0001104659-15-015825.txt : 20150302 0001104659-15-015825.hdr.sgml : 20150302 20150302164338 ACCESSION NUMBER: 0001104659-15-015825 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 44 CONFORMED PERIOD OF REPORT: 20141231 FILED AS OF DATE: 20150302 DATE AS OF CHANGE: 20150302 EFFECTIVENESS DATE: 20150302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WANGER ADVISORS TRUST CENTRAL INDEX KEY: 0000929521 IRS NUMBER: 362692100 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08748 FILM NUMBER: 15665300 BUSINESS ADDRESS: STREET 1: 227 WEST MONROE STREET STE 3000 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126349200 MAIL ADDRESS: STREET 1: 227 WEST MONROE STREET STE 3000 CITY: CHICAGO STATE: IL ZIP: 60606-5016 0000929521 S000008981 Wanger USA C000024403 Wanger USA WUSAX 0000929521 S000008982 Wanger International C000024404 Wanger International WSCAX 0000929521 S000008983 Wanger Select C000024405 Wanger Select WATWX 0000929521 S000008984 Wanger International Select C000024406 Wanger International Select WAFFX N-CSR 1 a15-1023_5ncsr.htm N-CSR

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number

811-08748

 

Wanger Advisors Trust

(Exact name of registrant as specified in charter)

 

227 W. Monroe Street

Suite 3000

Chicago, IL

 

60606

(Address of principal executive offices)

 

(Zip code)

 

Scott R. Plummer

Columbia Management Investment Advisers, LLC

5228 Ameriprise Financial Center

Minneapolis, MN 55474

 

P. Zachary Egan

Columbia Acorn Trust

227 West Monroe Street, Suite 3000

Chicago, Illinois 60606

 

Mary C. Moynihan

Perkins Coie LLP

700 13th Street, NW

Suite 600

Washington, DC 20005

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

(312) 634-9200

 

 

Date of fiscal year end:

December 31

 

 

Date of reporting period:

December 31, 2014

 

 

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

 

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 



 

Item 1. Reports to Stockholders.

 



Wanger International

2014 Annual Report

Not FDIC insuredNo bank guaranteeMay lose value




  Wanger International

  2014 Annual Report

    Table of Contents

 

1

   

Understanding Your Expenses

 
 

2

   

Communications Satellites: Past and Present

 
 

4

   

Performance Review

 
 

6

   

Statement of Investments

 
 

16

   

Statement of Assets and Liabilities

 
 

16

   

Statement of Operations

 
 

17

   

Statement of Changes in Net Assets

 
 

18

   

Financial Highlights

 
  19    

Notes to Financial Statements

 
 

23

   

Report of Independent Registered Public Accounting Firm

 
  24    

Federal Income Tax Information (Unaudited)

 
  25    

Board of Trustees and Management of Wanger Advisors Trust

 

Columbia Wanger Asset Management, LLC (CWAM) is one of the leading global small- and mid-cap equity managers in the United States with over 40 years of small- and mid-cap investment experience. As of December 31, 2014, CWAM managed $32 billion in assets. CWAM is the investment manager to Wanger USA, Wanger International, Wanger Select and Wanger International Select (together, the Columbia Wanger Funds) and the Columbia Acorn Family of Funds.

An important note: Columbia Wanger Funds are available only through variable annuity contracts and variable life insurance policies issued by participating insurance companies or certain eligible retirement plans. Columbia Wanger Funds are not offered directly to the public and are not available in all contracts, policies or plans. Contact your financial advisor or insurance representative for more information. Columbia Wanger Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA, and are managed by CWAM.

Investors should carefully consider investment objectives, risks, charges and expenses before investing. For variable fund and variable contract prospectuses, which contain this and other important information, investors should contact their financial advisor or insurance representative. Read the prospectus carefully before investing.

The views expressed in "Communications Satellites: Past and Present" and in the Performance Review reflect the current views of the respective authors. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Wanger Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Wanger Fund. References to specific company securities should not be construed as a recommendation or investment advice.

