro International (b) 2,602,740 Free Subway Newspapers 80,000 Proffice (b) 2,285,229 Temporary Employment Agency 622,200 Adcore 1,902,873 Internet Consulting 50,000 Modern Times Group (b) 1,327,386 TV, Newspapers & Electronic Commerce 75,000 Autoliv 1,195,313 Seatbelts & Airbags 2,300 Feintool International 1,091,163 Engineering & Machinery See accompanying notes to financial statements. 18 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Sweden-5.2% (cont) 207,000 Cell Network (formerly known as Mandator) $384,676 Computer & Internet Consulting - -------------------------------------------------------------------------------- 14,107,847 - -------------------------------------------------------------------------------- France/Belgium-7.7% 83,200 Prosodie 4,859,987 Automated Call Centers 120,000 Fininfo 4,522,320 Data Feeds for French Banks & Brokers 250,000 Telindus Group (Belgium) 4,180,791 Network Integration Services 35,000 Ipsos 3,825,129 Market Research 40,000 Cegedim 1,677,027 Medical Market Research 70,000 FI System (b) 929,243 Internet Consulting 2,300 Essilor International 753,013 Eyeglass Lenses - -------------------------------------------------------------------------------- 20,747,510 - -------------------------------------------------------------------------------- United Kingdom-13.3% 800,000 St. James Place Capital 4,999,614 Life Insurance 1,225,000 Taylor Nelson 4,560,429 Market Research Services 500,000 Informa Group 4,485,300 Business Information Provider 700,000 Expro International 4,238,609 Offshore Oil Field Services 1,727,600 Chloride Group 4,210,184 Electrical Equipment Manufacturer/Retailer 450,000 Mitie Group 2,556,621 Facilities Management 1,352,000 Incepta 2,233,620 Business Information & Marketing Services 400,000 Charles Taylor Group 2,212,748 Insurance - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- United Kingdom-13.3% (cont) 400,000 Regus (b) $2,171,974 Rental of Office Space in Full Service Business Centers 150,000 Bloomsbury Publishing 1,943,817 Publishing 600,000 Photobition Group 897,060 Production of Graphics for Exhibits 200,000 Orchestream Holdings (b) 816,325 Network Management Software 117,000 Ncipher (b) 479,298 Security Software 150,000 Telework Group 426,103 Software for Scheduling & Telephone Messages - -------------------------------------------------------------------------------- 36,231,702 - -------------------------------------------------------------------------------- Spain/Portugal-6.5% 375,000 Red Electrica 3,550,727 Power Grid 255,000 Prosegur 2,882,979 Security Guards 130,000 Aldeasa 2,510,830 Airport Management 75,000 Abengoa 2,401,776 Engineering & Construction Services for Infrastructure Projects & Recycling 143,000 Cortefiel 2,384,676 Apparel Retailer 51,000 Ibersol (Portugal) 2,003,670 Fast Food Retailer 60,500 PT Multimedia (Portugal) (b) 1,489,412 Cable & Satellite Operator 56,200 Zarddoya Otis 495,072 Elevator Maintenance & Service Provider - -------------------------------------------------------------------------------- 17,719,142 - -------------------------------------------------------------------------------- Switzerland-3.2% 20,000 Selecta Group 4,899,225 Vending Machine Owner/Operator 1,950 Bachem 3,375,163 Drug Manufacturer See accompanying notes to financial statements. 19 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Switzerland-3.2% (cont) 6,000 Gretag Imaging $520,930 Photofinishing Equipment - -------------------------------------------------------------------------------- 8,795,318 - -------------------------------------------------------------------------------- Italy-1.2% 232,000 Italdesign Giugiaro 1,693,986 Automotive Designers 145,000 Class Editori 1,639,341 Newspapers & On-Line Financial Data - -------------------------------------------------------------------------------- 3,333,327 - -------------------------------------------------------------------------------- Europe-Total 160,752,644 Asia-16.9% - -------------------------------------------------------------------------------- Japan-7.5% 260,000 Diamond Leasing 2,668,588 Leasing 28,000 Moshi Moshi Hotline 2,440,950 Telemarketing 110,000 Densei Lambda 2,286,862 Power Supplies 62,000 ARRK 2,274,633 Prototypes & Moulds 32,000 Venture Link 1,719,078 Retail Franchises 75,000 BML 1,677,149 Clinical Testing 4,000 Bellsystem24 1,607,268 Call Centers 16,000 Don Quijote 1,355,695 Retail Franchises 60,000 Wilson Learning 1,257,862 Corporate Training 18,000 C-Two Network 1,116,352 Discount Food Retailer 70,000 Pasona Softbank 733,753 Temporary Employment Services 11,800 Drake Beam Morin 462,806 Employment Outplacement Services - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Japan-7.5% (cont) 11,000 Stella Chemifa $444,881 Specialty Chemicals 40,000 Optex 303,983 Industrial Sensors - -------------------------------------------------------------------------------- 20,349,860 - -------------------------------------------------------------------------------- Taiwan-3.5% 464,000 Faraday Technology (b) 2,871,981 Application Specific Integrated Circuits (ASIC's) 1,525,500 Phoenixtec Power 1,552,215 Uninterruptable Power Supply Manufacturer 2,000,000 Chroma Ate 1,419,082 Test & Measurement Instruments 1,000,000 Systex (b) 1,231,884 Systems Integrator & Internet Services 117,000 ASE Test (b) 994,500 Semiconductor Packaging & Test Services 1,040,000 Hitron Technology 841,546 Network Integration & Internet Services 857,720 Cosmo Electronics 660,382 Relay & Opto-Coupler Manufacturer - -------------------------------------------------------------------------------- 9,571,590 - -------------------------------------------------------------------------------- Singapore-4.1% 4,000,000 Omni Industries 5,884,050 Contract Electronics Manufacturer 500,000 Sembcorp Logistics 2,768,965 Logistic Services for Marine Transport 3,750,000 Star Cruises (b) 2,625,000 Cruise Line - -------------------------------------------------------------------------------- 11,278,015 - -------------------------------------------------------------------------------- South Korea-1.8% 249,863 S1 Corporation 1,998,124 Home/Business Security Services 31,750 Cheil Communications 1,558,599 Advertising 32,000 Cheil Jedang 772,768 Consumer Staples - -------------------------------------------------------------------------------- See accompanying notes to financial statements. 20 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- South Korea-1.8% (cont) 275,300 Korea Technology Investment $527,498 Venture Capital - -------------------------------------------------------------------------------- 4,856,989 - -------------------------------------------------------------------------------- Asia-Total 46,056,454 Latin America-2.1% - -------------------------------------------------------------------------------- Mexico-2.1% 1,000,000 Corp Interamericana de Entretenimiento (b) 4,106,029 Special Events & Live Entertainment 91,000 Grupo Aeroportuario (b) 1,512,875 Cancun Airport Manager - -------------------------------------------------------------------------------- 5,618,904 - -------------------------------------------------------------------------------- Latin America-Total 5,618,904 Other Countries-15.6% - -------------------------------------------------------------------------------- Australia-3.9% 575,000 Keycorp (b) 2,974,211 Smart Card Technology 4,250,000 Open Telecommunications (b) 2,671,045 Computer Services 2,115,000 Infomedia (b) 2,109,056 Publisher of Electronic Catalog for Auto Parts 1,200,000 Novogen (b) 1,917,287 Pharmaceuticals 350,000 Securenet (b) 939,901 IT Security Provider - -------------------------------------------------------------------------------- 10,611,500 - -------------------------------------------------------------------------------- Canada-8.6% 630,000 Patheon (b) 6,241,577 Pharmaceuticals 200,000 Penn West Petroleum (b) 4,990,326 Oil & Gas Producer 150,000 Corus Entertainment (b) 3,902,862 CATV Programming & Radio Stations 1,100,000 AltaGas Services (b) 3,742,745 Natural Gas Gatherer and Processor - -------------------------------------------------------------------------------- Principal Amount or Value Number of Shares - -------------------------------------------------------------------------------- Canada-8.6% (cont) 365,000 Mosaic (b) $2,362,065 Outsourced Marketing Services 393,300 Magellan Aerospace (b) 1,534,996 Civil Aerospace Parts 92,000 MDSI Mobil Data Solutions (b) 724,500 Wireless Software - -------------------------------------------------------------------------------- 23,499,071 - -------------------------------------------------------------------------------- Israel-3.1% 141,000 DSP Group (b) 2,967,609 Telecom Semiconductors 101,000 Orbotech (b) 3,768,562 Automatic Optical Inspection Equipment for Electronics 354,000 Paradigm Geophysical (b) 1,593,000 Seismic Software - -------------------------------------------------------------------------------- 8,329,171 - -------------------------------------------------------------------------------- Other-Total 42,439,742 Total Common Stocks-93.8% 254,867,744 - -------------------------------------------------------------------------------- (Cost: $278,250,259) Short-Term Obligations-8.1% - -------------------------------------------------------------------------------- Yield 6.25%-6.40% Due 1/02-1/03/01 $12,551,000 General Electric 12,548,769 9,353,000 American General 9,349,752 - -------------------------------------------------------------------------------- 21,898,521 - -------------------------------------------------------------------------------- (Amortized Cost: $21,898,521) Total Investments-101.9% 276,766,265 - -------------------------------------------------------------------------------- (Cost: $300,148,780) Cash and Other Assets Less Liabilities-(1.9%) (5,091,529) - -------------------------------------------------------------------------------- Total Net Assets-100% $271,674,736 - -------------------------------------------------------------------------------- Notes to Statement of Investments: (a)At December 31, 2000, for federal income tax purposes cost of investments was $301,915,704 and net unrealized depreciation was $25,149,439 consisting of gross unrealized appreciation of $45,218,028 and gross unrealized depreciation of $70,367,467. (b)Non-income producing security. (c)At December 31, 2000, $96,468,669 or 35.5% of the Fund's net assets was denominated in the Euro currency. See accompanying notes to financial statements. 21 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Portfolio Diversification December 31, 2000 At December 31, 2000 the Fund's portfolio of investments as a percentage of net assets was diversified as follows: Market Value Percent - -------------------------------------------------------------------------------- Information Technology Computer Related Hardware Semiconductors and Related Equipment $10,828,486 4.0% Computer Hardware and Related Equipment 6,241,698 2.3 Contract Manufacturing 5,884,050 2.2 Instrumentation 1,419,082 0.5 - -------------------------------------------------------------------------------- 24,373,316 9.0 Media Satellite Broadcasting and Services 6,259,795 2.3 TV Broadcasting 1,327,387 0.5 - -------------------------------------------------------------------------------- 7,587,182 2.8 Software and Services Business Information and Marketing Services 28,992,122 10.7 Computer Services 20,033,668 7.4 Publishing 13,549,218 5.0 Business Software 9,865,710 3.6 Internet Related 5,789,229 2.1 Advertising 3,920,665 1.4 Transaction Processors 2,974,211 1.1 - -------------------------------------------------------------------------------- 85,124,823 31.3 Telecom Telephone Services 1,489,412 0.6 Telecommunications Equipment 841,545 0.3 - -------------------------------------------------------------------------------- 2,330,957 0.9 - -------------------------------------------------------------------------------- 119,416,278 44.0 - -------------------------------------------------------------------------------- Health Care Pharmaceuticals 8,158,864 3.0 Biotechnology/ Drug Delivery 3,375,163 1.2 Hospital Services 1,677,149 0.6 Medical Equipment 753,013 0.3 - -------------------------------------------------------------------------------- 13,964,189 5.1 - -------------------------------------------------------------------------------- Industrial Goods Outsourcing Services 17,937,067 6.6 Electrical Components 9,559,393 3.5 Logistics 4,735,563 1.7 Industrial Materials 4,318,969 1.6 Market Value Percent - -------------------------------------------------------------------------------- Industrial Goods (cont) Construction $2,401,776 0.9% Machinery 2,084,306 0.8 Speciality Chemicals 444,881 0.2 - -------------------------------------------------------------------------------- 41,481,955 15.3 - -------------------------------------------------------------------------------- Consumer Goods & Services Retail 9,086,630 3.3 Other Durable Goods (includes auto related) 5,872,145 2.2 Other Consumer Services 4,899,225 1.8 Entertainment 4,106,029 1.5 Nondurables 2,776,438 1.0 Cruise Lines 2,625,000 1.0 - -------------------------------------------------------------------------------- 29,365,467 10.8 - -------------------------------------------------------------------------------- Energy & Minerals Oil Services 9,795,704 3.6 Oil & Gas Producers 4,990,326 1.8 Refining/Marketing/Distribution 3,742,745 1.4 Non-Ferrous Metals 3,575,648 1.3 - -------------------------------------------------------------------------------- 22,104,423 8.1 - -------------------------------------------------------------------------------- Finance Insurance 7,212,362 2.7 Brokerage 6,379,541 2.3 Other Finance Companies 2,668,588 1.0 Money Management 527,499 0.2 - -------------------------------------------------------------------------------- 16,787,990 6.2 - -------------------------------------------------------------------------------- Other Transportation 6,024,740 2.2 Regulated Utilities 3,550,728 1.3 Real Estate 2,171,974 0.8 - -------------------------------------------------------------------------------- 11,747,442 4.3 - -------------------------------------------------------------------------------- Total Common Stocks 254,867,744 93.8 Short-Term Obligations 21,898,521 8.1 - -------------------------------------------------------------------------------- Total Investments 276,766,265 101.9 Cash and Other Assets Less Liabilities (5,091,529) (1.9) - -------------------------------------------------------------------------------- Net Assets $271,674,736 100.0% - -------------------------------------------------------------------------------- See accompanying notes to financial statements. 22 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger Twenty Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares Common Stocks-93.8% Information-40.0% - -------------------------------------------------------------------------------- Television Programming-2.8% 25,000 Liberty Media Group, AT&T (b) $339,063 CATV & Satellite Dish Programming - -------------------------------------------------------------------------------- Telephone Services-1.8% 15,000 McLeod USA, Inc. 211,875 Super Regional CLEC: Local, Long Distance & Internet Services - -------------------------------------------------------------------------------- Mobile Communications-5.2% 7,000 Telephone and Data Systems 630,000 Cellular & Telephone Services - -------------------------------------------------------------------------------- Business Information/Marketing Services/Publishing-12.3% 16,000 H&R Block 662,000 Tax Preparation 14,000 Getty Images (b) 448,000 Photographs for Publications & Electronic Media 9,000 Tribune 380,250 Publishing & Media - -------------------------------------------------------------------------------- 1,490,250 - -------------------------------------------------------------------------------- Business Software-3.2% 22,000 JD Edwards (b) 391,875 Mid-Market ERP Software - -------------------------------------------------------------------------------- Contract