-----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, VQOzGi5uEsQaytv2c88QV9vVSqg5B0G0iz9G5orjV0FzY89IoEdQ5Loa5OeYXIbU ZRUgAFeLWjE4WlrDtQCuiw== 0000950131-99-005200.txt : 19990908 0000950131-99-005200.hdr.sgml : 19990908 ACCESSION NUMBER: 0000950131-99-005200 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990907 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WANGER ADVISORS TRUST CENTRAL INDEX KEY: 0000929521 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08748 FILM NUMBER: 99706619 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 1999 SEMI-ANNUAL REPORT Wanger Advisors Trust 1999 Semiannual Report Wanger 99 ------------------------- New Funds! Wanger Foreign Forty Wanger Twenty [LOGO APPEARS HERE] Wanger Advisors Trust 1999 Semiannual Report Contents 1 New Funds 2 J.P. Morgan 4 Funds at a Glance 6 Performance Review Wanger U.S. Small Cap 8 Performance Review Wanger International Small Cap 10 Performance Review Wanger Twenty 12 Performance Review Wanger Foreign Forty 14 Statement of Investments Wanger U.S. Small Cap 18 Statement of Investments Wanger International Small Cap 21 Portfolio Diversification Wanger International Small Cap 22 Statement of Investments Wanger Twenty 24 Statement of Investments Wanger Foreign Forty 26 Portfolio Diversification Wanger Foreign Forty 27 Statements of Assets and Liabilities 28 Statements of Operations 29 Statements of Changes in Net Assets 30 Financial Highlights Wanger U.S. Small Cap 31 Financial Highlights Wanger International Small Cap 32 Financial Highlights Wanger Twenty 33 Financial Highlights Wanger Foreign Forty 34 Notes to Financial Statements Wanger Asset Management, L.P. ("WAM") is one of the leading global small-cap equity managers in the United States with 29 years of small-cap investment experience. WAM manages over $7 billion in equities and is the investment adviser to Wanger U.S. Small Cap, Wanger International Small Cap, Wanger Twenty, Wanger Foreign Forty, and the Acorn Family of Funds. WAM uses a unique style of catching trends with small, attractively priced niche companies. For more complete information about our funds including the Acorn funds, fees and expenses, call WAM Brokerage Services, L.L.C., distributor, at 1-800-5-WANGER for a prospectus. Read it carefully before you invest or send money. [LOGO APPEARS HERE] Wanger 99 New Funds to Complement Your Variable Annuity Mix! We are pleased to announce that Wanger Twenty and Wanger Foreign Forty, our newest funds, are now available to you. They are focused mid-cap funds that are an extension of Wanger's proven expertise in small-cap investing. The funds invest in a select group of medium-to larger-size companies. Both funds invest in companies with market capitalizations of $1 billion to $10 billion and take advantage of the advisor's proven research and stock-picking capabilities. They follow an investment philosophy similar to the philosophy that has distinguished Wanger's small-cap investing style. This philosophy is based on the belief that less profiled companies may offer higher return potential than the stocks of companies with capitalizations above $10 billion. Wanger Twenty seeks long-term growth and invests primarily in the stocks (generally between 20-25) of medium- to larger-size U.S. companies. Wanger Foreign Forty also seeks long-term growth. It invests primarily in the stocks (generally between 40-60) of medium- to larger-size foreign companies in developed markets. Wanger Twenty is co-managed by John Park and Mark Yost. Wanger Foreign Forty is managed by Marcel Houtzager. The funds are off to a great start. From their inception on February 1, 1999, through June 30, Wanger Twenty has returned 25.3% vs. 11.2% for the S&P MidCap 400 and 7.9% for the S&P 500. Wanger Foreign Forty has returned 13.5% vs. 4.3% for the EAFE Index./1/ More information about the funds' performance is on pages 5, 11 and 13 of this report. For more information on these new funds, please call 800-492-6437 or visit our web site at www.wanger.com. We plan to do everything we can to help your investments work hard for you. Peter Zaldivar joins Marcel Houtzager as Co-portfolio Manager of Wanger International Small Cap Peter has been a key member of the international analytical team since 1996 covering European equities. "International investing offers a very rich universe of stocks to pick from. Our team of seven analysts concentrates on finding under-followed companies, reasonably valued with strong growth potential," said Mr. Zaldivar. "We travel the world talking to company managements, competitors and suppliers, and leverage that knowledge to find and own what we believe are the very best investments for our shareholders." Before joining Wanger Asset Management, Mr. Zaldivar was a portfolio manager with Lord Asset Management. A Chartered Financial Analyst, Mr. Zaldivar's degrees include a B.A. from the University of Wisconsin/Madison and a J.D. from Harvard Law School. - ------------------------------------------------------------------------------ /1/Past performance is no guarantee of future results. Share price and investment return will vary, so you may have a gain or a loss when you sell shares. Total return includes changes in share price and reinvestment of income and capital gains distributions. 1 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- J.P. Morgan [LOGO APPEARS HERE] In the history of American finance, there have been many interesting and important figures from Alexander Hamilton to George Soros. None approaches the mythic status of John Pierpont Morgan. He dominated the banking scene from the end of the Civil War to the eve of World War I. Since his death in 1913, no other person has achieved his level of power and reputation. Morgan was loved by a few, respected by many, and hated by most. He was not hated for his deeds so much as what he stood for--massive wealth and power. In the Gilded Age, he personified the wealth of a Bill Gates and the influence of an Alan Greenspan. Morgan: American Financier/1/, a new biography by Jean Strouse, is a splendid study of the man and his period. What a period it was! Some of the people who did business with Morgan were Mellon, Rockefeller, Harriman, Frick, Carnegie, Baker, Widener and Edison, a group of tycoons now turned into universities, museums, banks or libraries. One could ponder on the transformation of a businessman into a building. Morgan, as a person, was agreeably complex and contradictory. He was deeply religious and a womanizer. He was a handsome youth, but an ugly adult (his nose became deformed by rhinophyma). He was a leader, but not a good speaker or writer. Despite achieving every worldly success, he suffered from fits of depression, and often sat alone in his study, smoking a cigar and playing solitaire. (Strouse does not say what game of solitaire he favored, but in that primitive age he had to use real cards, not the Microsoft version.) Mr. Morgan played solitaire in very nice surroundings. He had a Manhattan mansion (a series of five, of increasing splendor), an art-filled house in London, a great country house on the Hudson, and three vacation houses. He had a fabulous yacht, the Corsair, built in three different versions. His art collection included Gutenberg bibles and other rare books and manuscripts, old master paintings, armor, Egyptian antiquities, all in great quantity, many now in the Met or the Morgan Library. It was the best art collection ever assembled by one private individual. His artistic taste was informed and refined, but conventional. For instance, he missed the French Impressionist movement altogether, although he could have bought a boxcar load of VanGoghs and Monets for what he paid for one Gainsborough. As mutual fund investors, you and I should be most interested in Morgan as the supreme financial tycoon. His firm put together U.S. Steel, creating the biggest industrial company in the country. Another deal created International Harvester. Railroads were the leading industry of his time, and he put together the Northern Pacific and the Southern Railway. His least successful trust was an ocean shipping company, IMM, that not only lost money in the freight business, but through the White Star Line, owned the ill-fated (but photogenic) Titanic. These mergers were attacked by Progressive "trust-busters," but big companies were needed as the United States became an industrial giant. Regardless of your opinion on these mergers, Morgan did many things that clearly benefited the country. Bringing in Capital The construction of the U.S. railway network was dependent on European capital. By today's standards, 19th Century America would have been classified as an Emerging Market. If you think of the United States in Morgan's era as the equivalent to Argentina now, it's not surprising that many European investors lost their money on American railroads that went bust. Morgan's firm (Drexel, Morgan & Co. until 1895, now J.P. Morgan & Co.) was in the center of international banking, with his father's bank in London funneling money to New York./2/ The amount of European capital invested in the United States grew from $222 million in 1853 to $3 billion in 1890. Morgan himself spent about half of each year in Europe, mixing business, art collecting and spa treatments./3/ The key to keeping European investors happy was a sound dollar, backed by gold. Therefore, Morgan and the other bankers fought to base the U.S. currency on a gold standard. Whether your were pro or anti, the gold standard was one of the key political divides of the 1890s. Farmers always hate bankers, and opposed the gold standard. So did silver miners, who wanted silver to be counted in monetary reserves together with gold. The Populist party, which represented the anti-gold standard factions, wanted faster growth in the money supply and inflation to enable debtors to pay off their obligations in cheaper dollars. Morgan, the defender of sound money, was hated as the leader of the gold- standard Eastern banking interests. The One-Man Fed In 1894, foreign investors became nervous that the Populists would prevail and inflate the money supply, which would cause their dollar-denominated bonds to lose value. European investors started selling bonds for gold and physically shipping the gold to London. At the end of 1894, the U.S. gold reserve plunged from $100 2 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- [LOGO APPEARS HERE] million to $45 million. In early 1895, gold losses reached $2 million per day, and the U.S. government faced a crisis not unlike the one that forced several Asian countries to devalue their currencies two years ago. Morgan and several other bankers met with President Cleveland in February 1895, the day gold reserves dropped to only $9 million, with claims of $12 million against that gold. A U.S. government default was only a day away. Morgan's group figured out a way to sell $62 million in new gold-backed bonds without Congressional approval (the silverites in Congress would not have approved the bond issue), and saved the government. After the bond sale, Morgan ran a delicate foreign- exchange support program that succeeded, and U.S. gold reserves rebounded back over $100 million by June. Despite this triumph, Morgan and Rothschild, the two syndicate managers, were vilified in the press and in Congress, where Bryan made a nasty anti-gold, anti-Semitic speech. In 1896, the Democrats nominated the Populist William Jennings Bryan for president. His convention speech was perhaps the best political oration in American history, ending with the famous phrase: "You shall not crucify mankind upon a cross of gold." I always had thought that this was a great anti- materialistic religious thunderbolt, but its context was merely part of Bryan's violent hatred of the gold standard. Bryan lost the election anyway. The Panic of 1907 In 1907, there was a terrible panic, one of the worst financial crises ever to hit America. Many banks, trust companies, insurance companies, and stockbrokers had too much debt. After a couple of banks failed, a panic started that threatened to wipe out a large part of the American financial system and create the kind of depression