A Comment on Trading Volumes

Market conditions are always changing and vary by country and industry sector, and investing in international markets involves unique risks. In the wake of the 2007-2009 financial crisis, trading volumes in both emerging and developed international markets declined significantly and have stayed at generally reduced levels since then. Although it is difficult to accurately assess trends in trading volumes in foreign markets, because some amount of activity has migrated to alternative trading venues, a reduction in trading volumes poses challenges to the Fund. This is particularly so because the Fund focuses on small- and mid-cap companies that usually have lower trading volumes and often takes sizeable positions in portfolio companies. As a result of lower trading volumes, it may take longer to buy or sell securities, which can exacerbate the Fund's exposure to volatile markets. The Fund may also be limited in its ability to execute favorable trades in portfolio securities in response to changes in company prices and fundamentals. If the Fund is forced to sell securities to meet redemption requests or other cash needs, or in the case of an event affecting liquidity in a particular market or markets, it may be forced to dispose of those securities under disadvantageous circumstances and at a loss. As the Fund grows in size, these considerations take on increasing significance and may adversely impact performance.




Wanger International 2014 Annual Report

Understanding Your Expenses

As a shareholder, you incur three types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing costs, which generally include management fees and other expenses for Wanger International (the Fund). Lastly, there may be additional fees or charges imposed by the insurance company that sponsors your variable annuity and/or variable life insurance product. The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.

Analyzing your Fund's expenses

To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in the Fund during the period. The actual and hypothetical information in the table below is based on an initial investment of $1,000 at the beginning of the period indicated and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "Actual" column is calculated using the Fund's actual operating expenses and total return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the results by the expenses paid during the period under the Actual column. The amount listed in the "Hypothetical" column assumes a 5% annual rate of return before expenses (which is not the Fund's actual return) and then applies the Fund's actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the period. See "Compare with other funds" below for details on how to use the hypothetical data.

Compare with other funds

Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing cost of investing in a fund only and do not reflect any transaction costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.

July 1, 2014 – December 31, 2014

  Account value at the
beginning of the period ($)
  Account value at the
end of the period ($)
  Expenses paid during
period ($)
  Fund's annualized
expense ratio (%)*
 

 

Actual

 

Hypothetical

 

Actual

 

Hypothetical

 

Actual

 

Hypothetical

     

Wanger International

   

1,000.00

     

1,000.00

     

902.60

     

1,019.86

     

5.08

     

5.40

     

1.06

   

*Expenses paid during the period are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the Fund's most recent fiscal half-year and divided by 365.

It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the Fund. Expenses paid during the period do not include any insurance charges imposed by your insurance company's separate account. The hypothetical example provided is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.


1



Wanger International 2014 Annual Report

Communications Satellites: Past and Present

The Soviet Union launched Sputnik, mankind's first satellite, in October 1957. This 184-pound satellite was a 23-inch sphere with four antennas. It transmitted a "beep beep" signal over ham radio frequencies accessible by many around the globe, and its surface was polished so it was visible as it orbited the Earth.1 Sputnik was a propaganda tool that woke up the world.

Prior to the launch of Sputnik, satellites had been theorized for a long time. In the 17th century, Sir Isaac Newton developed his theory of gravitation. In it he stated that a projectile launched at the correct angle at a speed of 17,000 miles per hour would orbit the Earth.2 In 1945, science fiction writer Arthur C. Clarke introduced the concept of geostationary orbit: a satellite orbiting above the Earth's equator at an altitude of about 22,200 miles would remain over the same position, appearing stationary to people on Earth. Clarke thought that within 50 years, there could be three equally spaced geostationary satellites communicating to virtually the whole planet.3

The United States launched its first satellite, Explorer 1, in January 1958. This satellite discovered the Van Allen radiation belts around Earth. In December 1958, the United States launched its first communications satellite, SCORE, which broadcast a tape-recorded holiday message from President Eisenhower.4

Many experiments and innovations in satellites followed. Perhaps the oddest was Echo-1, which inflated into a 100-foot diameter sphere coated in aluminum, enabling it to reflect radio waves.5 This passive communications satellite reflected about one ten-millionth of originating signal sent toward it.6

Telstar-1, launched in 1962, provided the first live TV broadcast from space, as well as the first phone conversation transmitted by satellite. Rather than being a passive reflector like Echo-1, Telstar-1 had an active transponder that received, amplified and re-sent signals. It could communicate a total of one black and white TV

channel along with 600 telephone conversations.7

The first satellites achieved low or medium Earth orbits, far below Arthur C. Clarke's geostationary orbit, and transmitted at low power. As a result, ground antennas needed to be huge, initially 100 feet wide,8 and had to rotate in order to remain pointed at a moving satellite.9 Furthermore, such satellites were in view of the ground antennas for short periods of time; a low Earth orbit satellite 500 miles up is in touch for 12 minutes per orbit, while a medium Earth satellite 5,000 miles up is in view for 30 minutes.10