Manufacturing-2.5% 12,000 Jabil Circuit (b) 304,500 Electronic Manufacturing Services - -------------------------------------------------------------------------------- Instrumentation- 12.2% 20,000 Tektronix 673,750 Analytical Instruments 4,000 Perkin Elmer 420,000 Analytical Instruments for Biotech/Telecom - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Instrumentation- 12.2% (cont) 4,600 Waters (b) $384,100 Chromatography, Mass Spectrometry, Thermal Analysis - -------------------------------------------------------------------------------- 1,477,850 - -------------------------------------------------------------------------------- Information-Total 4,845,413 - -------------------------------------------------------------------------------- Health Care-14.0% Hospital/Laboratory Supplies-3.0% 10,000 Techne (b) 360,625 Cytokines, Antibodies, Other Reagents For Life Sciences - -------------------------------------------------------------------------------- Medical Equipment-5.6% 50,000 Boston Scientific (b) 684,375 Stents & Catheters - -------------------------------------------------------------------------------- Services-5.4% 14,000 First Health Group (b) 651,875 PPO Network - -------------------------------------------------------------------------------- Health Care-Total 1,696,875 Consumer Goods/Services-15.9% - -------------------------------------------------------------------------------- Furniture-5.0% 21,000 Herman Miller 603,750 Office Furniture - -------------------------------------------------------------------------------- Manufacturers-5.3% 20,000 Jones Apparel (b) 643,750 Women's Apparel - -------------------------------------------------------------------------------- Retail-2.5% 16,000 Callaway Golf 298,000 Premium Golf Clubs & Balls - -------------------------------------------------------------------------------- Leisure Vehicles-3.1% 9,560 Harley-Davidson 380,010 Motorcycles & Related Merchandise - -------------------------------------------------------------------------------- Consumer Goods/Services-Total 1,925,510 See accompanying notes to financial statements. 23 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger Twenty Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares Finance-11.3% - -------------------------------------------------------------------------------- Money Management-8.0% 8,700 SEI Investments $974,400 Mutual Fund Administration - -------------------------------------------------------------------------------- Banks-3.3% 9,000 TCF Financial 401,063 Great Lakes Bank - -------------------------------------------------------------------------------- Finance-Total 1,375,463 Industrial Goods/Services-3.1% - -------------------------------------------------------------------------------- Logistics-3.1% 7,000 Expeditors International of Washington 375,812 International Freight Forwarder - -------------------------------------------------------------------------------- Industrial Goods/Services-Total 375,812 Energy/Minerals-9.5% - -------------------------------------------------------------------------------- Oil/Gas Producers-3.3% 6,500 Devon Energy 396,305 Oil & Gas Producers - -------------------------------------------------------------------------------- Distribution/Marketing/Refining-6.2% 13,524 Dynegy 758,189 Natural Gas & Electric Processing, Production & Marketing - -------------------------------------------------------------------------------- Energy/Minerals-Total 1,154,494 Total Common Stocks-93.8% 11,373,567 - -------------------------------------------------------------------------------- (Cost: $9,040,373) - -------------------------------------------------------------------------------- Principal Amount Value Short-Term Obligations-5.9% - -------------------------------------------------------------------------------- Yield 6.25%-6.40% Due 1/02-1/03/01 $364,000 American General $363,874 353,000 General Electric 352,937 - -------------------------------------------------------------------------------- (Amortized Cost: $716,811) 716,811 Total Investments-99.7% 12,090,378 - -------------------------------------------------------------------------------- (Cost: $9,757,184) Cash and Other Assets Less Liabilities-0.3% 39,005 - -------------------------------------------------------------------------------- Total Net Assets-100% $12,129,383 - -------------------------------------------------------------------------------- Notes to Statement of Investments: (a)At December 31, 2000, for federal income tax purposes cost of investments was $9,757,184 and net unrealized appreciation was $2,333,194 consisting of gross unrealized appreciation of $2,876,012 and gross unrealized depreciation of $542,818. (b)Non-income producing security. See accompanying notes to financial statements. 24 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger Foreign Forty Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares Common Stocks-94.6% Europe-59.3% - -------------------------------------------------------------------------------- Germany-3.4% 7,000 Rhoen Klinikum $394,384 Hospital Management 2,000 Henkel (b) 131,901 Chemicals, Detergents & Non-Food Consumer Brands - -------------------------------------------------------------------------------- 526,285 - -------------------------------------------------------------------------------- Belgium-2.1% 4,000 RTL 329,753 TV & Radio Broadcaster - -------------------------------------------------------------------------------- Netherlands-5.7% 27,000 Fortis (b) 880,157 Financial Services Conglomerate - -------------------------------------------------------------------------------- Finland-1.9% 20,000 Comptel 289,240 Telephone Billing Software - -------------------------------------------------------------------------------- Sweden-3.3% 10,000 Netcom (b) 416,268 Telecommunication Services 3,500 Modern Times Group (b) 92,917 TV, Newspapers & Electronic Commerce - -------------------------------------------------------------------------------- 509,185 - -------------------------------------------------------------------------------- France-3.8% 9,000 M6 Metropole TV 338,750 Television Broadcaster 27,300 Gemplus International 244,347 Smart Card Products & Services - -------------------------------------------------------------------------------- 583,097 - -------------------------------------------------------------------------------- United Kingdom/Ireland-25.8% 55,000 Irish Life & Permanent (Ireland) 684,001 Savings Products 90,000 Hays 519,398 Outsourcing Services 58,400 Serco Group 467,129 Facilities Management - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- United Kingdom/Ireland-25.8% (cont) 15,000 Logica $385,579 Computer Software & Services 50,000 Capita Group 373,775 Outsourcing Services 52,000 Dimension Data (b) 357,628 Networks & Computer Services 50,000 Peninsular & Oriental 236,973 Cruise Line 25,000 Enterprise Oil 211,930 Oil & Gas Producers 50,000 P & O Princess Cruises 211,557 Leisure Cruise Line 50,000 BG Group 204,081 Oil & Gas Producers 20,000 SSL International 149,510 Medical & Footcare Products 20,000 Energis (b) 133,397 Telecommunication Services 5,000 Exel 71,017 Freight Forwarding & Logistics 2,000 Sema Group 8,814 Computer Software & Services - -------------------------------------------------------------------------------- 4,014,789 - -------------------------------------------------------------------------------- Switzerland-6.2% 80 Julius Baer 440,062 Private Banking, Brokerage & Mutual Funds 95 Cie Fin Richemont 255,395 Luxury Goods, Tobacco & Pay TV 300 Synthes-Startec 222,698 Products for Orthopedic Surgery 20 Pargesa Holdings 39,070 Industrial & Media Conglomerate - -------------------------------------------------------------------------------- 957,225 - -------------------------------------------------------------------------------- Italy-7.1% 100,000 Saipem 547,389 Offshore Construction & Drilling 27,000 Banca Fideuram 373,939 Life Insurance/Mutual Funds See accompanying notes to financial statements. 