N-30D 1 file001.txt WANGER ADVISOR TRUST 2002 Semiannual Report Wanger U.S. Smaller Companies Wanger International Small Cap Wanger Twenty Wanger Foreign Forty [photo of 3D bar chart] [logo: Wanger Advisors Funds managed by Liberty Wanger Asset Management, L.P.] [inside front cover] [art: squirrel] WANGER ADVISORS FUNDS 2002 SEMIANNUAL REPORT Contents 2 The Zit Indicator 4 Performance Review Wanger U.S. Smaller Companies 6 Performance Review Wanger International Small Cap 8 Performance Review Wanger Twenty 10 Performance Review Wanger Foreign Forty 12 Statement of Investments Wanger U.S. Smaller Companies 17 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 30 Statements of Assets and Liabilities 31 Statements of Operations 32 Statements of Changes in Net Assets 34 Financial Highlights Wanger U.S. Smaller Companies 35 Financial Highlights Wanger International Small Cap 36 Financial Highlights Wanger Twenty 37 Financial Highlights Wanger Foreign Forty 38 Notes to Financial Statements 42 Management of Wanger Advisors Trust LIBERTY WANGER ASSET MANAGEMENT, L.P. ("LIBERTY WAM") IS ONE OF THE LEADING GLOBAL SMALL-CAP EQUITY MANAGERS IN THE U.S. WITH MORE THAN 30 YEARS OF SMALL-CAP INVESTMENT EXPERIENCE. LIBERTY WAM MANAGES MORE THAN $9.9 BILLION IN EQUITIES AND IS THE INVESTMENT ADVISER TO WANGER U.S. SMALLER COMPANIES, WANGER INTERNATIONAL SMALL CAP, WANGER TWENTY, WANGER FOREIGN FORTY AND THE LIBERTY ACORN FAMILY OF FUNDS. FOR MORE COMPLETE INFORMATION ABOUT OUR FUNDS, INCLUDING THE LIBERTY ACORN FUNDS, OUR FEES, RISKS ASSOCIATED WITH INVESTING, OR EXPENSES, CALL 1-800-4-WANGER FOR A PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. Wanger Advisors Trust 2002 Semiannual Report [art: squirrel] THE ZIT INDICATOR The top of the U.S. market was signaled by lots of different indicators. One of the most significant, and probably the funniest, was on September 21, 2000 when the SEC settled its market manipulation case against Mr. Jonathan Lebed of Cedar Grove, New Jersey. Mr. Lebed agreed to pay a fine to the SEC of $285,000, although he had made $800,000 in the preceding year. The partial disgorgement of profits made sense because it was unclear whether Mr. Lebed could have been convicted in a jury trial. Furthermore, a trial would have seriously disrupted Mr. Lebed's homework schedule. In September 2000, Mr. Lebed was 15 years old. At age 12, Jonathan entered a CNBC stock-picking contest for children. His team finished fourth in the nation, enough to make the local newspaper. At 13, he started trading with real money in an account his mom opened for him on E-Trade. He was an avid contributor to the Yahoo! Finance chat room. He frequently put his stock recommendations on the chat room wire, complete with optimistic forecasts of future success for the subject company with lots of exclamation points included in the copy. He found that making his reports vivid had a better impact on his audience than more conservative writing. Michael Lewis, author of a recent book that shares Jonathan's tale,1 thinks the SEC was smart to settle for $285 grand. After all, Mr. Lebed was doing neither more nor less than was being done by thousands of other people, both amateur and "professional." The amateurs were reading and writing chat room touts while some professionals were plugging the same stocks with little more factual basis than Mr. Lebed was using. If the SEC had tried to make an example of Jonathan, they might have been accused of picking on a little kid. Jonathan's example does not mark the first time a youngster took on the market with great success. In 1968, Adam Smith wrote about kids running money in his book titled The Money Game.2 "My boy," said the Great Winfield3 over the phone, "Our trouble is that we are too old for this market. The best players in this kind of market have not passed their twenty-ninth birthday ... My solution to the current market, Kids. This is a kid's market. This is Billy the Kid, Johnny the Kid, and Sheldon the Kid ... Billy the Kid started with five thousand dollars and has run it up over half a million in the last six months." "Wow!" I said. I asked Billy the Kid how he did it. "Computer leasing stocks, sir!" He said, like a cadet being quizzed by an upperclassman. "I buy the convertibles, bank them, and buy some more ... I put up five percent cash." I asked Billy the Kid why these computer leasing stocks are so good. "The need for computers is practically infinite," said Billy the Kid. "Leasing has proved to be the only way to sell them, and computer companies themselves do not have the capital. Therefore, earnings will be up a hundred percent this year, will double next year, and will double again the year after ..." "Look at the skepticism on the face of this dirty old man," said the Great Winfield, pointing at me [Smith] ... "He's going to ask what makes a finance company worth fifty times earnings. Right?" Billy the Kid smiled tolerantly, well aware that the older generation has trouble figuring out the New Math, the New Economics, and the New Market. I asked how much it costs to rent a kid. "A buck fifty an hour, room, board, no baby-sitting, only one day's lawn-mowing a week, and half the trading profits," said the Great Winfield. In 1929, the first great popular stock market boom, kids showed up for the first time. One article complained that investing was "becoming a children's crusade, not an adventure for a few hard-boned knights; a place for the butcher, the barber and the candle-stick maker."4 Other non-kid sources of investment wisdom in 1929 included Evangeline Adams, an astrologer, and Pat Bologna, shoe shiner to J.P. Morgan partners and Joe Kennedy. It seems that every time the market gets near a peak, the kids take over. Therefore, I would like to contribute another market indicator to the financial literature. I call it the zit indicator. You know the market has reached the top when a kid with Oxy 10 instead of shaving cream in his medicine cabinet is knocking down big bucks in the market. A proper world is supposed to be divided into professionals and outsiders. The outsiders are supposed to be content to give respect and fees to insiders for advice. The information on companies and markets available on the Internet made it apparently very easy for anyone, pre- or post-adolescence, to feel knowledgeable about stocks and the market. E-Trade made it possible for them to execute their trades from home. In a once in a lifetime runaway bull market such as 1999, anybody with a Yahoo! connection could be a stock market genius. For those of us who were paid a lot of money to be professional stock market geniuses, this was somewhere between inconvenient and embarrassing. Jonathan Lebed may have described the market mentality of the time better than anyone: "People who trade stocks, trade based on what they feel will move and they can trade for profit. Nobody makes investment decisions based on reading financial filings. Whether a company is making millions or losing millions it has no impact on the price of the stock. Whether it is analysts, brokers, 2 Wanger Advisors Trust 2002 Semiannual Report advisors, Internet traders, or the companies, everybody is manipulating the market. If it wasn't for everybody manipulating the market, there wouldn't be a stock market at all."5 What did the grown-ups in Mr. Lebed's life do or say when he was speculating vigorously and making $100,000 per month? His parents apparently had no idea what was going on. However, his teachers at school did know that Jonathan was speculating outrageously in the market. As a result, they continually badgered him for stock tips. At one point, a teacher called Mr. Lebed out of an exam to ask him if he had ideas about the five stocks in the teacher's portfolio. The Internet has flattened the difference between professional and outsider. Even though many Internet stocks have vanished, the Internet itself is alive and well. It is a great leveler. For instance, it allows anyone in the world to post material that anyone anywhere else in the world can read. This is not what dictators like to see. Those who are against free speech are furious. Robert Mugabe, dictator of Zimbabwe, has put a journalist on trial for an article that was posted on the Internet. The Internet will go a long way toward reducing the number of dictators in the world. There is an enormous amount of material on the Internet about the stock market.6 The problem for the user, of course, is to figure out which websites offer useful, interesting, well-reasoned opinions and which are the rantings of a sex-crazed adolescent (excuse the redundancy). The related effect of the Internet is to deflate the value of all expertise and authority. The SEC is a competent, serious agency. As long as most stock reports were published by a couple of dozen banks, investment advisors and brokerage firms, it wasn't too hard for the Feds to keep track of what was going on and discipline anyone who violated standards. The AIMR7 tests and licenses people who call themselves CFAs, a designation that implies that the holder has the technical skills and ethics to make reasonable comments on stocks. If anybody and everybody can put their opinion on Internet chat rooms, and other people decide to take action based on these dubious communications, then SEC and AIMR alike have far less control over the veracity of the information reaching investors. Everyone is a brave soldier while drinking beer with buddies. Combat turns out to be different from barroom conversation, I am told. I have never been in combat but at least I understand half of the metaphor. In a runaway bull market, a 14-year-old kid and his teacher can both make money. The market of the last two years is likely to have returned both of them to the classroom to write an essay on the meaning of Darwinian struggle. Any period of giddy enthusiasm such as 1998-99 is bound to end badly. It is highly likely that the high prices of 1999 (S&P 500 at 1,550) represented levels that will not be exceeded before Jonathan has earned his MBA. This doesn't mean that the stock market will be a terrible place even if returns of 15% or 20% per year will be exceedingly hard to come by. We had such a period from 1969 to 1982 and, even though the market was no higher at the end of the period than it had been at the beginning, there were still lots of interesting and profitable things to do. For instance, retailing saw the decline of department stores and the emergence of discounters including Wal-Mart and Home Depot. In technology, Digital Equipment, Cray Research and Storage Technology were great companies and great stocks (no longer the case for these three). The oil and gas industry was a leading sector with many exciting small companies succeeding or failing due to their exploration skills/luck. I still remember Houston Oil & Minerals with great fondness. There is no reason to think one should give up in this kind of market but it is highly likely that experienced professionals will do better than enthusiastic adolescents on balance, although some of these kids will prove to be the investment pros of the future. [photo of RALPH WANGER RALPH WANGER Chief Investment Officer, Liberty Wanger Asset Management, L.P. Lead Portfolio Manager, Liberty Acorn Trust -------------------------------------------------------------------------------- 1Lewis, Michael, Next: The Future Just Happened, W.W. Norton & Company, New York, NY, 2002. 2Chapter 17: "Losers and Winners: Poor Grenville, Charley, and the Kids," Smith, Adam, The Money Game, Random House, New York, NY, 1967 and 1968. 3The Great Winfield, as described by Smith, "is a friend of mine who is a tape-reader, a super-speculator, and most recently, Marlboro-commercial rancher." 4Harper's Magazine, April 1929. Quoted in Thomas and Morgan-Witts, The Day the Bubble Burst, Doubleday, Garden City, NY, 1979. 5Lewis, op. cit. 6"325,000 financial websites," says Maria Bartiromo in a book she co-authored called Use The News. (HarperBusiness, New York, NY, 2001) She also writes about the Lebed case, giving the SEC's point of view. However, the book as a whole is not great. 7Association for Investment Management and Research. 3 Wanger Advisors Trust 2002 Semiannual Report [art: squirrel] PERFORMANCE REVIEW WANGER U.S. SMALLER COMPANIES* Wanger U.S. Smaller Companies* declined 6.02% for the six-month period ended June 30, 2002 vs. a 4.70% drop in the Russell 2000. Accounting scandals, earnings disappointments and telecom meltdowns have caused the stock market to decline sharply in 2002. Even in tough markets, there are always companies that prosper. The Fund's top performer was security guard and prison management firm Wackenhut. The company's sale to global security firm Group 4 Falck drove the stock up 73%. ITT Educational Services, a provider of technology-oriented degree programs, was also strong. ITT has steady, recurring revenue and stands to benefit from a weaker economy as displaced workers seek training to find new jobs. Lincare Holdings, a provider of home care for respiratory patients, also posted positive returns. Demand for its services is strong and Lincare is dominant in its niche. It is prospering while several of its competitors have gone out of business. Retailers Christopher & Banks, Steven Madden and Coach also ranked in the top holdings as consumers turned to shopping as a respite from gloomy economic news. Kronos was the biggest dollar loser for the six-month period. This provider of time management software holds a dominant market share but was hit by slowed sales due to curtailed spending by its customers. We continue to like the stock and believe it will have an upswing when corporate spending picks up. Energy trading company Dynegy was also down dramatically. The stock, which was still selling at $30 a share two months ago, is now just over a buck per share. The company's business was better than Enron's but not enough better to keep it from getting destroyed. Mutual fund administrator SEI Investments declined with the markets. Company fees are based on a percentage of assets under management but despite current conditions, SEI continues to gain market share. The tumble in telecoms provided another performance hurdle. Mediacom Communications, Western Wireless, Telephone and Data Systems and Seachange International were among the Fund's losers. Telecom sank as overcapacity in the sector drove prices down. Fear is the current market fad. The papers are loaded with stories predicting prolonged bear market conditions and new scandals seem to be popping up each day. In response, investors are taking money out of the market. Like those investors who jumped in at the high in 1999 just in time to catch the ride down, investors who jump out now may miss out on some terrific deals. I would argue that this may be a better time to invest in the markets than any time in the last two years. *Effective May 1, 2002, Wanger U.S. Small Cap was renamed Wanger U.S. Smaller Companies. 