The first successful geostationary communications satellite, Syncom 3, launched in August 196411 and was stationed over the Pacific Ocean.12 As planned, it remained in constant contact with fixed-position Earth stations within its coverage area. Also, since geostationary satellites are rarely in Earth's shadow, it was primarily powered by solar cells.13 But with a transmitter output of two watts,14 large Earth stations were needed to communicate with it. Other geostationary satellites followed shortly thereafter. In July 1969, Intelsat, a leading provider of satellite services worldwide, had three geostationary satellites covering nearly the entire Earth, fulfilling Clarke's concept some 25 years earlier than he had imagined.

Early communications satellites, continuing to transmit just one TV channel each,15 enabled much of the world to witness milestone events, which in turn drove demand for more communications satellites. Syncom satellites carried the 1964 Tokyo Olympics, while Intelsat allowed much of the world to witness Neil Armstrong walking on the moon.16 Nearly a billion people worldwide watched the 1972 Summer Olympics held in Munich, Germany.

Additional and more powerful communications satellites were launched shortly thereafter, along with improved and less expensive 16- to 33-foot ground antennas. New businesses were created and existing business models were altered. WESTAR I launched in April 1974 and provided

fledgling cable TV programmer Home Box Office the opportunity to broadcast live Muhammad Ali's "Thrilla in Manila" fight in 1975.

When entrepreneur Ted Turner learned that he could broadcast his Atlanta WTCG TV station via satellite everywhere in the country, he signed a million-dollar-a-year contract to do so, and in 1976 reached homes in over 27 states via local cable television (CATV) systems.17 Turner subsequently launched CNN in 1980, creating the first 24-hour news channel. Numerous other CATV channels followed. Satellites enabled cable TV operators to offer additional content, which eventually ended the dominance of the three major U.S. television networks.

As demand for satellite communications rose, the International Telecommunications Union awarded additional radio bandwidth and orbital slots to industry participants. Current communications satellites have far better circuitry, software and solar power, along with innovations such as spot beams, data compression algorithms and fuel-saving electrical propulsion systems. Rather than being simple "bent pipe" mechanisms receiving and transmitting the same signal, today's satellites enhance signals and allocate bandwidth more efficiently.

New satellites continue to be larger, and are broadcasting at higher power and at higher frequencies. Early "C-band" satellite TV signals were transmitted at 10 to 17 watts, while current "Ku-band" satellite TV signals are transmitted at 100 to 200 watts.18 Higher power and higher frequencies, coupled with improved electronics, facilitate still smaller and cheaper ground station equipment. Neiman Marcus offered a 20-foot satellite TV dish in 1979 for $36,500,19 capable of receiving only HBO; today, direct-to-home receivers cost below $100 and can receive hundreds of channels using dishes as small as 18 inches across.20

Satellite technology has extended beyond broadcasting TV signals. The Global Positioning System (GPS) was introduced by the U.S. military


2



Wanger International 2014 Annual Report

in 1978, currently consists of 24 satellites in orbit,21 and has been made available for civilian use.22 These satellites transmit precise time signals along with their exact positions. A GPS receiver measures the range from three or four satellites and uses simultaneous equations to calculate its position. Vehicle and handheld GPS navigation systems combine position information with map data, and then provide locations and directions to users. It seems that the smallest satellite receivers may currently be GPS wristwatches!

Internet connection for fixed locations in densely populated areas is dominated by cable, telephone and cell phone service providers. Satellite data cannot compete economically with these technologies, where they are available. However, satellites provide data and Internet access elsewhere, such as in remote areas, on the oceans and in airplanes. These applications have also benefited from improved satellite technology. For example, satellite data speeds have hit 30 megabits per second per aircraft, up 70-fold from prior generation satellite equipment.23

The next generation high-throughput satellites, utilizing even higher power and more frequencies, and providing more spot beams, are launching through 2017. Combined, these satellites will increase bandwidth in the sky by a factor of eight to ten,24 and promise to deliver more data, more quickly, to ever more users.