25 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger Foreign Forty Statement of Investments December 31, 2000 - -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- Italy-7.1% (cont) 20,000 Editoriale L'Espresso $173,732 Newspapers & Magazines - -------------------------------------------------------------------------------- 1,095,060 - -------------------------------------------------------------------------------- Europe-Total 9,184,791 Asia-13.4% - -------------------------------------------------------------------------------- Hong Kong-0.9% 75,000 Li & Fung 136,544 Sourcing of Consumer Goods - -------------------------------------------------------------------------------- Japan-4.3% 2,800 Orix 280,293 Finance Leasing 3,200 Oriental Land 213,836 Disney Theme Park Operator 136 Sky Perfect Communications (b) 178,197 Satellite TV Subscriptions - -------------------------------------------------------------------------------- 672,326 - -------------------------------------------------------------------------------- Taiwan-2.4% 45,000 United Microelectronics (b) 371,250 Semiconductor Foundry - -------------------------------------------------------------------------------- Singapore-5.8% 70,680 Venture Manufacturing 472,967 Electronic Manufacturing Services 605,000 Star Cruises (b) 423,500 Cruise Lines - -------------------------------------------------------------------------------- 896,467 - -------------------------------------------------------------------------------- Asia-Total 2,076,587 Other Countries-21.9% - -------------------------------------------------------------------------------- Australia-6.4% 120,000 Computershare 578,404 5,000 Computershare Warrants 3,352 Financial Software/Services - -------------------------------------------------------------------------------- Principal Amount or Value Number of Shares - -------------------------------------------------------------------------------- Australia-6.4% (cont) 270,000 ERG $413,138 Smart Card Systems for Public Transportation - -------------------------------------------------------------------------------- 994,894 - -------------------------------------------------------------------------------- Canada-9.2% 21,800 Talisman Energy (b) 809,374 Oil & Gas Producer 11,300 Celestica (b) 610,648 Electronic Manufacturing Services - -------------------------------------------------------------------------------- 1,420,022 - -------------------------------------------------------------------------------- Israel - 6.3% 4,900 Comverse Technology (b) 532,262 Voicemail & Related Systems 6,800 Amdocs (b) 450,500 Telecommunications Billing & Customer Care Software - -------------------------------------------------------------------------------- 982,762 - -------------------------------------------------------------------------------- Other-Total 3,397,678 Total Common Stocks-94.6% 14,659,056 - -------------------------------------------------------------------------------- (Cost: $14,800,612) Short-Term Obligations-8.9% - -------------------------------------------------------------------------------- Yield 6.25% - 6.55% Due 1/02 - 1/04/01 $487,000 American General 486,831 486,000 Ford Motor Credit 485,735 404,000 General Electric 403,928 - -------------------------------------------------------------------------------- (Amortized Cost: $1,376,494) 1,376,494 Total Investments- 103.5% 16,035,550 - -------------------------------------------------------------------------------- (Cost: $16,177,106) Cash and Other Assets Less Liabilities-(3.5%) (539,954) - -------------------------------------------------------------------------------- Total Net Assets -100% $15,495,596 - -------------------------------------------------------------------------------- Notes to Statement of Investments: (a)At December 31, 2000, for federal income tax purposes cost of investments was $16,215,584 and net unrealized depreciation was $180,034 consisting of gross unrealized appreciation of $1,772,353 and gross unrealized depreciation of $1,952,387. (b)Non-income producing security. (c)At December 31, 2000, $4,387,593 or 28.3% of the Fund's net assets was denominated in the Euro currency. See accompanying notes to financial statements. 26 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger Foreign Forty Portfolio Diversification December 31, 2000 At December 31, 2000 the Fund's portfolio of investments as a percentage of net assets was diversified as follows: Market Value Percent - -------------------------------------------------------------------------------- Information Technology Computer Related Hardware Contract Manufacturing $1,083,613 7.0% Semiconductors and Related Equipment 371,250 2.4 Computer Hardware and Related Equipment 244,347 1.6 - -------------------------------------------------------------------------------- 1,699,210 11.0 Media TV Broadcasting 761,420 4.9 Satellite Broadcasting and Services 178,197 1.2 - -------------------------------------------------------------------------------- 939,617 6.1 Software and Services Business Software 1,125,319 7.3 Transaction Processors 994,894 6.4 Computer Services 366,442 2.4 Publishing 173,735 1.1 - -------------------------------------------------------------------------------- 2,660,390 17.2 Telecom Telephone Services 549,665 3.5 Telecommunications Equipment 532,263 3.4 - -------------------------------------------------------------------------------- 1,081,928 6.9 - -------------------------------------------------------------------------------- 6,381,145 41.2 - -------------------------------------------------------------------------------- Health Care Hospital Management 394,384 2.6 Medical Equipment 222,698 1.4 Pharmaceuticals 149,510 1.0 - -------------------------------------------------------------------------------- 766,592 5.0 - -------------------------------------------------------------------------------- Industrial Goods Outsourcing Services 1,496,845 9.6 - -------------------------------------------------------------------------------- 1,496,845 9.6 Market Value Percent - -------------------------------------------------------------------------------- Consumer Goods & Services Cruise Lines $872,030 5.6% Nondurables 387,296 2.5 Entertainment 213,836 1.4 - -------------------------------------------------------------------------------- 1,473,162 9.5 - -------------------------------------------------------------------------------- Energy & Minerals Oil & Gas Producers 1,225,385 7.9 Oil Services 547,389 3.5 - -------------------------------------------------------------------------------- 1,772,774 11.4 - -------------------------------------------------------------------------------- Finance Insurance 1,564,157 10.1 Money Management 814,001 5.2 Other Finance Companies 280,293 1.8 Closed End Funds 39,070 0.3 - -------------------------------------------------------------------------------- 2,697,521 17.4 - -------------------------------------------------------------------------------- Other Transportation 71,017 0.5 - -------------------------------------------------------------------------------- 71,017 0.5 - -------------------------------------------------------------------------------- Total Common Stocks 14,659,056 94.6% Short-Term Obligations 1,376,494 8.9 - -------------------------------------------------------------------------------- Total Investments 16,035,550 103.5 Cash and Other Assets Less Liabilities (539,954) (3.5) - -------------------------------------------------------------------------------- Net Assets 15,495,596 100.0% - -------------------------------------------------------------------------------- See accompanying notes to financial statements. 27 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Statements of Assets and Liabilities December 31, 2000