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 06/30/02, the Fund's positions in the holdings mentioned were: Wackenhut, 0.0%; ITT Educational Services, 4.7%; Lincare Holdings, 5.3%; Christopher & Banks, 0.7%; Steven Madden, 1.7%; Coach, 0.6%; Kronos, 2.5%; Dynegy, 0.5%; SEI Investments, 1.6%; Mediacom Communications, 0.8%; Western Wireless, 0.3%; Telephone and Data Systems, 1.2%; Seachange International, 0.7%. [photo of ROBERT A. MOHN] ROBERT A. MOHN Portfolio Manager 4 Wanger Advisors Trust 2002 Semiannual Report THE VALUE OF A $10,000 INVESTMENT IN WANGER U.S. SMALLER COMPANIES* TOTAL RETURN FOR EACH PERIOD MAY 3, 1995 THROUGH JUNE 30, 2002 [line chart data]: AVERAGE ANNUAL TOTAL RETURN ----------------------------------------------- 1 Year 3 Years 5 Years Life of fund -9.21% 2.92% 8.53% 15.89% WANGER U.S. SMALLER COMPANIES Russell 2000 5/31/95 $ 9,870.0 $10,179.4 9/30/95 12,060.0 11,765.0 12/31/95 11,600.0 12,019.9 3/31/96 13,296.8 12,633.3 6/30/96 15,350.9 13,265.3 9/30/96 15,791.8 13,310.1 12/31/96 17,004.2 14,002.6 3/31/97 16,365.5 13,278.5 6/30/97 19,093.1 15,431.1 9/30/97 22,394.9 17,727.7 12/31/97 22,005.3 17,134.0 3/31/98 24,865.1 18,857.5 6/30/98 25,361.1 17,978.3 9/30/98 20,875.5 14,356.5 12/31/98 23,916.2 16,697.8 3/31/99 22,387.9 15,792.1 6/30/99 26,374.5 18,248.0 9/30/99 25,388.8 17,094.2 12/31/99 29,908.8 20,247.2 3/31/00 29,076.9 21,681.5 6/30/00 25,545.4 20,862.0 9/30/00 26,740.9 21,092.7 12/31/00 27,469.2 19,635.5 3/31/01 26,306.2 18,358.2 6/30/01 31,669.2 20,981.2 9/30/01 26,567.5 16,619.3 12/31/01 30,596.6 20,123.7 3/31/02 32,219.2 20,925.3 6/30/02 28,753.9 19,177.6 This graph compares the results of $10,000 invested in Wanger U.S. Smaller Companies on May 3,1995 (the date the Fund began operations) through June 30, 2002 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. Smaller Companies is a diversified fund that invests 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. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. -------------------------------------------------------------------------------- RESULTS AS OF JUNE 30, 2002 2nd quarter Year to date 1 year WANGER U.S. SMALLER COMPANIES -10.76% -6.02% -9.21% Russell 2000 -8.35% -4.70% -8.60% S&P MidCap 400 -9.31% -3.21% -4.72% S&P 500 -13.40% -13.16% -17.99% N.A.V. AS OF 6/30/02: $20.91 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. Performance numbers reflect all Fund expenses but do not include any insurance charge imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. *Wanger U.S. Small Cap was renamed Wanger U.S. Smaller Companies on May 1, 2002. Portfolio holdings will vary in the future. -------------------------------------------------------------------------------- TOP 5 INDUSTRIES As a % of net assets, as of 6/30/02 Information 30.1% Health Care 19.1 Consumer Goods/Services 13.0 Finance 11.6 Energy/Minerals 5.6 -------------------------------------------------------------------------------- TOP 10 HOLDINGS As a % of net assets 1. Lincare Holdings 5.3% Home Health Care Services 2. ITT Educational Services 4.7% Technology Oriented Post Secondary Degree Programs 3. JDA Software 3.5% Applications/Software & Services for Retailers 4. AmeriCredit 3.4% Auto Lending 5. First Health Group 3.4% PPO Network 6. Conectiv 3.2% Electric Utility in New Jersey, Delaware & Maryland 7. Commonwealth Telephone 2.6% Rural Phone Franchises & CLEC 8. Kronos 2.5% Labor Management Solutions 9. Micros Systems 2.3% Information Systems for Restaurants & Hotels 10. Steris 2.1% Sterilization Devices 5 Wanger Advisors Trust 2002 Semiannual Report [art: squirrel] PERFORMANCE REVIEW WANGER INTERNATIONAL SMALL CAP While U.S. markets hobbled through the first half of the year, international markets regained their footing. The EMI Global ex US rose 7.66% for the six-month period ended June 30, 2002. Wanger International Small Cap was up 5.58% for that period, falling short of the benchmark due to blow-ups in a couple of Korean holdings and general market weakness in the UK. What's interesting to note about year-to-date market performance is the spread between small-cap and large-cap benchmarks. For the six month period, the EMI Global ex US surpassed the large-cap EAFE Index by 9%. That is a large amount. Astute U.S. equity investors know that the Russell 2000 has outperformed the S&P 500 since early 1999. Should it be a surprise that international markets follow suit? In 2001, the EMI index and EAFE fell a lot, but the former finished the year down between one-quarter and one-third less. We believe outperformance of small caps may be developing into a global trend. We can think of a few reasons why the cycle right now might favor small-cap equities worldwide. First, smaller companies have a reputation for responding more quickly to a pickup in economic activity because they are more agile than larger corporations. We believe this may translate into faster earnings growth coming out of a recession, and a higher bounce for the share price. Second, bear markets typically punish riskier assets more than defensive ones. Since the "flight to safety" usually equates with blue chips, the relative valuations of smaller companies suffer. That makes most small caps cheaper at the bottom, with more room for multiple expansion when the markets recover. Both of these conditions appear to exist in today's environment but two additional factors may be at work this time around. The Enron debacle and various accounting scandals have placed a premium on transparency. We believe small companies are easier to understand because their organizations are often less complex. Therefore, we feel transparency is less of an issue for smaller companies. The other factor is what might be called the "nineties reversal syndrome": Everything that did well in the last decade will trail the averages for the next decade, and vice versa. We have seen this phenomenon with growth vs. value. Value managers were hurting badly up until the spring of 2000, when they suddenly came back into style with a vengeance. Small-cap managers (with the exception of those specializing in technology) were another out of favor group for most of the last dozen years. The prevailing mantra was "bigger is better," especially if prefaced with the word "multinational." Stock markets have a tendency to take good ideas too far, until the pendulum invariably swings back. We believe international plus small cap could well turn out to be a strong combination. 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. [photo of TODD M. NARTER] TODD M. NARTER Co-Portfolio Manager [photo of CHRISTOPHER J. OLSON] CHRISTOPHER J. OLSON Co-Portfolio Manager 6 Wanger Advisors Trust 2002 Semiannual Report THE VALUE OF A $10,000 INVESTMENT IN WANGER INTERNATIONAL SMALL CAP TOTAL RETURN FOR EACH PERIOD MAY 3, 1995 THROUGH JUNE 30, 2002 [line chart data]: AVERAGE ANNUAL TOTAL RETURN --------------------------------------------------- 1 Year 3 Years 5 Years Life of fund -7.09% 2.85% 7.15% 15.25% WANGER INTERNATIONAL EMI Global SMALL CAP ex US 5/3/95 $10,000.0 $10,000.0 6/30/95 10,970.0 9,889.5 9/30/95 12,910.0 10,265.1 12/31/95 13,450.0 10,421.5 3/31/96 15,499.1 11,019.5 6/30/96 17,183.4 11,491.6 9/30/96 17,023.0 11,217.3 12/31/96 17,754.8 11,051.5 3/31/97 18,357.5 10,973.0 6/30/97 19,568.3 11,753.3 9/30/97 19,363.1 11,308.5 12/31/97 17,495.5 10,048.2 3/31/98 21,306.5 11,686.3 6/30/98 21,410.2 11,462.2 9/30/98 17,437.3 9,673.7 12/31/98 20,352.2 10,923.1 3/31/99 21,564.1 11,104.9 6/30/99 25,404.3 11,939.7 9/30/99 29,265.6 12,484.8 12/31/99 46,071.7 13,688.2 3/31/00 54,788.8 14,005.8 6/30/00 44,628.0 13,590.7 9/30/00 41,179.0 12,822.6 12/31/00 33,243.8 11,966.0 3/31/01 29,861.7 10,807.9 6/30/01 29,742.8 11,102.3 9/30/01 23,692.2 9,347.9 12/31/01 26,173.6 10,211.8 3/31/02 27,006.4 10,858.1 6/30/02 27,635.3 10,992.8 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 June 30, 2002 with the EMIGlobal ex US. 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 billion. Smaller company stocks are often more volatile or 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. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. -------------------------------------------------------------------------------- RESULTS TO JUNE 30, 2002 2nd quarter Year to date 1 year WANGER INTERNATIONAL SMALL CAP 2.33% 5.58% -7.09% EMI Global ex US 1.24% 7.66% -0.99% EAFE -2.12% -1.62% -9.49% Lipper International Small Cap Funds Index 2.62% 6.91% -4.23% Lipper International Funds Index -1.89% 0.52% -7.29% N.A.V. AS OF 6/30/02: $16.26 The EMI Global ex US is an index of the bottom 20% of institutionally investable capital of developed and emerging countries, selected by index sponsor, outside the U.S. 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. Performance numbers reflect all Fund expenses but do not include any insurance charge imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. Portfolio holdings will vary in the future. -------------------------------------------------------------------------------- TOP 5 COUNTRIES As a % of net assets, as of 6/30/02 Japan 14.1% United Kingdom 13.9 Netherlands 8.8 Germany 6.7 France 6.2 -------------------------------------------------------------------------------- TOP 10 HOLDINGS As a % of net assets 1. Bang & Olufsen 1.8% Manufacturer of High-End Electronics - Denmark 2. AltaGas Services 1.7% Natural Gas Gatherer & Processor - Canada 3. CSK 1.7% Computer Services - Japan 4. Fugro 1.6% Survey &GPS Services - Netherlands 5. Red Electrica 1.6% Power Grid - Spain 6. ARRK 1.4% Prototypes & Moulds for New Product Development - Japan 7. Cegedim 1.4% Medical Market Research-- France 8. Prosegur 1.4% Security Guards - Spain 9. United Services Group 1.3% Temporary Staffing Services - Netherlands 10. OPG Group 1.3% Pharmaceutical Wholesaler & Retailer - Netherlands 7 Wanger Advisors Trust 2002 Semiannual Report [art: squirrel] PERFORMANCE REVIEW WANGER TWENTY For the six-month period, Wanger Twenty fell 5.14% vs. a 3.21% loss for the S&P MidCap 400, a 13.16% decline for the large-cap S&P 500 and a 17.37% drop for the Lipper Mid-Cap Growth Index. Although we are always dissatisfied when losing money, we are pleased with the Fund's relative outperformance compared to its Lipper Mid-Cap Growth peer group* during a particularly challenging period for the equity markets. A pair of health care stocks, Boston Scientific and Lincare Holdings, were the top performing names for the six-month period with gains of 23% each. Boston Scientific develops stents and catheters used in heart surgery. Lincare offers home health care services for respiratory patients. Both companies benefited from strong growth in the medical industry, which has generally been insulated from the economic downturn. Synopsys, a new position for the Fund this year, was up 22% for the half-year. Synopsys provides software used in designing semiconductor chips. Fidelity National Financial, another new position, was up 21%. Fidelity National is the largest title insurance company in the country. Its business has benefited from the strong growth of home purchases and mortgage refinancings. The Fund's biggest losing positions were Comverse Technology and Dynegy, each down 42%. Comverse, a provider of voicemail and related systems, is a telecom name that was hurt by the further declines in its sector. A competitor to Enron in the energy trading business, Dynegy has been closely scrutinized. We sold both stocks to buy some of our new ideas that we believe offer more attractive investment opportunities. As a result, we believe we have upgraded the quality of the Fund's portfolio. In a non-diversified fund like Wanger Twenty, constant monitoring and evaluating of the risk of a holding vs. the reward potential is essential. Because of the increased market volatility, we are continuing to analyze a growing number of investment candidates. Should prices drop to favorable levels, we will swap into these stocks as well in an effort to improve the Fund's risk/reward profile. * The Lipper Mid-Cap Growth Funds Category Average for the quarter was -14.62%. Year-to-date the average was -16.68% to June 30 and for the 1 year, -25.16% 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 6/30/02, the Fund's positions in the holdings mentioned were: Boston Scientific, 5.1%; Lincare Holdings, 4.1%; Synopsys, 5.9%; Fidelity National Financial, 2.9%; Comverse Technology, 0.0%; Dynegy, 0.0%. [photo of JOHN H. PARK] JOHN H. PARK Portfolio Manager 8 Wanger Advisors Trust 2002 Semiannual Report THE VALUE OF A $10,000 INVESTMENT IN WANGER TWENTY TOTAL RETURN FOR THE PERIOD FEBRUARY 1, 1999 THROUGH JUNE 30, 2002 ]line chart data]: AVERAGE ANNUAL TOTAL RETURN -------------------------------------- 1 year 3 years Life of fund -0.07% 6.68% 13.08% WANGER TWENTY S&P MidCap 400 2/1/99 $10,000.0 $10,000.0 3/31/99 10,530.0 9,741.2 6/30/99 12,530.0 11,120.2 9/30/99 11,410.0 10,186.3 12/31/99 13,430.0 11,936.9 3/31/00 13,696.7 13,451.5 6/30/00 13,822.0 13,008.1 9/30/00 15,064.3 14,588.3 12/31/00 14,698.9 14,026.6 3/31/01 13,790.7 12,515.5 6/30/01 15,220.9 14,162.3 9/30/01 13,592.3 11,816.4 12/31/01 16,035.2 13,941.9 3/31/02 15,920.3 14,879.2 6/30/02 15,210.5 13,494.2 This graph compares the results of $10,000 invested in Wanger Twenty on February 1, 1999 through June 30, 2002, 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. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. 