As much as satellite technology has changed the world, investments in satellite companies have had mixed results. We have tended to shy away from start-up satellite companies that needed to make large up-front investments before earning highly uncertain revenues. That bias proved correct long ago when satellite phone provider Iridium filed for bankruptcy shortly after launch, citing initial subscriber counts dramatically lower than expected.

Instead, we opted to invest either downstream from satellite technology or in proven satellite service providers. Long ago, our domestic Funds

benefited substantially from investments in cable TV channel companies and, more recently, a company providing mapping data. The Funds currently have investments in a company utilizing GPS signals for engineering and construction. Our international Funds have benefited from satellite service providers possessing visible revenue streams within a more consolidated industry.

Charles P. McQuaid
Portfolio Manager, Analyst and Advisor
Columbia Wanger Asset Management, LLC

The information and data provided in this analysis are derived from sources that we deem to be reliable and accurate. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. The views/opinions expressed here are those of the author and not of the Wanger Advisors Trust Board, are subject to change at any time based upon economic, market or other conditions, may differ from views expressed by other Columbia Management associates and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Wanger Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Wanger Fund.

1  Virgil S. Labrador and Peter I. Galace, Heavens Fill with Commerce: A Brief History of the Communications Satellite Industry (Sonoma, California, SATNEWS PUBLISHERS, 2005), p. 23.

2  Ibid., p. 15.

3  Ibid., p. 21.

4  Ibid., p. 36.

5  Ibid., p. 39.

6  Steve Ford, The ARRL Satellite Handbook (ARRL, The National Association for Amateur Radio, 2008-2013), appendix B, p. 5.

7  Labrador, op. cit., p. 42.

8  Bruce Elbert, The Satellite Communication Ground Segment and Earth Station Handbook, Second Edition (Norwood, Massachusetts, Artech House, 2014) p. 10.

9  Labrador, op. cit., p. 43.

10  Elbert, op. cit., p. 77.

11  Labrador, op. cit., p. 46.

12  NASA Technical Report, R-252, Syncom Engineering Report, Volume II, By Syncom Projects Office, Goddard Space Flight Center, Greenbelt, Maryland, April 1967, p. 3.

13  Ibid., p. 10.

14  Ibid., p. 8.

15  Labrador, op. cit., p. 115.

16  Ibid., p. 58.

17  Ibid., p. 119.

18  Ibid., p. 133.

19  Ray B. Browne and Pat Browne, The Guide to United States Popular Culture (Madison, Wisconsin, Popular Press 3, 2001), p. 706.

20  Elbert, op. cit., p. 304.

21  Madhavendra Richharia, Mobile Satellite Communications: Principles and Trends, Second Edition (West Sussex, United Kingdom, John Wiley & Sons, Ltd, 2014), p. 30.

22  Ford, op. cit., p. 5-14.

23  First Edition, The Anatomy of Inflight Connectivity: An Inside Look at What it Takes to Bring Connectivity to Aircraft Around the World (Gogo LLC, an aero-communications service provider, 2014), p. 41.

24  Anne Wainscott-Sargent, "Ground Players Tackle Bandwidth Optimization in an HTS World," Via Satellite, January 2015, p. 16.


3



Wanger International 2014 Annual Report

Performance Review Wanger International

 

 
Louis J. Mendes III
Co-Portfolio Manager
  Christopher J. Olson
Co-Portfolio Manager
 

Performance data shown represents past performance and is not a guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data shown. Please visit columbiamanagement.com for most recent month-end performance updates.

International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards, operational and settlement risks and other risks associated with future political and economic developments. Stocks of small- and mid-cap companies pose special risks, including illiquidity and greater price volatility than stocks of larger, more established companies. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Please also see "A Comment on Trading Volumes" on the inside cover of this report.

Wanger International declined 4.40% for the year ended December 31, 2014. This compares to a 1.76% drop in its primary benchmark, the S&P Global Ex-U.S. Between $500M and $5B Index. For comparison, the large-cap, developed market MSCI EAFE Index (Net) declined 4.90% during the year.