that showed up 22 years later in 1929. There was no Federal Reserve System to regulate banks or act as lender of last resort. Morgan and a small group of allies acted as a private Fed, deciding which financial institutions were hopeless and should be allowed to go under, and which were sound but illiquid and could be saved by extending new credit. Morgan then browbeat his friends into extending the savable banks new credit despite the fear and panic that enveloped Wall Street at that moment. It worked. The Panic of 1907 was short-lived, and no depression followed. A lot of the time Morgan and other nineteenth century bankers were don't- rock-the-boat conservatives. Sometimes Morgan acted as a risk-taking venture capitalist. His most successful undertaking was Edison and his new electric light. In 1878, Edison was well-known, but had little money. Drexel, Morgan supplied capital for the new Edison Electric Light Co., and continued to support Edison during the start-up phase. Development was not smooth: the 1878 lamp used a platinum filament that proved a dead-end. (Carbon filament worked better, and finally the tungsten filament bulb, that we still use today, replaced carbon in turn). The electric light was the "killer app" for the electrical industry. In 1892, Edison's company was combined with its major competition to form General Electric, with Morgan as the investment banker. If Morgan did so many good things in his life, why did he receive such bad press in his lifetime and to this day? One answer is that his critics on the left--variously Anarchists, Communists, Fabian Socialists, Utopian Socialists, other sects of Socialists, union organizers, Populists and Progressives-- detested his immense wealth and unparalleled power. They didn't believe any one man should be allowed to obtain that kind of wealth and influence. The standard anti-capitalist caricature is still J.P. Morgan in formal dress, whether in political cartoon, movie, or the little banker guy in your Monopoly game. No one since Morgan has equaled his immense power. Morgan's power died with him. Our world today has grown too large for any one financier to dominate it. - --------------------------------------------------------------------- 1 Strouse, Jean. Morgan: American Financier. Random House, NYC, 1999. 2 Papa's bank became Morgan, Grenfell & Co. in 1910. Other Morgan companies that are in operation today include J.P. Morgan & Co., and Morgan Stanley Dean Witter Discover. 3 Morgan and his wife Fanny both spent six months every year in Europe; just not the same six months. When she was heading back to New York with her companions, he would sail for London with his entourage, usually including one of his lady friends. [PHOTO OF RALPH WANGER APPEARS HERE] Ralph Wanger Chief Investment Officer Wanger Asset Management, L.P. 3 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Funds at a Glance - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Results to June 30, 1999
Year Last 12 2nd qtr. to date months Wanger U.S. Small Cap 17.8% 10.3% 4.0% Russell 2000 15.6% 9.3% 1.5% S & P MidCap 400 14.2% 6.9% 17.2% S & P 500 7.1% 12.4% 22.8%
Wanger U.S. Small Cap N.A.V. as of 6/30/99: $21.94 The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then eliminating the largest 1,000, leaving a good small company index. The 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. - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Top 5 Industries As a % of net assets, as of 6/30/99 Information 37.3% Energy/Minerals 16.4% Finance 15.3% Industrial Goods/Services 10.5% Health Care 9.8% - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Top 10 Holdings MidAmerican Energy 7.5% Growth Utility Kronos 4.9% Labor Management Solutions RCN 4.6% Metro Market: Voice, Video & Internet Services UICI 4.3% Insurance/Specialty Finance Lincare Holdings 4.0% Home Health Care Services Micros Systems 4.0% Information Systems for Restaurants & Hotels National Data 3.8% Credit Cards & Health Claims Processor Wackenhut 3.5% Prison Management Tesoro Petroleum 3.2% Oil Refinery/Gas Reserves Sykes Enterprises 2.8% Call Center Services - -------------------------------------------------------------------------------- Wanger International Small Cap Results to June 30, 1999
Year Last 12 2nd qtr. to date months Wanger International Small Cap 17.8% 24.8% 18.7% EMI (World ex-U.S.) 6.2% 7.7% 3.4% EAFE 2.5% 4.0% 7.6% Lipper Int'l Small Cap Funds Avg. 13.6% 17.8% 7.8% Lipper Int'l Funds Avg. 5.6% 6.9% 4.0%
The EMI is Salomon Brothers' index of the bottom 20% of institutionally investable capital of countries, as selected by Salomon, excluding the U.S.EAFE is Morgan Stanley's Europe, Australasia and Far East Index, an unmanaged index of companies throughout the world in proportion to world stock market capitalization, excluding the U.S. and Canada. The Lipper International Small Cap Funds Avg. is calculated from the performance of a group of small-cap international funds. For the 2nd qtr. 6- and 12-mos. periods above, the group consisted of 70, 69 and 68 funds, respectively and included Wanger International Small-Cap. The Lipper International Funds Avg. is an average of all international funds tracked by Lipper, excluding the International Small Cap Funds. This group consisted of 630, 620 and 570 funds for the 2nd qtr. 6- and 12-mos. periods above, respectively. All indexes are unmanaged and returns include reinvested dividends. - -------------------------------------------------------------------------------- Wanger International Small Cap Top 5 Countries As a % of net assets, as of 6/30/99 Singapore 16.4% United Kingdom 14.4% Sweden 9.2% Japan 8.2% Netherlands 8.1% - -------------------------------------------------------------------------------- Wanger International Small Cap Top 10 Holdings Star Cruises 4.4% Cruise Line-Singapore Omni Industries 4.1% Electronic Manufacturing Services-Singapore Venture Manufacturing 3.3% Electronic Manufacturing Services Icon Medialab 3.0% Web Site Development- Sweden Datacraft Asia 2.8% Network Systems Integration-Singapore Athens Medical Center 2.7% Hospitals-Greece Talentum 2.6% Trade Journals & Internet Services-Finland Class Editori 2.4% Newspapers and Online Financial Data-Italy Li and Fung 2.4% Sourcing of Consumer Goods- Hong Kong S1 Corporation 2.3% Central Station Alarm Business-South Korea 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. 4 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Funds at a Glance - -------------------------------------------------------------------------------- Wanger Twenty Results to June 30, 1999
2nd qtr. Life of Fund Wanger Twenty 19.0% 25.3% Russell 2000 15.6% 7.9% S & P MidCap 400 14.2% 11.2% S & P 500 7.1% 7.9%
Wanger Twenty N.A.V. as of 6/30/99: $12.53 Life of Fund performance for Wanger Twenty is from inception (2/1/99) through 6/30/99.The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then eliminating the largest 1,000, leaving a good small company index. The 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. - -------------------------------------------------------------------------------- Wanger Twenty Top 5 Industries As a % of net assets, as of 6/30/99
Information 42.5% Finance 17.8% Consumer Goods/Services 14.8% Energy/Minerals 9.8% Real Estate 6.1%
- -------------------------------------------------------------------------------- Wanger Twenty Top 10 Holdings PRIMEDIA 7.3% Specialty Magazines & Other Publications Americredit 6.1% Auto Lending The Rouse Company 6.1% Regional Shopping Malls AES Corporation 6.0% Power Plants National Data 5.6% Credit Cards & Health Claims Processor UICI 5.0% Insurance/Specialty Finance ServiceMaster 4.9% Facilities Management H & R Block 4.9% Tax Preparation Telephone & 4.7% Data Systems Cellular & Telephone Franchises Sterling Commerce 4.7% Electronic Commerce Software & Services - -------------------------------------------------------------------------------- Wanger Foreign Forty Results to June 30, 1999
2nd qtr. Life of Fund* Wanger Foreign Forty 11.4% 13.5% EAFE 2.5% 4.3% SSB Cap Range $2-10B 4.8% 6.2%
Wanger Foreign Forty N.A.V. as of 6/30/99: $11.35 Life of Fund performance for Wanger Foreign Forty is from inception (2/1/99) through 6/30/99. EAFE is Morgan Stanley's Europe, Australasia and Far East Index, an unmanaged widely recognized international benchmark that comprises 20 major markets in Europe, Australia, and the Far East. The SSB Cap Range $2-10B is Salomon Smith Barney's two to 10 billion U.S. dollar security market capitalization subset of its Broad Market Index. It represents a mid-cap developed market index, excluding the U.S. All indexes are unmanaged and returns include reinvested dividends. - -------------------------------------------------------------------------------- Wanger Foreign Forty Top 5 Countries As a % of net assets, as of 6/30/99 United Kingdom 19.1% Japan 11.8% Italy 9.7% Germany 7.6% Canada 7.4% - -------------------------------------------------------------------------------- Wanger Foreign Forty Top 10 Holdings Logica 4.1% Computer Services/ Consulting-United Kingdom Editoriale L'Espresso 3.9% Newspapers and Magazines-Italy Bodycote 3.5% Materials Technology & Metal Processing-United Kingdom Softbank 3.4% Internet Services/ Investment Holdings-Japan Canadian Natural 3.3% Resources Oil & Gas Producer-Canada Celestica 3.1% Electronic Manufacturing Services-Canada Stinnes 3.0% Freight Forwarder- Germany MobileCom 3.0% Telecommunication Services-Germany SmarTone Telecom 3.0% Mobile Telecommunications- Hong Kong MIH 2.9% Pay TV-US 5 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Performance Review Wanger U.S. Small Cap Small stocks started the year slowly, then rallied in the second quarter. Wanger U.S. Small Cap gained 10.3% through June 30, a bit ahead of the small-cap Russell 2000 Index return of 9.3% and a bit behind the S&P 500 return of 12.4%. The two trends on Wall Street seem to be size and youth. S&P 500 stocks, until this past quarter, dominated the market while Internet companies fared well, too, especially those just hatched in some college dorm room. However, after interest rates rose in April, price became important. Long-ignored stocks soared (even the historically rate-sensitive utility stocks rallied), while glamour stocks declined. Our best stocks so far this year are companies benefiting from the Internet. Some examples include RCN, TV Guide and Liberty Media. RCN is an Internet service provider building an advanced fiber optic telecommunications network in the Northeast and West Coast. TV Guide offers an interactive program listing that one day may be your TV's portal to the World Wide Web. Liberty Media is a holding company comprising cable channel and Internet site companies. Wanger U.S. Small Cap's best stocks of the quarter were not so long ago its worst. All are thriving small companies whose stock prices had plunged, then rebounded 50% or more by June. Some examples include Magellan (managed care), Aspect Telecom (call center software) and Equitable Resources (gas utility). Small stocks were the market's winners this quarter. How long will this small-cap rally last? Well, small-caps underperformed large-caps for five years. Maybe the market will shift to favor small caps for the next five years. Wanger U.S. Small Cap shareholders should do well if this normal rotation occurs. [PHOTO OF ROBERT A. MOHN APPEARS HERE] Robert A. Mohn Portfolio Manager Wanger U.S. Small Cap 6 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- [LOGO APPEARS HERE] Wanger U.S. Small Cap Results to June 30, 1999 The Value of a $10,000 Investment in Wanger U.S. Small Cap Total Return for the Period May 3, 1995 through June 30, 1999 [CHART APPEARS HERE] Wanger U.S. Small Cap Mountain Chart Plot Points Wanger U.S. Small Cap Russell 2000 --------------------- ------------ 5/3/95 $10,000 $10,000 12/31/95 $11,600 $11,808 12/31/96 $17,004 $13,756 12/31/97 $22,005 $16,830 12/30/98 $23,916 $16,404 3/31/99 $22,388 $15,792 6/30/99 $26,375 $18,248 Average Annual Total Return 1 year: 4.0% 3 Years: 19.8% Life: 26.3% - -------------------------------------------------------------------------------- This graph compares the results of $10,000 invested in Wanger U.S. Small Cap on May 3,1995 through June 30, 1999 , with the Russell 2000 with dividends 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. 