-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D5lJMlixbZxe7YWDgbCvy0e5/mCqMu4av3H/od+hTs0TWoDwRjD+QMHIU5Gtviwj DkGtOuqHXjm8RfhEn6/gXg== 0000950131-97-005187.txt : 19970822 0000950131-97-005187.hdr.sgml : 19970822 ACCESSION NUMBER: 0000950131-97-005187 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970821 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WANGER ADVISORS TRUST CENTRAL INDEX KEY: 0000929521 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08748 FILM NUMBER: 97667203 BUSINESS ADDRESS: STREET 1: 227 WEST MONROE STREET STE 3000 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126349200 FORMER COMPANY: FORMER CONFORMED NAME: WANGER ADVISORS TRUT DATE OF NAME CHANGE: 19940902 N-30D 1 WANGER ADVISORS TRUST - 1997 SEMI-ANNUAL REPORT Wanger Advisors Trust 1997 Semi-Annual Report [SQUIRREL WANGER 97 LOGO] Wanger Advisors Trust 1997 Semi-Annual Report Contents 1 Squirrel Chatter 3 Funds at a Glance 4 Performance Review Wanger U.S. Small Cap 6 Performance Review Wanger International Small Cap 8 Statement of Investments Wanger U.S. Small Cap 12 Statement of Investments Wanger International Small Cap 16 Portfolio Diversification Wanger International Small Cap 17 Statements of Assets and Liabilities 18 Statements of Operations 19 Statements of Changes in Net Assets 20 Financial Highlights Wanger U.S. Small Cap 21 Financial Highlights Wanger International Small Cap 22 Notes to Financial Statements Wanger Asset Management, L.P., ("WAM") is one of the leading global small-cap equity managers in the U.S. with 27 years of small-cap investment experience. WAM manages over $6 billion in equities and is the investment adviser to Wanger U.S. Small Cap, Wanger International Small Cap, Acorn Fund, Acorn International and Acorn USA. WAM uses a unique style of catch- ing trends with small, attractively- priced niche companies. For more complete information about our funds including the Acorn Funds, fees and expenses, call WAM Brokerage Services, L.L.C., distributor, at 1-800-5WANGER for a prospectus. Read it carefully before you invest or send money. [SQUIRREL WANGER 97 LOGO] Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- [LOGO] Squirrel Chatter Mr. Wanger identified the investment concept of "downstream technology" in 1970, all the while wondering whether the idea had already run its course. 27 years later, he defined the idea for investors in his book, A Zebra in Lion Country: "Going downstream - investing in the businesses that will benefit from new technology rather than in the technology companies themselves - is often the smarter strategy." We thought our readers would find this excerpt from A Zebra in Lion Country interesting, as it shows how Mr. Wanger's 27-year-old investment philosophy still applies today. The Users, Not the Makers I seldom own the companies that develop the new technologies, however - the makers of the computers and the semiconductor chips that go into them. Semiconductors are what really make computers, cellular phones, fax machines, and much else possible. But Motorola and Intel have never been in our portfolio. Intel and Motorola have done well, but other semiconductor makers, such as Fairchild, failed at the game, and anyway, Intel's and Motorola's customers have made more money than they have. New products are dangerous, especially in the computer field, where obsolescence comes fast and technological breakthroughs bring price slashing every year. What I have always looked for instead are the downstream users of new technologies. I've bought the stocks of companies that buy, use, and exploit the computers and electronics to reduce costs, revitalize their businesses, and add functionality to their products. Even new industries emerge as people figure out ways to use these devices. (And some industries and enterprises can be made obsolete. I believe that the New York Stock Exchange, since we no longer need a hub to create a trading network, is an anachronism that is taking a very long time to die.) I may never have owned semiconductor companies, but I've made a considerable amount of money in cellular phone companies - LIN Broadcasting, Mobile Communications, and Telephone & Data Systems - that use the chips. I didn't buy VCR makers, but I have owned companies like Electronic Arts and Sierra On-line, which make those video games that keep kids away from useful activities. Television is also dependent on semiconductors, but broadcasting stations have made more profit than the entire semiconductor industry put together. There is no comparing the genius it takes to run a television station. But I'm afraid that when you compare profit margins, it just proves the point that in this world the stupid people can make all the money. Most of the folks running electronics companies are indeed geniuses, and they've got a building full of even smarter geniuses out back, working like crazy to invent new stuff. But they end up struggling; they have problems in the competitive world. There's usually some nerd in Austin or Aoyama who's a little bit ahead of them. The geniuses cancel each other out. Even if you invent a brand new sixteen-meg chip, you'll still be surrounded by competitors. But if you have the only channel that can show Home Improvement at 7 p.m., you have a monopoly. All you have to do to run a cable company is get a license from the city and be mean to your customers. Since the Industrial Revolution began, going downstream - investing in businesses that will benefit from new technology rather than investing in the technology companies themselves - has often proved the smarter strategy. The railroad, the product of the transforming technology of the steam locomotive, one of the greatest inventions in history, was obviously of supreme importance to the United States and its economy. But the makers of the locomotives, like Baldwin and American (continued) 1 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- [LOGO] Squirrel Chatter (continued) "One future downstream possibility has me worried. Some day you'll be able to go into a computer store and pay $80 for a "Portfolio Manager" program, and I'll be out of business." Locomotive Works, were not terribly profitable.The railroads themselves were moderately profitable for a while, but in the end most of them fared poorly or went broke. (Their capital came mostly from abroad, an international wealth transfer, a sort of Marshall Plan in reverse. The savings in English and Scottish trusts moved over here, and the net return to all those investors was probably zero.) Those who really made money out of the new technology were not the transportation people but those who bought real estate in Chicago in the 1880's and 1890's. As the railroad came in and created a city of 3 million people, land values skyrocketed. The railroads that were most successful were those that secured land grants from the government to build the tracks and thus owned some enormously valuable real estate. So the manufacturer who built the steam locomotive made $5, the tycoon who built the railroad made $50, and the land speculator who bought land that later became downtown Wichita made $500. Similarly, when jet planes - larger and faster than the props - came on the scene, they changed the airline business, but it wasn't the jet-engine makers General Electric, Pratt and Whitney, and Rolls-Royce that benefited most. In that instance it was the airlines that reaped the profits for a while; I know, because I did well in airline stocks back then, when the big carriers could actually make money. Now the airline industry is barely breaking even, and airline stocks are only speculations. But think of what the jet plane made possible! Also in the postwar era, air-conditioning changed the way we all live, but you didn't make much money investing in Carrier and the other makers. But downstream, you could have made a fortune, for air conditioners created the New South. In 1930 the population of Houston was six men and a dog, and the dog was dead. Houston was in a basically uninhabitable part of the world. But then came air conditioners, which made southern California, Texas, and Arizona boom areas. Phoenix is a thriving city, in spite of the fact that it gets to 116 degrees in the summer. Without air-conditioning it would still be a trading post. So Carrier made a moderate amount of money, but the big