After a strong year in 2013, international markets struggled to provide positive U.S. dollar returns in 2014 for several reasons. First and foremost was the strength of the U.S. dollar against nearly all world currencies. The combination of a recovering U.S. economy and increasing economic and political risk in Eastern Europe and the Middle East sent many investors fleeing to the security of the U.S. currency. The euro fell over 11% and the British pound fell over 6% versus the dollar. In Japan, Abenomics' continued easy money policies helped drive the yen down over 13% versus the dollar. It is not our practice to hedge currency exposures in the Fund in order to express a view on direction. This introduces some volatility to U.S. dollar returns, but we believe it lowers costs in the long term, and also provides shareholders with the benefit of currency diversification when exchange rates move in the other direction.

The second major factor impacting global markets was the rising specter of global deflation, most notably felt in the declining price of most commodities, particularly oil. While oil's dramatic fall in price has triggered debate over whether its cause is U.S.-led supply or declining global growth, there is considerable consensus that slow growth is driving the fall in other commodities, such as iron ore and copper. The flight to safety, as reflected in the roughly 0.85% drop in U.S. Treasury 10-year bond yields, only further reinforces the notion of little inflation in an increasingly hostile world outside the United States. It is notable that the 10-year yield, which has stayed under 2% for most of January 2015, implies a negative real return, assuming the Federal Reserve meets its long-term inflation target of 2%.

Several top contributors to gains during the year came from a country that is often forgotten in global market discussions: South Africa. This country represented about 2.5% of the Fund's benchmark, but 4.9% of Fund assets at year end. Three of the Fund's largest positions, Coronation Fund Managers, Naspers and Rand Merchant Insurance, are based in the country and generated strong returns of 36%, 24% and 38%, respectively, for the year in a market that rose less than 7% in U.S. dollar terms in the benchmark. One factor that these companies all have in common is excellent management that has allowed them to expand overseas into other markets. Coronation Fund

Managers is leveraging off a successful domestic operation to expand into the international fund management business, opening up new avenues of growth. While operating a pay-television franchise in sub-Saharan Africa, Naspers generates the bulk of its value from its investment in Hong Kong-based Tencent, an Internet software/mobile application business. Rand Merchant Insurance is growing through its Australian car insurance operations. Finding overlooked gems in often under-covered markets has been a hallmark of our investment style and has yielded strong returns in South Africa.

Oil prices fell dramatically during the period. The ramifications for many small- to mid-sized oil service providers are significant as the major oil companies are expected to cancel many exploration and production projects that no longer make economic sense. The Fund's energy positions on average fell 38% for the full year and underperformed the benchmark's energy weighting, which fell 27%.

Outside the energy sector, Macau casino operator Melco Crown Entertainment fell 35% on negative sentiment, as the industry came under greater scrutiny from mainland China. Neopost, a French provider of postage meter machines, declined 22% on poor contract renewals with the French public sector. While 2014 was disappointing, both Melco Crown Entertainment and Neopost have been long-term winners for the Fund's shareholders.

As we look ahead to 2015, international markets remain out of favor as market pundits continue to champion U.S. economic growth and currency strength as a reason for keeping more assets stateside than abroad. While no one knows the future direction of markets, as dedicated international investors, we will continue to seek out the best opportunities we can find for shareholders.

Fund's Positions in Mentioned Holdings

As a percentage of net assets, as of 12/31/14

Coronation Fund Managers

   

1.7

%

 

Naspers

   

1.2

   

Neopost

   

0.9

   

Rand Merchant Insurance

   

0.9

   

Melco Crown Entertainment

   

0.6

   

Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. Top holdings exclude short-term holdings and cash, if applicable.


4



Wanger International 2014 Annual Report

Growth of a $10,000 Investment in Wanger International
May 3, 1995 (inception date) through December 31, 2014

Performance data shown represents past performance and is not a guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data shown. Performance results reflect any fee waivers or reimbursements of Fund expenses by the investment manager and/or any of its affiliates. Absent these fee waivers and/or expense reimbursement arrangements, performance results would have been lower. For most recent month-end performance updates, please visit columbiamanagement.com.

This graph compares the results of $10,000 invested in Wanger International on May 3, 1995 (the date the Fund began operations) through December 31, 2014, to the S&P Global Ex-U.S. Between $500M and $5B Index with dividends and capital gains reinvested. Although the index is provided for use in assessing the Fund's performance, the Fund's holdings may differ significantly from those in the index.