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. -------------------------------------------------------------------------------- 1RESULTS TO JUNE 30, 2002 2nd quarter Year to date 1 year WANGER TWENTY -4.46% -5.14% -0.07% S&P MidCap 400 -9.31% -3.21% -4.72% S&P 500 -13.40% -13.16% -17.99% Lipper Mid-Cap Growth Index -14.95% -17.37% -25.50% N.A.V. AS OF 6/30/02: $14.57 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 Growth Index measures the performance of the 30 largest mid-cap growth funds tracked by Lipper. All indexes are unmanaged and include reinvested dividends. It is not possible to invest directly in an index. Performance numbers reflect all Fund expenses but do not include any insurance charge imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. Portfolio holdings will vary in the future. -------------------------------------------------------------------------------- TOP 5 INDUSTRIES As a % of net assets, as of 6/30/02 Information 36.6% Health Care 21.5 Finance 17.9 Consumer Goods/Services 10.2 Industrial Goods/Services 5.3 -------------------------------------------------------------------------------- TOP 10 HOLDINGS As a % of net assets 1. H&R Block 8.2% Tax Preparation 2. First Health Group6.0% PPO Network 3. Synopsys 5.9% Software for Designing Semiconductor Chips 4. Markel 5.5% Specialty Insurance 5. Expeditors International of Washington 5.3% International Freight Forwarder 6. Boston Scientific 5.1% Stents & Catheters 7. International Game Technology 4.9% Slot Machines & Progressive Jackpots 8. Associated Banc-Corp 4.6% Midwest Bank 9. Liberty Media Group 4.5% CATV & Satellite Dish Programming 10. Jones Apparel 4.4% Women's Apparel 9 Wanger Advisors Trust 2002 Semiannual Report [art: squirrel] PERFORMANCE REVIEW WANGER FOREIGN FORTY Wanger Foreign Forty declined 2.84% for the six-month period ended June 30, 2002. The SSB World ex US Cap Range $2-$10B was up 5.64% for the same period. The relative underperformance for the six-month period can be largely attributed to weakness in the Fund's UK and Japanese holdings in the early months of the year. The Fund's top performers year-to-date were two Irish financial names: Irish Life & Permanent, up 45%, and Anglo Irish Bank, up 58%. European financial stocks have benefited from low interest rates and tame inflation. Irish Life is a major player in one of the fastest growing life assurance markets in Europe. The company has managed to gain considerable market share by cutting costs, developing a multi-channel network for its products, and improving customer service. Anglo Irish Bank has exceptional asset quality and a growing customer base. As a result, loan growth has outpaced its peers and the share price has followed. Another winner for the six months was Givaudan, a Swiss-based manufacturer of flavors and fragrances. The stock gained nearly 34% in the period on news that the company would not go ahead with a potentially expensive acquisition. Japanese holdings were good performers late in the period, helped in part by the weakening dollar. The yen strengthened 10% against the U.S. dollar during the second quarter of the year. On the downside, Amdocs, an Israeli software provider to the telecommunications industry, crashed when management pre-announced weak earnings for the quarter. Historically, Amdocs management has set aggressive growth targets and has achieved these targets since the bulk of its business is based on long-term contracts. The stock's decline mirrors the general malaise in software and telecom stocks worldwide. Australia's Computershare, a provider of financial software and services, was also off substantially in the period. The investment environment both at home and abroad has been a tough one for investors. Given the breadth of corporate problems around the world, and the lack of a sustained economic recovery, volatility will likely continue to be high. Against this backdrop, stock prices have been marked down a lot, which we believe should lead to a number of higher-quality names selling at bargain-basement prices. In a weak U.S. market, the euro and yen should continue to strengthen against the dollar. We are optimistic about the future for international markets. As of 2/1/02 Wanger Foreign Forty became a diversified fund. Prior to that, Wanger Foreign Forty was a non-diversified fund, meaning that the performance of its holdings would have a greater impact on its 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 6/30/02, the Fund's positions in the holdings mentioned were: Irish Life & Permanent, 3.6%; Anglo Irish Bank, 2.4%; Givaudan, 2.5%; Amdocs, 0.5%; Computershare, 0.0%. [photo of TODD M. NARTER] TODD M. NARTER Co-Portfolio Manager [photo of CHRISTOPHER J. OLSON] CHRISTOPHER J. OLSON Co-Portfolio Manager 10 Wanger Advisors Trust 2002 Semiannual Report THE VALUE OF A $10,000 INVESTMENT IN WANGER FOREIGN FORTY TOTAL RETURN FOR THE PERIOD FEBRUARY 1, 1999 THROUGH JUNE 30, 2002 ]line chart data]: AVERAGE ANNUAL TOTAL RETURN -------------------------------------- 1 year 3 years Life of fund -4.257% 4.38% 7.77% WANGER SSB World ex US FOREIGN FORTY Cap Range $2-$10B 2/1/99 $10,020.0 $ 9,749.8 3/31/99 10,190.0 10,135.2 6/30/99 11,350.0 10,623.6 9/30/99 11,650.0 11,183.3 12/31/99 18,390.0 12,387.9 3/31/00 20,853.0 12,298.7 6/30/00 20,193.5 12,231.9 9/30/00 19,827.1 11,802.4 12/31/00 18,099.8 11,637.7 3/31/01 14,664.2 10,288.7 6/30/01 15,052.2 10,668.9 9/30/01 11,811.2 9,109.7 12/31/01 13,283.4 9,835.5 3/31/01 12,918.2 10,244.8 6/30/02 12,906.8 10,390.3 This graph compares the results of $10,000 invested in Wanger Foreign Forty on February 1, 1999 through June 30, 2002, to the SSB World ex US Cap Range $2-$10B 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 invests in the stocks of medium- to larger-size companies with market capitalizations of $5 billion to $15 billion. Prior to 2/1/02, Wanger Foreign Forty was a non-diversified fund, meaning that the performance of its holdings would 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. 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. MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE DIFFERENT THAN THAT SHOWN. 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. -------------------------------------------------------------------------------- 1RESULTS TO JUNE 30, 2002 2nd quarter Year to date 1 year WANGER FOREIGN FORTY -0.09% -2.84% -14.25% SSB World ex US Cap Range $2-10B 1.42% 5.64% -2.61% EAFE -2.12% -1.62% -9.49% N.A.V. AS OF 6/30/02: $11.31 The SSB World ex US 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. EAFE is Morgan Stanley's Europe, Australasia and Far East Index, a widely recognized international benchmark that comprises 20 major markets in Europe, Australia and the Far East. All indexes are unmanaged and returns include reinvested dividends. It is not possible to invest directly in an index. Performance numbers reflect all Fund expenses but do not include insurance charge imposed by your insurance company's separate accounts. If performance included the effect of these additional charges, it would be lower. Portfolio holdings will vary in the future. -------------------------------------------------------------------------------- TOP 5 COUNTRIES As a % of net assets, as of 6/30/02 Japan 13.2% United Kingdom 12.4 Ireland 10.1 Switzerland 9.9 France 9.6 -------------------------------------------------------------------------------- TOP 10 HOLDINGS As a % of net assets 1. Rhoen-Klinikum 4.8% Hospital Management - Germany 2. DNB Holding 4.1% Universal Bank - Norway 3. Kerry Group 4.1% Food Ingredients - Ireland 4. Oriental Land 3.9% Disney Theme Park Operator - Japan 5. Alliance Unichem 3.7% Pharmaceutical Wholesaler & Retailer - UK 6. Irish Life & Permanent 3.6% Life Insurance & Savings Products - Ireland 7. Nintendo 3.5% Entertainment Software & Hardware - Japan 8. Pargesa Holdings 3.3% Industrial & Media Conglomerate - Switzerland 9. Investors Group 3.2% Mutual Funds - Canada 10. Synthes-Stratec 3.1% Products for Orthopedic Surgery - Switzerland 11 Wanger Advisors Trust 2002 Semiannual Report WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares COMMON STOCKS-89.1% INFORMATION-30.1% -------------------------------------------------------------------------------- TELEVISION PROGRAMMING-0.8% 555,000 Mediacom Communications (b) $4,323,450 Cable Television Franchises -------------------------------------------------------------------------------- RADIO-2.1% 395,900 Salem Communications (b) 9,846,033 Radio Stations for Religious Programming 80,000 Cumulus Media, Cl. A 1,102,400 Radio Stations in Small Cities -------------------------------------------------------------------------------- 10,948,433 -------------------------------------------------------------------------------- TELECOMMICATIONS/WIRELINE COMMUNICATIONS-2.6% 336,300 Commonwealth Telephone (b) 13,532,712 Rural Phone Franchises & CLEC -------------------------------------------------------------------------------- MOBILE COMMUNICATIONS-2.4% 103,000 Telephone & Data Systems 6,236,650 Cellular & Telephone Services 351,750 COMARCO (b) 2,771,790 Wireless Network Testing 560,000 Western Wireless (b) 1,792,000 Rural Cellular Phone Franchises 430,000 Crown Castle International (b) 1,689,900 Communication Towers in USA & UK -------------------------------------------------------------------------------- 12,490,340 -------------------------------------------------------------------------------- TELECOMMUNICATIONS EQUIPMENT-0.2% 347,800 Aspect Telecommunications (b) 1,112,960 Call Center Equipment -------------------------------------------------------------------------------- BUSINESS INFORMATION/MARKETING SERVICES/ MARKETING-2.6% 192,900 Information Holdings (b) 4,706,760 Scientific & Medical Publications, Patent Information 545,100 Navigant Consulting (b) 3,810,249 Consulting Firm 153,700 Getty Images (b) 3,346,049 Photographs for Publications & Electronic Media 200,000 Rainbow Technologies (b) 984,000 Computer Network Security Products -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- BUSINESS INFORMATION/MARKETING SERVICES/ MARKETING-2.6% (CONT) 43,000 Martha Stewart Living Omnimedia (b) $493,210 Magazines, Merchandise & TV Programs -------------------------------------------------------------------------------- 13,340,268 -------------------------------------------------------------------------------- BUSINESS/CONSUMER SOFTWARE-11.7% 655,000 JDA Software Group (b) 18,510,300 Applications/Software & Services for Retailers 421,350 Kronos (b) 12,846,540 Labor Management Solutions 442,900 Micros Systems (b) 12,272,759 Information Systems for Restaurants & Hotels 380,000 JD Edwards (b) 4,617,000 Mid Market ERP & Supply Chain Software 1,320,000 Novell (b) 4,237,200 Directory, Identity Management & Authorization Software 266,000 MRO Software (b) 3,027,080 Enterprise Management Software 450,000 MAPICS (b) 2,515,500 Mid Market ERP Software 440,000 E.Piphany (b) 1,931,600 CRM Software 37,500 THQ (b) 1,118,250 Entertainment Software 100,000 Multex.com (b) 408,000 Provider Of Investment Info To Institutions & Individuals -------------------------------------------------------------------------------- 61,484,229 -------------------------------------------------------------------------------- TRANSACTION PROCESSORS-2.2% 235,440 Global Payments 7,004,340 Credit Card Processor 152,000 Concord EFS (b) 4,581,280 Credit Card Processor -------------------------------------------------------------------------------- 11,585,620 -------------------------------------------------------------------------------- COMPUTER HARDWARE/RELATED SYSTEMS-1.5% 415,800 Seachange International (b) 3,650,724 Systems for Video on Demand & Ad Insertion 31,600 Zebra Technologies (b) 1,523,752 Bar Code Printing Hardware, Supplies & Software See accompanying notes to financial statements. 12 Wanger Advisors Trust 2002 Semiannual Report WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- COMPUTER HARDWARE/RELATED SYSTEMS-1.5% (CONT) 111,000 American Power Conversion (b) $1,401,930 Uninterruptible Power Systems 301,205 SensAble Technologies (b) 1,000,001 Sensory Devices for Computer Based Sculpting 35,000 Applied Films (b) 390,600 Thin-Film Glass Coating Equipment -------------------------------------------------------------------------------- 7,967,007 -------------------------------------------------------------------------------- SEMICONDUCTORS/RELATED EQUIPMENT-0.8% 90,000 Integrated Circuit Systems (b) 1,817,100 Silicon Timing Devices 120,000 Axcelis Technologies (b) 1,356,000 Ion Implantation Tools 95,900 IXYS (b) 515,942 Power Semiconductors 68,600 Microsemi (b) 452,760 Analog/Mixed Signal Semiconductors -------------------------------------------------------------------------------- 4,141,802 -------------------------------------------------------------------------------- GAMING EQUIPMENT-0.1% 35,000 Shuffle Master (b) 642,950 Card Shufflers, Casino Games & Slot Machines -------------------------------------------------------------------------------- INSTRUMENTATION-1.2% 288,000 Tektronix (b) 5,388,480 Analytical Instruments 25,000 Mettler Toledo (b) 921,750 Laboratory Equipment -------------------------------------------------------------------------------- 6,310,230 -------------------------------------------------------------------------------- COMPUTER SERVICES-1.9% 753,000 RCM Technologies (b) 3,765,000 Technology Staffing Services 137,000 American Management Systems (b) 2,618,070 Software Development Services 170,000 Pomeroy Computer Resources (b) 2,478,600 Network Integration Services -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- COMPUTER SERVICES-1.9% (CONT) 256,600 Analysts International $1,090,550 Technology Staffing Services -------------------------------------------------------------------------------- 9,952,220 -------------------------------------------------------------------------------- INFORMATION-TOTAL 157,832,221 HEALTH CARE-19.1% -------------------------------------------------------------------------------- BIOTECHNOLOGY/DRUG DELIVERY-1.2% 346,200 Inhale Therapeutic Systems (b) 3,285,438 Pulmonary Drug Delivery 154,231 SYRRX, Series C (b) 1,002,502 X-Ray Crystallography 250,000 Locus Discovery, Series D. Pfd. (b) 1,000,000 High Throughput Rational Drug Design 42,000 Myriad Genetics (b) 854,280 Gene Discovery & Diagnostic Products -------------------------------------------------------------------------------- 6,142,220 -------------------------------------------------------------------------------- MEDICAL EQUIPMENT-4.7% 581,000 Steris (b) 11,102,910 Sterilization Devices 219,000 Edwards Lifesciences (b) 5,080,800 Heart Valves 136,000 Orthofix International (b) 4,780,400 Bone Fixation & Stimulation Devices 213,600 Visx (b) 2,328,240 Laser Eye Surgery Equipment 338,000 Novoste (b) 1,561,560 Radiation Catheters for In-Stent Restenosis -------------------------------------------------------------------------------- 24,853,910 -------------------------------------------------------------------------------- MEDICAL SUPPLIES-0.2% 35,000 Techne (b) 987,700 Cytokines, Antibodies, Other Reagents For Life Sciences -------------------------------------------------------------------------------- SERVICES-13.0% 866,000 Lincare Holdings (b) 27,971,800 Home Health Care Services 636,000 First Health Group (b) 17,833,440 PPO Network See accompanying notes to financial statements. 13 Wanger Advisors Trust 2002 Semiannual Report WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- SERVICES-13.0% (CONT) 1,318,000 Beverly Enterprises (b) $10,029,980 Nursing Homes 309,300 NDCHealth 8,629,470 Health Claims Processing & Drug Marketing Services 86,000 Syncor International (b) 2,709,000 Nuclear Pharmacy for Radiopharmaceuticals 592,700 Magellan Health Services (b) 592,700 Mental Health Services 19,300 Medquist (b) 513,959 Medical Transcription Services -------------------------------------------------------------------------------- 68,280,349 -------------------------------------------------------------------------------- HEALTH CARE-TOTAL 100,264,179 CONSUMER GOODS/SERVICES-13.0% -------------------------------------------------------------------------------- RETAIL-2.7% 85,000 Christopher & Banks (b) 3,595,500 Specialty Women's Retailer at Moderate Price Levels 99,000 Zale Corp (b) 3,588,750 Specialty Retailer of Jewelry 55,000 Hot Topic (b) 1,469,050 Music Inspired Retailer of Apparel, Accessories & Gifts 85,000 Tweeter Home Entertainment Group (b) 1,388,900 Consumer Electronics Retailer 55,000 Genesco (b) 1,339,250 Multi-Concept Branded Footware Retailer 105,000 Gadzooks (b) 1,321,950 Teen Apparel Retailer 67,000 Borders (b) 1,232,800 Bookstores 1,700 Aeropostale (b) 46,529 Mall Based Teen Retailer -------------------------------------------------------------------------------- 13,982,729 -------------------------------------------------------------------------------- APPAREL-3.0% 445,000 Steven Madden (b) 8,823,905 Wholesaler/Retailer of Fashion Footware -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- APPAREL-3.0% (CONT) 59,000 Coach (b) $3,239,100 Designer & Retailer of Branded Leather Accessories 108,000 Skechers USA (b) 2,333,880 Footwear Designer & Marketer 39,480 Jones Apparel (b) 1,480,500 Women's Apparel -------------------------------------------------------------------------------- 15,877,385 -------------------------------------------------------------------------------- ENTERTAINMENT-0.4% 80,000 Six Flags 1,156,000 Worldwide Theme Park Operator 45,000 Speedway Motors (b) 1,144,350 Motorsport Racetrack Owner & Operator -------------------------------------------------------------------------------- 2,300,350 -------------------------------------------------------------------------------- CASINOS-0.5% 107,700 Monarch Casino & Resort (b) 1,597,191 Casino/Hotel in Reno 75,000 Alliance Gaming (b) 936,000 Diversified Gaming Company -------------------------------------------------------------------------------- 2,533,191 -------------------------------------------------------------------------------- DURABLE GOODS-1.3% 410,000 Callaway Golf 6,494,400 Premium Golf Clubs & Balls -------------------------------------------------------------------------------- NON-DURABLES-0.2% 25,000 Scotts Company (b) 1,135,000 Consumer Lawn & Garden Products -------------------------------------------------------------------------------- TRAVEL-0.2% 150,000 La Quinta (b) 1,087,500 Owner/Franchiser of Mid-Priced Hotels -------------------------------------------------------------------------------- CONSUMER SERVICES-4.7% 1,130,000 ITT Educational Services (b) 24,634,000 Technology Oriented Post Secondary Degree Programs -------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES-TOTAL 68,044,555 See accompanying notes to financial statements. 