7 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Performance Review Wanger International Small Cap Your Fund delivered strong performance in the first half of 1999. Our year-to- date gain of 24.8% significantly outpaced both the competition and the Fund's benchmarks. The best-performing countries were Singapore and Japan. European service companies, Asian contract manufacturers and companies with Internet businesses also did particularly well. Since we started this Fund in May of 1995, it has risen an average of 25% per year vs. an annual 4% increase in the EMI and 9% gain in the EAFE indexes. (The Lipper International Small Cap Index had not been invented yet when we started the Fund). Our bottom-up research approach, and our emphasis on a limited number of key investment themes drove these excellent short- and long- term results. By identifying themes, we are able to assemble a portfolio that is widely diversified by country and industry where good ideas make a big difference. This might sound contradictory, yet a good investment theme can apply to many different companies in different countries and different industries. For example, the Internet, the European Economic Union, and the European common currency are causing the cold winds of competition to blow across Europe at hurricane strength. Large companies are responding with cost cuts. A variety of tasks that used to be performed in-house are now being outsourced to service companies. These service companies can do the work cheaper and more efficiently. Luckily for us, many of the service companies riding this outsourcing boom are small caps. They range from temporary employment agencies to computer service bureaus to cleaning companies to contract manufacturers, and they make up almost 20% of your Fund. Teamwork has always been necessary to our labor intensive research effort. Peter Zaldivar has been a key member of our research team (you can find his bio on page 1 or on our web site at www.wanger.com). In recognition of his contributions, we are pleased to add him as a co-portfolio manager of Wanger International Small Cap. In the Wanger tradition, Peter is also an investor in the Fund. [PHOTO OF MARCEL P. HOUTZAGER APPEARS HERE] Marcel P. Houtzager Lead Portfolio Manager [PHOTO OF PETER ZALDIVAR APPEARS HERE] Peter Zaldivar Co-Portfolio Manager 8 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- [LOGO APPEARS HERE] Wanger International Small Cap Results to June 30, 1999 The Value of a $10,000 Investment in Wanger International Small Cap Total Return for the Period May 3, 1995 through June 30, 1999 [CHART APPEARS HERE] Wanger Int'l Small Cap Mountain Chart Plot Points Wanger Int'l Small Cap EMI (World ex U.S.) ---------------------- ------------------- 5/3/95 $10,000 $10,000 12/31/95 $13,450 $10,123 12/31/96 $17,755 $10,855 12/31/97 $17,496 $ 9,835 12/31/98 $20,352 $11,030 6/30/99 $25,404 $11,875 Average Annual Total Return 1 year: 18.7% 3 Years: 13.9% Life: 25.1% - -------------------------------------------------------------------------------- This graph compares the results of $10,000 invested in Wanger International Small Cap on May 3, 1995 through June 30, 1999, with all dividends and capital gains reinvested, with the EMI (World ex-U.S.) In preceding years, the performance of Wanger International Small Cap was compared to Morgan Stanley's Europe, Australasia Far East Index (EAFE), an unmanaged international benchmark that comprises 20 major markets in Europe, Australia and the Far East. The EMI (World ex- U.S.) more closely approximates the composition of Wanger International Small Cap's portfolio. For the 6-months ended 6/30/99, the EMI showed an increase of 7.7% and EAFE showed an increase of 4.0%, compared to Wanger International Small Cap's total return of 24.8% for the same period. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. 9 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Performance Review Wanger Twenty New Fund! This quarter paid off for small- and mid-cap investors. Wanger Twenty gained 19.0%, beating the S&P MidCap 400 Index return of 14.2% and the S&P 500 Index return of 7.1%. Since inception (2/1/99), Wanger Twenty returned 25.3%, beating the S&P 400 gain of 11.2% and the S&P 500 gain of 7.9%. Investors rediscovered the meaning of value during the second quarter. They finally noticed the wide valuation gap between small- and mid-cap stocks versus their large-cap brethren. The small cap Russell 2000 and the S&P MidCap 400 indexes outperformed the S&P 500 by 8.5% and 7.1%, respectively during the quarter. This supports our belief that relative value exists among small to midsized companies. Many of Wanger Twenty's stocks trade at lower price-earnings multiples than S&P 500 companies, yet have higher expected growth rates. Twelve stocks posted double-digit gains in your Fund. Some standouts include AES, an energy company, up 56% over the past three months. Liberty Media produced a 40% gain after it invested in News Corp. Several other stocks were up 20% or more, including three stocks highlighted in our March 30 report-- Telephone & Data Systems, RCN and Jones Apparel. We had one disappointment this quarter--McKesson HBOC, a hospital computer services company. The stock declined 42% during the quarter when an accounting scandal was uncovered in April. While we are disappointed, it is important to remember that our concentrated strategy is to have our winners outweigh the losers, resulting in superior, long-term return potential. As a new institutional offering, we want to welcome fellow shareholders. We hope you are as happy with the Fund's strong start as we are. We continue to be excited about the Fund's future prospects and we appreciate your investment in Wanger Twenty. [PHOTO OF MARK H. YOST APPEARS HERE] Mark H. Yost Co-Portfolio Manager [PHOTO OF JOHN H. PARK APPEARS HERE] John H. Park Co-Portfolio Manager 10 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- [LOGO APPEARS HERE] Wanger Twenty Results to June 30, 1999 - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Wanger Twenty Total Return for the Period February 1 through June 30, 1999 [CHART APPEARS HERE] Wanger Twenty Mountain Chart Plot Points Wanger Twenty S&P MidCap 400 ------------- -------------- 2/1/99 $10,000 $10,000 3/31/99 $10,530 $9,741 4/30/99 $12,150 $10,509 5/31/99 $12,220 $10,555 6/30/99 $12,530 $11,120 - -------------------------------------------------------------------------------- This graph compares the results of $10,000 invested in Wanger Twenty on February 1, 1999 through June 30, 1999, with the S & P MidCap 400 Index, with dividends 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. Total Return 2nd qtr: 19.0% Life: 25.3% 11 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Performance Review Wanger Foreign Forty New Fund! Wanger Foreign Forty returned a satisfying 11.4% in the second quarter, well ahead of the 2.5% EAFE Index return. Since inception (2/1/99), the Fund is up 13.5% vs. the EAFE gain of 4.3%. Three of your Fund's stocks gained more than 50% during the quarter. We thank Michael King, our Japanese analyst, for unearthing Softbank at a time when it was very underfollowed. Michael also scored with Nintendo, up 64%, a name that is on the tip of every child's tongue, but not yet in every parent's portfolio. Our International Research Director, Roger Edgley, contributed contract manufacturer Natsteel Electronics in Singapore, up 56%. Not all of our stocks went up. We experienced modest declines in two of our European life insurance companies, Mapfre Vida in Spain, and ASR in the Netherlands. We visited these companies and have confirmed that their core life insurance businesses are still doing extremely well. Danish cleaning contractor ISS and Olivetti, an Italian typewriter maker-turned telecom operator, also had poor stock returns this quarter, although nothing bad happened to their businesses. As this Fund is a new offering, we would like to welcome our fellow shareholders. We hope that you are as happy with the Fund's impressive start as we are. We continue to see many excellent opportunities in the international mid-to large-cap stock universe. We believe Wanger Foreign Forty provides both a good way to diversify and to own what we think will be tomorrow's blue chips. [PHOTO OF MARCEL P. HOUTZAGER GOES HERE] Marcel P. Houtzager Portfolio Manager 12 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- [LOGO APPEARS HERE] Wanger Foreign Forty Results to June 30, 1999 - -------------------------------------------------------------------------------- The Value of a $10,000 Investment in Wanger Foreign Forty Total Return for the Period February 1 through June 30, 1999 [CHART APPEARS HERE] Wanger Foreign Forty Mountain Chart Plot Points Wanger Foreign Forty EAFE -------------------- ------- 2/1/99 $10,000 $10,000 3/31/99 $10,190 $10,169 4/30/99 $10,620 $10,581 5/31/99 $10,480 $10,036 6/30/99 $11,350 $10,428 - -------------------------------------------------------------------------------- This graph compares the results of $10,000 invested in Wanger Foreign Forty on February 1, 1999 through June 30, 1999, with the EAFE Index, with dividends 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. Total Return 2nd qtr: 11.4% Life: 13.5% 13 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments (unaudited) June 30, 1999
- -------------------------------------------------------------------------------- Number of Value Shares Common Stocks--93.1% Information--37.3% - -------------------------------------------------------------------------------- Broadcasting--2.1% 250,600 Data Transmission Network (b) $ 7,048,125 Data Services for Farmers - -------------------------------------------------------------------------------- Television Programming--2.5% 217,200 TV Guide (b) 7,954,950 TV Program Guides & Programming 20,200 Liberty Media Group, AT&T (b) 742,350 Cable Programming - -------------------------------------------------------------------------------- 8,697,300 - -------------------------------------------------------------------------------- Telephone Services--6.2% 380,600 RCN (b) 15,842,475 Metro Market: Voice, Video & Internet Services 127,300 Commonwealth Telephone (b) 5,147,693 Rural Market: Local, Lon Distance & Internet Access - -------------------------------------------------------------------------------- 20,990,168 - -------------------------------------------------------------------------------- Mobile Communications--3.9% 102,000 Telephone & Data Systems 7,452,375 Cellular & Telephone Franchises 234,500 COMARCO (b) (c) 4,646,031 Wireless Network Testing 50,000 Pinnacle Holdings (b) 1,225,000 Towers for Cellular, PCS, & Paging - -------------------------------------------------------------------------------- 13,323,406 - -------------------------------------------------------------------------------- Telecommunications Equipment--1.2% 425,900 Aspect Telecommunications (b) 4,152,525 Call Center Equipment - -------------------------------------------------------------------------------- Business Software--1.3% 314,000 JDA Software Group (b) 2,924,125 Applications/Software & Services for Retailers 97,600 Systems & Computer Technology (b) 1,421,300 Enterprise Software & Services - -------------------------------------------------------------------------------- 4,345,425 - -------------------------------------------------------------------------------- Business Information/Marketing Services--3.0% 194,300 CACI International (b) $ 4,371,750 Technology Services for Government 429,400 IntelliQuest Information (b) (c) 3,220,500 Technology/Market Research 151,000 PRIMEDIA (b) 2,557,563 Specialty Magazines & Other Publications - -------------------------------------------------------------------------------- 10,149,813 - -------------------------------------------------------------------------------- Transaction Processors--3.8% 305,300 National Data 13,051,575 Credit Card & Health Claims Processor - -------------------------------------------------------------------------------- Computer Hardware/Related Systems--8.9% 368,900 Kronos (b) 16,784,950 Labor Management Solutions 396,100 Micros Systems (b) 13,467,400 Information Systems for Restaurants & Hotels - -------------------------------------------------------------------------------- 30,252,350 - -------------------------------------------------------------------------------- Gaming Equipment--0.6% 113,000 International Game Technology 2,090,500 Slot Machines and Progressive Jackpots - -------------------------------------------------------------------------------- Computer Services--3.8% 283,900 Sykes Enterprises (b) 9,475,162 Call Center Services 119,000 Computer Task Group 2,023,000 Application Development & Staffing Services 50,000 IMR Global (b) 962,500 Application Development & Maintenance Services 357,000 Aztec Technology Partners (b) 669,375 Technology Staffing Service - -------------------------------------------------------------------------------- 13,130,037 - -------------------------------------------------------------------------------- Information--Total 127,231,224