money came to the fellows who owned the land, built the tract houses, created the stores (like Phoenix's Goldwater's), and opened the restaurants. Recognizing a transforming technology and then investing downstream from it should be a key concept for any direct stock investor. From A Zebra in Lion Country by Ralph Wanger with Everett Mattlin. Copyright (C) 1997 by Ralph Wanger. Published by Simon & Schuster, New York, $25.00. Reprinted by permission. [PHOTO] Ralph Wanger President 2 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Funds at a Glance - -------------------------------------------------------- Wanger U.S. Small Cap Results to June 30, 1997 2nd qtr Last Last 6 months 12 months Wanger U.S. Small Cap 16.7% 12.3% 24.4% Russell 2000 16.2% 10.2% 16.3% S&P MidCap 400 14.7% 13.0% 23.3% S&P 500 17.5% 20.6% 34.7% Dow Jones 17.1% 20.1% 38.5% Net Asset Value per share as of 6/30/97 $18.62 The Russell 2000 is formed by taking 3,000 companies and then eliminating the largest 1,000 leaving a good small company index. The S&P MidCap 400 is a market value-weighted index of 400 stocks that are in the next tier down from the S&P 500. The S&P 500 is a broad market-weighted average, still blue chip dominated. The Dow Jones Industrial Average includes 30 large companies. All indices are unmanaged and include reinvested dividends. - -------------------------------------------------------- Wanger International Small Cap Results to June 30, 1997 2nd qtr Last Last 6 months 12 months Wanger Int'l Small Cap 6.6% 10.2% 13.9% EAFE 13.0% 11.2% 12.8% Lipper International Small Co. Funds Average 7.3% 10.4% 13.5% Lipper International Funds Average 11.1% 12.5% 16.5% Net Asset Value per share as of 6/30/97 $19.07 EAFE is Morgan Stanley's Europe, Australia and Far East Index, an index of companies throughout the world in proportion to world market capitalization, excluding the U.S. and Canada. The Lipper International Small Company Funds Average is calculated from the performance of a group of small company international funds. The Lipper International Funds Average is an average of all international funds tracked by Lipper Analytical Services. All indices are unmanaged and include reinvested dividends. - -------------------------------------------------------- Wanger U.S. Small Cap Top 5 Industries As a % of net assets, as of 6/30/97 Information 25.1% Energy/Minerals 18.8% Industrial Goods/Services 16.7% Finance 12.7% Health Care 11.6% - -------------------------------------------------------- Wanger International Small Cap Top 5 Countries As a % of net assets, as of 6/30/97 United Kingdom 17.0% Japan 13.2% Australia 6.0% Singapore 5.6% Sweden 5.5% - -------------------------------------------------------- Wanger U.S. Small Cap Top 10 Holdings HealthCare Compare 5.2% PPO Network CalEnergy 5.2% Power Plants C-Tec 4.1% Cable TV/Local Telephone Data Transmission 3.9% Data Services for Farmers Coast Savings 3.6% California Savings & Loan Wackenhut 3.2% Prison Management Tesoro Petroleum 3.2% Oil Refinery/Gas Reserves Kronos 3.2% Time Accounting Software & Clocks Applied Industrial 2.8% Distributes Industrial Components Host Marriott Services 2.7% Runs Airport Restaurants - -------------------------------------------------------- Wanger International Small Cap Top 10 Holdings Genting International 2.9% Cruise Line - Singapore Tyndall Australia 2.6% Money Management/ Insurance - Australia Kempen 2.5% Stock Brokerage/Investment Management - Netherlands TT Tieto 2.3% Computer Services/ Consulting - Finland Li and Fung 2.0% Sourcing of Consumer Goods - Hong Kong Euro Money 1.9% Publications Financial Publications/ Databases - United Kingdom Shinki 1.9% Corporate/Consumer Lending - Japan Venture Manufacturing 1.9% Contract Electronics Manufacturer - Singapore St James Place 1.8% Life Insurance - United Kingdom Vanda Systems 1.8% Systems Integrator - Hong Kong - -------------------------------------------------------- The funds' top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statements of Investments for complete lists of the funds' holdings, including those described under "Performance Review." Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Performance Review Exuberance reigned on Wall Street last quarter, and Wanger U.S. Small Cap joined in the parade. Your fund's 16.7% return was not quite up to the large-capped S&P 500's +17.5%, but better than the small-fried Russell 2000's +16.2%. Over the past year, your fund has gained 24.4%, better than nearly three quarters of all other variable annuity funds tracked by Lipper Analytical Services, Inc. This is based on the one-year total return ending 6/30/97 for all 1013 variable insurance funds. We nearly pitched a perfect game last quarter. Only one of our top 20 holdings (Respironics) fell in price, and merely 1/8 of a point at that. Our top five sluggers were Wackenhut, HealthCare Compare, Data Transmission, C-Tec and Kronos, each up 20-60% over the past three months. What propelled such strong returns? Not any extraordinary news events, not any outsized earnings increases, but simply the buying pressure from investors discovering and paying up for our companies' wonderful franchises. These newly enlightened investors figured out that Wackenhut manages safer, cheaper prisons than do state bureaucrats; HealthCare Compare has a one-of-a- kind national PPO health care network impossible to clone; Data Transmission's subscriber base is growing 20% a year; C-Tec is offering a prix fixe bundled cable, phone and internet service before any other cable guy or baby Bell; and Kronos's time-clock software is a crucial piece of the factory automation puzzle. Even after their recent run, none of these companies are household names, yet. We don't want to own yesterday's celebrity stocks, we want tomorrow's. We're stock market talent scouts, not autograph hounds. We will continue to build our portfolio of new and exciting small companies for you. [PHOTO] Robert Mohn Lead Portfolio Manager Wanger U.S. Small Cap 4 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- [SQUIRREL LOGO] Wanger U.S. Small Cap Results to June 30, 1997 - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Wanger U.S. Small Cap Total Return for Each Period May 3, 1995 through June 30, 1997 Wanger U.S. Small Cap $19,093 Russell 2000 $15,159 [GRAPH] Wanger U.S. Small Cap Wanger U.S. Small Cap Russell 2000 --------------------- ------------ 5/3/95 $10,000 $10,000 6/30/95 $10,770 $10,700 9/30/95 $12,060 $11,757 12/31/95 $11,600 $12,012 3/31/96 $13,297 $12,629 6/30/96 $15,351 $13,261 9/30/96 $15,792 $13,306 12/31/96 $17,004 $13,756 3/31/97 $16,366 $13,044 4/30/97 $16,355 $13,081 5/31/97 $17,986 $14,536 6/30/97 $19,093 $15,159 - -------------------------------------------------------------------------------- This graph compares the results of $10,000 invested in Wanger U.S. Small Cap on May 3,1995 (the date the Fund began operations) through June 30, 1997, with the Russell 2000 with dividends reinvested. The beginning date of the Russell 2000 is as of May 31, 1995. The performance data quoted is past performances 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. Average Annual Total Return 1 year: 24.4% Life: 34.9% 5 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Performance Review Your fund performed well in absolute terms during the first half of 1997 with a gain of 10.2%. However, while we would all be very happy to have our investments rise 10% every six months, you will note that the benchmarks we publish on page 3 of this report rose even more during the period, and that the red hot US market did even better than the international benchmarks. The underperformance of foreign stock markets relative to the US is explained by the fact that not all foreign markets followed the US bull, and that those which did (mainly the European markets) experienced currency weakness, which almost entirely offset the appreciation in local share prices. Adding insult to injury, small company shares in the larger foreign markets underperformed their large company brethren by a very substantial margin. For example, the UK FTSE index of large British company shares rose a respectable 12%, but the smaller companies managed only a measly 2% in the half. In France, the large caps beat the small caps by a score of 23% to 11% (but a 13% fall in the French Franc meant 10% and -2% returns