Top 10 Holdings

As a percentage of net assets, as of 12/31/14

1. Coronation Fund Managers (South Africa)
South African Fund Manager
  1.7
 

%

 
2. Naspers (South Africa)
Media in Africa, China, Russia & other Emerging Markets
  1.2
 
 
3. CCL Industries (Canada)
Largest Global Label Converter
  1.2
 
 
4. Charles Taylor (United Kingdom)
Insurance Services
  1.2
 
 
5. WuXi PharmaTech – ADR (China)
Largest Contract Research Organization Business in China
  1.0
 
 
6. Zee Entertainment Enterprises (India)
Programmer of Pay Television Content
  1.0
 
 
7. Partners Group (Switzerland)
Private Markets Asset Management
  1.0
 
 
8. Neopost (France)
Postage Meter Machines
  0.9
 
 
9. Amcor (Australia)
Global Leader in Flexible & Rigid Packaging
  0.9
 
 
10. Rand Merchant Insurance (South Africa)
Directly Sold Property & Casualty Insurance; Holdings in other Insurers
  0.9
 
 

Top 5 Countries

As a percentage of net assets, as of 12/31/14

Japan

   

19.4

%

 

United Kingdom

   

10.8

   

South Africa

   

4.9

   

Australia

   

4.6

   

Canada

   

4.2

 

Results as of December 31, 2014

 

4th quarter*

 

1 year

 

5 years

 

10 years

 

Wanger International

   

-2.79

%

   

-4.40

%

   

8.69

%

   

9.13

%

 
S&P Global Ex-U.S. Between $500M
and $5B Index**
   

-3.48

     

-1.76

     

7.14

     

7.65

   

MSCI EAFE Index (Net)

   

-3.57

     

-4.90

     

5.33

     

4.43

   

*Not annualized.

**The Fund's primary benchmark.

NAV as of 12/31/14: $29.07

Performance numbers reflect all Fund expenses but do not include any fees and expenses imposed under your variable annuity or life insurance policy or qualified pension or retirement plan. If performance included the effect of these additional charges, it would be lower.

The Fund's annual operating expense ratio of 1.07% is stated as of the Fund's prospectus dated May 1, 2014, and differences in expense ratios disclosed elsewhere in this report may result from including fee waivers and expense reimbursements as well as different time periods used in calculating the ratios.

All results shown assume reinvestment of distributions.

The S&P Global Ex-U.S. Between $500M and $5B Index is a subset of the broad market selected by the index sponsor representing the mid- and small-cap developed and emerging markets, excluding the United States. The MSCI Europe, Australasia, Far East (EAFE) Index (Net) is a capitalization-weighted index that tracks the total return of common stocks in 22 developed-market countries within Europe, Australasia and the Far East. The returns of the MSCI EAFE Index (Net) are presented net of the withholding tax rate applicable to foreign non-resident institutional investors in the foreign companies included in the index who do not benefit from double taxation treaties. The performance of the MSCI EAFE Index (Net) is provided to show how the Fund's performance compares to a widely recognized broad-based index of foreign market performance. Indexes are not managed and do not incur fees or expenses. It is not possible to invest directly in an index.

Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings.


5




Wanger International 2014 Annual Report

Wanger International

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Equities – 94.4%

 
   

Asia – 42.5%

 
   

Japan – 19.4%

 
  256,589     Kansai Paint
Paint Producer in Japan, India, China & Southeast Asia
 

$

3,975,071
 
  286,000     Nippon Kayaku
Functional Chemicals, Pharmaceuticals & Auto
Safety Systems
  3,556,861
 
  2,520     Orix JREIT
Diversified REIT
  3,543,846
 
  194,100     Aeon Mall
Suburban Shopping Mall Developer, Owner & Operator
  3,439,640
 
  329,400     Ushio
Industrial Light Sources
  3,430,389
 
  113,700     Benesse
Education Service Provider
  3,373,814
 
  125,000     Glory
Currency Handling Systems & Related Equipment
  3,367,637
 
  88,400     FamilyMart
Convenience Store Operator
  3,329,483
 
  82,400     Japan Airport Terminal
Airport Terminal Operator at Haneda
  3,240,298
 