See accompanying notes to financial statements. 14 [WANGER 99] Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments (unaudited) June 30, 1999
- -------------------------------------------------------------------------------- Number of Value Shares Health Care--8.0% - -------------------------------------------------------------------------------- Biotechnology/Drug Delivery--0.2% 117,000 Synaptic Pharmaceuticals (b) $555,750 Receptor Targeted Drug Design - -------------------------------------------------------------------------------- Services--7.8% 544,800 Lincare Holdings (b) 13,620,000 Home Health Care Services 348,000 First Health (b) 7,503,750 PPO Network 547,700 Magellan Health Services (b) 5,477,000 Mental Health Services - -------------------------------------------------------------------------------- 26,600,750 - -------------------------------------------------------------------------------- Health Care--Total 27,156,500 Consumer Goods/Services--3.6% - -------------------------------------------------------------------------------- Nondurables--0.5% 92,000 NuSkin Enterprises (b) 1,834,250 Personal Care/Herbal Products - -------------------------------------------------------------------------------- Retail--2.9% 809,000 Host Marriott Services (b) 6,573,125 Fast Food Kiosks in Airports 66,000 Whole Foods Market (b) 3,172,125 Natural Food Supermarkets - -------------------------------------------------------------------------------- 9,745,250 - -------------------------------------------------------------------------------- Casinos--0.2% 115,200 Monarch Casino & Resort (b) 734,400 Casino/Hotel in Reno - -------------------------------------------------------------------------------- Consumer Goods/Services--Total 12,313,900 Finance--15.3% - -------------------------------------------------------------------------------- Banks/Savings & Loans--1.8% 82,000 Texas Regional Bancshares 2,229,375 TexMex Bank 67,500 Peoples Bank Bridgeport 2,054,531 Connecticut Savings & Loan 49,500 Chittenden $1,548,875 Vermont & West Massachusetts Bank 157,500 Coast Contingency Rights (b) 167,343 Litigation Claim Against US Government - -------------------------------------------------------------------------------- 5,998,124 - -------------------------------------------------------------------------------- Finance Companies--2.3% 419,400 Americredit (b) 6,710,400 Auto Lending 232,000 World Acceptance (b) 1,167,250 Personal Loans - -------------------------------------------------------------------------------- 7,877,650 - -------------------------------------------------------------------------------- Insurance--8.8% 529,600 UICI (b) 14,630,200 Insurance/Specialty Finance 403,900 Acceptance Insurance (b) 6,083,744 Crop Insurance 21,000 Markel (b) 3,927,000 Specialty Insurance 92,000 Leucadia National 2,334,500 Insurance Holding Company 57,000 Protective Life 1,881,000 Life/Dental Insurance 44,000 AmerUs Life Holdings 1,188,000 Annuities/Life Insurance - -------------------------------------------------------------------------------- 30,044,444 - -------------------------------------------------------------------------------- Money Management--2.4% 57,000 SEI 5,030,250 Mutual Fund Administration 167,700 Baker Fentress 3,186,300 Closed-End Investment Company - -------------------------------------------------------------------------------- 8,216,550 - -------------------------------------------------------------------------------- Finance--Total 52,136,768
See accompanying notes to financial statements. 15 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments (unaudited) June 30, 1999 - --------------------------------------------------------------------------------
Number of Value Shares Industrial Goods/Services-9.8% - -------------------------------------------------------------------------------- Machinery-0.9% 99,000 Vallen (b) $ 1,584,000 Safety Products Distribution 135,700 Farr (b) 1,492,700 Filters - -------------------------------------------------------------------------------- 3,076,700 - -------------------------------------------------------------------------------- Steel-1.1% 232,400 Atchison Casting (b) 2,418,413 Steel Foundries 56,400 Schnitzer Steel 1,265,475 Scrap Steel Processor - -------------------------------------------------------------------------------- 3,683,888 - -------------------------------------------------------------------------------- Specialty Chemicals-1.0% 189,600 Lilly Industries, Cl. A 3,519,450 Industrial Coatings - -------------------------------------------------------------------------------- Other Industrial Services-6.8% 496,400 Wackenhut, Cl. B 11,913,600 Prison Management 412,100 Insurance Auto Auctions (b) 6,645,113 Auto Salvage Services 123,000 Labor Ready (b) 3,997,500 Temporary Manual Labor 92,300 Compass International Services (b) 646,100 Collection Agencies - -------------------------------------------------------------------------------- 23,202,313 - -------------------------------------------------------------------------------- Industrial Goods/Services-Total 33,482,351 Energy/Minerals-16.4% - -------------------------------------------------------------------------------- Independent Power-8.1% 737,600 MidAmerican Energy 25,539,400 Growth Utility 38,000 AES Corporation (b) 2,208,750 Power Plants - -------------------------------------------------------------------------------- 27,748,150 - -------------------------------------------------------------------------------- Oil/Gas Producers-3.3% 688,900 Tesoro Petroleum (b) $10,979,344 Oil Refinery/Gas Reserves 78,000 Tipperary (b) 97,500 Oil & Gas Producer - -------------------------------------------------------------------------------- 11,076,844 - -------------------------------------------------------------------------------- Distribution/Marketing/Refining-5.0% 258,000 Atmos Energy 6,450,000 Natural Gas Utility 259,100 Dynegy 5,279,163 Natural Gas & Electric Processing, Production & Marketing 137,000 Equitable Resources 5,171,750 Natural Gas Utility & Producer - -------------------------------------------------------------------------------- 16,900,913 - -------------------------------------------------------------------------------- Energy/Minerals-Total 55,725,907 Other Industries-2.7% - -------------------------------------------------------------------------------- Real Estate-1.5% 67,600 Forest City Enterprises Cl. A 1,892,800 Shopping Malls 53,900 Gaylord Entertainment 1,617,000 Opryland Hotel & Other Assets 47,000 The Rouse Company 1,192,625 Regional Shopping Malls 25,000 Cornerstone Properties 396,875 Downtown Office Buildings - -------------------------------------------------------------------------------- 5,099,300 - -------------------------------------------------------------------------------- Transportation-1.2% 174,000 Hub Group (b) 3,904,125 Truck & Rail Freight Forwarder - -------------------------------------------------------------------------------- Other Industries-Total 9,003,425
See accompanying notes to financial statements. 16 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Statement of Investments (unaudited) June 30, 1999
Principal Amount Value Total Common Stocks-93.1% $317,050,075 - -------------------------------------------------------------------------------- (Cost: $268,555,292) Short-Term Obligations-6.5% - -------------------------------------------------------------------------------- $13,123,000 Commercial Credit 5.10% Maturing 07/02/99 13,121,141 $9,123,000 Ford Motor Credit 5.21% Maturing 07/01/99 9,123,000 - -------------------------------------------------------------------------------- (Amoritized Cost: $22,244,141) 22,244,141 Total Investments-99.6% 339,294,216 - -------------------------------------------------------------------------------- (Cost: $290,799,433) Cash and Other Assets less Liabilities-0.4% 1,429,841 - -------------------------------------------------------------------------------- Total Net Assets--100% $340,724,057 - --------------------------------------------------------------------------------
Notes to Statement of Investments: (a) At June 30, 1999, for federal income tax purposes cost of investments was $291,203,919 and net unrealized appreciation was $48,090,297 consisting of gross unrealized appreciation of $75,176,038 and gross unrealized depreciation of $27,085,741. (b) Non-income producing security. (c) At June 30, 1999, the Fund held the following percentages of the outstanding voting shares of the affiliated companies (ownership of at least 5%) listed below: IntelliQuest Information 5.46% COMARCO 5.28% The aggregate cost and value of investments in these companies at June 30, 1999, was $8,676,591 and $7,866,531, respectively. The market value of these securities represents 2.31% of the total net assets at June 30, 1999. During the six months ended June 30, 1999, cost of purchases in affiliated companies was $921,500. There were no proceeds from sales or dividends received from these companies during the six months ended June 30, 1999. See accompanying notes to financial statements. 17 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments (unaudited) June 30, 1999
- -------------------------------------------------------------------------------- Number of Value Shares Common Stocks--99.1% Europe--56.5% - -------------------------------------------------------------------------------- Germany--2.2% 34,000 Rhoen Klinikum $3,383,695 Hospital Management 7,800 Kamps 317,744 Bakery Chain - -------------------------------------------------------------------------------- 3,701,439 - -------------------------------------------------------------------------------- Denmark--0.9% 25,000 Vest Wood 1,515,573 Furniture - -------------------------------------------------------------------------------- Netherlands--8.1% 94,243 Hunter Douglas 3,236,520 Decorative Window Coverings 51,666 Kempen 2,584,232 Stock Brokerage/Investment Management 101,785 Unique International 2,482,561 Human Resources 121,818 Computer Service Solutions (b) 1,746,269 Computer Services 160,000 Scala Business Solutions (b) 1,361,316 Enterprise Software for Small-to-Medium Sized Companies 60,000 Detron Group (b) 841,541 Telephone Services 26,000 Frans Maas Group 777,600 Transportation/Freight Forwarding 30,000 UCC Holding 417,676 Computer Services - -------------------------------------------------------------------------------- 13,447,715 - -------------------------------------------------------------------------------- Finland--3.2% 288,800 Talentum 4,408,024 Trade Journals & Internet Services 112,000 Teleste Corporation (b) 1,016,449 Cable Television Equipment - -------------------------------------------------------------------------------- 5,424,473 - -------------------------------------------------------------------------------- Norway--1.8% 500,000 Visma $1,937,123 Business Software 67,700 Enitel (b) 1,074,944 Telephone Services - -------------------------------------------------------------------------------- 3,012,067 - -------------------------------------------------------------------------------- Sweden--9.2% 140,000 Icon Medialab (b) 5,071,748 Web Site Development 175,000 Modern Times 3,797,636 TV, Newspapers & Internet 250,000 Semcon 2,234,768 Technical Consultant 247,000 Mandator 1,641,437 Computer Services/Consulting 300,000 Micronic Laser Systems (b) 1,340,861 Electronics Production Equipment 55,000 IBS (b) 1,238,826 Supply Chain Management Software 3,300 Entra Data 65,208 Banking Software - -------------------------------------------------------------------------------- 15,390,484 - -------------------------------------------------------------------------------- France--2.9% 15,000 Fininfo 2,567,937 Data Feeds for French Banks & Brokers 50,000 CPR Finance 2,230,702 Stock Brokerage - -------------------------------------------------------------------------------- 4,798,639