in US $ terms), and in Japan the large caps rose 6% whereas the small caps actually declined 8%! In last year's annual report we emphasized that the relatively low volatility of the fund (which has continued in the first six months of 1997) is the result of extensive diversification by country and industry. The first half once again provided evidence of this diversification in that the five best and worst stocks came from eight different countries and nine different industries. The good news is that international small company stocks now appear to be priced more attractively relative to larger company stocks than at any time since this fund's inception. [PHOTO OF MARCEL HOUTZAGER] Marcel Houtzager Lead Portfolio Manager Wanger International Small Cap 6 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- [SQUIRREL LOGO] Wanger International Small Cap Results to June 30, 1997 - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Wanger International Small Cap Total Return for Each Period May 3, 1995 through June 30, 1997 Wanger International Small Cap $19,568 EAFE $12,558 [GRAPH] Wanger Int'l Small Cap Wanger Int'l Small Cap EAFE ---------------------- ---- 5/3/95 $10,000 $10,000 6/30/95 $10,970 $ 9,825 9/30/95 $12,910 $10,234 12/31/95 $13,450 $10,649 3/31/96 $15,499 $10,956 6/30/96 $17,183 $11,130 9/30/96 $17,023 $11,116 12/31/96 $17,755 $11,293 3/31/97 $18,357 $11,116 4/30/97 $18,204 $11,175 5/31/97 $18,983 $11,901 6/30/97 $19,568 $12,558 - -------------------------------------------------------------------------------- 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 30,1997, with Morgan Stanley's Europe, Australia and Far East Index (EAFE), with dividends reinvested. The beginning date of EAFE is as of May 31, 1995. The performance data quoted is past performances 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. Average Annual Total Return 1 year: 13.9% Life: 36.5% 7 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------- Number Value of Shares Common Stocks and Other Equity-Like Securities-93.4% Information -25.1% - --------------------------------------------------------------------------------- Broadcasting/CATV-4.1% 235,200 C-Tec (b) $ 8,202,600 Cable TV/Local Telephone - --------------------------------------------------------------------------------- Programming for CATV/TV/Satellites-10.6% 244,600 Data Transmission (b) 7,766,050 Data Services for Farmers 195,000 Gaylord Entertainment 4,497,187 Country & Western Cable Channels 193,100 United Video Satellite (b) 4,055,100 CATV & Satellite Dish Programming 118,000 Tele-Communications, Liberty Media Group (b) 2,802,500 CATV & Satellite Dish Programming 58,000 International Family Entertainment 1,993,750 Cable TV Programming - --------------------------------------------------------------------------------- Total 21,114,587 - --------------------------------------------------------------------------------- Mobile Communications-2.3% 184,500 COMARCO (b) 3,551,625 Wireless Network Testing 63,000 Centennial Cellular (b) 1,000,125 Cellular Franchises - --------------------------------------------------------------------------------- Total 4,551,750 - --------------------------------------------------------------------------------- Computer Software/Services-3.6% 306,400 Wonderware (b) 4,327,900 Industrial Control Software 69,500 CACI International, Cl. A (b) 1,059,875 Computer Software Systems 20,000 Compuware (b) 955,000 Computer Software & Services 29,200 BDM International (b) 671,600 Software Consulting 6,300 Analysts International 211,050 Contract Programming - --------------------------------------------------------------------------------- Total 7,225,425 - --------------------------------------------------------------------------------- Business Information-0.5% 49,000 American Business Information (b) $ 1,065,750 Provides Data on Small Businesses - --------------------------------------------------------------------------------- Contract Manufacturing-0.8% 38,200 ACT Manufacturing (b) 1,594,850 Contract Manufacturing - --------------------------------------------------------------------------------- Computer Systems-3.2% 232,000 Kronos (b) 6,380,000 Time Accounting Software & Clocks ================================================================================= Information-Total 50,134,962 Health Care-11.6% - --------------------------------------------------------------------------------- Medical Equipment -3.2% 210,000 Respironics (b) 4,436,250 Sleep Apnea Products 70,000 Kinetic Concepts 1,260,000 Hospital Beds 80,000 Cardiac Pathways (b) 720,000 Heart Surgery Devices - --------------------------------------------------------------------------------- Total 6,416,250 - --------------------------------------------------------------------------------- Services-8.4% 199,000 HealthCare Compare (b) 10,422,625 PPO Network 125,000 Lincare Holdings (b) 5,375,000 Home Health Care Services 74,900 United Payors & Providers (b) 992,425 Medical Claims Repricing - --------------------------------------------------------------------------------- Total 16,790,050 ================================================================================= Health Care-Total 23,206,300
See accompanying notes to financial statements. 8 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------- Number Value of Shares Consumer Goods/Services -6.7% - --------------------------------------------------------------------------------- Retail-3.5% 458,400 Host Marriott Services (b) $ 5,386,200 Runs Airport Restaurants 60,000 Borders Group (b) 1,447,500 Bookstores - --------------------------------------------------------------------------------- Total 6,833,700 - --------------------------------------------------------------------------------- Entertainment/Leisure-3.0% 112,500 Royal Caribbean Cruises 3,930,468 Cruises to Caribbean & Alaska 50,400 Showboat 878,850 Casinos 42,000 Rio Hotel & Casino (b) 632,625 Casino & Hotel 115,200 Monarch Casino & Resort (b) 460,800 Casino & Hotel - --------------------------------------------------------------------------------- Total 5,902,743 - --------------------------------------------------------------------------------- Manufacturers-0.3% 14,000 Newell 554,750 Household Goods ================================================================================= Consumer Goods/Services-Total 13,291,193 Finance-12.7% - --------------------------------------------------------------------------------- Banks/Savings & Loans-7.3% 160,000 Coast Savings (b) 7,270,000 California Savings & Loan 60,000 Texas Regional Bancshares 2,520,000 TexMex Bank 67,500 Peoples Bank Bridgeport 1,746,562 Consumer Finance 106,000 Imperial Thrift & Loan (b) 1,722,500 California Thrift 80,000 Commonwealth Bancorp 1,310,000 Pennsylvania Savings & Loan - --------------------------------------------------------------------------------- Total 14,569,062 - --------------------------------------------------------------------------------- Insurance-2.9% 112,100 Acceptance Insurance (b) $ 2,550,275 Crop Insurance 64,000 Penn Treaty American (b) 1,960,000 Nursing Home Insurance 43,000 Leucadia National 1,330,312 Insurance Holding Company - --------------------------------------------------------------------------------- Total 5,840,587 - --------------------------------------------------------------------------------- Money Management-2.3% 125,000 Baker Fentress 2,468,750 Closed-End Investment Company 68,000 SEI Investments 1,640,500 Mutual Fund Administration 65,000 Phoenix Duff & Phelps 479,375 Money Management - --------------------------------------------------------------------------------- Total 4,588,625 - --------------------------------------------------------------------------------- Credit Cards-0.2% 10,000 National Data 433,125 Credit Card & Medical Claims Processor ================================================================================= Finance-Total 25,431,399
See accompanying notes to financial statements. 9
Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments June 30, 1997 (Unaudited) - --------------------------------------------------------------------- Number Value of Shares Industrial Goods/Services-16.7% - --------------------------------------------------------------------- Machinery-3.7% 154,800 Applied Industrial Technologies $5,572,800 Distributes Industrial Components 117,450 Farr (b) 1,835,156 Filters - --------------------------------------------------------------------- Total 7,407,956 - --------------------------------------------------------------------- Steel-6.6% 115,000 Schnitzer Steel 3,421,250 Scrap Steel Processor 176,000 Atchison Casting (b) 2,926,000 Steel Foundries 87,000 Gibraltar Steel (b) 2,001,000 Steel Processing 73,600 Steel Dynamics (b) 1,840,000 Steel Mini-Mill 91,000 Worthington Industries 1,666,437 Steel Processing 105,000 Universal Stainless (b) 1,365,000 Semi-Finished Stainless Steel Producer - --------------------------------------------------------------------- Total 13,219,687 - --------------------------------------------------------------------- Industrial Suppliers-1.1% 115,000 Lilly Industries, Cl. A 2,314,375 Industrial Coatings - --------------------------------------------------------------------- Services-5.2% 323,300 Wackenhut, Cl. B 6,445,793 Prison Management 100,000 World Color Press (b) 2,375,000 Printing 50,000 Hub Group (b) 1,506,250 Freight Forwarder - --------------------------------------------------------------------- Total 10,327,043 - --------------------------------------------------------------------- Industrial Goods/Services-Total 33,269,061 - --------------------------------------------------------------------- Energy/Minerals-18.8% - --------------------------------------------------------------------- Independent Power-5.9% 272,000 CalEnergy (b) $10,336,000 Power Plants 19,000 AES Corporation (b) 1,344,250 Power Plants - --------------------------------------------------------------------- Total 11,680,250 - --------------------------------------------------------------------- Oil/Gas Producers-5.1% 432,300 Tesoro Petroleum (b) 6,403,443 Oil Refinery/Gas Reserves 126,900 Seagull Energy (b) 2,220,750 Oil & Gas Producer 41,300 United Meridian (b) 1,239,000 Oil & Gas Producer 100,000 Tipperary (b) 400,000 Oil & Gas Producer - --------------------------------------------------------------------- Total 10,263,193 - --------------------------------------------------------------------- Distribution/Marketing/Refining-3.5% 163,000 United Cities Natural Gas 3,830,500 Natural Gas Distributor 181,100 NGC 2,795,736 Gas Processing/Marketing 18,000 Atmos Energy 432,000 Natural Gas Distributor - --------------------------------------------------------------------- Total 7,058,236 - --------------------------------------------------------------------- Oil Services-4.3% 46,700 Atwood Oceanics (b) 3,128,900 Offshore Drilling 211,000 GeoScience (b) 2,769,375 Offshore Seismic Equipment 100,300 J Ray McDermott (b) 2,708,100 Offshore Construction - --------------------------------------------------------------------- Total 8,606,375 - --------------------------------------------------------------------- Energy/Minerals-Total 37,608,054
See accompanying notes to financial statements. 10 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments June 30, 1997 (Unaudited) - ---------------------------------------------------------------- Principal Amount or Value Number of Shares Real Estate-1.9% - ---------------------------------------------------------------- 54,800 Forest City Enterprises Cl. A $2,616,700 Shopping Centers 80,000 Cornerstone Properties 1,230,000 Downtown Office Buildings - ---------------------------------------------------------------- Real Estate-Total 3,846,700 Total Common Stocks and Other Equity-Like Securities-93.4% 186,787,669 - ---------------------------------------------------------------- (Cost: $149,968,929) Short-Term Obligation-6.5% 12,947,000 $12,947,000 State Street Bank Repurchase Agreement 5.00% 07/01/97; 6/30/97 Agreement Collateralized by U.S. Treasury Notes - ---------------------------------------------------------------- (Cost: $12,947,000) Total Investments-99.9% 199,734,669 - ---------------------------------------------------------------- (Cost: $162,915,929) Cash and Other Assets Less Liabilities-0.1% 180,800 - ---------------------------------------------------------------- Total Net Assets-100% $199,915,469 - ---------------------------------------------------------------- Notes to Statement of Investments: (a) At June 30, 1997 for federal income tax purposes cost of investments was $162,915,929 and net unrealized appreciation was $36,818,740 consisting of gross unrealized appreciation of $38,144,789 and gross unrealized depreciation of $1,326,049. (b) Non-income producing security. See accompanying notes to financial statements. 11 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments June 30, 1997 (Unaudited) - -------------------------------------------------------------------------- Number Value of Shares Common Stocks and Other Equity-Like Securities-96.2% Europe-43.4% - -------------------------------------------------------------------------- Germany/Austria-4.0% 10,000 Rhoen Klinikum $1,319,866 1,200 Rhoen Klinikum Pfd. 153,563 Hospital Management 9,200 Schaltbau 1,425,456 Components Supplier to the Rail Industry 12,000 KTM Motorradholding (b) 822,118 Off-Road Motorcycles (Austria) 10,000 Schoeller-Bleckmann (b) 812,087 Oilfield Services (Austria) 2,500 Cewe Color Holdings 652,762 Photographic Developing/Printing - -------------------------------------------------------------------------- Total 5,185,852 - -------------------------------------------------------------------------- Denmark-0.5% 5,000 Kompan International 603,227 Playground Equipment - -------------------------------------------------------------------------- Netherlands-2.5% 90,000 Kempen 3,293,523 Stock Brokerage/Investment Management - -------------------------------------------------------------------------- Finland-3.1% 34,000 TT Tieto, Cl. B 2,945,593 Computer Services/Consulting 99,200 Talentum 1,126,795 Trade Journals - -------------------------------------------------------------------------- Total 4,072,388 - -------------------------------------------------------------------------- Norway-0.4% 62,500 P4 Radio Helo Norge (b) 529,299 Commercial Radio Station - -------------------------------------------------------------------------- Sweden-5.5% 106,000 Getinge Industrier 1,878,168 Sterilization & Disinfection Equipment 50,000 Esselte, Series A 1,144,593 Office Supplies & Related Equipment 78,000 MTV Production (b) 635,540 Television Production Company 78,300 Caran 587,351 Engineering Consulting 10,200 Scala International (b) 580,444 Accounting Software 50,000 Elanders (b) 565,830 Printer 20,000 Tryckindustri 475,944 Printer 75,000 Micronic Laser Systems (b) 368,598 Laser Equipment 10,500 Pricer, Cl. B (b) 361,226 Electronic Shelf Labels for Supermarkets 30,000 Mandator (b) 343,378 Computer Services/Consulting 24,000 Oresa Ventures (b) 223,490 Eastern European Venture Capital - -------------------------------------------------------------------------- Total 7,164,562 - -------------------------------------------------------------------------- France-2.0% 12,000 Axime Ex Segin (b) 1,420,541 Computer Services/Consulting 10,000 Fininfo 1,175,268 Data Feeds for French Banks & Brokers - -------------------------------------------------------------------------- Total 2,595,809 - -------------------------------------------------------------------------- United Kingdom/Ireland-17.0% 100,000 Euro Money Publications 2,504,772 Financial Publications & Databases 1,100,000 St James Place 2,398,257 Life Insurance 3,000,000 Premier Oil (b) 2,309,217 Oil & Gas Producer 63,000 Oresa 2,097,018 Natural Cosmetics Sold Door-to-Door 480,000 Medeva 2,049,086 Drugs for Hyperactive Children 85,000 Oriflame International 1,493,293 Natural Cosmetics Sold Door-to-Door
See accompanying notes to financial statements. 12
Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap - -------------------------------------------------------------------------------- Number Value of Shares - -------------------------------------------------------------------------------- United Kingdom/Ireland-17.0% (cont.) 200,000 Seton Healthcare Group $ 1,436,291 Pharmaceuticals 160,000 Edinburgh Fund Managers 1,255,548 Investment Management 775,000 Aberdeen Trust 1,180,197 Money Management 2,000,000 Electronics Boutique (b) 1,115,081 Videogame/Computer Software Stores 240,000 Dorling Kindersley 1,024,543 Reference Books & CD-ROMs 40,000 NTL (b) 995,000 Cable TV & Telephone System 60,000 Vosper Thornycroft 761,417 Naval Shipbuilding 58,500 Serco Group 685,425 Facilities Management 65,000 Planning Sciences (b) 373,756 Database & Business Intelligence Software 170,000 Tunstall 370,639 "I've fallen and I can't get up" monitors - -------------------------------------------------------------------------------- Total 22,049,540 - -------------------------------------------------------------------------------- Portugal-1.0% 39,200 Investec (b) 1,337,737 Sports Newspaper - -------------------------------------------------------------------------------- Switzerland-1.4% 3,000 Societe Generale d'Affichage 1,154,400 Billboard Advertising 1,400 Phoenix Mecano 729,817 Electrical Components Manufacturer - -------------------------------------------------------------------------------- Total 1,884,217 - -------------------------------------------------------------------------------- Hungary-0.9% 40,000 Cofinec (b) 1,105,000 Consumer Goods Packaging - -------------------------------------------------------------------------------- Italy/Greece-5.1% 232,500 Athens Medical Center 1,867,827 Hospitals (Greece)
- -------------------------------------------------------------------------------- Statement of Investments June 30, 1997 (Unaudited) - -------------------------------------------------------------------------------- Number Value of Shares - -------------------------------------------------------------------------------- Italy/Greece-5.1% (cont.) 100,000 Pininfarina $ 1,660,299 Car Design 40,000 Cellular Communications International (b) 1,340,000 Mobile Communications 75,000 Banca Pop Commercia e Industria 905,819 Regional Bank 500,000 Autogrill Finanziaria (b) 836,027 Tollway Restaurants - -------------------------------------------------------------------------------- Total 6,609,972 ================================================================================ Europe-Total 56,431,126 Asia-32.3% - -------------------------------------------------------------------------------- Hong Kong-5.4% 2,300,000 Li and Fung 2,582,935 Sourcing of Consumer Goods 4,994,000 Vanda Systems 2,320,691 Systems Integrator 4,900,000 Golden Harvest Entertainment 1,214,405 Movie Distribution & Exhibition 3,000,000 Regent Pacific 842,263 Money Management - -------------------------------------------------------------------------------- Total 6,960,294 - -------------------------------------------------------------------------------- Japan-13.2% 100,040 Shinki 2,482,859 Corporate & Consumer Lending 120,300 Belluna 1,576,946 Catalog Sales 39,000 Hokuto 1,380,319 Mushroom Grower 40,000 People 1,363,278 Sports Clubs 85,000 Tecmo 1,337,061 Commercial Video Games 50,000 Nihon Jumbo 1,214,716 Photo Processing Lab 25,000 Tiemco 1,114,218 Fishing Equipment 30,000 Konami 1,122,083 Entertainment Software/Hardware
See accompanying notes to financial statements. 13 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments June 30, 1997 (Unaudited)
- ---------------------------------------------------------------------------- Number Value of Shares - ---------------------------------------------------------------------------- Japan--13.2% (cont.) 20,300 HIS $1,073,276 Travel Agent 50,000 Arrk 1,070,523 Industrial Modeling 35,000 NuSkin Asia Pacific (b) 927,500 Network Sales 61,920 Central Uni 811,675 Health Care/Medical Equipment 10,000 Ryohin Keikaku 790,002 Designer & Retailer of Muji Brand Specialty Consumer Goods 12,600 Noritsu Koki 622,127 Photo Processing Lab Manufacturer 10,000 Mars Engineering 228,967 150 Mars Engineering Warrants 1/25/00 2,187 Gaming Systems & Machinery - ---------------------------------------------------------------------------- Total 17,127,737 - ---------------------------------------------------------------------------- Malaysia--0.7% 159,500 Malaysian Assurance Alliance 928,942 Insurance - ---------------------------------------------------------------------------- Indonesia/Philippines--3.4% 3,236,700 Int'l Container Terminal Services (b) 1,656,636 Container Handling Terminals & Port Management (Philippines) 900,000 Komatsu Indonesia 1,406,539 Industrial Equipment Machines 3,700,000 Mondragon International (b) 1,304,55 Casinos/Resorts (Philippines) - ---------------------------------------------------------------------------- Total 4,367,770 - ---------------------------------------------------------------------------- India--0.7% 60,000 IS Himalaya Fund (b) 906,000 Closed-End Fund - ---------------------------------------------------------------------------- Korea--2.6% 9,135 S1 Corporation 1,831,114 Alarm Monitoring 55,000 Dongbu Fire & Marine Insurance (b) 1,597,973 Non-Life Insurance - ---------------------------------------------------------------------------- Total 3,429,087 - ---------------------------------------------------------------------------- Singapore--5.6% 1,277,400 Genting International 3,768,331 Cruise Line 750,000 Venture Manufacturing 2,444,397 Contract Electronics Manufacturer 2,062,000 Omni Industries (b) 1,059,987 Contract Electronics Manufacturer - ---------------------------------------------------------------------------- Total 7,272,715 - ---------------------------------------------------------------------------- Thailand--0.7% 745,600 Shinawatra Satellite 899,440 Satellite Leasing ============================================================================ Asia--Total 41,891,985 Latin America--8.0% - ---------------------------------------------------------------------------- Mexico--2.0% 417,000 Nadro, Series L 1,417,957 Pharmaceutical Distribution 87,000 Grupo Radio Centro 1,022,250 Radio Stations & Networks 35,000 Corp Interamericana de Entretenimiento (b) 149,591 Management of Live Entertainment - ---------------------------------------------------------------------------- Total 2,589,798 - ---------------------------------------------------------------------------- Brazil/Chile--2.9% 120,000 Elevadores Atlas 1,563,254 Elevator Services 20,000 Genesis Chile Fund 1,005,000 Closed-End Fund (Chile) 29,500 Bompreco 818,625 Supermarket Chain 550,000 Braziian Smaller Companies Warrants 409,750 Closed-End Fund - ---------------------------------------------------------------------------- Total 3,796,629
14 See accompanying notes to financial statements. Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments June 30, 1997 (Unaudited)
- ------------------------------------------------------------------- Number Value of Shares - ------------------------------------------------------------------- Argentina-3.1% 123,300 Patagonia $ 1,812,691 Supermarkets 500,000 Siderca 1,295,129 Steel Pipe Producer 412,000 Cresud (b) 918,852 Grain & Cattle Farms - ------------------------------------------------------------------- Total 4,026,672 =================================================================== Latin America-Total 10,413,099 Other Countries-12.5% - ------------------------------------------------------------------- Australia-6.0% 2,000,000 Tyndall Australia 3,371,412 Money Management & Insurance 1,000,000 Australia Hospital Care 1,723,160 Hospital Management 450,000 Anaconda Nickel (b) 1,264,275 Nickel Mining 100,000 Hudson Conway (b) 1,000,183 Casino Managers 88,450 PetSec Energy (b) 400,913 Oil & Gas Producer - ------------------------------------------------------------------- Total 7,759,943 - ------------------------------------------------------------------- Israel-1.4% 70,100 Blue Square Israel (b) 1,209,225 Supermarkets & Department Stores 56,100 ZAG Industries (b) 575,025 Plastic Hardwares - ------------------------------------------------------------------- Total 1,784,250 - ------------------------------------------------------------------- Canada-4.3% 70,000 Shaw Industries 1,778,414 Oil Field Services 140,000 Ranger Oil 1,303,750 Oil & Gas Producer 76,000 Milltronics (b) 936,503 Industrial Measurement Instruments - ------------------------------------------------------------------- Principal Amount or Value Number of Shares - ------------------------------------------------------------------- Canada-4.3% (cont.) 316,500 Pan East Petroleum (b) $ 825,892 Oil & Gas Producer 85,000 Club Monaco (b) 754,747 Speciality Apparel & Accessories - ------------------------------------------------------------------- Total 5,599,306 - ------------------------------------------------------------------- South Africa-0.8% 200,000 Energy Africa (b) 1,036,269 Oil & Gas Producer =================================================================== Other-Total 16,179,768 Total Common Stocks and Other Equity-Like Securities-96.2% 124,915,978 - ------------------------------------------------------------------- (Cost: $109,472,124) Short-Term Obligation-4.7% 6,129,000 $6,129,000 State Street Bank Repurchase Agreement 5.00% 7/01/97; 6/30/97 Agreement Collateralized by U.S. Treasury Notes - ------------------------------------------------------------------- (Cost: $6,129,000) Total Investments-100.9% 131,044,978 - ------------------------------------------------------------------- (Cost: $115,601,124) Cash and Other Assets Less Liabilities-(0.9%) (1,169,102) - ------------------------------------------------------------------- Total Net Assets-100% $129,875,876