Wanger Wanger Wanger Wanger U.S. Small Cap International Twenty Foreign Small Cap Forty - ----------------------------------------------------------------------------------------------------------------------------------- Assets Investments, at value (cost: Wanger U.S. Small Cap $352,187,814; $404,351,793 $276,766,265 $12,090,378 $16,035,550 Wanger International Small Cap $300,148,780; Wanger Twenty $9,757,184; Wanger Foreign Forty $16,177,106) Foreign Currency (cost: International Small Cap $2,091,754; -- 2,012,913 -- 585,521 Foreign Forty $584,140) Cash 910 173 950 387 Receivable for: Securities sold 990,141 1,652,620 -- -- Fund shares sold 869,185 214,090 63,489 515,247 Dividends and interest 31,185 128,122 5,525 4,749 Expense reimbursement due from Advisor -- -- 1,822 3,379 Other assets 2,887 2,650 76 100 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets 406,246,101 280,776,833 12,162,240 17,144,933 Liabilities and Net Assets Payable for: Securities purchased 1,675,952 3,437,128 -- 1,072,077 Fund shares redeemed 1,202,364 5,565,635 3,809 543,255 Accrued: Management fee 2,050 458 8,263 11,355 Transfer Agent fee 3,945 4,420 3,100 3,100 Other 56,268 94,456 17,685 19,550 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 2,940,579 9,102,097 32,857 1,649,337 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Fund shares outstanding $403,305,522 $271,674,736 $12,129,383 $15,495,596 =================================================================================================================================== Fund shares outstanding 20,173,416 9,522,186 861,480 896,201 =================================================================================================================================== Pricing of Shares Net asset value, offering price and redemption price per share $19.99 $28.53 $14.08 $17.29 =================================================================================================================================== Analysis of Net Assets Paid-in capital $358,991,582 $224,248,012 $10,421,120 $14,909,724 Undistributed net realized gain (loss) on sales of investments (8,124,940) 72,650,498 (624,931) 725,164 and foreign currency transactions Net unrealized appreciation (depreciation) of investments 52,163,979 (25,223,774) 2,333,194 (159,631) and foreign currency transactions Undistributed net investment income 274,901 -- -- 20,339 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Fund shares $403,305,522 $271,674,736 $12,129,383 $15,495,596 ===================================================================================================================================
See accompanying notes to financial statements. 28 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Statements of Operations
Wanger Wanger Wanger Wanger U.S. Small Cap International Twenty Foreign Small Cap Forty Year ended December 31, 2000 - ----------------------------------------------------------------------------------------------------------------------------------- Investment Income: Dividends (net of foreign taxes of $218,983 for Wanger $1,739,427 $1,446,205 $51,447 $75,248 International Small Cap and $10,116 for Wanger Foreign Forty) Interest 2,334,360 981,750 46,447 63,625 - ----------------------------------------------------------------------------------------------------------------------------------- Total investment income 4,073,787 2,427,955 97,894 138,873 Expenses: Investment advisory 3,597,280 4,044,255 83,967 111,079 Custodian 54,497 559,688 6,513 24,750 Legal and audit 65,830 58,732 15,663 16,009 Reports to shareholders 12,996 11,346 15,234 14,979 Amortization of organization costs 5,045 6,711 -- -- Transfer agent 21,408 21,228 18,736 18,869 Trustees' 30,958 26,737 605 679 Other 16,554 2,109 327 133 - ----------------------------------------------------------------------------------------------------------------------------------- Total expenses 3,804,568 4,730,866 141,045 186,498 Less custodian fees paid indirectly (6,009) (4,769) (3,758) (185) Less reimbursement of expenses by advisor -- -- (18,163) (25,643) - ----------------------------------------------------------------------------------------------------------------------------------- Net expenses 3,798,559 4,726,097 119,124 160,670 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) 275,228 (2,298,142) (21,230) (21,797) Net realized and unrealized gain (loss) on investments: Net realized gain (loss) on sales of investments (7,234,589) 73,196,254 (610,947) 763,879 Net change in unrealized appreciation (depreciation) (24,916,759) (174,794,354) 1,563,675 (1,795,255) - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (32,151,348) (101,598,100) 952,728 (1,031,376) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(31,876,120) $(103,896,242) $931,498 $(1,053,173) ===================================================================================================================================
See accompanying notes to financial statements. 29 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Statements of Changes in Net Assets
Wanger U.S. Small Cap Wanger International Small Cap Year ended Year ended Year ended Year ended December December December December 31, 2000 31, 1999 31, 2000 31, 1999 - ------------------------------------------------------------------------------------------------------------------------------------ From operations: Net investment income (loss) $275,228 $481,843 $(2,298,142) $(881,145) Net realized gain (loss) on sales of investments (7,234,589) 49,157,155 73,196,254 47,468,114 Net change in unrealized appreciation (depreciation) (24,916,759) 26,975,880 (174,794,354) 124,783,648 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations (31,876,120) 76,614,878 (103,896,242) 171,370,617 Distributions to shareholders from: Net investment income (482,170) -- -- (2,396,217) Net realized gain (49,642,751) (31,015,042) (39,240,076) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions to shareholders (50,124,921) (31,015,042) (39,240,076) (2,396,217) From Fund share transactions: Reinvestment of dividends and capital gain distributions 50,124,921 30,987,684 39,240,076 2,391,782 Proceeds from other shares sold 88,487,383 39,307,491 294,589,657 30,696,445 - ------------------------------------------------------------------------------------------------------------------------------------ 138,612,304 70,295,175 333,829,733 33,088,227 Payments for shares redeemed (44,015,214) (64,304,419) (230,349,651) (31,984,964) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets from Fund share transactions 94,597,090 5,990,756 103,480,082 1,103,263 - ------------------------------------------------------------------------------------------------------------------------------------ Total increase (decrease) in net assets 12,596,049 51,590,592 (39,656,236) 170,077,663 Net assets: Beginning of period 390,709,473 339,118,881 311,330,972 141,253,309 - ------------------------------------------------------------------------------------------------------------------------------------ End of period $403,305,522 $390,709,473 $271,674,736 $311,330,972 - ------------------------------------------------------------------------------------------------------------------------------------ Undistributed Net Investment Income $274,901 $481,843 -- -- ==================================================================================================================================== Wanger Twenty Wanger Foreign Forty Inception Inception February 2 February 2 Year ended through Year ended through December December December December 31, 2000 31, 1999 31, 2000 31, 1999 - ------------------------------------------------------------------------------------------------------------------------------------ From operations: Net investment income (loss) $(21,230) $(28,532) $(21,797) $(2,048) Net realized gain (loss) on sales of investments (610,947) 308,673 763,879 401,583 Net change in unrealized appreciation (depreciation) 1,563,675 769,519 (1,795,255) 1,646,008 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 931,498 1,049,660 (1,053,173) 2,045,543 Distributions to shareholders from: Net investment income -- -- (3,779) -- Net realized gain (294,125) -- (402,719) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions to shareholders (294,125) -- (406,498) -- From Fund share transactions: Reinvestment of dividends and capital gain distributions 294,125 -- 406,498 -- Proceeds from other shares sold 7,467,271 6,997,548 15,240,646 4,072,887 - ------------------------------------------------------------------------------------------------------------------------------------ 7,761,396 6,997,548 15,647,144 4,072,887 Payments for shares redeemed (2,839,517) (1,477,077) (4,518,005) (292,302) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets from Fund share transactions 4,921,879 5,520,471 11,129,139 3,780,585 - ------------------------------------------------------------------------------------------------------------------------------------ Total increase (decrease) in net assets 5,559,252 6,570,131 9,669,468 5,826,128 Net assets: Beginning of period 6,570,131 -- 5,826,128 -- - ------------------------------------------------------------------------------------------------------------------------------------ End of period $12,129,383 $6,570,131 $15,495,596 $5,826,128 - ------------------------------------------------------------------------------------------------------------------------------------ Undistributed Net Investment Income -- -- $20,339 $3,778 ====================================================================================================================================
See accompanying notes to financial statements. 30 & 31 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Financial Highlights
Year Year Year Year Year ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, 2000 1999 1998 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, beginning of period $24.88 $22.18 $21.46 $16.97 $11.60 Income From Investment Operations Net investment income (loss) (b) .02 .03 (.05) (.02) (.06) Net realized and unrealized gain (loss) on investments (1.82) 4.79 1.93 4.90 5.46 - ---------------------------------------------------------------------------------------------------------------------------------- Total from investment operations (1.80) 4.82 1.88 4.88 5.40 Less Distributions Dividends from net investment income (0.03) -- -- -- -- Distributions from net realized gain (3.06) (2.12) (1.16) (.39) (.03) - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions (3.09) (2.12) (1.16) (.39) (.03) Net Asset Value, end of period $19.99 $24.88 $22.18 $21.46 $16.97 =================================================================================================================================== Total Return (8.16%) 25.06% 8.68% 29.41% 46.59% Ratios/Supplemental Data Ratio of expenses to average net assets (a) 1.00% 1.02% 1.02% 1.06% 1.21% Ratio of net investment income (loss) to average net assets 0.07% 0.14% (.25%) (.10%) (.41%) Portfolio turnover rate 36% 35% 34% 34% 46% Net assets at end of period $403,305,522 $390,709,473 $339,118,881 $270,865,827 $128,957,911 - --------------------------------------------------------------------------------
(a)In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian ("custodian fees paid indirectly"). This ratio net of custodian fees paid indirectly would have been 1.04% for the year ended December 31, 1997 and 1.19% for the year ended December 31, 1996. (b)Net investment income (loss) per share was based upon the average shares outstanding during the period. See accompanying notes to financial statements. 32 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Financial Highlights
Year Year Year Year Year ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, 2000 1999 1998 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, beginning of period $43.67 $19.62 $17.05 $17.71 $13.45 Income From Investment Operations Net investment income (loss) (b) (.26) (.13) .03 .02 (.09) Net realized and unrealized gain (loss) on investments (9.75) 24.52 2.76 (.26) 4.38 - ---------------------------------------------------------------------------------------------------------------------------------- Total from investment operations (10.01) 24.39 2.79 (.24) 4.29 Less Distributions Dividends from net investment income -- (.34) (.22) -- -- Distributions from net realized gain and unrealized gain reportable for federal income taxes (5.13) -- -- (.42) (.03) - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions (5.13) (.34) (.22) (.42) (.03) Net Asset Value, end of period $28.53 $43.67 $19.62 $17.05 $17.71 ================================================================================================================================== Total Return (27.84%) 126.37% 16.33% (1.46%) 32.01% Ratios/Supplemental Data Ratio of expenses to average net assets (a) 1.41% 1.49% 1.55% 1.60% 1.79% Ratio of net investment income (loss) to average net assets (.68%) (.49%) .16% .12% (.56%) Portfolio turnover rate 67% 75% 56% 60% 50% Net assets at end of period $271,674,736 $311,330,972 $141,253,309 $120,660,158 $84,855,082 - --------------------------------------------------------------------------------
(a)In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian ("custodian fees paid indirectly"). This ratio net of custodian fees paid indirectly would have been 1.59% for the year ended December 31, 1997 and 1.75% for the year ended December 31, 1996. (b)Net investment income (loss) per share was based upon the average shares outstanding during the period. - -------------------------------------------------------------------------------- Federal Income Tax Information (Unaudited) For the fiscal year ended December 31, 2000, the Fund earned $53,472,483 of long-term capital gains. See accompanying notes to financial statements. 33 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger Twenty Financial Highlights
February 2, 1999 through Year ended December 31, December 31, 2000 1999 - ----------------------------------------------------------------------------------------- Net Asset Value, beginning of period $13.43 $10.00 Income From Investment Operations Net investment loss (c) (.03) (.08) Net realized and unrealized gain on investments 1.23 3.51 - ----------------------------------------------------------------------------------------- Total from investment operations 1.20 3.43 Less Distributions Dividends from net investment income -- -- Distributions from net realized gain (.55) -- - ----------------------------------------------------------------------------------------- Total distributions (.55) -- - ----------------------------------------------------------------------------------------- Net Asset Value, end of period $14.08 $13.43 ========================================================================================= Total Return 9.45% 34.30% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (b) 1.39% 1.41%* Ratio of net investment loss to average net assets (b) (.24%) (.77%)* Portfolio turnover rate 86% 113%* Net assets at end of period $12,129,383 $6,570,131 - -------------------------------------------------------------------------------- *Annualized (a)In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian ("custodian fees paid indirectly"). This ratio net of custodian fees paid indirectly would have been 1.35% for the year ended December 31, 2000 and the period ended December 31, 1999. (b)The fund was reimbursed by the Advisor for certain expenses from February 2, 1999 through December 31, 2000. Without the reimbursement, the ratio of expenses (prior to custodian fees paid indirectly) to average net assets and the ratio of net investment income to average net assets would have been 1.60% and (.49%), respectively, for the year ended December 31, 2000 and 2.12% and (1.48%), respectively, for the period ended December 31, 1999. (c)Net investment loss per share was based upon the average shares outstanding during the period. See accompanying notes to financial statements. 34 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Wanger Foreign Forty Financial Highlights February 2, Year ended 1999 through December 31, December 31, 2000 1999 - ---------------------------------------------------------------------------------- Net Asset Value, beginning of period $18.39 $10.00 Income From Investment Operations Net investment loss (c) (.04) (.01) Net realized and unrealized gain (loss) on investments (.10) 8.40 - ---------------------------------------------------------------------------------- Total from investment operations (.14) 8.39 Less Distributions Dividends from net investment income (.01) -- Distributions from net realized gain (.95) -- - ---------------------------------------------------------------------------------- Total distributions (.96) -- - ---------------------------------------------------------------------------------- Net Asset Value, end of period $17.29 $18.39 ================================================================================== Total Return (1.58%) 83.90% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (b) 1.45% 1.59%* Ratio of net investment loss to average net assets (b) (.20%) (.10%)* Portfolio turnover rate 96% 91%* Net assets at end of period $15,495,596 $5,826,128