14 Wanger Advisors Trust 2002 Semiannual Report WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares FINANCE-11.6% -------------------------------------------------------------------------------- BANKS/SAVINGS & LOANS-2.3% 99,000 Texas Regional Bancshares $4,817,340 Tex-Mex Bank 105,500 Chittenden 3,057,390 Vermont & Western Massachusetts Bank 37,000 TCF Financial 1,816,700 Great Lakes Bank 65,200 Anchor Bancorp Wisconsin 1,571,972 Wisconsin Thrift 26,500 Peoples Bank Bridgeport 691,915 Connecticut Savings & Loan -------------------------------------------------------------------------------- 11,955,317 -------------------------------------------------------------------------------- FINANCE COMPANIES-3.8% 640,400 AmeriCredit (b) 17,963,220 Auto Lending 232,000 World Acceptance (b) 1,948,800 Personal Loans -------------------------------------------------------------------------------- 19,912,020 -------------------------------------------------------------------------------- INSURANCE-3.3% 43,000 Markel (b) 8,471,000 Specialty Insurance 220,000 HCC Insurance Holdings 5,797,000 Aviation Insurace 92,000 Leucaudia National 2,912,720 Insurance Holding Company -------------------------------------------------------------------------------- 17,180,720 -------------------------------------------------------------------------------- MONEY MANAGEMENT-2.2% 306,000 SEI Investments 8,620,020 Mutual Fund Administration & Investment Management 60,900 Neuberger Berman 2,228,940 Major Asset Management Company 27,900 BKF Capital Group (b) 795,150 Institutional Money Manager -------------------------------------------------------------------------------- 11,644,110 -------------------------------------------------------------------------------- FINANCE-TOTAL 60,692,167 -------------------------------------------------------------------------------- Number of Value Shares INDUSTRIAL GOODS/SERVICES-4.6% -------------------------------------------------------------------------------- INDUSTRIAL GOODS-0.8% 98,000 Clarcor $3,101,700 Mobile & Industrial Filters 25,100 Mine Safety Appliances 1,004,000 Safety Equipment -------------------------------------------------------------------------------- 4,105,700 -------------------------------------------------------------------------------- MACHINERY-0.9% 50,000 Ametek 1,862,500 Aerospace/Industrial Instruments 49,000 Esco Technologies (b) 1,715,000 Filtration & Test Equipment 35,000 Cuno (b) 1,266,300 Filtration & Fluids Clarification -------------------------------------------------------------------------------- 4,843,800 -------------------------------------------------------------------------------- SPECIALTY CHEMICALS & INDUSTRIAL MATERIALS-0.5% 95,000 Spartech 2,586,850 Plastics Distribution & Compounding -------------------------------------------------------------------------------- OTHER INDUSTRIAL SERVICES-2.4% 412,100 Insurance Auto Auctions (b) 8,035,950 Auto Salvage Services 125,000 Clark/Bardes Consulting (b) 2,855,000 Executive Compensation & Benefits Consulting 174,000 Hub Group (b) 1,609,500 Truck & Rail Freight Forwarder -------------------------------------------------------------------------------- 12,500,450 -------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES-TOTAL 24,036,800 ENERGY/MINERALS-5.6% -------------------------------------------------------------------------------- OIL/GAS PRODUCERS-0.4% 70,000 Southwestern Energy (b) 1,063,300 Oil & Gas Exploration/Production 20,000 Evergreen Resources (b) 850,000 Coal Seam Gas Producer -------------------------------------------------------------------------------- 1,913,300 See accompanying notes to financial statements. 15 Wanger Advisors Trust 2002 Semiannual Report WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- OIL SERVICES-1.5% 841,000 Newpark Resources (b) $6,181,350 Oilfield Fluid Management & Equipment Rental 89,000 FMC Technologies (b) 1,847,640 Deep Water Oil & Gas Well Head Manuacturer -------------------------------------------------------------------------------- 8,028,990 -------------------------------------------------------------------------------- DISTRIBUTION/MARKETING/REFINING-3.7% 232,000 Equitable Resources 7,957,600 Natural Gas Utility & Producer 168,000 Atmos Energy 3,937,920 Natural Gas Utility 495,000 Tesoro Petroleum (b) 3,836,250 Oil Refinery/Gas Producer 393,400 Dynegy 2,832,480 Energy Trading &Generation 115,000 Aquila 570,988 Energy Trading -------------------------------------------------------------------------------- 19,135,238 -------------------------------------------------------------------------------- ENERGY/MINERALS-TOTAL 29,077,528 OTHER INDUSTRIES-5.1% -------------------------------------------------------------------------------- REAL ESTATE-1.3% 152,000 Chelsea Property Group 5,084,400 Outlet Malls 47,000 The Rouse Company 1,551,000 Regional Shopping Malls -------------------------------------------------------------------------------- 6,635,400 -------------------------------------------------------------------------------- Principal Amount or Value Number of Shares -------------------------------------------------------------------------------- REGULATED UTILITIES-3.8% 647,000 Conectiv $16,699,070 Electric Utility in New Jersey, Delaware & Maryland 175,000 Unisource Energy 3,255,000 Electric Utility in Arizona -------------------------------------------------------------------------------- 19,954,070 -------------------------------------------------------------------------------- OTHER INDUSTRIES--TOTAL 26,589,470 TOTAL COMMON STOCKS (COST: $380,263,307)-89.1% 466,536,920 -------------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS-10.7% -------------------------------------------------------------------------------- Yield 1.62% - 1.68% Due 7/1/02 - 7/5/02 $15,800,000 AmGen Financial 15,799,289 14,922,000 GE Capital 14,920,649 14,740,000 Toyota Motor 14,740,000 10,720,000 Prudential Funding 10,717,999 -------------------------------------------------------------------------------- (AMORTIZED COST: $56,177,937) 56,177,937 TOTAL INVESTMENTS (COST: $436,441,244)(A)-99.8% 522,714,857 -------------------------------------------------------------------------------- CASH AND OTHER ASSETS LESS LIABILITIES-0.2% 1,169,151 -------------------------------------------------------------------------------- TOTAL NET ASSETS-100% $523,884,008 ================================================================================ NOTES TO STATEMENT OF INVESTMENTS: (a)At June 30, 2002, cost for federal income tax purposes is the same and net unrealized appreciation was $86,273,613 consisting of gross unrealized appreciation of $140,455,345 and gross unrealized depreciation of $54,181,732. (b)Non-income producing security. See accompanying notes to financial statements. 16 Wanger Advisors Trust 2002 Semiannual Report WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares COMMON STOCKS-92.3% EUROPE-56.9% -------------------------------------------------------------------------------- GERMANY/AUSTRIA-7.4% 118,001 Zaph Creation $3,088,903 Toy Manufacturer 150,000 Jenoptik 2,848,227 High Tech Construction & Electrical Components 135,000 GFK 2,476,396 Market Research Services 383,000 Takkt 2,221,617 Mail Order Retailer of Office & Warehouse Durables 56,000 Flughafen Wien (Austria) 1,932,333 Vienna Airport Authority 64,000 DisDeutscher Industrie Services 1,649,939 Temporary Employment 112,000 Norddeutsche Affinerie 1,526,987 Copper Smelter/Copper Products 75,600 Hugo Boss Designs 1,379,286 Fashion Apparel 18,000 Beru 972,711 Auto Parts & Electronics 55,000 Software AG 741,679 Database Software 32,100 Teleplan International (b) 201,476 After-Sale Warranty Repair Services 20,000 Lion Bioscience (b) 83,290 Bioinformatics -------------------------------------------------------------------------------- 19,122,844 -------------------------------------------------------------------------------- DENMARK-2.5% 175,450 Bang & Olufsen 4,660,182 Manufacturer of High-End Electronics 24,500 Kobenhavns Lufthavne 1,896,665 Copenhagen Airport Authority -------------------------------------------------------------------------------- 6,556,847 -------------------------------------------------------------------------------- NETHERLANDS-8.8% 76,128 Fugro 4,189,402 Survey & GPS Services 174,548 United Services Group 3,478,769 Temporary Staffing Services -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- NETHERLANDS-8.8% (CONT) 79,300 OPG Group $3,416,470 Pharmaceutical Wholesaler & Retailer 161,000 IM Tech 3,392,340 Technical Engineering 66,370 Hunter Douglas 2,053,255 Decorative Window Coverings 174,300 OCE 2,039,361 Manufacturer of High Speed Copiers 104,000 Aalberts Industries 1,936,616 Flow Control & Heat Treatment 40,831 Nutreco Holdings 1,395,957 Salmon, Animal Feeds 105,200 Pink Roccade 854,308 Computer Services/Outsourcing -------------------------------------------------------------------------------- 22,756,478 -------------------------------------------------------------------------------- FINLAND-1.9% 135,000 Lassila & Tikanoja 2,543,326 Waste Removal 70,000 Amer Group 2,290,481 Branded Outdoor Sporting Goods -------------------------------------------------------------------------------- 4,833,807 -------------------------------------------------------------------------------- SWEDEN-3.6% 152,800 Lindex 3,095,550 Ladies & Children's Wear 119,000 Cardo 2,716,213 Industrial Doors, Pumps & Railbraking Systems 144,500 Hexagon 2,667,013 Diversified Engineering 150,000 Intrum Justitia (b) 868,236 Receivables Management & Debt Collection -------------------------------------------------------------------------------- 9,347,012 -------------------------------------------------------------------------------- FRANCE/BELGIUM-6.6% 60,000 Cegedim 3,617,174 Medical Market Research 120,000 Fininfo 3,325,659 Data Feeds for French Banks & Brokers See accompanying notes to financial statements. 17 Wanger Advisors Trust 2002 Semiannual Report WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- FRANCE/BELGIUM-6.6% (CONT) 45,000 Coface $2,692,802 Credit Insurance 83,200 Prosodie 2,474,909 Automated Call Centers 35,000 IPSOS 2,446,650 Market Research 95,000 Cerep (b) 1,332,891 Health Care 200,036 Telindus Group (Belgium) 1,130,570 Network Integration Services -------------------------------------------------------------------------------- 17,020,655 -------------------------------------------------------------------------------- UNITED KINGDOM/IRELAND-15.8% 220,000 French Connection 3,351,687 Clothing Wholesaler & Retailer 550,000 Spectris 3,280,106 Electronic Instruments & Controls 450,000 Expro International 3,203,931 Offshore Oil Field Services 430,000 Nestor Healthcare 3,028,615 Healthcare Staffing Solutions 400,000 Charles Taylor Consulting 2,480,463 Mutual Insurance Management 790,000 Care UK 2,352,689 Nursing Home & Psychiatric Care Facilities 300,000 Anglo Irish Bank (Ireland) 1,942,446 Corporate Lending & Private Banking 200,000 Torex 1,858,816 Application Software for Hospital Management & Retail 900,000 Mitie Group 1,812,116 Facilities Management 160,000 Bloomsbury Publishing 1,810,432 Publishing 3,000,000 Waterford Wedgwood (Ireland) 1,784,790 Crystal, Tableware & Cookware 300,000 Ricardo 1,689,241 Auto Engine Design 300,000 Grafton Group (Ireland) 1,308,846 DIY Retailing & Wholesaling of Construction Materials -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- UNITED KINGDOM/IRELAND-15.8% (CONT) 375,000 TDG Group $1,280,424 Logistics & Storage Company 445,800 St. James Capital 1,249,134 Life Insurance & Investment Product Distributor 750,000 Tullow Oil (b) 1,108,744 Oil & Gas Producer 225,000 Homestyle Group 1,040,416 Soft Furnishings Retailer 250,000 Hit Entertainment 1,018,215 Television Shows for Children 350,000 Aggreko 964,935 Provider of Temporary Power & Temperature Control Services 220,000 Umeco 951,610 Aerospace Parts Distributor 269,200 Taylor Nelson 791,396 Market Research Services 100,000 Galen Holdings 721,784 Women's Health Care 250,000 Amey 687,104 Facilities Management 300,000 RPS Group 594,852 Environmental Consulting 120,000 Edinburgh Fund Managers 499,216 Investment Management -------------------------------------------------------------------------------- 40,812,008 -------------------------------------------------------------------------------- SPAIN-5.5% 375,000 Red Electrica 4,071,552 Power Grid 255,000 Prosegur 3,605,573 Security Guards 192,500 Zarddoya Otis 2,557,703 Elevator Maintenance & Service Provider 356,000 Cortefiel 2,174,429 Apparel Retailer 244,100 Abengoa 1,778,975 Engineering & Construction -------------------------------------------------------------------------------- 14,188,232 See accompanying notes to financial statements. 