See accompanying notes to financial statements. 18 [WANGER 99] Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments (unaudited) June 30, 1999
- -------------------------------------------------------------------------------- Number of Value Shares - -------------------------------------------------------------------------------- United Kingdom/Ireland--15.1% 600,000 Informa Group $3,494,657 Business Information Provider 345,000 Parity 3,426,088 Computer Software, IT Staffing & Services 1,300,000 Workplace Technologies 3,278,704 Network Integration 2,000,000 Electronics Boutique 2,908,274 Video/Computer Games Retailer 1,000,000 Taylor Nelson 2,490,554 Market Research Services 500,000 Hogg Robinson 1,785,160 Corporate Travel Management 150,000 SSL International 1,730,777 Medical & Footcare Products 400,000 Oriflame International 1,513,248 Cosmetics Sold Door-to-Door 60,000 Icon (Ireland) (b) 1,177,500 Contract Research Organization 245,868 Morse Holdings (b) 903,019 Computer Hardware & Equipment 250,000 Photobition Group (b) 853,172 Production of Graphics for Exhibits 129,000 Edinburgh Fund Managers 850,989 Investment Management 150,000 Expro International Group 800,366 Oil Field Services - ------------------------------------------------------------------------------- 25,212,508 - ------------------------------------------------------------------------------- Spain/Portugal--3.9% 100,000 Mapfre Vida 2,856,701 Life Insurance/Mutual Funds 200,000 Prosegur 2,248,234 Security Guards 100,000 Filmes Lusomundo (Portugal) 1,390,192 Newspapers, Radio, Video, Film Distribution - ------------------------------------------------------------------------------- 6,495,127 - ------------------------------------------------------------------------------- Switzerland--2.0% 4,000 Phoenix Mecano $1,883,443 Electrical Components Manufacturer 3,000 Affichage 1,418,371 Billboard Advertising - ------------------------------------------------------------------------------- 3,301,814 - ------------------------------------------------------------------------------- Italy/Greece--7.2% 180,000 Athens Medical Center (Greece) (b) 4,486,854 Hospitals 500,000 Class Editori 3,996,287 Newspapers & Online Financial Data 150,000 Banca Pop Commercia e Industria 3,511,576 150,000 Banca Pop Commercia e Industria Rights (b) 92,972 Regional Bank - ------------------------------------------------------------------------------- 12,087,689 - ------------------------------------------------------------------------------- Europe--Total 94,387,528 Asia--29.6% - ------------------------------------------------------------------------------- Hong Kong--2.4% 1,640,000 Li and Fung 3,931,485 Sourcing of Consumer Goods - ------------------------------------------------------------------------------- Japan--8.2% 175,000 NuSkin Enterprises (b) 3,489,063 Personal Care/Herbal Products 31,000 Nichii Gakkan 3,380,701 Health Care Services 10,000 Ryohin Keikaku 2,515,697 Designer & Retailer of Muji Brand Specialty Consumer Goods 31,100 Trans Cosmos 2,261,071 Information Technology Services & Investments 28,000 Moshi Moshi Hotline 2,058,824 Telemarketing - ------------------------------------------------------------------------------- 13,705,356
See accompanying notes to financial statements. 19 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Statement of Investments (unaudited) June 30, 1999
- -------------------------------------------------------------------------------- Number of Value Shares Asia--29.6% (cont) - -------------------------------------------------------------------------------- Malaysia--0.3% 388,000 Computer System Advisor $551,659 Systems Integration & Software Services - ------------------------------------------------------------------------------- Singapore--16.4% 1,630,400 Star Cruises 7,271,584 Cruise Line 7,200,000 Omni Industries 6,851,101 Electronic Manufacturing Services 720,000 Venture Manufacturing 5,540,088 Electronic Manufacturing Services 1,080,000 Datacraft Asia 4,708,800 Network Systems Integration 4,509,000 Datapulse Technology (b) 2,939,789 CD-ROM Replication - ------------------------------------------------------------------------------- 27,311,362 - ------------------------------------------------------------------------------- South Korea--2.3% 20,000 S1 Corporation 3,853,132 918 S1 Corporation Rights (b) 41,716 Central Station Alarm Business - ------------------------------------------------------------------------------- 3,894,848 - ------------------------------------------------------------------------------- Asia-Total 49,394,710 Latin America--4.1% - ------------------------------------------------------------------------------- Mexico--3.3% 1,600,000 Grupo Continental 2,502,964 Beverages 641,000 Corp Interamericana 2,079,451 de Entretenimiento (b) Special Events and Live Entertainment 1,240,000 Nadro, Series L 984,335 Pharmaceutical Distributor - ------------------------------------------------------------------------------- 5,566,750 - ------------------------------------------------------------------------------- Brazil--0.8% 46,900 Tele Celular $ 1,017,144 Mobile Communications 10,000 Tele Nordeste 270,000 Cellular Operator - ------------------------------------------------------------------------------- 1,287,144 - ------------------------------------------------------------------------------- Latin America--Total 6,853,894 Other Countries--8.9% - ------------------------------------------------------------------------------- Australia--2.9% 750,000 AAPT (b) 2,333,198 Telecommunications Services 1,100,000 Powertel (b) 1,317,843 Telecommunications Services 500,000 Keycorp (b) 1,234,444 Smart Card Technology - ------------------------------------------------------------------------------- 4,885,485 - ------------------------------------------------------------------------------- Canada--3.8% 200,000 Penn West Petroleum (b) 3,648,402 Oil & Gas Producer 140,000 MDSI Mobil Data Solutions (b) 2,266,250 Wireless Software 175,000 Canadian 88 Energy (b) 487,129 Oil & Gas Producer - ------------------------------------------------------------------------------- 6,401,781 - ------------------------------------------------------------------------------- Israel--2.2% 80,000 Galileo Technology (b) 3,625,000 Communications Semiconductors - ------------------------------------------------------------------------------- Other-Total 14,912,266 Total Common Stocks--99.1% 165,548,398 - ------------------------------------------------------------------------------- (Cost: $118,965,633) Cash and Other Assets less Liabilities--0.9% 1,431,364 - ------------------------------------------------------------------------------- Total Net Assets--100% $166,979,762 - -------------------------------------------------------------------------------
Notes to Statement of Investments: (a) At June 30, 1999, for federal income tax purposes cost of investments was $118,980,042 and net unrealized appreciation was $46,568,356 consisting of gross unrealized appreciation of $53,171,832 and gross unrealized depreciation of $6,603,476. (b) Non-income producing security. See accompanying notes to financial statements. 20 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Portfolio Diversification June 30, 1999 At June 30, 1999, the Fund's portfolio of investments as a percentage of net assets was diversified as follows:
Value Percent - ----------------------------------------------------------- Information Computer Services $17,022,781 10.2% Contract Manufacturing 15,330,978 9.2 Publishing 13,592,139 8.1 Telephone Services 11,174,564 6.7 Business Software 10,284,392 6.2 Business Information & Marketing Services 5,911,663 3.5 Semiconductors & Related Equipment 4,965,861 3.0 Domestic Consumer Software 2,266,250 1.3 Advertising 1,418,371 0.9 Computer Hardware & Related Equipment 1,238,826 0.8 Transaction Processors 1,234,444 0.7 Telecommunications Equipment 1,016,449 0.6 - ----------------------------------------------------------- 85,456,718 51.2 - ----------------------------------------------------------- Health Care Hospital Management 7,870,549 4.7 Healthcare Services 3,380,701 2.0 Pharmaceuticals 1,730,777 1.0 - ----------------------------------------------------------- 12,982,027 7.7 - ----------------------------------------------------------- Consumer Goods/Services Travel 9,056,744 5.4 Other Consumer Services 5,974,299 3.6 Retail 5,423,971 3.3 Nondurables 5,002,311 3.0 Other Entertainment 4,708,800 2.8 Other Durable Goods 3,236,520 1.9 Beverages 2,502,964 1.5 Furniture/Textile 1,515,573 0.9 Consumer Goods Distribution 984,335 0.6 Food 317,744 0.2 - ----------------------------------------------------------- 38,723,261 23.2 - ----------------------------------------------------------- Finance Brokerage $4,814,934 2.9 Banks 3,604,548 2.2 Insurance 2,856,701 1.7 Money Management 850,989 0.5 - ----------------------------------------------------------- 12,127,172 7.3 - ----------------------------------------------------------- Industrial Goods/Services Outsourcing and Training Services 8,662,280 5.2 Electrical Components 1,883,443 1.1 - ----------------------------------------------------------- 10,545,723 6.3 - ----------------------------------------------------------- Energy/Minerals Oil/Gas Producers 4,135,531 2.5 Oil Services 800,366 0.5 - ----------------------------------------------------------- 4,935,897 3.0 - ----------------------------------------------------------- Other Transportation 777,600 0.4 - ----------------------------------------------------------- - ----------------------------------------------------------- Total Common Stocks 165,548,398 99.1 - ----------------------------------------------------------- Cash and Other Assets less Liabilities 1,431,364 0.9 - ----------------------------------------------------------- Net Assets $166,979,762 100.0% - -----------------------------------------------------------
See accompanying notes to financial statements. 21 Wagner 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger Twenty Statement of Investments (unaudited) June 30, 1999