- -------------------------------------------------------------------------------- *Annualized (a)In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian ("custodian fees paid indirectly"). This ratio net of custodian fees paid indirectly would have been 1.45% for the year ended December 31, 1999. (b)The fund was reimbursed by the Advisor for certain expenses from February 2, 1999 through December 31, 2000. Without the reimbursement, the ratio of expenses (prior to custodian fees paid indirectly) to average net assets and the ratio of net investment income (loss) to average net assets would have been 1.68% and (.43%), respectively, for the year ended December 31, 2000 and 3.45% and (1.96%), respectively, for the period ended December 31, 1999. (c)Net investment loss per share was based upon the average shares outstanding during the period. - -------------------------------------------------------------------------------- Federal Income Tax Information (Unaudited) For the fiscal year ended December 31, 2000, the Fund earned $454,883 of long-term capital gains. See accompanying notes to financial statements. 35 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Notes to Financial Statements 1. Nature of Operations Wanger U.S. Small Cap, Wanger International Small Cap, Wanger Twenty and Wanger Foreign Forty ("the Funds") are series of Wanger Advisors Trust ("the Trust"), an open-end management investment company organized as a Massachusetts business trust. The investment objective of each Fund is to seek long-term growth of capital. The Funds are available only for allocation to certain life insurance company separate accounts established for the purpose of funding qualified and non-qualified variable annuity contracts, and may also be offered directly to certain types of pension plans and retirement arrangements. 2. Significant Accounting Policies Security valuation Investments are stated at current value. Securities traded on securities exchanges or in over-the-counter markets in which transaction prices are reported are valued at the last sales price at the time of valuation. Securities for which there are no reported sales on the valuation date are valued at the mean of the latest bid and ask quotation or, if there is no ask quotation, at the most recent bid quotation. Money market instruments having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis. Securities for which quotations are not readily available and any other assets are valued as determined in good faith by the Board of Trustees. Foreign currency translations Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales of investments and dividend and interest income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The gain or loss resulting from changes in foreign exchange rates is included with net realized and unrealized gain or loss from investments, as appropriate. Security transactions and investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the information is available to the Fund. Interest income is recorded on the accrual basis and includes amortization of discounts on money market instruments and on long-term debt instruments when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated. Fund share valuation Fund shares are sold and redeemed on a continuing basis at net asset value. Net asset value per share is determined daily as of the close of trading on the New York Stock Exchange on each day the Exchange is open for trading by dividing the total value of the Fund's investments and other assets, less liabilities, by the number of Fund shares outstanding. Custodian fees Custodian fees are reduced based on each Fund's cash balances maintained with the custodian. The amount is disclosed as a reduction of total expenses in the Statement of Operations. Federal income taxes, dividends and distributions to shareholders The Funds have complied with the special provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distribute all their taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required. Dividends and distributions payable to each Fund's shareholders are recorded by the respective Fund on the ex-dividend date. The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These differences primarily relate to investment securities sold at a loss, certain foreign currency and foreign security transactions. As a result, net investment income (loss) on investment transactions for a reporting period may differ from distributions during such period. Accordingly, the Funds may periodically make reclassifications among certain of their capital accounts to reflect differences between financial reporting and federal income tax basis distributions. These reclassifications have no impact on the total net assets or the net asset values of the Funds. The Wanger International Small Cap and Wanger Foreign Forty Funds have elected to mark-to-market their investments in Passive Foreign Investment Companies ("PFIC's") for federal income tax purposes. Gains relating to PFIC's are treated as ordinary income for federal income tax purposes. A summary of transactions relating to PFIC's is as follows: Wanger Wanger International Foreign Small Cap Forty --------- -------- Cumulative unrealized appreciation on PFIC's recognized in prior years at December 31, 1999 -- $5,826 Unrealized appreciation on PFIC's recognized for federal income tax purposes during 2000 $1,766,924 6,372 Unrealized appreciation recognized in prior years on PFIC's sold during 2000 -- (1,813) Cumulative unrealized appreciation on PFIC's recognized at December 31, 2000 $1,766,924 $10,835 36 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Notes to Financial Statements Dividends and distributions payable to each Fund's shareholders are recorded by the Fund on the ex-dividend date. 3. Transactions With Affiliates The Funds' investment advisor, Liberty Wanger Asset Management, L.P., ("WAM") furnishes continuing investment supervision to the Funds and is responsible for overall management of each Fund's business affairs. Each Fund pays WAM a monthly advisory fee based upon average daily net assets at the following rates: Wanger U.S. Small Cap Average Daily Net Assets For the first $100 million 1.00% Next $150 million .95% In excess of $250 million .90% Wanger International Small Cap Average Daily Net Assets For the first $100 million 1.30% Next $150 million 1.20% In excess of $250 million 1.10% Wanger Twenty On average daily net assets .95% Wanger Foreign Forty On average daily net assets 1.00% The investment advisory agreement also provides that WAM will reimburse the Funds to the extent that ordinary operating expenses (computed based on net custodian fees) exceed a percentage of average net assets. This amount is 1.50% for Wanger U.S. Small Cap, 1.90% for Wanger International Small Cap, 1.35% for Wanger Twenty and 1.45% for Wanger Foreign Forty. Wanger Twenty and Wanger Foreign Forty were reimbursed $18,163 and $25,643, respectively, for the year ended December 31, 2000. Certain officers and trustees of the Trust are also principals of WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with WAM. The Funds paid the following trustees' fees and expenses to trustees not affiliated with WAM: Year ended December 31, 2000 Wanger U.S. Small Cap $30,958 Wanger International Small Cap 26,737 Wanger Twenty 605 Wanger Foreign Forty 679 WAM advanced $100,000 in connection with the organization and initial registration of Wanger U.S. Small Cap and Wanger International Small Cap. These costs were amortized and reimbursed to WAM over the period May, 1995 through April, 2000. WAM paid all organization costs associated with the organization of Wanger Twenty and Wanger Foreign Forty. These costs amounted to $ 20,816. WAM will not be reimbursed for these costs by the Funds. Liberty Funds Distributor, Inc. ("LFD") serves as the principal underwriter of the Trust and is a wholly owned indirect subsidiary of Liberty Financial Companies and receives no compensation for its services. 