18 Wanger Advisors Trust 2002 Semiannual Report WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- SWITZERLAND-4.8% 7,500 Hiestand Holding (b) $2,417,966 Bakery Goods 8,000 Geberit International (b) 2,268,584 Plumbing Supplies 10,200 Kaba Holdings 2,203,767 Building Security Systems 5,900 Saia Burgess Electronics 1,971,845 Electrical Components Manufacturing 7,000 Feintool International 1,417,865 Engineering & Machinery 100,000 Xstrata (b) 1,286,235 Smelting 12,000 Bachem 729,188 Drug Manufacturer -------------------------------------------------------------------------------- 12,295,450 -------------------------------------------------------------------------------- EUROPE-TOTAL 146,933,333 ASIA-26.2% -------------------------------------------------------------------------------- HONG KONG-4.2% 5,700,000 Global Bio-Chem Technology Group 2,137,514 Corn-Based Food Products 750,000 Hong Kong Exchanges & Clearing1, 235,585 Trading, Clearing & Settlement Services for Financial Markets 2,000,000 SCMP Group 1,160,264 English Language Newspaper in Hong Kong 3,800,000 Tingyi Holding 1,157,059 Instant Noodles 2,300,000 Aeon Credit Service 899,365 Credit Card Issuer 2,250,000 Zhejiang Expressway 764,428 Toll Road Builder & Operator 1,100,000 Travelsky Technology 754,492 Online Air Travel Bookings in China 1,244,000 JCG Holding 741,620 Consumer Finance 2,044,000 NGAI Lik Industrial 733,748 China Based A/V Contract Manufacturer -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- HONG KONG-4.2% (CONT) 200,000 Wing Hang Bank $662,825 Consumer & Commercial Banking 2,374,000 Jiangsu Express 646,767 Toll Road Builder & Operator 50,000 Linmark (b) 14,744 Apparel/Hard Goods Sourcing Agent -------------------------------------------------------------------------------- 10,908,411 -------------------------------------------------------------------------------- JAPAN-14.1% 120,000 CSK 4,284,817 Computer Services 82,000 ARRK 3,702,804 Prototypes & Moulds for New Product Development 75,000 Fuji Seal 3,242,462 Packaging Materials & Machinery 70,000 Eneserve (b) 3,155,077 Sells &Maintains In-House Power Generators 825,000 Daiei OMC (b) 3,083,789 Credit Card Issuer 103,200 Hokuto 2,692,511 Mushroom Production 28,000 Moshi Moshi Hotline 2,655,182 Telemarketing 220,000 Tenma 2,498,306 Molded Plastic Products 7,000 Bellsystem 24 2,455,575 Call Centers 230,000 NIFCO 2,286,825 Industrial Fasteners 75,000 BML 2,119,830 Clinical Testing 63,000 Goldcrest 1,938,704 Developer/Seller of Apartments 60,000 Drake Beam Morin 1,906,593 Employment Outplacement Services 48,300 Wilson Learning 323,117 Corporate Training -------------------------------------------------------------------------------- 36,345,592 See accompanying notes to financial statements. 19 Wanger Advisors Trust 2002 Semiannual Report WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- TAIWAN-2.7% 2,460,000 Phoenixtec Power $1,907,034 Uninterruptable Power Supplies 180,000 ASE Test (b) 1,746,000 Semiconductor Packaging &Test Services 793,000 Advantech 1,744,553 Computer Based Industrial Automation 2,300,000 Chroma Ate 1,665,968 Test & Measurement Insturments -------------------------------------------------------------------------------- 7,063,555 -------------------------------------------------------------------------------- SINGAPORE-2.0% 200,000 Venture Manufacturing 1,595,519 Electronic Manufacturing Services 1,000,000 Sembcorp Logistics 1,250,389 Logistic Services for Marine Transport 2,500,000 Star Cruises (b) 1,012,500 Cruise Line 2,000,000 Comfort Group 837,365 Singapore Taxi Service 400,000 Want Want Holdings 386,000 Snack Foods -------------------------------------------------------------------------------- 5,081,773 -------------------------------------------------------------------------------- THAILAND-0.1% 840,800 Thai Union Frozen Products 350,291 Canned Tuna Fish -------------------------------------------------------------------------------- INDIA-0.4% 80,000 Housing Development Finance 1,066,394 Mortgage Loan Provider in India -------------------------------------------------------------------------------- SOUTH KOREA-2.7% 44,000 Halla Climate Control (b) 1,974,689 Auto Parts Manufacturer 100,000 S1 Corporation 1,948,378 Home/Business Security Services 90,000 Samyoung Heat Exchange 1,030,392 Power Plant Related Machinery -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- SOUTH KOREA-2.7% (CONT) 90,000 Jungsoft $1,019,151 System Recovery Software 20,000 Yuhan 907,578 Ethical Drug Producer -------------------------------------------------------------------------------- 6,880,188 -------------------------------------------------------------------------------- ASIA-TOTAL 67,696,204 LATIN AMERICA-1.5% -------------------------------------------------------------------------------- MEXICO-0.8% 750,000 Consorcio ARA (b) 1,093,075 Low/Medium Income House Builder 70,000 Grupo Aeroportuario 903,000 Mexican Airport Authority -------------------------------------------------------------------------------- 1,996,075 -------------------------------------------------------------------------------- ARGENTINA-0.4% 63,900 Siderca 1,010,259 Seamless Pipes for Oil Wells -------------------------------------------------------------------------------- BRAZIL-0.3% 182,700 Cia De Consessoes Rodoviaria (b) 907,826 Brazilian Tollroads -------------------------------------------------------------------------------- LATIN AMERICA-TOTAL 3,914,160 OTHER COUNTRIES-7.7% -------------------------------------------------------------------------------- AUSTRALIA-0.9% 55,000 Perpetual Trustees 1,329,696 Investment Management 800,000 Computershare 991,848 Financial Software/Services -------------------------------------------------------------------------------- 2,321,544 -------------------------------------------------------------------------------- CANADA-5.0% 600,000 AltaGas Services 4,315,691 Natural Gas Gatherer and Processor 400,000 Patheon (b) 3,214,992 Pharmaceuticals See accompanying notes to financial statements. 20 Wanger Advisors Trust 2002 Semiannual Report WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- CANADA-5.0% (CONT) 135,000 Corus Entertainment (b) $2,396,396 CATV Programming & Radio Stations 199,998 Silent Witness (b) 1,319,770 99,999 Silent Witness Warrants (b) 0 Security Camera Manufacturer 46,000 Celestica (b) 1,039,051 Electronic Manufacturing Services 40,000 Martinrea International (b) 335,265 38,000 Martinrea International (formerly known as Royal Laser Tech) (b) 335,265 Auto Parts -------------------------------------------------------------------------------- 12,956,430 -------------------------------------------------------------------------------- UNITED STATES-1.0% 160,000 Central Euro Distribution (b) 2,489,440 Spirits & Wine Distribution -------------------------------------------------------------------------------- ISRAEL-0.8% 430,000 Paradigm Geophysical (b) 2,171,500 Seismic Software -------------------------------------------------------------------------------- OTHER COUNTRIES-TOTAL 19,938,914 TOTAL COMMON STOCKS (COST: $241,255,536)-92.3% 238,482,611 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Principal Value Amount SHORT-TERM OBLIGATIONS-6.1% -------------------------------------------------------------------------------- Yield 1.70% - 1.79% Due 7/1/02 - 7/2/02 $9,861,000 Toyota Motor $9,860,534 5,877,000 AmGen Financial 5,877,000 -------------------------------------------------------------------------------- (AMORTIZED COST: $15,737,534) 15,737,534 TOTAL INVESTMENTS (COST: $256,993,070)(A)-98.4% 254,220,145 ---------------------------------------------- --------------------------------- CASH AND OTHER ASSETS LESS LIABILITIES-1.6% 3,976,214 -------------------------------------------------------------------------------- TOTAL NET ASSETS-100% $258,196,359 ================================================================================ NOTES TO STATEMENT OF INVESTMENTS: (a) At June 30, 2002, cost for federal income tax purposes is $258,759,994 and net unrealized depreciation was $4,539,849 consisting of gross unrealized appreciation of $34,239,350 and gross unrealized depreciation of $38,779,199. (b) Non-income producing security. (c) At June 30, 2002, $82,884,769 or 32.1% of the Fund's net assets was denominated in the Euro currency. See accompanying notes to financial statements. 21 Wanger Advisors Trust 2002 Semiannual Report WANGER INTERNATIONAL SMALL CAP PORTFOLIO DIVERSIFICATION (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- AT JUNE 30, 2002, THE FUND'S PORTFOLIO INVESTMENTS AS A PERCENT OF NET ASSETS WAS DIVERSIFIED AS FOLLOWS: Value Percent -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY Business Information & Marketing Services $15,068,826 5.8% Computer Services 8,128,511 3.1 Instrumentation 6,265,845 2.4 Business Software 5,461,295 2.1 Computer Hardware 3,651,587 1.4 Television Programming 3,414,611 1.3 Contract Manufacturing 3,368,318 1.3 Transaction Processors 2,981,925 1.2 Publishing 2,970,696 1.2 Internet Related 2,474,909 1.0 Semiconductors and Related Equipment 1,746,000 0.7 -------------------------------------------------------------------------------- 55,532,523 21.5 HEALTHCARE Services 10,917,604 4.2 Pharmaceuticals 4,844,354 1.9 Biotechnology/ Drug Delivery 2,062,079 0.8 -------------------------------------------------------------------------------- 17,824,037 6.9 CONSUMER GOODS/SERVICES Food 10,537,298 4.1 Retail 9,662,082 3.7 Durable Goods 4,732,190 1.8 Electronics 4,660,182 1.8 Entertainment 3,088,903 1.2 Goods Distribution 2,489,440 1.0 Leisure Products 2,290,481 0.9 Furniture and Textiles 2,053,255 0.8 Apparels 1,394,030 0.5 Cruise Lines 1,012,500 0.4 -------------------------------------------------------------------------------- 41,920,361 16.2 Value Percent -------------------------------------------------------------------------------- FINANCE Savings & Loans $5,321,386 2.1% Insurance 3,729,597 1.4 Credit Cards 3,083,789 1.2 Banks 1,942,446 0.8 Money Management 1,828,912 0.7 Finance Companies 1,609,856 0.6 -------------------------------------------------------------------------------- 17,515,986 6.8 -------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Industrial Services 16,108,315 6.2 Outsourcing & Training Services 14,755,226 5.7 Industrial Materials 13,935,659 5.4 Conglomerates 10,168,069 3.9 Machinery 6,297,986 2.4 Construction 5,291,588 2.1 Electrical Components 2,173,321 0.8 Steel 1,010,259 0.4 -------------------------------------------------------------------------------- 69,740,423 26.9 -------------------------------------------------------------------------------- ENERGY/MINERALS Oil Services 9,564,833 3.7 Oil Refining/ Marketing/Distribution 4,315,691 1.7 Independent Power 3,155,077 1.2 Non-Ferrous Metals 2,813,222 1.1 Oil/Gas Producers 1,108,744 0.4 -------------------------------------------------------------------------------- 20,957,567 8.1 -------------------------------------------------------------------------------- OTHER Transportation 7,888,383 3.1 Regulated Utilities 4,071,552 1.6 Real Estate 3,031,779 1.2 -------------------------------------------------------------------------------- 14,991,714 5.9 -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 238,482,611 92.3 -------------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS 15,737,534 6.1 -------------------------------------------------------------------------------- TOTAL INVESTMENTS 254,220,145 98.4 -------------------------------------------------------------------------------- CASH AND OTHER ASSETS LESS LIABILITIES 3,976,214 1.6 -------------------------------------------------------------------------------- NET ASSETS $258,196,359 100.0% ================================================================================ See accompanying notes to financial statements. 22 Wanger Advisors Trust 2002 Semiannual Report WANGER TWENTY STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares COMMON STOCKS-91.5% INFORMATION-36.6% -------------------------------------------------------------------------------- TELEVISION PROGRAMMING-4.5% 115,000 Liberty Media Group, AT&T (b) $1,150,000 CATV & Satellite Dish Programming -------------------------------------------------------------------------------- BUSINESS INFORMATION/MARKETING SERVICES/PUBLISHING-10.4% 45,000 H & R Block 2,076,750 Tax Preparation 11,000 Moody's 547,250 Ratings Service for Credit Obligations -------------------------------------------------------------------------------- 2,624,000 -------------------------------------------------------------------------------- BUSINESS SOFTWARE-9.1% 27,000 Synopsys (b) 1,479,870 Software for Designing Semiconductor Chips 67,000 JD Edwards (b) 814,050 Mid Market ERP & Supply Chain Software -------------------------------------------------------------------------------- 2,293,920 -------------------------------------------------------------------------------- GAMING EQUIPMENT-4.9% 22,000 International Game Technology (b) 1,247,400 Slot Machines & Progressive Jackpots -------------------------------------------------------------------------------- INSTRUMENTATION-7.7% 23,000 Mettler Toledo (b) 848,010 Laboratory Equipment 24,000 Waters (b) 640,800 Chromatography, Mass Spectrometry, Thermal Analysis 24,000 Tektronix (b) 449,040 Analytical Instruments -------------------------------------------------------------------------------- 1,937,850 -------------------------------------------------------------------------------- INFORMATION-TOTAL 9,253,170 HEALTH CARE-21.5% -------------------------------------------------------------------------------- HOSPITAL/LABORATORY SUPPLIES-2.8% 25,000 Techne (b) 705,500 Cytokines, Antibodies, Other Reagents For Life Sciences -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- MEDICAL EQUIPMENT-5.1% 44,000 Boston Scientific (b) $1,290,080 Stents & Catheters -------------------------------------------------------------------------------- SERVICES-13.6% 54,000 First Health Group (b) 1,514,160 PPO Network 32,000 Lincare Holdings (b) 1,033,600 Home Health Care Services 50,000 IMS Health 897,500 Prescription Data to Pharmaceutical Industry -------------------------------------------------------------------------------- 3,445,260 -------------------------------------------------------------------------------- HEALTH CARE-TOTAL 5,440,840 CONSUMER GOODS/SERVICES-10.2% -------------------------------------------------------------------------------- ENTERTAINMENT-2.1% 13,000 International Speedway Motors 521,300 Largest Motorsport Racetrack Owner & Operator -------------------------------------------------------------------------------- APPAREL-4.4% 30,000 Jones Apparel (b) 1,125,000 Women's Apparel -------------------------------------------------------------------------------- LEISURE VEHICLES-3.7% 18,000 Harley-Davidson 922,860 Motorcycles & Related Merchandise -------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES-TOTAL 2,569,160 FINANCE-17.9% -------------------------------------------------------------------------------- MONEY MANAGEMENT-1.4% 13,000 SEI Investments 366,210 Mutual Fund Administration & Investment Management -------------------------------------------------------------------------------- INSURANCE-8.4% 7,000 Markel (b) 1,379,000 Specialty Insurance 23,100 Fidelity National Financial 729,960 Title Insurance & Other Services -------------------------------------------------------------------------------- 2,108,960 See accompanying notes to financial statements. 23 Wanger Advisors Trust 2002 Semiannual Report WANGER TWENTY STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- BANKS-8.1% 30,800 Associated Banc-Corp $1,161,468 Midwest Bank 18,000 TCF Financial 883,800 Great Lakes Bank -------------------------------------------------------------------------------- 2,045,268 -------------------------------------------------------------------------------- FINANCE-TOTAL 4,520,438 INDUSTRIAL GOODS/SERVICES-5.3% -------------------------------------------------------------------------------- LOGISTICS-5.3% 40,000 Expeditors International of Washington 1,326,400 International Freight Forwarder -------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES-TOTAL 1,326,400 TOTAL COMMON STOCKS (COST: $19,389,729)-91.5% 23,110,008 -------------------------------------------------------------------------------- Principal Value Amount SHORT-TERM OBLIGATIONS-8.1% -------------------------------------------------------------------------------- Yield 1.63% - 1.79% Due 7/01/02 - 7/02/02 $787,000 Toyota Motor $786,926 633,000 Prudential Funding 632,971 631,000 AmGen Financial 631,000 -------------------------------------------------------------------------------- (AMORTIZED COST: $2,050,897) 2,050,897 TOTAL INVESTMENTS (COST: $21,440,626)(A)-99.6% 25,160,905 -------------------------------------------------------------------------------- CASH AND OTHER ASSETS LESS LIABILITIES-0.4% 89,224 -------------------------------------------------------------------------------- TOTAL NET ASSETS-100% $25,250,129 ================================================================================ NOTES TO STATEMENT OF INVESTMENTS: (a) At June 30, 2002, cost for federal income tax purposes is the same and net unrealized appreciation was $3,720,279 consisting of gross unrealized appreciation of $4,719,894 and gross unrealized depreciation of $999,615. (b) Non-income producing security. See accompanying notes to financial statements. 