  102,300     NGK Spark Plug
Automobile Parts
  3,108,429
 
  37,900     Disco
Semiconductor Dicing & Grinding Equipment
  3,031,338
 
  515     Kenedix Office Investment
Tokyo Mid-size Office REIT
  2,914,975
 
  137,000     NGK Insulators
Ceramic Products for Auto, Power & Electronics
  2,808,267
 
  186,000     Park24
Parking Lot Operator
  2,738,173
 
  81,400     Misumi Group
Industrial Components Distributor
  2,684,181
 
  56,200     Hamamatsu Photonics
Optical Sensors for Medical & Industrial Applications
  2,675,290
 
  23,000     Hirose Electric
Electrical Connectors
  2,668,530
 
  421,000     NOF
Specialty Chemicals, Life Science & Rocket Fuels
  2,660,224
 
  122,800     Tamron
Camera Lenses
  2,434,792
 
  84,000     Nippon Paint Holdings
Paints for Automotive, Decorative & Industrial Usage
  2,434,152
 
Number of
Shares
     

Value

 
  62,900     Kintetsu World Express
Airfreight Logistics
 

$

2,413,588
 
  98,240     Ariake Japan
Commercial Soup & Sauce Extracts
  2,388,754
 
  18,200     Shimano
Manufacturer of Bicycle Components & Fishing Tackle
  2,357,295
 
  52,100     Makita
Power Tools
  2,347,730
 
  54,800     Nakanishi
Dental Tools & Machinery
  2,326,410
 
  502     Industrial & Infrastructure Fund
Industrial REIT in Japan
  2,322,329
 
  42,600     Santen Pharmaceutical
Specialty Pharma (Ophthalmic Medicine)
  2,293,362
 
  65,500     Ezaki Glico
Confectionary, Ice Cream & Dairy Products
  2,289,710
 
  131,000     Daiseki
Waste Disposal & Recycling
  2,263,256
 
  93,000     Nabtesco
Machinery Components
  2,247,684
 
  122,000     Suruga Bank
Regional Bank
  2,241,993
 
  96,639     Nihon Parkerizing
Metal Surface Treatment Chemicals & Processing
Service
  2,204,823
 
  106,100     Aica Kogyo
Laminated Sheets, Building Materials & Chemical
Adhesives
  2,191,077
 
  707,000     Aozora Bank
Commercial Bank
  2,188,550
 
  134,700     OSG
Consumable Cutting Tools
  2,173,647
 
  100,000     Stanley Electric
Automobile Lighting & LED Equipment
  2,159,346
 
  66,900     Toyo Suisan Kaisha
Instant Noodles & Processed Foods
  2,154,106
 
  229,500     Moshi Moshi Hotline
Call Center Operator
  2,118,185
 
  169,500     Rohto Pharmaceutical
Pharmaceutical, Health & Beauty Products
  2,117,726
 
  103,300     Aeon Financial Service
Diversified Consumer-related Finance Company in Japan
  2,040,270
 

See accompanying notes to financial statements.
6



Wanger International 2014 Annual Report

Wanger International

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Japan – 19.4% (cont)

 
  174,000     Toto
Toilets & Bathroom Fittings
 

$

2,024,091
 
  78,000     JIN (a)
Eyeglasses Retailer
  1,948,879
 
  134,700     Doshisha
Consumer Goods Wholesaler
  1,901,967
 
  57,400     OBIC
Computer Software
  1,862,613
 
  176,800     Asahi Diamond Industrial
Consumable Diamond Tools
  1,848,455
 
  26,900     Rinnai
Gas Appliances for Home & Commercial Use
  1,807,470
 
  74,900     Icom
Two-way Radio Communication Equipment
  1,802,140
 
  39,700     Omron
Electric Components for Factory Automation
  1,775,999
 
  36,000     Hoshizaki Electric
Commercial Kitchen Equipment
  1,734,766
 
  700     Japan Retail Fund
Retail REIT in Japan
  1,479,299
 
  22,800     Hikari Tsushin
Office IT/Mobiles/Insurance Distribution
  1,386,797
 
  46,820     Milbon
Hair Products for Salons
  1,274,615
 
  36,600     Otsuka
One-stop IT Services & Office Supplies Provider
  1,160,529
 
  50,000     MonotaRO (a)
Online Maintenance, Repair and Operations Goods
Distributor in Japan
  1,007,450
 
  47,600     Lifenet Insurance (b)
Online Life Insurance Company in Japan
  128,990
 