- --------------------------------------------------------------------------- Number of Value Shares Common Stocks-92.7% Information-42.5% - --------------------------------------------------------------------------- Television Programming-3.5% 4,400 Liberty Media Group, AT&T (b) $ 161,700 Cable Programming - --------------------------------------------------------------------------- Telephone Services-4.3% 4,700 RCN (b) 195,637 Metro Market: Voice, Video & Internet Services - --------------------------------------------------------------------------- Mobile Communications-4.7% 3,000 Telephone & Data Systems 219,188 Cellular & Telephone Franchises - --------------------------------------------------------------------------- Business Software-4.7% 6,000 Sterling Commerce (b) 219,000 Electronic Commerce Software & Services - --------------------------------------------------------------------------- Business Information/Marketing Services-16.2% 20,000 PRIMEDIA (b) 338,750 Specialty Magazines & Other Publications 4,500 H & R Block 225,000 Tax Preparation 7,500 Acxiom (b) 187,031 Database Marketing Services - --------------------------------------------------------------------------- 750,781 - --------------------------------------------------------------------------- Transaction Processors-5.6% 6,000 National Data 256,500 Credit Card & Health Claims Processor - --------------------------------------------------------------------------- Computer Services-3.5% 7,200 Keane (b) 162,900 Application Development & Maintenance Services - --------------------------------------------------------------------------- Information-Total 1,965,706 Health Care-1.7% - --------------------------------------------------------------------------- Services-1.7% 3,200 Lincare Holdings (b) $ 80,000 Home Health Care Services - --------------------------------------------------------------------------- Health Care-Total 80,000 Consumer Goods/Services-14.8% - --------------------------------------------------------------------------- Furniture/Manufacturers-6.5% 6,000 Jones Apparel (b) 205,875 Women's Apparel 4,400 Herman Miller 92,400 Office Furniture - --------------------------------------------------------------------------- 298,275 - --------------------------------------------------------------------------- Cruise Lines-3.4% 3,600 Royal Caribbean Cruises 157,500 Cruises to Caribbean & Alaska - --------------------------------------------------------------------------- Other Consumer Services-4.9% 12,200 ServiceMaster 228,750 Facilities Management - --------------------------------------------------------------------------- Consumer Goods/Services-Total 684,525 Finance-17.8% - --------------------------------------------------------------------------- Finance Companies-6.1% 17,800 Americredit (b) 284,800 Auto Lending - --------------------------------------------------------------------------- Insurance-8.2% 8,400 UICI (b) 232,050 Insurance/Specialty Finance 1,000 Progressive 145,000 Auto Insurance - --------------------------------------------------------------------------- 377,050
See accompanying notes to financial statements. 22 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger Twenty Statement of Investments (unaudited) June 30, 1999
- --------------------------------------------------------------------------- Number of Value Shares - --------------------------------------------------------------------------- Money Management-3.5% 1,850 SEI Investments $163,263 Mutual Fund Administration - --------------------------------------------------------------------------- Finance-Total 825,113 Energy/Minerals-9.8% - --------------------------------------------------------------------------- Independent Power-9.8% 4,800 AES Corporation (b) 279,000 Power Plants 5,000 MidAmerican Energy 173,125 Growth Utility - --------------------------------------------------------------------------- Energy/Minerals-Total 452,125 - --------------------------------------------------------------------------- Real Estate-6.1% 11,000 The Rouse Company 279,125 Regional Shopping Malls - --------------------------------------------------------------------------- Real Estate-Total 279,125 Total Common Stocks-92.7% 4,286,594 - --------------------------------------------------------------------------- (Cost: $3,810,312) Cash and Other Assets less Liabilities-7.3% 339,201 - --------------------------------------------------------------------------- Total Net Assets-100% $4,625,795 - ---------------------------------------------------------------------------
Notes to Statement of Investments: (a) At June 30, 1999, for federal income tax purposes cost of investments was $3,823,621 and net unrealized appreciation was $462,973 consisting of gross unrealized appreciation of $529,341 and gross unrealized depreciation of $66,368. (b) Non-income producing security. See accompanying notes to financial statements. 23 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger Foreign Forty Statement of Investments (unaudited) June 30, 1999
- --------------------------------------------------------------------------- Number of Value Shares Common Stocks-94.5% Europe-61.7% - --------------------------------------------------------------------------- Germany-7.6% 3,500 Stinnes (b) $ 54,504 Freight Forwarder 600 MobilCom 53,710 Telecommunication Services 300 Rhoen Klinikum 29,856 Hospital Management - --------------------------------------------------------------------------- 138,070 - --------------------------------------------------------------------------- Denmark-1.5% 500 ISS International Service (b) 26,766 Cleaning Services - --------------------------------------------------------------------------- Netherlands-5.9% 1,229 Hunter Douglas 42,207 Decorative Window Coverings 1,006 Getronics 38,698 Computer Services 406 ASR Verzekeringsgrp 26,776 Insurance - --------------------------------------------------------------------------- 107,681 - --------------------------------------------------------------------------- Finland-2.3% 1,000 Tieto Corporation 41,665 Computer Services/Consulting - --------------------------------------------------------------------------- Sweden-1.9% 1,000 Netcom 33,639 Telecommunication Services - --------------------------------------------------------------------------- France-3.3% 150 SITA 33,940 Waste Hauling & Landfills 260 Atos (b) 26,546 Computer Services/Transaction Processing - --------------------------------------------------------------------------- 60,486 - --------------------------------------------------------------------------- United Kingdom-19.1% 7,000 Logica $ 73,377 Computer Software & Services 10,000 Bodycote 62,500 Materials Technology & Metal Processing 600 NTL (b) 51,713 Voice, Video & Data Services 5,000 Airtours 39,880 Packaged Tour Vacations 1,500 Serco Group 33,812 Facilities Management 10,000 Smith & Nephew 30,423 Medical Equipment & Supplies 3,000 Sema 28,941 Computer Software & Services 1,000 Energis (b) 23,849 Telecommunication Services - --------------------------------------------------------------------------- 344,495 - --------------------------------------------------------------------------- Spain/Portugal-7.1% 800 Aguas de Barcelona 41,664 Water Utility 3,000 Prosegur 33,724 Security Guards 1,000 Mapire Vida 28,567 Life Insurance & Mutual Funds 2,300 Indra Sistamas 24,787 Computer Services - --------------------------------------------------------------------------- 128,742 - --------------------------------------------------------------------------- Switzerland-3.3% 20 Pargesa 30,362 Industrial & Media Conglomerate 15 Cie Fin Richemont 28,850 Luxury Goods, Tobacco & Pay TV - --------------------------------------------------------------------------- 59,212
See accompanying notes to financial statements. 24 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger Foreign Forty Statement of Investments (unaudited) June 30, 1999
- --------------------------------------------------------------------------- Number of Value Shares - --------------------------------------------------------------------------- Italy-9.7% 4,400 Editoriale L'Espresso $71,242 Newspapers & Magazines 10,000 Saipem 39,911 Offshore Construction 25,000 SEAT Pagine Gialle 34,161 Yellow Pages Publisher 3,000 Autogrill Finanziari 30,908 Tollway Restaurants - --------------------------------------------------------------------------- 176,222 - --------------------------------------------------------------------------- Europe-Total 1,116,978 Asia-17.2% - --------------------------------------------------------------------------- Hong Kong-3.0% 15,000 SmarTone Telecom 53,358 Mobile Telecommunications - --------------------------------------------------------------------------- Japan-11.8% 300 Softbank 60,749 Internet Services/Investment Holdings 2,500 NuSkin Enterprises (b) 49,844 Personal Care/Herbal Products 300 Nintendo 42,160 Video Games 300 Takefuji 31,006 Unsecured Consumer Loans 2,000 Olympus Optical 29,560 Photographic & Medical Equipment - --------------------------------------------------------------------------- 213,319 - --------------------------------------------------------------------------- Singapore-2.4% 10,000 Natsteel Electronics 43,759 Electronic Manufacturing Services - --------------------------------------------------------------------------- Asia-Total 310,436 Other Countries-15.6% - --------------------------------------------------------------------------- Canada-7.4% 3,000 Canadian Natural Resources (b) $58,780 Oil & Gas Producer 1,300 Celestica (b) 55,949 Electronic Manufacturing Services 1,000 Power Financial 18,918 Financial Services Holding Company - --------------------------------------------------------------------------- 133,647 - --------------------------------------------------------------------------- Israel-1.3% 1,000 Amdocs (b) 22,750 Telecommunications Billing & Customer Care Software - --------------------------------------------------------------------------- United States-6.9% 2,000 MIH (b) 53,000 Pay TV 600 Global TeleSystems (b) 48,600 Telecommunication Services 1,200 Azurix (b) 24,000 Owner & Operator of Water Utilities - --------------------------------------------------------------------------- 125,600 - --------------------------------------------------------------------------- Other-Total 281,997 Total Common Stocks-94.5% 1,709,411 - --------------------------------------------------------------------------- (Cost: $1,568,486) Cash and Other Assets less Liabilities-5.5% 98,822 - --------------------------------------------------------------------------- Total Net Assets-100% $1,808,233 - ---------------------------------------------------------------------------
Notes to Statement of Investments: (a) At June 30, 1999, for federal income tax purposes cost of investments was $1,568,486 and net unrealized appreciation was $140,925 consisting of gross unrealized appreciation of $212,483 and gross unrealized depreciation of $71,558. (b) Non-income producing security. See accompanying notes to financial statements. 25 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger Foreign Forty Portfolio Diversification June 30, 1999 At June 30, 1999 the Fund's portfolio of investments as a percentage of net assets was diversified as follows:
Value Percent - ------------------------------------------------------------------ Information Telephone Services $300,319 16.6% Computer Services 209,226 11.5 Publishing 131,991 7.3 CATV 51,713 2.9 Contract Manufacturing 43,759 2.4 Business Information & Marketing Services 24,787 1.4 Business Software 22,750 1.2 - ------------------------------------------------------------------ 784,545 43.3 - ------------------------------------------------------------------ Health Care Hospital/Laboratory Supplies 30,423 1.7 Hospital Management 29,856 1.7 Medical Equipment 29,560 1.6 - ------------------------------------------------------------------ 89,839 5.0 - ------------------------------------------------------------------ Consumer Goods/Services Nondurables 49,844 2.8 Other Durable Goods 42,207 2.3 International Consumer Software 42,160 2.3 Travel 39,880 2.2 Restaurants 30,908 1.7 Other Entertainment 28,850 1.6 - ------------------------------------------------------------------ 233,849 12.9 - ------------------------------------------------------------------ Finance Insurance 74,261 4.1 Finance Companies 31,006 1.7 Closed-End Funds 30,362 1.7 - ------------------------------------------------------------------ 135,629 7.5 - ------------------------------------------------------------------ Industrial Goods/Services Outsourcing & Training Services 94,301 5.2 Industrial Materials 62,500 3.5 Electrical Components 55,949 3.1 - ------------------------------------------------------------------ 212,750 11.8 - ------------------------------------------------------------------ Energy/Minerals Oil/Gas Producers 58,780 3.3 Oil Services 39,910 2.2 - ------------------------------------------------------------------ 98,690 5.5 - ------------------------------------------------------------------ Other Regulated Utilities 65,665 3.6 Transportation 54,504 3.0 Waste Management 33,940 1.9 - ------------------------------------------------------------------ 154,109 8.5 - ------------------------------------------------------------------ Total Common Stocks 1,709,411 94.5 - ------------------------------------------------------------------ Cash and Other Assets less Liabilities 98,822 5.5 - ------------------------------------------------------------------ Net Assets $1,808,233 100.0% - ------------------------------------------------------------------