24 Wanger Advisors Trust 2002 Semiannual Report WANGER FOREIGN FORTY STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares COMMON STOCKS-89.2% EUROPE-61.7% -------------------------------------------------------------------------------- GERMANY-7.2% 16,000 Rhoen-Klinikum $777,375 Hospital Management 9,000 Deutsche Boerse 381,499 Trading, Clearing & Settlement Services for Financial Markets -------------------------------------------------------------------------------- 1,158,874 -------------------------------------------------------------------------------- DENMARK-2.0% 13,000 Jyske Bank 326,210 Retail & Corporate Banking -------------------------------------------------------------------------------- NORWAY-7.2% 123,000 DNB Holding 670,876 Universal Bank 25,650 Orkla 495,986 Diversified Consumer Goods -------------------------------------------------------------------------------- 1,166,862 -------------------------------------------------------------------------------- FRANCE/BELGIUM-10.5% 18,000 Suez 481,893 Regulated Utilities 8,200 Essilor International 334,741 Eyeglass Lenses 7,000 AGF 322,888 Life & Health Insurance 2,600 Technip 274,818 Global Oil Engineering & Construction 3,986 RTL Group (Belguim) 158,093 TV & Radio Broadcaster 7,400 Euronext 139,412 Trading, Clearing & Settlement Services for Financial Markets -------------------------------------------------------------------------------- 1,711,845 -------------------------------------------------------------------------------- UNITED KINGDOM/IRELAND-22.5% 45,000 Kerry Group (Ireland) 669,296 Food Ingredients 63,000 Alliance Unichem 595,656 Pharmaceutical Wholesaler & Retailer -------------------------------------------------------------------------------- Number of Value Shares -------------------------------------------------------------------------------- UNITED KINGDOM/IRELAND-22.5% (CONT) 40,000 Irish Life & Permanent (Ireland) $581,048 Life Insurance & Savings Products 80,000 Smith & Nephew 445,148 Medical Equipment & Supplies 60,000 Anglo Irish Bank (Ireland) 388,489 Corporate Lending & Private Banking 100,000 Wood Group (b) 321,863 Oil Services 30,000 Standard Chartered 321,444 International Banking Group 25,000 Galen Holdings 180,446 Women's Health Care 20,000 Hanson Trust 142,703 Global Supplier of Construction Material -------------------------------------------------------------------------------- 3,646,093 -------------------------------------------------------------------------------- SWITZERLAND-9.9% 260 Pargesa Holdings 538,222 Industrial & Media Conglomerate 830 Synthes-Stratec 509,959 Products for Orthopedic Surgery 1,000 Givaudan 405,104 Industrial Fragrances & Flavors 550 Julius Baer 158,750 Private Banking, Brokerage & Mutual Funds -------------------------------------------------------------------------------- 1,612,035 -------------------------------------------------------------------------------- ITALY-2.4% 30,000 Autogrill 350,116 Restaurants & Catering for Travelers 5,000 Saipem 36,092 Offshore Oil Construction & Drilling -------------------------------------------------------------------------------- 386,208 -------------------------------------------------------------------------------- EUROPE-TOTAL 10,008,127 See accompanying notes to financial statements. 25 Wanger Advisors Trust 2002 Semiannual Report WANGER FOREIGN FORTY STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2002 -------------------------------------------------------------------------------- Number of Value Shares ASIA-17.9% -------------------------------------------------------------------------------- HONG KONG-2.6% 40,000 TVB $170,258 Television Programming & Broadcasting 110,000 Li & Fung 148,078 Sourcing of Consumer Goods 90,000 Hang Lung Properties 102,693 Property Manager -------------------------------------------------------------------------------- 421,029 -------------------------------------------------------------------------------- JAPAN-13.2% 8,800 Oriental Land 630,647 Disney Theme Park Operator 3,800 Nintendo 560,856 Entertainment Software & Hardware 6,000 Orix 485,178 Finance Leasing & Other Financial Services 4,000 Hoya 291,675 Opto-Electrical Components & Eyeglasses 13,000 Terumo 174,152 Medical Supplies -------------------------------------------------------------------------------- 2,142,508 -------------------------------------------------------------------------------- SINGAPORE-2.1% 22,500 Venture Manufacturing 179,496 Electronic Manufacturing Services 150,000 Singapore Technical Engineering 163,795 Defense Supplier -------------------------------------------------------------------------------- 343,291 -------------------------------------------------------------------------------- ASIA-TOTAL 2,906,828 OTHER COUNTRIES-9.6% -------------------------------------------------------------------------------- AUSTRALIA-2.5% 150,000 Lion Nathan 409,983 Beer Brewer/Distributor -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Principal Amount or Value Number of Shares -------------------------------------------------------------------------------- CANADA-6.6% 28,000 Investors Group $512,736 Mutual Funds 8,800 Talisman Energy 396,332 Oil & Gas Producer 7,000 Celestica (b) 158,118 Electronic Manufacturing Services -------------------------------------------------------------------------------- 1,067,186 -------------------------------------------------------------------------------- ISRAEL-0.5% 11,200 Amdocs (b) 84,560 Telecommunications Billing & Customer Care Software -------------------------------------------------------------------------------- OTHER COUNTRIES-TOTAL 1,561,729 TOTAL COMMON STOCKS (COST $14,261,168)-89.2% 14,476,684 -------------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS-10.5% -------------------------------------------------------------------------------- Yield 1.63% - 1.70% Due 7/1/02 - 7/3/02 $835,000 GE Capital 835,000 436,000 Toyota Motor 435,959 436,000 AmGen Financial 435,920 -------------------------------------------------------------------------------- (AMORTIZED COST: $1,706,879) 1,706,879 TOTAL INVESTMENTS (COST: $15,968,047)(B)-99.7% 16,183,563 -------------------------------------------------------------------------------- CASH AND OTHER ASSETS LESS LIABILITIES-0.3% 51,742 -------------------------------------------------------------------------------- TOTAL NET ASSETS-100% $16,235,305 ================================================================================ NOTES TO STATEMENT OF INVESTMENTS: (a) At June 30, 2002, cost for federal income tax purposes is $15,978,432 and net unrealized appreciation was $205,131 consisting of gross unrealized appreciation of $1,298,100 and gross unrealized depreciation of $1,092,969. (b) Non-income producing security. (c) At June 30, 2002, $4,895,762 or 30.2% of the Fund's net assets were denominated in the Euro currency. See accompanying notes to financial statements. 26 Wanger Advisors Trust 2002 Semiannual Report WANGER FOREIGN FORTY PORTFOLIO DIVERSIFICATION (Unaudited) JUNE 30, 2002 AT JUNE 30, 2002, THE FUND'S PORTFOLIO INVESTMENTS AS A PERCENT OF NET ASSETS WAS DIVERSIFIED AS FOLLOWS: Value Percent -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY Computer Related Hardware Contract Manufacturing $337,614 2.1% Semiconductors and Related Equipment 291,675 1.8 -------------------------------------------------------------------------------- 629,289 3.9 Media TV Broadcasting 328,350 2.0 -------------------------------------------------------------------------------- 328,350 2.0 Software and Services Transaction Processors 520,911 3.2 Business Software 84,560 0.5 -------------------------------------------------------------------------------- 605,471 3.7 -------------------------------------------------------------------------------- 1,563,110 9.6 -------------------------------------------------------------------------------- HEALTHCARE Medical Equipment 1,464,000 9.0 Hospital Management 777,375 4.8 Pharmeceutical 776,102 4.8 -------------------------------------------------------------------------------- 3,017,477 18.6 -------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Beverage 1,165,282 7.2 Entertainment 630,647 3.9 Consumer Software 560,856 3.5 Food 409,983 2.5 Restaurants 350,116 2.2 -------------------------------------------------------------------------------- 3,116,884 19.3 Value Percent -------------------------------------------------------------------------------- FINANCE Banks $1,707,020 10.5% Insurance 903,937 5.6 Money Management 671,486 4.1 Finance Companies 485,178 3.0 -------------------------------------------------------------------------------- 3,767,621 23.2 -------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Conglomerates 538,222 3.3 Speciality Chemicals 405,104 2.5 Industrial Services 163,795 1.0 Outsourcing 148,078 0.9 Construction 142,703 0.9 -------------------------------------------------------------------------------- 1,397,902 8.6 -------------------------------------------------------------------------------- ENERGY/MINERALS Oil Services 632,773 3.9 Oil/Gas Producers 396,331 2.4 -------------------------------------------------------------------------------- 1,029,104 6.3 -------------------------------------------------------------------------------- OTHER Regulated Utilities 481,893 3.0 Real Estate 102,693 0.6 -------------------------------------------------------------------------------- 584,586 3.6 -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 14,476,684 89.2 SHORT-TERM OBLIGATIONS 1,706,879 10.5 -------------------------------------------------------------------------------- TOTAL INVESTMENTS 16,183,563 99.7 -------------------------------------------------------------------------------- CASH AND OTHER ASSETS LESS LIABILITIES 51,742 0.3 -------------------------------------------------------------------------------- NET ASSETS $16,235,305 100.0% ================================================================================ See accompanying notes to financial statements. 27 Wanger Advisors Trust 2002 Semiannual Report This page intentionally left blank 28 Wanger Advisors Trust 2002 Semiannual Report WANGER ADVISORS FUNDS o STATEMENTS OF ASSETS AND LIABILITIES o STATEMENTS OF OPERATIONS o STATEMENTS OF CHANGES IN NET ASSETS o FINANCIAL HIGHLIGHTS o NOTES TO FINANCIAL STATEMENTS 29 Wanger Advisors Trust 2002 Semiannual Report
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) JUNE 30, 2002 WANGER WANGER WANGER WANGER U.S. SMALLER INTERNATIONAL TWENTY FOREIGN COMPANIES SMALL CAP FORTY ------------------------------------------------------------------------------------------------------------------- ASSETS Investments, at value (cost: Wanger U.S. Smaller Companies $436,441,244; Wanger $522,714,857 $254,220,145 $25,160,905 $16,183,563 International Small Cap $256,993,070; Wanger Twenty $21,440,626; Wanger Foreign Forty $15,968,047) Cash 178 657 69 15,993 Foreign Currency (cost: Wanger International Small Cap $3,565,895; Wanger Foreign Forty $453,842) -- 3,702,864 -- 455,398 Receivable for: Investments sold 278,413 3,802,255 -- 77,948 Fund shares sold 1,794,672 2,264,012 258,611 559,204 Dividends and interest 112,830 623,098 7,200 41,327 Other assets 53,703 1,294 81 668 ------------------------------------------------------------------------------------------------------------------- Total Assets 524,954,653 264,614,325 25,426,866 17,334,101 LIABILITIES Payable for: Investments purchased 241,293 4,562,411 -- 985,574 Fund shares repurchased 412,996 1,542,159 130,382 78,872 Management fee 401,052 258,987 19,308 12,959 Transfer agent fee 2,109 1,499 1,523 1,441 Other liabilities 13,195 52,910 25,524 19,950 ------------------------------------------------------------------------------------------------------------------- Total Liabilities 1,070,645 6,417,966 176,737 1,098,796 ------------------------------------------------------------------------------------------------------------------- Net Assets $523,884,008 $258,196,359 $25,250,129 $16,235,305 =================================================================================================================== COMPOSITION OF NET ASSETS Paid in capital $465,809,025 $331,685,241 $22,954,872 $21,924,995 Undistributed net investment income or Accumulated net net investment loss (1,109,325) 1,311,640 (71,489) 74,873 Accumulated net realized loss (27,089,305) (70,427,382) (1,353,533) (5,971,064) Net unrealized appreciation (depreciation) on: Investments (net of prior year unrealized PFIC gains of $1,766,924 for Wanger International Small Cap and $10,385 for Wanger Foreign Forty) 86,273,613 (4,539,849) 3,720,279 205,131 Foreign currency transactions -- 166,709 -- 1,370 ------------------------------------------------------------------------------------------------------------------- Net Assets $523,884,008 $258,196,359 $25,250,129 $16,235,305 =================================================================================================================== Fund shares outstanding 25,050,998 15,878,652 1,733,528 1,435,428 =================================================================================================================== Net asset value, offering price and redemption price per share $20.91 $16.26 $14.57 $11.31 ===================================================================================================================
See accompanying notes to financial statements. 30