- ------------------------------------------------------------------- Notes to Statement of Investments: (a) At June 30, 1997 for federal income tax purposes cost of investments was $115,789,080 and net unrealized appreciation was $15,255,898 consisting of gross unrealized appreciation of $23,430,383 and gross unrealized depreciation of $8,174,485. (b) Non-income producing security. See accompanying notes to financial statements. 15 Wanger Advisors Trust 1997 Semi-Annual Report ================================================================================ Wanger International Small Cap Portfolio Diversification June 30, 1997 (Unaudited)
At June 30, 1997, the Fund's portfolio of investments as a percentage of net assets was diversified as follows: Value Percent ====================================================== Information Software/Services $11,103,089 8.6% Broadcasting/CATV 4,519,826 3.5 Distribution 3,529,315 2.7 Mobile Communications 2,239,440 1.7 Consumer Electronics 2,066,878 1.6 Computer Systems 1,059,987 0.8 Equipment 368,598 0.3 - ------------------------------------------------------ Total 24,887,133 19.2 ====================================================== Health Care Biotechnology/Drug Delivery 4,903,334 3.8 Services 4,131,258 3.2 Equipment 2,689,843 2.1 Hospital/Laboratory Supplies 1,723,160 1.3 - ------------------------------------------------------ Total 13,447,595 10.4 ====================================================== Consumer Goods/Services Retail 16,354,863 12.6 Entertainment/Leisure 9,503,635 7.3 Manufacturers 7,366,586 5.7 Food 3,135,198 2.4 Recreational Vehicles 822,118 0.6 - ------------------------------------------------------ Total 37,182,400 28.6 ====================================================== Finance Money Management 14,885,440 11.5 Insurance 2,526,915 1.9 Banks 905,819 0.7 Other 4,588,825 3.5 - ------------------------------------------------------ Total 22,906,999 17.6 ====================================================== Industrial Goods/Services Services 13,650,907 10.5 Machinery 1,406,539 1.1 Steel 761,417 0.6 - ------------------------------------------------------ Total 15,818,863 12.2 ====================================================== Energy/Minerals Oil/Gas Producers 5,876,041 4.5 Oil Services 2,107,216 1.6 Mining 1,264,275 1.0 - ------------------------------------------------------ Total 9,247,532 7.1 ====================================================== Transportation 1,425,456 1.1 ====================================================== Total Common Stocks and Other Equity-Like Securities 124,915,978 96.2 ====================================================== Short-Term Obligations 6,129,000 4.7 ====================================================== Cash and Other Assets less Liabilities (1,169,102) (0.9) ====================================================== Net Assets $129,875,876 100.0%
See accompanying notes to financial statements. 16
Wanger Advisors Trust 1997 Semi-Annual Report =============================================================================================================================== Statements of Assets and Liabilities June 30, 1997 (Unaudited) Wanger U.S. Wanger International Small Cap Small Cap =============================================================================================================================== Assets Investments, at value (cost: Wanger U.S. Small Cap $162,915,929; $199,734,669 $131,044,978 Wanger International Small Cap $115,601,124) Cash 981 627,022 Organization costs 56,735 56,735 Receivable for: Securities sold 850,358 300,400 Fund shares sold 509,961 328,129 Dividends and interest 40,725 300,227 Other assets 1,735 1,723 - ------------------------------------------------------------------------------------------------------------------------------- Total assets 201,195,164 132,659,214 Liabilities and Net Assets Payable for: Securities purchased 664,647 1,928,057 Fund shares redeemed 522,244 730,062 Amount owed to advisor 56,960 56,742 Other 35,844 68,477 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities 1,279,695 2,783,338 - ------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Fund shares outstanding $199,915,469 $129,875,876 =============================================================================================================================== Fund shares outstanding 10,733,961 6,811,524 =============================================================================================================================== Pricing of Shares Net asset value, offering price and redemption price per share $18.62 $19.07 =============================================================================================================================== Analysis of Net Assets Paid-in capital $159,357,460 $111,243,576 Undistributed net realized gain on sales of investments and foreign currency transactions 3,894,567 3,094,271 Net unrealized appreciation of investments and foreign currencies (net of unrealized PFIC gains of $187,956 for Wanger International Small Cap) 36,818,740 15,258,756 Net investment income (loss) (155,298) 279,273 - ------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Fund shares outstanding $199,915,469 $129,875,876 ===============================================================================================================================
See accompanying notes to financial statements. 17
Wanger Advisors Trust 1997 Semi-Annual Report - ---------------------------------------------------------------------------------------------------------------------------------- Statements of Operations For the Six Months Ended June 30, 1997 (Unaudited) Wanger U.S. Wanger International Small Cap Small Cap ========================================================================================================================= Investment Income: Dividends (net of foreign taxes of $105,009 for Wanger International Small Cap) $396,581 $1,026,335 Interest 296,431 140,936 - ------------------------------------------------------------------------------------------------------------------------- Total investment income 693,012 1,167,271 ========================================================================================================================= Expenses: Investment advisory 771,098 697,099 Custodian 15,609 113,701 Legal and audit 33,374 33,814 Reports to shareholders 11,826 10,726 Amortization of organization costs 9,906 9,906 Transfer agent 9,593 9,593 Trustees 8,001 8,025 Insurance 3,408 3,410 Other 1,045 1,724 - ------------------------------------------------------------------------------------------------------------------------- Total expenses 863,860 887,998 Less custodian fees paid indirectly (15,550) - - ------------------------------------------------------------------------------------------------------------------------- Net expenses 848,310 887,998 ========================================================================================================================= Net investment income (loss) (155,298) 279,273 Net realized and unrealized gain on investments: Net realized gain on sales of investments 3,894,637 3,094,338 Net change in unrealized appreciation 17,357,008 7,442,343 - ------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 21,251,645 10,536,681 - ------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $21,096,347 $10,815,954 ========================================================================================================================= See accompanying notes to financial statements.