See accompanying notes to financial statements. 26 Wanger99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Statements of Assets and Liabilities (unaudited) June 30, 1999
--------------------------------------------------------------- Wanger Wanger Wanger Wanger U.S. Small Cap International Twenty Foreign Small Cap Forty - ----------------------------------------------------------------------------------------------------------------------------------- Assets Investments, at value (cost: Wanger U.S. Small Cap $290,799,433; $339,294,216 $165,548,398 $ 4,286,594 $ 1,709,411 Wanger International Small Cap $118,965,633; Wanger Twenty $3,810,312; Wanger Foreign Forty $1,568,486) Cash 912 1,750,994 451,819 4,384 Organization costs 16,782 16,782 -- -- Receivable for: Securities sold 994,578 3,052,143 -- 72,053 Fund shares sold 477,161 144,406 10,104 16,968 Dividends and interest 25,418 240,362 950 3,422 Amount due from advisor -- -- 5,495 13,931 Other assets 1,135 3,371 -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total assets 340,810,202 170,756,456 4,754,962 1,820,169 Liabilities and Net Assets Payable for: Securities purchased -- 3,521,955 117,872 -- Fund shares redeemed 42,265 171,757 -- 21 Amount owed to advisor 17,170 16,680 -- -- Other 26,710 66,302 11,295 11,915 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 86,145 3,776,694 129,167 11,936 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Fund shares outstanding $340,724,057 $166,979,762 $ 4,625,795 $ 1,808,233 - ----------------------------------------------------------------------------------------------------------------------------------- Fund shares outstanding 15,531,414 6,933,671 369,296 159,352 - ----------------------------------------------------------------------------------------------------------------------------------- Pricing of Shares Net asset value, offering price and redemption price per share $21.94 $24.08 $12.53 $11.35 - ----------------------------------------------------------------------------------------------------------------------------------- Analysis of Net Assets Paid-in capital $260,423,742 $114,179,466 $ 4,046,893 $ 1,598,626 Undistributed net realized gain on sales of investments and foreign currency transactions 31,189,978 6,162,015 109,670 60,151 Net unrealized appreciation of investments and foreign currency transactions 48,494,783 46,576,943 476,282 140,885 Undistributed net investment income (loss) 615,554 61,338 (7,050) 8,571 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Fund shares outstanding $340,724,057 $166,979,762 $ 4,625,795 $ 1,808,233
See accompanying notes to financial statements. 27 Wanger99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Statements of Operations (unaudited)
---------------- ---------------- ------------- ------------- Wanger Wanger Wanger Wanger U.S. Small Cap International Twenty Foreign Forty Inception Inception February 1 February 1 Six months ended Six months ended through through June 30, 1999 June 30, 1999 June 30, 1999 June 30, 1999 - --------------------------------------------------------------------------------------------------------------------------------- Investment Income: Dividends (net of foreign taxes of $128,740 for Wanger $ 1,699,825 $ 1,193,034 $ 7,227 $ 16,910 International Small Cap and $1,456 for Wanger Foreign Forty) Interest 524,396 10,115 -- -- - --------------------------------------------------------------------------------------------------------------------------------- Total investment income 2,224,221 1,203,149 7,227 16,910 Expenses: Investment advisory 1,502,772 935,848 10,047 5,751 Custodian 19,401 130,267 2,200 3,853 Legal and audit 29,517 28,112 6,871 6,871 Reports to shareholders 14,015 14,015 3,318 3,318 Amortization of organization costs 9,906 9,906 -- -- Transfer agent 10,860 10,860 8,636 8,636 Trustees' 15,117 8,537 417 417 Insurance 2,232 1,017 -- -- Other 7,240 3,801 167 167 - --------------------------------------------------------------------------------------------------------------------------------- Total expenses 1,611,060 1,142,363 31,656 29,013 Less custodian fees paid indirectly (2,393) (667) (1,836) (992) Less reimbursement of expenses by advisor -- -- (15,543) (19,682) - --------------------------------------------------------------------------------------------------------------------------------- Net expenses 1,608,667 1,141,696 14,277 8,339 - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) 615,554 61,453 (7,050) 8,571 Net realized and unrealized gain (loss) on investments: Net realized gain on sales of investments 31,594,733 13,523,454 109,670 60,151 Net change in unrealized appreciation (1,610,075) 20,023,079 476,282 140,885 - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 29,984,658 33,546,533 585,952 201,036 - --------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $30,600,212 $33,607,986 $578,902 $209,607 - ---------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 28 Wanger99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Statements of Changes in Net Assets (unaudited)
------------------------- ------------------------- ------------- ------------- Wanger U.S. Small Cap Wanger International Wanger Twenty Wanger Small Cap Foreign Forty Inception Inception Six months Year ended Six months Year ended February 1 February 1 ended June December ended June December through June through June 30, 1999 31, 1998 30, 1999 31, 1999 30, 1999 30, 1999 - ------------------------------------------------------------------------------------------------------------------------------------ From operations: Net investment income (loss) $615,554 $(783,423) $61,453 $220,138 $(7,050) $8,571 Net realized gain (loss) on sales of investments 31,594,733 31,406,965 13,523,454 (2,995,916) 109,670 60,151 Net change in unrealized appreciation (1,610,075) (6,414,368) 20,023,079 21,548,547 476,282 140,885 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets resulting from operations 30,600,212 24,209,174 33,607,986 18,772,769 578,902 209,607 Distributions to shareholders from: Net investment income -- -- (2,396,217) (1,532,876) -- -- Net realized gain (31,015,042) (15,422,770) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions to shareholders (31,015,042) (15,422,770) (2,396,217) (1,532,876) -- -- From Fund share transactions: Reinvestment of dividends and capital gain distributions 30,987,684 15,407,847 2,391,782 1,530,069 -- -- Proceeds from other shares sold 16,882,083 94,608,919 7,859,552 26,836,486 4,367,302 1,765,984 - ------------------------------------------------------------------------------------------------------------------------------------ 47,869,767 110,016,766 10,251,334 28,366,555 4,367,302 1,765,984 Payments for shares redeemed (45,849,761) (50,550,116) (15,736,650) (25,013,297) (320,409) (167,358) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from Fund share transactions 2,020,006 59,466,650 (5,485,316) 3,353,258 4,046,893 1,598,626 - ------------------------------------------------------------------------------------------------------------------------------------ Total increase in net assets 1,605,176 68,253,054 25,726,453 20,593,151 4,625,795 1,808,233 Net assets: Beginning of period 339,118,881 270,865,827 141,253,309 120,660,158 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ End of period $340,724,057 $339,118,881 $166,979,762 $141,253,309 $ 4,625,795 $ 1,808,233 - ------------------------------------------------------------------------------------------------------------------------------------ Undistributed Net Investment Income (Loss) $615,554 $0 $61,337 $2,396,211 $(7,050) $8,571 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 29 Wanger99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger U.S. Small Cap Financial Highlights
Six months ended Year ended Year ended Year ended May 3, 1995 through June 30. 1999 December 31, 1998 December 31, 1997 December 31, 1996 December 31, 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Net Asset Value, beginning of period $22.18 $21.46 $16.97 $11.60 $10.00 Income From Investment Operations Net investment income (loss) (c) .04 (.05) (.02) (.06) (.05) Net realized and unrealized gain on investments 1.84 1.93 4.90 5.46 1.65 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.88 1.88 4.88 5.40 1.60 Less Distributions Dividends from net investment income -- -- -- -- -- Distributions from net realized gain (2.12) (1.16) (.39) (.03) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (2.12) (1.16) (.39) (.03) -- Net Asset Value, end of period $21.94 $22.18 $21.46 $16.97 $11.60 - ------------------------------------------------------------------------------------------------------------------------------------ Total Return 10.3% 8.68% 29.41% 46.59% 16.00% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (b) 1.02%* 1.02% 1.06% 1.21% 2.08%* Ratio of net investment income (loss) to average net assets (b) .39%* (.25%) (.10%) (.41%) (1.44%) Portfolio turnover rate 37%* 34% 34% 46% 59% Net assets at end of period 340,724,057 339,118,881 270,865,827 128,957,911 21,903,536
- -------------------------------------------------------------------------------- *Annualized (a) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian (custodian fees paid indirectly). This ratio net of custodian fees paid indirectly would have been 1.04% for the year ended December 31, 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 (prior to custodian fees paid indirectly) 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 2.35% and (1.71%), respectively. (c) Net investment income (loss) per share for the six months ended June 30, 1999, and the years ended December 31, 1998, 1997 and 1996 was based upon the average shares outstanding during the period. See accompanying notes to financial statements. 30 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger International Small Cap Financial Highlights
Six months ended Year ended Year ended Year ended May 3, 1995 through June 30, 1999 December 31, 1998 December 31, 1997 December 31, 1996 December 31, 1995 - ----------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, beginning of period $19.62 $17.05 $17.71 $13.45 $10.00 Income From Investment Operations Net investment income (loss) (c) -- .03 .02 (.09) (.03) Net realized and unrealized gain (loss) on investments 4.80 2.76 (.26) 4.38 3.48 - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 4.80 2.79 (.24) 4.29 3.45 Less Distributions Dividends from net investment income (.34) (.22) -- -- -- Distributions from net realized gain and unrealized gain reportable for federal income taxes -- -- (.42) (.03) -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions (.34) (.22) (.42) (.03) -- Net Asset Value, end of period $24.08 $19.62 $17.05 $17.71 $13.45 - ----------------------------------------------------------------------------------------------------------------------------------- Total Return 24.82% 16.33% (1.46%) 32.01% 34.50% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (b) 1.55%* 1.55% 1.60% 1.79% 2.32% Ratio of net investment income (loss) to average net assets (b) .08%* .16% .12% (.56%) (.81%)* Portfolio turnover rate 73%* 56% 60% 50% 14%* Net assets at end of period 166,979,762 141,253,309 120,660,158 84,855,082 11,368,924 - -----------------------------------------------------------------------------------------------------------------------------------
*Annualized (a) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian (custodian fees paid indirectly). This ratio net of custodian fees paid indirectly would have been 1.54% for the six months ended June 30, 1999, 1.59% for the year ended December 31, 1997, 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 (prior to custodian fees paid indirectly) 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, 1999, and the years ended December 31, 1998, 1997 and 1996 was based upon the average shares outstanding during the period. See accompanying notes to financial statements. 31 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger Twenty Financial Highlights