Wanger Advisors Trust 2002 Semiannual Report STATEMENTS OF OPERATIONS (Unaudited) FOR THE SIX MONTHS ENDED JUNE 30, 2002 WANGER WANGER WANGER WANGER U.S. SMALLER INTERNATIONAL TWENTY FOREIGN COMPANIES SMALL CAP FORTY ------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividend income (net of foreign taxes of $338,346 for Wanger International Small Cap and $1,104,525 $2,909,470 $53,457 $180,258 $20,370 for Wanger Foreign Forty) Interest income 423,551 148,466 15,795 10,170 ------------------------------------------------------------------------------------------------------------------- Total investment income 1,528,076 3,057,936 69,252 190,428 EXPENSES: Management fees 2,461,423 1,513,993 110,683 79,064 Custody fees 8,145 98,545 2,224 11,297 Legal and audit fees 35,888 25,365 8,782 8,581 Reports to shareholders 63,468 19,591 6,980 6,968 Transfer agent fees 10,753 9,953 9,222 9,125 Trustees' fees 40,165 24,612 1,228 1,750 Other expenses 17,559 9,394 1,622 1,227 ------------------------------------------------------------------------------------------------------------------- Total Expenses 2,637,401 1,701,453 140,741 118,012 Less expenses reimbursed by Advisor -- -- -- (3,264) ------------------------------------------------------------------------------------------------------------------- Net Expenses 2,637,401 1,701,453 140,741 114,748 ------------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) (1,109,325) 1,356,483 (71,489) 75,680 NET REALIZED AND UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS: Net realized gain (loss) on: Investments 6,987,505 (8,929,464) (114,756) (1,631,208) Foreign currency transactions -- (261,384) -- 168 ------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) 6,987,505 (9,190,848) (114,756)(1,631,040) ------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments (40,088,316) 21,884,485 (1,039,334) 1,226,199 Foreign currency transactions -- 402,293 -- 156 ------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) (40,088,316) 22,286,778 (1,039,334) 1,226,355 ------------------------------------------------------------------------------------------------------------------- Net Gain (Loss) (33,100,811) 13,095,930 (1,154,090) (404,685) ------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets from Operations $(34,210,136) $14,452,413 $(1,225,579) $(329,005) ===================================================================================================================
See accompanying notes to financial statements. 31
Wanger Advisors Trust 2002 Semiannual Report STATEMENTS OF CHANGES IN NET ASSETS WANGER U.S. SMALLER COMPANIES WANGER INTERNATIONAL SMALL CAP (Unaudited) (Unaudited) Six Months ended Year ended Six Months ended Year ended INCREASE (DECREASE) IN NET ASSETS June 30, 2002 December 31, 2001 June 30, 2002 December 31, 2001 ----------------------------------------------------------------------------------------------------------------------------------- FROM OPERATIONS: Net investment income (loss) $(1,109,325) $(884,329) $1,356,483 $238,615 Net realized gain (loss) on investments and foreign currency transactions 6,987,505 (25,956,670) (9,190,848) (55,961,150) Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions (40,088,316) 74,197,950 22,286,778 (1,436,144) ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (34,210,136) 47,356,951 14,452,413 (57,158,679) DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- (275,386) -- -- Net realized gain -- -- -- (78,693,586) ----------------------------------------------------------------------------------------------------------------------------------- Total distributions to shareholders -- (275,386) -- (78,693,586) SHARE TRANSACTIONS: Subscriptions 86,060,808 108,000,641 259,539,432 517,577,408 Distributions reinvested -- 275,386 -- 78,693,586 Redemptions (26,152,807) (60,476,971) (246,421,899) (501,467,052) ----------------------------------------------------------------------------------------------------------------------------------- Net Increase from Share Transactions 59,908,001 47,799,056 13,117,533 94,803,942 ----------------------------------------------------------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets 25,697,865 94,880,621 27,569,946 (41,048,323) NET ASSETS: Beginning of period 498,186,143 403,305,522 230,626,413 271,674,736 ----------------------------------------------------------------------------------------------------------------------------------- End of period $523,884,008 $498,186,143 $258,196,359 $230,626,413 ----------------------------------------------------------------------------------------------------------------------------------- UNDISTRIBUTED NET INVESTMENT INCOME (OVERDISTRIBUTED NET INVESTMENT INCOME OR ACCUMULATED NET INVESTMENT LOSS) $(1,109,325) -- $1,311,640 $(44,843) =================================================================================================================================== WANGER TWENTY WANGER FOREIGN FORTY (Unaudited) (Unaudited) Six Months ended Year ended Six Months ended Year ended INCREASE (DECREASE) IN NET ASSETS June 30, 2002 December 31, 2001 June 30, 2002 December 31, 2001 ---------------------------------------------------------------------------------------------------------------------------------- FROM OPERATIONS: Net investment income (loss) $(71,489) $(54,495) $75,680 $(32,650) Net realized gain (loss) on investments and foreign currency transactions (114,756) (613,846) (1,631,040) (3,761,021) Net change in unrealized appreciation (depreciation) investments and foreign currency transactions (1,039,334) 2,426,419 1,226,355 (860,223) ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (1,225,579) 1,758,078 (329,005) (4,653,894) DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- -- -- (20,439) Net realized gain -- -- -- (1,311,409) ---------------------------------------------------------------------------------------------------------------------------------- Total distributions to shareholders -- -- -- (1,331,848) SHARE TRANSACTIONS: Subscriptions 7,356,822 10,836,793 19,989,648 66,745,612 Distributions reinvested -- -- -- 1,331,848 Redemptions (2,310,559) (3,294,809) (18,856,461) (62,156,191) ---------------------------------------------------------------------------------------------------------------------------------- Net Increase from Share Transactions 5,046,263 7,541,984 1,133,187 5,921,269 ---------------------------------------------------------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets 3,820,684 9,300,062 804,182 (64,473) NET ASSETS: Beginning of period 21,429,445 12,129,383 15,431,123 15,495,596 ---------------------------------------------------------------------------------------------------------------------------------- End of period $25,250,129 $21,429,445 $16,235,305 $15,431,123 ---------------------------------------------------------------------------------------------------------------------------------- UNDISTRIBUTED NET INVESTMENT INCOME (OVERDISTRIBUTED NET INVESTMENT INCOME OR ACCUMULATED NET INVESTMENT LOSS) $(71,489) -- $74,873 $(807) ================================================================================================================================== See accompanying notes to financial statements.
32-33 SPREAD
Wanger Advisors Trust 2002 Semiannual Report WANGER U.S. SMALLER COMPANIES FINANCIAL HIGHLIGHTS (Unaudited) Six Months Ended SELECTED DATA FOR A SHARE June 30, Year Ended December 31, OUTSTANDING THROUGHOUT EACH PERIOD 2002 2001 2000 1999 1998 1997 ------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $22.25 $19.99 $24.88 $22.18 $21.46 $16.97 ------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (a) (0.05) (0.04) 0.02 0.03 (0.05) (0.02) Net realized and unrealized gain (loss) on investments (1.29) 2.31 (1.82) 4.79 1.93 4.90 ------------------------------------------------------------------------------------------------------------------- Total from Investment Operations (1.34) 2.27 (1.80) 4.82 1.88 4.88 ------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.01) (0.03) -- -- -- From net realized capital gains -- -- (3.06) (2.12) (1.16) (0.39) ------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders -- (0.01) (3.09) (2.12) (1.16) (0.39) ------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $20.91 $22.25 $19.99 $24.88 $22.18 $21.46 =================================================================================================================== Total Return (b) (6.02)%(c) 11.39% (8.16)% 25.06% 8.68% 29.41% ------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: Expenses 1.00%(d) 0.99% 1.00%(e) 1.02%(e) 1.02%(e) 1.06%(f) Net investment income (loss) (0.42)%(d) (0.20)% 0.07%(e) 0.14%(e) (0.25)%(e) (0.10)%(f) Portfolio turnover rate 6%(c) 18% 36% 35% 34% 34% Net assets, end of period (000's) $523,884 $498,186 $403,306 $390,709 $339,119 $270,866 ------------------------------------------------------------------------------------------------------------------- (a) Net investment income (loss) per share was based upon the average shares outstanding during the period. (b) Total return at net asset value assuming all distributions are reinvested. (c) Not annualized. (d) Annualized. (e) The benefits derived from custody fees paid indirectly had no impact. (f) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custody fees for cash balances it maintains with the custodian ("custody fees paid indirectly"). The ratios of expenses to average daily net assets and net investment income to average daily net assets net of custody fees paid indirectly would have been 1.04% and (0.08%), respectively, for the year ended December 31, 1997. See accompanying notes to financial statements. 34 Wanger Advisors Trust 2002 Semiannual Report WANGER INTERNATIONAL SMALL CAP FINANCIAL HIGHLIGHTS (Unaudited) Six Months Ended SELECTED DATA FOR A SHARE June 30, Year Ended December 31, OUTSTANDING THROUGHOUT EACH PERIOD 2002 2001 2000 1999 1998 1997 ------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $15.40 $28.53 $43.67 $19.62 $17.05 $17.71 ------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (a) 0.09 0.02 (0.26) (0.13) 0.03 0.02 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.77 (5.12) (9.75) 24.52 2.76 (0.26) ------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 0.86 (5.10) (10.01) 24.39 2.79 (0.24) ------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- -- -- (0.34) (0.22) -- From net realized gain and unrealized gain reportable for federal income taxes -- (8.03) (5.13) -- -- (0.42) ------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders -- (8.03) (5.13) (0.34) (0.22) (0.42) ------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $16.26 $15.40 $28.53 $43.67 $19.62 $17.05 =================================================================================================================== Total Return (b) 5.58%(c) (21.27)% (27.84)% 126.37% 16.33% (1.46)% ------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: Expenses 1.39%(d) 1.43%(e) 1.41%(e) 1.49%(e) 1.55%(e) 1.60%(f) Net investment income (loss) 1.11%(d) 0.10%(e) (0.68)%(e) (0.49)%(e) 0.16%(e) 0.12%(f) Portfolio turnover rate 24%(c) 56% 67% 75% 56% 60% Net assets, end of period (000's) $258,196 $230,626 $271,675 $311,331 $141,253 $120,660 ------------------------------------------------------------------------------------------------------------------- (a) Net investment income (loss) per share was based upon the average shares outstanding during the period. (b) Total return at net asset value assuming all distributions are reinvested. (c) Not annualized. (d) Annualized. (e) The benefits derived from custody fees paid indirectly had no impact. (f) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custody fees for cash balances it maintains with the custodian ("custody fees paid indirectly"). The ratios of expenses to average daily net assets and net investment income to average daily net assets net of custody fees paid indirectly would have been 1.59% and 0.13%, respectively, for the year ended December 31, 1997. See accompanying notes to financial statements. 35 Wanger Advisors Trust 2002 Semiannual Report WANGER TWENTY FINANCIAL HIGHLIGHTS (Unaudited) February 1, Six Months Ended 1999 through SELECTED DATA FOR A SHARE June 30, Year Ended December 31, December 31, OUTSTANDING THROUGHOUT EACH PERIOD 2002 2001 2000 1999 ----------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $15.36 $14.08 $13.43 $10.00 ----------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment loss (a) (0.05) (0.05) (0.03) (0.08) Net realized and unrealized gain (loss) on investments (0.74) 1.33 1.23 3.51 ----------------------------------------------------------------------------------------------------- Total from Investment Operations (0.79) 1.28 1.20 3.43 ----------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net realized capital gains -- -- (0.55) -- ----------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders -- -- (0.55) -- ----------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $14.57 $15.36 $14.08 $13.43 ===================================================================================================== Total Return (b) (5.14)%(c) 9.09% 9.45%(d) 34.30%(c)(d) ----------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: Expenses 1.21%(e) 1.33%(f) 1.39%(g) 1.41%(e)(g) Net investment loss (0.61)%(e) (0.34)%(f) (0.24)%(g) (0.77)%(e)(g) Reimbursement -- -- 0.21% 0.71%(e) Portfolio turnover rate 28%(c) 76% 86% 113%(e) Net assets, end of period (000's) $25,250 $21,429 $12,129 $6,570 ----------------------------------------------------------------------------------------------------- (a) Net investment loss per share was based upon the average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Not annualized. (d) Had the Advisor not reimbursed a portion of its expenses, total return would have been reduced. (e) Annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custody fees for cash balances it maintains with the custodian ("custody fees paid indirectly"). The ratios of expenses to average daily net assets and net investment income to average daily net assets net of custody fees paid indirectly would have been 1.35% and (0.20%), respectively, for the year ended December 31, 2000 and 1.35% and (0.71%), respectively, for the period ended December 31, 1999. See accompanying notes to financial statements. 36 Wanger Advisors Trust 2002 Semiannual Report WANGER FOREIGN FORTY FINANCIAL HIGHLIGHTS (Unaudited) February 1, Six Months Ended 1999 through SELECTED DATA FOR A SHARE June 30, Year Ended December 31, December 31, OUTSTANDING THROUGHOUT EACH PERIOD 2002 2001 2000 1999 ---------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $11.64 $17.29 $18.39 $10.00 ---------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (a) 0.05 (0.03) (0.04) (0.01) Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.38) (4.46) (0.10) 8.40 ---------------------------------------------------------------------------------------------------- Total from Investment Operations (0.33) (4.49) (0.14) 8.39 ---------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income -- (0.02) (0.01) -- From net realized capital gains -- (1.14) (0.95) -- ---------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders -- (1.16) (0.96) -- ---------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $11.31 $11.64 $17.29 $18.39 ==================================================================================================== Total Return (b) (2.84)%(c)(d)(26.61)% (1.58)%(d) 83.90%(c)(d) ---------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: Expenses 1.45%(e) 1.45%(f) 1.45%(f) 1.59%(e)(g) Net investment income (loss) 0.96%(e) (0.20)%(f) (0.20)%(f) (0.10)%(e)(g) Reimbursement 0.04%(e) -- 0.23% 1.86%(e) Portfolio turnover rate 51%(c) 72% 96% 91%(e) Net assets, end of period (000's) $16,235 $15,431 $15,496 $5,826 ----------------------------------------------------------------------------------------------------