18
Wagner Advisors Trust 1997 Semi-Annual Report - --------------------------------------------------------------------------------------------------------------------------- Statements of Changes in Net Assets (Unaudited) ----------------------------------------------------------------------------------- Wanger U.S. Small Cap Wanger International Small Cap Six months ended Year ended Six months ended Year ended June 30, 1997 December 31, 1996 June 30, 1997 December 31, 1996 - --------------------------------------------------------------------------------------------------------------------------- From operations: Net investment income (loss) ($155,298) ($286,925) $279,273 ($272,469) Net realized gain on sales of investments 3,894,637 3,926,442 3,094,338 2,570,609 Net change in unrealized appreciation 17,357,008 19,022,289 7,442,343 6,894,415 - --------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting 21,096,347 22,661,806 10,815,954 9,192,555 from operations Distributions to shareholders from: Net investment income - - - (6,530) Net realized gain (3,530,225) (66,519) (2,453,255) (52,334) - --------------------------------------------------------------------------------------------------------------------------- Total distributions to shareholders (3,530,225) (66,519) (2,453,255) (58,864) From Fund share transactions: Reinvestment of dividends and capital gain distributions 3,530,225 66,519 2,453,255 58,864 Proceeds from other shares sold 53,233,183 91,019,446 38,496,843 67,872,674 - --------------------------------------------------------------------------------------------------------------------------- 56,763,408 91,085,965 40,950,098 67,931,538 Payments for shares redeemed (3,371,972) (6,626,877) (4,292,003) (3,579,071) - --------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from Fund share transactions 53,391,436 84,459,088 36,658,095 64,352,467 - --------------------------------------------------------------------------------------------------------------------------- Total increase in net assets 70,957,558 107,054,375 45,020,794 73,486,158 =========================================================================================================================== Net assets: Beginning of period 128,957,911 21,903,536 84,855,082 11,368,924 - --------------------------------------------------------------------------------------------------------------------------- End of period (a) $199,915,469 $128,957,911 $129,875,876 $84,855,082 ===========================================================================================================================
(a) Includes accumulated net investment income (loss) of ($155,298) and $279,273 at June 30, 1997 for Wanger U.S. Small Cap and Wanger International Small Cap, respectively. See accompanying notes to financial statements. 19
Wagner Advisors Trust 1997 Semi-Annual Report - --------------------------------------------------------------------------------------------------------------------------- Wanger U.S. Small Cap Financial Highlights (Unaudited) Six months ended Year ended May 3, 1995 through June 30, 1997 December 31, 1996 December 31, 1995 - -------------------------------------------------------------------------------------------------------------------------- Net Asset Value, beginning of period $16.97 $11.60 $10.00 Income From Investment Operations Net investment loss (c) (.01) (.06) (.05) Net realized and unrealized gain on investments 2.05 5.46 1.65 - -------------------------------------------------------------------------------------------------------------------------- Total from investment operations 2.04 5.40 1.60 Less Distributions Dividends from net investment income - - - Distributions from net realized gain (.39) (.03) - - -------------------------------------------------------------------------------------------------------------------------- Total distributions (.39) (.03) - Net Asset Value, end of period $18.62 $16.97 $11.60 - -------------------------------------------------------------------------------------------------------------------------- Total Return 12.28% 46.59% 16.00% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (b) 1.09%* 1.21% 2.08%* Ratio of net investment income (loss) to average net assets(b) (.20) (.41) (1.44) Portfolio turnover rate 31%* 46% 59%* Net assets at end of period $199,915,469 $128,957,911 $21,903,536 The average commissions paid per share on stock transactions for the six months ended June 30, 1997 and the year ended December 31, 1996 was $.0574 and $.0581, respectively. - --------------------------------------------------------------------------------------------------------------------------
*Annualized (a) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects gross custodian fees. This ratio net of custodian fees paid indirectly would have been 1.07% for the six months ended June 30, 1997, 1.19% for the year ended December 31, 1996 and 2.00% for the period ended December 31, 1995. (b) The Fund was reimbursed by the Advisor for certain expenses from May 3, 1995 through December 31, 1995. Without the reimbursement, the ratio of expenses to average net assets and the ratio of net investment income to average net assets for the period ended December 31, 1996 would have been 2.35% and (1.71%), respectively. (c) Net investment loss per share for the six months ended June 30, 1997 and the year ended December 31, 1996 was based upon the average shares outstanding during the period. See accompanying notes to financial statements. 20 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Financial Highlights (Unaudited)
Six months ended Year ended May 3, 1995 through June 30, 1997 December 31, 1996 December 31, 1995 ================================================================================================================================ Net Asset Value, beginning of period $17.71 $13.45 $10.00 Income From Investment Operations Net investment income (loss) (c) .05 (.09) (.03) Net realized and unrealized gain on investments 1.73 4.38 3.48 - --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.78 4.29 3.45 Less Distributions Dividends from net investment income - - - Distributions from net realized gain (.42) (.03) - - --------------------------------------------------------------------------------------------------------------------------------- Total distributions (.42) (.03) - Net Asset Value, end of period $19.07 $17.71 $13.45 ================================================================================================================================= Total Return 10.21% 32.01% 34.50% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (b) 1.64% 1.79% 2.32% Ratio of net investment income (loss) to average net assets (b) .52% (.56%) (.81%)* Portfolio turnover rate 38%* 50% 14%* Net assets at end of period $129,875,876 $84,855,082 $11,368,924 The average commissions paid per share on stock transactions for the six months ended June 30, 1997 and for the year ended December 31, 1996 was $.0096 and $.0130, respectively. - -------------------------------------------------------------------------------------------------------------------------------- *Annualized