4. Borrowing Arrangements The trust participates in a $250,000,000 credit facility which was entered into to facilitate portfolio liquidity. No amounts have been borrowed under this facility for the year ended December 31, 2000. 5. Fund Share Transactions Proceeds and payments on Fund shares as shown in the statement of changes in net assets are in respect of the following numbers of shares: Wanger U.S. Small Cap Year ended Year ended December 31, 2000 December 31, 1999 Shares sold 4,316,917 1,827,456 Shares issued in reinvestment of dividend and capital gain distributions 2,321,981 1,675,771 - -------------------------------------------------------------------------------- 6,638,898 3,503,227 Less shares redeemed 2,169,780 3,089,752 - -------------------------------------------------------------------------------- Net increase in shares outstanding 4,469,118 413,475 - -------------------------------------------------------------------------------- Wanger International Small Cap Year ended Year ended December 31, 2000 December 31, 1999 Shares sold 7,990,696 1,101,093 Shares issued in reinvestment of dividend and capital gain distributions 797,188 119,889 - -------------------------------------------------------------------------------- 8,787,884 1,220,982 Less shares redeemed 6,394,060 1,290,574 - -------------------------------------------------------------------------------- Net increase (decrease) in shares outstanding 2,393,824 (69,592) Wanger Twenty Feb. 2, 1999 Year ended through December 31, 2000 December 31, 1999 Shares sold 559,378 612,940 Shares issued in reinvestment of dividend and capital gain distributions 23,417 -- - -------------------------------------------------------------------------------- 582,795 612,940 Less shares redeemed 210,620 123,635 - -------------------------------------------------------------------------------- Net increase in shares outstanding 372,175 489,305 Wanger Foreign Forty Feb. 2, 1999 Year ended through December 31, 2000 December 31, 1999 Shares sold 797,617 342,192 Shares issued in reinvestment of dividend and capital gain distributions 19,780 -- - -------------------------------------------------------------------------------- 817,397 342,192 Less shares redeemed 237,976 25,412 - -------------------------------------------------------------------------------- Net increase in shares outstanding 579,421 316,780 37 Wanger Advisor Trust 2000 Semiannual Report - -------------------------------------------------------------------------------- Notes to Financial Statements 6. Investment Transactions The aggregate costs of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2000 were: - -------------------------------------------------------------------------------- Wanger U.S. Wanger Wanger Wanger Small Cap International Twenty Foreign Forty Small Cap Purchases $171,755,929 $264,330,877 $11,394,329 $20,286,948 Sales 123,750,972 211,155,021 7,033,343 9,630,903 7. Capital Loss Carryforwards At December 31, 2000, capital loss carryforwards available (to the extent provided in regulations) to offset future realized gains were as follows: Year of Capital Loss Expiration Carryforward Wanger U.S. Small Cap 2008 $7,246,000 Wanger Twenty 2008 $625,000 38 Wanger Advisors Trust 2000 Annual Report - -------------------------------------------------------------------------------- Report of Independent Auditors To the Board of Trustees and Shareholders of Wanger Advisors Trust We have audited the accompanying statements of assets and liabilities, including the statements of invest ments of Wanger U.S. Small Cap, Wanger International Small Cap, Wanger Twenty and the Wanger Foreign Forty portfolios, comprising the Wanger Advisors Trust, as of December 31, 2000, the related statements of operations, changes in net assets, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our respon sibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of December 31, 2000, by cor respon dence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presen tation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respec tive Funds of the Wanger Advisors Trust as of December 31, 2000, the results of their operations and changes in their net assets and financial highlights for the periods indicated therein, in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Chicago, Illinois February 20, 2001 39 logo: squirrel Wanger Advisors Trust Trustees Fred D. Hasselbring Charles P. McQuaid P. Michael Phelps Ralph Wanger Patricia H. Werhane Officers Ralph Wanger President Marcel P. Houtzager Vice President Robert A. Mohn Vice President Leah J. Zell Vice President John H. Park Vice President Peter Zaldivar Vice President Bruce H. Lauer Vice President and Treasurer Kenneth A. Kalina Assistant Treasurer Transfer Agent, Dividend Disbursing Agent and Custodian Liberty Funds Services, Inc. P.O. Box 1722 Boston, Massachusetts 02105-1722 Distributor Liberty Funds Distributor, Inc. One Financial Center Boston, Massachusetts 02111-2621 Investment Advisor Liberty Wanger Asset Management, L.P. 227 West Monroe Street Suite 3000 Chicago, Illinois 60606 1-800-4-WANGER (1-800-492-6437) Legal Counsel Bell, Boyd & Lloyd LLC Chicago, Illinois Independent Auditors Ernst & Young LLP Chicago, Illinois This report, including the audited schedules of investments and financial statements, is submitted for the general information of the shareholders of the Wanger Advisors Trust. This report is not authorized for distribution unless preceded or accompanied by a prospectus. SPECIAL NOTICE At a special meeting held on September 27, 2000, shareholders of each of the Funds voted to approve an investment advisory agreement between the Wanger Advisors Trust and Liberty Wanger Asset Management, L.P. (WAM), and ratified the selection of Ernst & Young LLP as each Fund's independent public accountants. The record date share position of each Fund and the total share position voted of each Fund were respectively: Wanger U.S. Small Cap 19,625,084.413 and 19,625,065.425; Wanger International Small Cap 9,024,605.320 and 9,020,876.911; Wanger Twenty 671,348.778 and 671,338.491; Wanger Foreign Forty 610,021.014 and 574,782.675. The outcome of the votes were as follows:
A. Approval of Investment Advisory Agreement FOR AGAINST ABSTAIN ----------- ---------- ----------- Wanger U.S. Small Cap 18,369,972.132 263,096.310 991,996.983 Wanger International Small Cap 8,273,162.912 184,602.173 563,111.826 Wanger Twenty 640,088.178 3,346.655 27,903.658 Wanger Foreign Forty 509,588.275 3,052.173 62,142.227 B. Ratification of Ernst & Young LLP FOR AGAINST ABSTAIN ----------- ---------- ----------- Wanger U.S. Small Cap 18,660,598.191 122,529.737 841,937.497 Wanger International Small Cap 8,501,689.145 84,246.457 434,941.309 Wanger Twenty 644,348.222 120.567 26,869.702 Wanger Foreign Forty 510,543.116 3,373.926 60,865.633
Wanger Advisors Trust Phoenix Home Life Mutual Insurance Company P.O. Box 942 Greenfield, MA 01302-0942 PRSRT STD U.S. Postage Paid Andrew Associates OL2568A 2/01 -----END PRIVACY-ENHANCED MESSAGE-----