February 1,1999 through June 30,1999 - -------------------------------------------------------------------------------- Net Asset Value, beginning of period $10.00 Income From Investment Operations Net investment loss (c) (.03) Net realized and unrealized gain on investments 2.56 - -------------------------------------------------------------------------------- Total from investment operations 2.53 - -------------------------------------------------------------------------------- Net Asset Value, end of period $12.53 - -------------------------------------------------------------------------------- Total Return 25.30% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (b) 1.52% * Ratio of net investment loss to average net assets (b) (.67%)* Portfolio turnover rate 119% * Net assets at end of period 4,625,795
*Annualized (a) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian (custodian fees paid indirectly). This ratio net of custodian fees paid indirectly would have been 1.35% for the period ended June 30, 1999. (b) The Fund was reimbursed by the Advisor for certain expenses from February 1, 1999 through June 30, 1999. Without the reimbursement, the ratio of expenses (prior to custodian fees paid indirectly) to average net assets and the ratio of net investment income to average net assets for the period ended June 30, 1999 would have been 2.82% and (2.14%), respectively. (c) Net investment loss per share for the period ended June 30, 1999 was based upon the average shares outstanding during the period. See accompanying notes to financial statements. 32 Wanger 99 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Wanger Foreign Forty Financial Highlights
February 1, 1999 through June 30, 1999 - -------------------------------------------------------------------------------- Net Asset Value, beginning of period $10.00 Income From Investment Operations Net investment income (c) .06 Net realized and unrealized gain on investments 1.29 - -------------------------------------------------------------------------------- Total from investment operations 1.35 - -------------------------------------------------------------------------------- Net Asset Value, end of period $11.35 - -------------------------------------------------------------------------------- Total Return 13.50% Ratios/Supplemental Data Ratio of expenses to average net assets (a) (b) 1.62%* Ratio of net investment income to average net assets (b) 1.49%* Portfolio turnover rate 101%* Net assets at end of period 1,808,233
- -------------------------------------------------------------------------------- *Annualized (a) In accordance with a requirement of the Securities and Exchange Commission, this ratio reflects total expenses prior to the reduction of custodian fees for cash balances it maintains with the custodian (custodian fees paid indirectly). This ratio net of custodian fees paid indirectly would have been 1.45% for the period ended June 30, 1999. (b) The Fund was reimbursed by the Advisor for certain expenses from February 1, 1999 through June 30, 1999. Without the reimbursement, the ratio of expenses (prior to custodian fees paid indirectly) to average net assets and the ratio of net investment income to average net assets for the period ended June 30, 1999 would have been 4.87% and (1.93%), respectively. (c) Net investment income per share for the period ended June 30, 1999, was based upon the average shares outstanding during the period. See accompanying notes to financial statements. 33 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Notes to Financial Statements 1. Nature of Operations Wanger U.S. Small Cap, Wanger International Small Cap, Wanger Twenty and Wanger Foreign Forty ("the Funds") are series of Wanger Advisors Trust ("the Trust"), an open-end management investment company organized as a Massachusetts business trust. The investment objective of each Fund is to seek long-term growth of capital. The Funds are available only for allocation to certain insurance company separate accounts established for the purpose of funding variable insurance contracts, and may also be offered directly to certain types of pension plans and retirement arrangements. 2. Significant Accounting Policies Security valuation Investments are stated at current value. Securities traded on securities exchanges or in over-the-counter markets in which transaction prices are reported are valued at the last sales price at the time of valuation. Securities for which there are no reported sales on the valuation date are valued at the mean of the latest bid and ask quotation or, if there is no ask quotation, at the most recent bid quotation. Money market instruments having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis. Securities for which quotations are not readily available and any other assets are valued as determined in good faith by the Board of Trustees. Foreign currency translations Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales of investments and dividend and interest income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The gain or loss resulting from changes in foreign exchange rates is included with net realized and unrealized gain or loss from investments, as appropriate. Security transactions and investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the information is available to the Fund. Interest income is recorded on the accrual basis and includes amortization of discounts on money market instruments and on long-term debt instruments when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated. Fund share valuation Fund shares are sold and redeemed on a continuing basis at net asset value. Net asset value per share is determined daily as of the close of trading on the New York Stock Exchange on each day the Exchange is open for trading by dividing the total value of the Fund's investments and other assets, less liabilities, by the number of Fund shares outstanding. Custodian fees Custodian fees are reduced based on each Fund's cash balances maintained with the custodian. This presentation does not affect the determination of Fund shares outstanding. 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 had no unrealized appreciation from investments in PFICs at June 30, 1999. Cumulative net unrealized appreciation recognized in prior years on PFICs sold in 1999 amounted to $83,762. Wanger International Small Cap intends to utilize provisions of the federal income tax law that allow it to carry a realized capital loss forward for eight years following the year of the loss and offset such losses against future realized gains. At December 31, 1998, the Fund had a capital loss carryforward of $7,263,202 of which $382,694 will expire December 31, 2005 and $6,880,508 will expire December 31, 2006. Dividends and distributions payable to each Fund's shareholders are recorded by the Fund on the ex-dividend date. Reclassifications have been made in 1998 for Wanger U.S. Small Cap in the accompanying analysis of net assets from undistributed net investment income to net realized gain on the sale of investments of $783,423 to reflect differences between financial reporting and income tax basis and had no impact on net asset value. Reclassifications have also been made in 1998 for Wanger International Small Cap from accumulated net realized gain on sale of investments to undistributed net investment income of $2,092,223 to reflect differences between financial reporting and income tax basis. 3. Transactions 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: 34 Wanger Advisor Trust 1999 Semiannual Report - -------------------------------------------------------------------------------- Notes to Financial Statements Wanger U.S. Small Cap Average Daily Net Assets For the first $100 million 1.00% Next $150 million .95% In excess of $250 million .90% Wanger International Small Cap Average Daily Net Assets For the first $100 million 1.30% Next $150 million 1.20% In excess of $250 million 1.10% Wanger Twenty On average daily net assets .95% Wanger Foreign Forty On average daily net assets 1.00% WAM has undertaken to reimburse the Funds to the extent that ordinary operating expenses (computed based on net custodian fees) exceed a percentage of average net assets. This amount is 1.50% for Wanger U.S. Small Cap, 1.90% for Wanger International Small Cap, 1.35% for Wanger Twenty and 1.45% for Wanger Foreign Forty. WAM was not required to reimburse Wanger U.S. Small Cap or Wanger International Small Cap under these undertakings for the six months ended June 30, 1999. Wanger Twenty and Wanger Foreign Forty were reimbursed $15,543 and $19,682, respectively, for the period ended June 30, 1999. Certain officers and trustees of the Trust are also principals of WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with WAM. The Funds paid the following trustees' fees and expenses to trustees not affiliated with WAM:
Period ended June 30, 1999 Wanger U.S. Small Cap $15,117 Wanger International Small Cap 8,537 Wanger Twenty 417 Wanger Foreign Forty 417
WAM advanced $100,000 in connection with the organization and initial registration of Wanger U.S. Small Cap and Wanger International Small Cap. These costs are being amortized and reimbursed to WAM over the period May, 1995 through April, 2000. WAM paid all organization costs associated with the organization of Wanger Twenty and Wanger Foreign Forty. These costs amounted to $20,816. WAM will not be reimbursed for these costs by the Funds. 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. Borrowing Arrangements The trust participates in a $250,000,000 credit facility which was entered into to facilitate portfolio liquidity. No amounts have been borrowed under this facility. 5. Fund Shares 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 Period ended Year ended June 30, 1999 December 31, 1998 Shares sold 834,884 4,370,518 Shares issued in reinvestment of dividend and capital gain distributions 1,675,771 686,318 - -------------------------------------------------------------------------------- 2,510,655 5,056,836 Less shares redeemed 2,270,064 2,389,858 - -------------------------------------------------------------------------------- Net increase in shares outstanding 240,591 2,666,978
Wanger International Small Cap Period ended Year ended June 30, 1999 December 31, 1998 Shares sold 370,799 1,389,310 Shares issued in reinvestment of dividend and capital gain distributions 119,889 76,657 - -------------------------------------------------------------------------------- 490,688 1,485,987 Less shares redeemed 754,971 1,346,776 - -------------------------------------------------------------------------------- Net decrease in shares outstanding (264,283) 119,191
Wanger Twenty Period ended June 30, 1999 Shares sold 396,035 Less shares redeemed 26,739 - -------------------------------------------------------------------------------- Net increase in shares outstanding 369,296
Wanger Foreign Forty Period ended June 30, 1999 Shares sold 175,081 Less shares redeemed 15,729 - -------------------------------------------------------------------------------- Net increase in shares outstanding 159,352
6. Investment Transactions The aggregate costs of purchases and proceeds from sales other than short-term obligations for the period ended June 30, 1999 were:
------------------------------------------------------------ Wanger U.S. Wanger Wanger Wanger Small Cap International Twenty Foreign Forty Small Cap Purchases $54,856,973 $53,569,418 $4,935,376 $2,055,610 Sales 83,195,198 58,000,528 1,234,734 547,275
35 - -------------------------------------------------------------------------------- Wanger Advisors Trust Trustees Fred D. Hasselbring Charles P. McQuaid P. Michael Phelps Ralph Wanger Patricia H. Werhane Officers Marcel P. Houtzager Vice President Kenneth A. Kalina Assistant Treasurer Bruce H. Lauer Vice President and Treasurer Charles P. McQuaid Senior Vice President Robert A. Mohn Vice President John H. Park Vice President Steven A. Radis Vice President and Secretary Ralph Wanger President Mark H. Yost Vice President Peter Zaldivar Vice President Leah J. Zell Vice President 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. 36 OBC1 Wanger Advisors Trust OL2568S 8/99 -----END PRIVACY-ENHANCED MESSAGE-----