(a) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects gross custodian fees. This ratio net of custodian fees paid indirectly would have been 1.75% for the year ended December 31, 1996 and 2.00% for the period ended December 31, 1995. (b) The Fund was reimbursed by the Advisor for certain expenses from May 3, 1995 through December 31, 1995. Without the reimbursement, the ratio of expenses to average net assets and the ratio of net investment income to average net assets for the period ended December 31, 1995 would have been 4.20% and (2.69%), respectively. (c) Net investment income (loss) per share for the six months ended June 30, 1997 and the year ended December 31, 1996 was based upon the average shares outstanding during the period. See accompanying notes to financial statements. 21 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- Notes to Financial Statements (Unaudited) 1. Nature of Operations Wanger U.S. Small Cap and Wanger International Small Cap ("the Funds") are series of Wanger Advisors Trust ("the Trust"), an open-end management investment company organized as a Massachusetts business trust. The investment objective of each Fund is to seek long-term growth of capital. The Funds are available only for allocation to certain life insurance company separate accounts established for the purpose of funding qualified and non-qualified variable annuity contracts, and may also be offered directly to certain types of pension plans and retirement arrangements. 2. Significant Accounting Policies Security valuation Investments are stated at current value. Securities traded on securities exchanges or in over-the-counter markets in which transaction prices are reported are valued at the last sales price at the time of valuation. Securities for which there are no reported sales on the valuation date are valued at the mean of the latest bid and ask quotation or, if there is no ask quotation, at the most recent bid quotation. Money market instruments having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis. Securities for which quotations are not readily available and any other assets are valued as determined in good faith by the Board of Trustees. Foreign currency translations Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales of investments and dividend and interest income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The gain or loss resulting from changes in foreign exchange rates is included with net realized and unrealized gain or loss from investments, as appropriate. Security transactions and investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the information is available to the Fund. Interest income is recorded on the accrual basis and includes amortization of discounts on money market instruments and on long-term debt instruments when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. 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's shares outstanding. Custodian fees Custodian fees are reduced based on each Fund's cash balances maintained with the custodian. This presentation does not affect the determination of net investment income. Federal income taxes, dividends and distributions to shareholders The Funds have complied with the special provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distribute all of their taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Wanger International Small Cap has elected to mark-to-market its investments in Passive Foreign Investment Companies ("PFICS") for income tax purposes. In accordance with this election, the Fund recognizes net unrealized appreciation on PFICS as ordinary income for federal income tax purposes. Cumulative net unrealized appreciation at June 30, 1997 amounted to $187,956. Dividends and distributions payable to its shareholders are recorded by each Fund on the ex-dividend date. 22 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- [WANGER LOGO] Notes to Financial Statements (Unaudited) 3. Transaction with Affiliates The Funds' investment advisor, Wanger Asset Management, L.P., ("WAM") furnishes continuing investment supervision to the Funds and is responsible for overall management of the Funds' business affairs. Each Fund pays WAM a monthly advisory fee based upon average daily net assets at the following rates:
Wanger U.S. Wanger International Small Cap Small Cap - -------------------------------------------------------------------- Average Daily Net Assets: For the first $100 million 1.00% 1.30% Next $150 million .95% 1.20% In excess of $250 million .90% 1.10% - --------------------------------------------------------------------
The investment advisory agreement also provides that WAM will reimburse the Funds to the extent that ordinary operating expenses (computed based on net custodian fees) exceed 1.50% for Wanger U.S. and 1.90% for Wanger International Small Cap, of average net assets. WAM was not required to reimburse the Funds under these agreements for the six months ended June 30, 1997. Certain officers and trustees of the Trust are also principals of WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with WAM. Wanger U.S. Small Cap and Wanger International Small Cap incurred trustees' fees and expenses of $7,950 each in 1997 to trustees not affiliated with WAM. WAM advanced $100,000 in connection with the organization and initial registration of the Fund. These costs are being amortized and reimbursed to WAM over the period May, 1995 through April, 2000. WAM Brokerage Services, L.L.C., a wholly-owned subsidiary of WAM, is the distributor of each Fund's shares and receives no compensation for its services. - -------------------------------------------------------------------------------- 4. Fund Share Transactions Proceeds and payments on Fund shares as shown in the statements of changes in net assets are in respect of the following numbers of shares:
---------------------------------------- -------------------------------------- Wanger U.S.Small Cap Wanger International Small Cap Six months ended Year ended Six months ended Year ended June 30, 1997 December 31, 1996 June 30, 1997 December 31, 1996 - ---------------------------------------------------------------------------------------------------------------------------- Shares sold 3,123,276 6,137,385 2,117,892 4,154,432 Shares issued in reinvestment of dividend and capital gain distributions 210,886 5,157 136,748 3,911 - ---------------------------------------------------------------------------------------------------------------------------- 3,334,162 6,142,542 2,254,640 4,158,343 Less shares redeemed 198,322 432,817 234,237 212,404 - ---------------------------------------------------------------------------------------------------------------------------- Net increase in shares outstanding 3,135,840 5,709,725 2,020,403 3,945,939 ============================================================================================================================
5. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the six months ended June 30, 1997 were:
Purchases Sales Wanger U.S. Small Cap $72,035,139 $22,884,152 Wanger International Small Cap 55,007,526 19,800,575 - --------------------------------------------------------------------------------
23 Wanger Advisors Trust 1997 Semi-Annual Report - -------------------------------------------------------------------------------- 24 Wanger Advisors Trust Trustees Fred D. Hasselbring Charles P. McQuaid P. Michael Phelps James A. Star Ralph Wanger Officers Ralph Wanger President Charles P. McQuaid Senior Vice President Terence M. Hogan Vice President Marcel P. Houtzager Vice President Robert A. Mohn Vice President Leah J. Zell Vice President Merrillyn J. Kosier Vice President Bruce H. Lauer Vice President and Treasurer Paula L. Rogers Vice President and Secretary Kenneth A. Kalina Assistant Treasurer Transfer Agent, Dividend Disbursing Agent and Custodian State Street Bank and Trust Company Attention: Wanger Advisors Trust P.O. Box 8502 Boston, Massachusetts 02266-8502 Distributor WAM Brokerage Services, L.L.C. 227 West Monroe Street Suite 3000 Chicago, Illinois 60606 1-800-5-WANGER (1-800-592-6437) Investment Advisor Wanger Asset Management, L.P. 227 West Monroe Street Suite 3000 Chicago, Illinois 60606 1-800-5-WANGER (1-800-592-6437) Legal Counsel Bell, Boyd & Lloyd Chicago, Illinois This report, including the unaudited schedules of investments and financial statements, is submitted for the general information of the shareholders of the Wanger Advisors Trust. This report is not authorized for distribution unless preceded or accompanied by a prospectus. Wanger Advisors Trust -----END PRIVACY-ENHANCED MESSAGE-----