(a) Net investment income (loss) per share was based upon the average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Not annualized. (d) Had the Advisor not reimbursed a portion of expenses, total return would be reduced. (e) Annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custody fees for cash balances it maintains with the custodian ("custody fees paid indirectly"). The ratios of expenses to average daily net assets and net investment income to average daily net assets net of custody fees paid indirectly would have been 1.45% and 0.04%, respectively, for the period ended December 31, 1999. See accompanying notes to financial statements. 37 Wanger Advisors Trust 2002 Semiannual Report NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. NATURE OF OPERATIONS Wanger U.S. Smaller Companies (known prior to May 1, 2002 as 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 fair 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 latest 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. FEDERAL INCOME TAXES 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 Funds paid no federal income taxes and no federal income tax provision was required. For the period October 31, 2001 to December 31, 2001, the Funds incurred net realized capital losses which each Fund intends to treat as having been incurred in the following fiscal year, in accordance with federal income tax regulations. AMOUNT --------- Wanger U.S. Smaller Companies $2,475,314 Wanger International Small Cap 5,273,180 Wanger Twenty 25,372 Wanger Foreign Forty 1,160,587 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, 2000 $1,766,924 $10,385 Unrealized appreciation on PFIC's recognized for federal income tax purposes during 2001 -- -- Unrealized appreciation recognized in prior years on PFIC's sold during 2001 -- -- ------------ -------- Cumulative unrealized appreciation on PFIC's carried forward at December 31, 2001 $1,766,924 $10,385 ============ ======== DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded on the ex-date. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital 38 Wanger Advisors Trust 2002 Semiannual Report NOTES TO FINANCIAL STATEMENTS (Unaudited) loss carryforwards) under income tax regulations. Net investment income, net realized gains (losses) and net assets were not affected by these reclassifications. The tax character of distributions paid during 2001 was as follows: WANGER WANGER INTERNA- WANGER U.S. SMALLER TIONAL FOREIGN COMPANIES SMALL CAP FORTY -------- ----------- -------- Ordinary Income $275,386 $25,006,153 $876,913 Long-Term Capital Gains -- 53,687,433 454,935 At December 31, 2001, there were no significant differences between the book basis and tax basis components of net assets, other than differences in the net unrealized appreciation (depreciation) in value of investments attributable to the tax deferral of losses on certain securities (wash sales), recognition of unrealized gains on certain passive foreign investments (PFIC's), and foreign currency transactions. 3. TRANSACTIONS WITH AFFILIATES The Funds' investment advisor, Liberty Wanger Asset Management, L.P., ("Liberty WAM") an indirect wholly-owned subsidiary of Columbia Management Group, Inc., which in turn is a wholly-owned subsidiary of Fleet National Bank, which in turn is a wholly-owned subsidiary of FleetBoston Financial Corporation ("Fleet"), furnishes continuing investment supervision to each Fund and is responsible for overall management of each Fund's business affairs. Each Fund pays Liberty WAM a monthly advisory fee based upon average daily net assets at the following annual rates: WANGER U.S. SMALLER COMPANIES 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 Liberty WAM will reimburse the Funds to the extent that ordinary operating expenses (computed based on net custodian fees) exceed an annual percentage of average daily net assets. Six Months Ended June 30, 2002 Wanger U.S. Smaller Companies 2.00% Wanger International Small Cap 2.00% Wanger Twenty 1.35% Wanger Foreign Forty 1.45% Certain officers and trustees of the Trust are also officers of Liberty WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with Liberty WAM. The Fund paid the following trustees' fees and expenses to trustees not affiliated with Liberty WAM: Six Months Ended June 30, 2002 Wanger U.S. Smaller Companies $40,165 Wanger International Small Cap 24,612 Wanger Twenty 1,228 Wanger Foreign Forty 1,750 Liberty Funds Distributor, Inc. ("LFD") an indirect subsidiary of Fleet serves as the principal underwriter of the Trust and receives no compensation for its services. During the six months ended June 30, 2002, the Funds engaged in purchases and sales transactions with funds that have a common investment advisor (or affiliated investment advisors), common Directors/Trustees, and/or common Officers. These purchase and sale transactions complied with the provisions of Rule 17a-7 under the Investment Company Act of 1940 and were as follows: PURCHASES SALES ------------------------------------------------------------- (in thousands) Wanger U.S. Smaller Companies $ -- $ -- Wanger International Small Cap 82,299 75,041 Wanger Twenty 64,000 -- Wanger Foreign Forty -- -- 4. BORROWING ARRANGEMENTS The Trust participates in a $150,000,000 credit facility which was entered into to facilitate portfolio liquidity. No amounts were borrowed under this facility for the six months ended June 30, 2002. 39 Wanger Advisors Trust 2002 Semiannual Report NOTES TO FINANCIAL STATEMENTS (Unaudited) 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. SMALLER Six Months ended Year ended COMPANIES June 30, 2002 December 31, 2001 Shares sold 3,839,281 5,138,267 Shares issued in reinvestment of dividend and capital gain distributions -- 14,578 -------------------------------------------------------------------- 3,839,281 5,152,845 Less shares redeemed 1,183,639 2,930,905 -------------------------------------------------------------------- Net increase in shares outstanding 2,655,642 2,221,940 WANGER INTERNATIONAL Six Months ended Year ended SMALL CAP June 30, 2002 December 31, 2001 Shares sold 16,662,398 30,073,056 Shares issued in reinvestment of capital gain distributions -- 4,496,664 -------------------------------------------------------------------- 16,662,398 34,569,720 Less shares redeemed 15,754,627 29,121,025 -------------------------------------------------------------------- Net increase in shares outstanding 907,771 5,448,695 WANGER TWENTY Six Months ended Year ended June 30, 2002 December 31, 2001 Shares sold 494,931 770,791 -------------------------------------------------------------------- Less shares redeemed 156,096 237,578 -------------------------------------------------------------------- Net increase in shares outstanding 338,835 533,213 WANGER FOREIGN FORTY Six Months ended Year ended June 30, 2002 December 31, 2001 Shares sold 1,770,616 5,410,460 Shares issued in reinvestment of dividend and capital gain distributions -- 103,485 -------------------------------------------------------------------- 1,770,616 5,513,945 Less shares redeemed 1,661,105 5,084,229 -------------------------------------------------------------------- Net increase in shares outstanding 109,511 429,716 6. INVESTMENT TRANSACTIONS The aggregate cost of purchases and proceeds from sales other than short-term obligations for the six months ended June 30, 2002 were: -------------------------------------------------------------------------------- WANGER U.S. WANGER WANGER WANGER SMALLER INTERNATIONAL TWENTY FOREIGN FORTY COMPANIES SMALL CAP PURCHASES $72,480,277 $63,764,170 $10,096,339 $7,773,099 SALES 29,795,535 55,796,538 6,068,781 7,379,016 7. CAPITAL LOSS CARRYFORWARDS At December 31, 2001, capital loss carryforwards available (to the extent provided in regulations) to offset future realized gains were as follows: Total Year of Expiration Capital Loss 2008 2009 Carryforward Wanger U.S. Smaller Companies $7,245,899 $23,984,483 $31,230,382 Wanger International Small Cap -- 55,963,354 55,963,354 Wanger Twenty 624,930 588,474 1,213,404 Wanger Foreign Forty -- 3,168,366 3,168,366 40 Wanger Advisors Trust 2002 Semiannual Report This page intentionally left blank 41 Wanger Advisors Trust 2002 Semiannual Report BOARD OF TRUSTEES AND MANAGEMENT OF WANGER ADVISORS TRUST The board of trustees serve indefinite terms of unlimited duration provided that a majority of trustees always has been elected by shareholders. The trustees appoint their own successors, provided that at least two-thirds of the trustees, after such appointment, have been elected by shareholders. Shareholders may remove a trustee, with or without cause, upon the vote of two-thirds of the Trust's outstanding shares at any meeting called for that purpose. A trustee may be removed, with or without cause, upon the vote of a majority of the trustees. The names of the trustees and officers of the Trust, the date each was first elected or appointed to office, their principal business occupations and other directorships they have held during at least the last five years, are shown below. Each trustee serves in such capacity for each of the four series of the Trust. Mr. Wanger also serves as a trustee for each of the five series of Liberty Acorn Trust.
NAME, POSITION(S) WITH YEAR FIRST WANGER ADVISORS TRUST ELECTED OR AND AGE AT APPOINTED TO PRINCIPAL OCCUPATION(S) DURING OTHER JANUARY 1, 2002 OFFICE PAST FIVE YEARS DIRECTORSHIPS -------------- ---------- ------------------- ------------ TRUSTEES WHO ARE NOT INTERESTED PERSONS OF WANGER ADVISORS TRUST: Fred D. Hasselbring, 60, 1994 Retail industry, general project development and business None. Trustee computer systems consultant; voice over specialist for industrial and institutional applications. P. Michael Phelps, 68, 1994 Retired since January 31, 1998; prior thereto, vice president None. Trustee and corporate secretary, Morton International, Inc. Patricia H. Werhane, 66, 1998 Ruffin Professor of Business Ethics, Darden Graduate School None. Trustee of Business Administration, University of Virginia, since 1993; Co-Director of the Olsson Center for Applied Ethics, Darden Graduate School of Business Administration, University of Virginia, since September 2001. TRUSTEES WHO ARE AN INTERESTED PERSON OF WANGER ADVISORS TRUST: Ralph Wanger, 67, 1994 President, chief investment officer and portfolio manager, Liberty Trustee and President* Liberty WAM since July 1992; president, Liberty Acorn Trust; Acorn principal, WAM from July 1992 until September 29, 2000; Trust. president, WAM Ltd. from July 1992 to September 29, 2000; president and director, WAM Acquisition GP, Inc. since September 29, 2000; director, Wanger Investment Company plc. OFFICERS OF WANGER ADVISORS TRUST: J. Kevin Connaughton, 37,2001 Treasurer of the Liberty Funds and of the Liberty All-Star Funds None. Assistant Treasurer since December 2000 (formerly controller of the Liberty Funds and of the Liberty All-Star Funds from February 1998 to October 2000); treasurer of the Stein Roe Funds since February 2001 (formerly controller from May 2000 to February 2001); senior vice president of Liberty Funds Group since January 2001 (formerly vice president of Colonial Management Associates since February 1998 to October 2000); senior tax manager, Coopers & Lybrand, LLP from April 1996 to January 1998. Kevin S. Jacobs, 41, 2001 Assistant vice president, Liberty Funds Group since None. Assistant Secretary June 2000; senior legal product manager, First Union Corp. September 1999 to June 2000; prior thereto, senior legal product manager, Colonial Management Associates. Kenneth A. Kalina, 42, 1995 Chief financial officer, Liberty WAM since April 2000; assistant None. Assistant Treasurer treasurer, Liberty Acorn Trust; fund controller, Liberty WAM since September 1995; prior thereto, treasurer of the Stein Roe Mutual Funds; director, New Americas Small Cap Fund. 42 Wanger Advisors Trust 2002 Semiannual Report NAME, POSITION(S) WITH YEAR FIRST WANGER ADVISORS TRUST ELECTED OR AND AGE AT APPOINTED TO PRINCIPAL OCCUPATION(S) DURING OTHER JANUARY 1, 2002 OFFICE PAST FIVE YEARS DIRECTORSHIPS -------------- ---------- ------------------- ------------ OFFICERS OF WANGER ADVISORS TRUST (CONTINUED): Bruce H. Lauer, 44, 1995 Chief operating officer, Liberty WAM since April 1995; None. Vice President, Secretary principal, WAM from January 2000 to September 29, 2000; and Treasurer vice president, treasurer and secretary,Liberty Acorn Trust; director, Wanger Investment Company plc and New Americas Small Cap Fund. Jean Loewenberg, 56, 2002 Group Senior Counsel, Fleet National Bank. None. Assistant Secretary Charles P. McQuaid, 48, 1994 Director of research, Liberty WAM since July 1992; principal, Liberty Senior Vice President WAM from July 1995 to September 29, 2000; trustee and senior Acorn vice president, Liberty Acorn Trust. Trust. Robert A. Mohn, 40, 1997 Analyst and portfolio manager, Liberty WAM since August None. Vice President 1992; principal, WAM from 1995 to September 29, 2000; vice president, Liberty Acorn Trust. Todd Narter, 37, 2001 Analyst and portfolio manager, Liberty WAM since June 1997; None. Vice President vice president, Liberty Acorn Trust; prior thereto, product manager for Teradyne (1990-1997). Christopher Olson, 38, 2001 Analyst and portfolio manager, Liberty WAM since January None. Vice President 2001; vice president, Liberty Acorn Trust; prior thereto, director and portfolio strategy analyst with UBS Asset Management/Brinson Partners. John H. Park, 34, 1998 Analyst and portfolio manager, Liberty WAM since July 1993; None. Vice President principal, WAM from 1998 to September 29, 2000; vice president, Liberty Acorn Trust. Vincent P. Pietropaolo, 37,2001 Vice president and counsel, Liberty Funds Group since None. Assistant Secretary December 1999; Associate, Morgan Lewis & Bockius, October 1998 to December 1999; product manager, Putnam Investments from April 1997 to October 1998; contracting attorney from May 1996 to April 1997. Joseph Turo, 34, 2002 Senior Counsel, FleetBoston Financial since August 1997; None. Assistant Secretary prior thereto; associate, Ropes & Gray. Leah J. Zell, 52, 1994 Analyst, and portfolio manager, Liberty WAM since July 1992; None. Vice President* vice president, Liberty Acorn Trust; director and managing member of trust committee, Chai Trust Company.
The address for Mr. Hasselbring is Four Wheaton Center, Suite 416, Wheaton, IL 60187. The address for Mr. Phelps is 222 E. Chestnut Street, Apt. 10-B, Chicago, IL 60611. The address for Ms. Werhane is 104 Falcon Drive, Charlottesville, VA 22901. The address for Messrs. Wanger, McQuaid, Kalina, Lauer, Mohn, Narter, Olson, Park, and Ms. Zell is Liberty Wanger Asset Management, L.P., 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606. The address for Connaughton, Jacobs, Pietropaolo, Loewenberg and Turo is Liberty Funds Distributor, Inc., One Financial Center, Boston, MA 02111. Wanger's Statement of Additional Information includes additional information about Wanger's trustees and officers. You may obtain a free copy of the Statement of Additional Information, or request any other information and discuss your questions about us, by writing or calling toll-free: Liberty Wanger Asset Management, L.P. Shareholder Services Group 227 West Monroe, Suite 3000 Chicago, IL 60606 (800) 4-WANGER (800-492-6437) www.wanger.com * Mr. Wanger and Ms. Zell are married to each other. 43 [art: squirrel] TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND CUSTODIAN Liberty Funds Services, Inc. P.O. Box 8081 Boston, Massachusetts 02266-8081 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 This report, including the 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. 44 [inside back cover] WANGER ADVISORS TRUST (8/02) 02/1603