 

         

129,399,291

   
   

Taiwan – 4.0%

 
  586,000     President Chain Store
Taiwanese Convenience Chain Store Operator
  4,526,161
 
  164,000     St. Shine Optical
Disposable Contact Lens Original Equipment
Manufacturer
  2,675,603
 
  453,000     Novatek Microelectronics
Display Related Integrated Circuit Designer
  2,531,409
 
Number of
Shares
     

Value

 
  29,000     Largan Precision
Mobile Device Camera Lenses & Modules
 

$

2,170,832
 
  915,000     Far EasTone Telecom
Taiwanese Mobile Operator
  2,107,931
 
  1,254,000     Vanguard International Semiconductor
Semiconductor Foundry
  2,051,974
 
  272,349     Advantech
Industrial PC & Components
  1,999,416
 
  330,000     Delta Electronics
Industrial Automation, Switching Power Supplies &
Passive Components
  1,950,048
 
  180,000     PChome Online
Taiwanese Internet Retail Company
  1,932,477
 
  159,500     Ginko International
Contact Lens Maker in China
  1,683,172
 
  565,000     Chroma Ate
Automatic Test Systems, Testing & Measurement
Instruments
  1,461,164
 
  16,250     Hermes Microvision
E-beam Inspection Systems for Semiconductor
Integrated Circuits
  812,673
 
  465,803     Lite-On Technology
Mobile Device, LED & PC Server Component Supplier
  532,124
 
 

         

26,434,984

   
   

Korea – 3.2%

 
  21,473     CJ Corp
Holding Company of Korean Consumer Conglomerate
  3,040,171
 
  53,013     LS Industrial Systems
Electrical & Automation Equipment
  2,878,841
 
  16,095     Cheil Industries (b)
Holding Company of Samsung Group
  2,313,615
 
  30,055     KT&G
Tobacco & Ginseng Products
  2,086,820
 
  25,739     Coway
Household Appliance Rentals
  1,962,641
 
  8,000     Nongshim
Instant Noodles, Snacks & Bottled Water
  1,835,282
 
  85,494     Paradise
Korean Casino Operator
  1,822,404
 
  66,955     LF Corp
Apparel Design & Retail
  1,814,336
 
  103,500     Cheil Worldwide (b)
Advertising
  1,619,615
 

See accompanying notes to financial statements.
7



Wanger International 2014 Annual Report

Wanger International

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Korea – 3.2% (cont)

 
  52,115     Grand Korea Leisure
'Foreigner Only' Casino Group in Korea
 

$

1,514,664
 
  7,669     Soulbrain
Electronic Chemical Producer
  223,056
 
 

         

21,111,445

   
   

India – 2.9%

 
  1,130,794     Zee Entertainment Enterprises
Programmer of Pay Television Content
  6,792,562
 
  288,064     Asian Paints
Paint Company
  3,414,523
 
  512,888     Adani Ports & Special Economic Zone
Indian West Coast Shipping Port
  2,581,621
 
  174,930     United Breweries
Brewer
  2,306,096
 
  7,374     Bosch
Automotive Parts
  2,277,297
 
  76,280     Colgate Palmolive India
Consumer Products in Oral Care
  2,154,350
 
 

         

19,526,449

   
   

Singapore – 2.6%

 
  4,913,804     Mapletree Commercial Trust
Retail & Office Property Landlord
  5,229,139
 
  569,000     Singapore Exchange
Singapore Equity & Derivatives Market Operator
  3,345,217
 
  1,560,890     CDL Hospitality Trust
Hotel Owner Operator
  2,050,314
 
  1,137,000     Ascendas REIT
Industrial Property Landlord
  2,039,497
 
  707,000     Petra Foods
Chocolate Manufacturer in South East Asia
  2,026,219
 
  1,735,934     Mapletree Logistics Trust
Industrial Property Landlord
  1,549,975
 
  1,339,888     Mapletree Industrial Trust
Industrial Property Landlord
  1,499,167
 
 

         

17,739,528

   
   

China – 2.6%

 
  204,819     WuXi PharmaTech – ADR (b)
Largest Contract Research Organization
Business in China
  6,896,256
 
Number of
Shares
     

Value

 
  6,760,000     Sihuan Pharmaceuticals
Chinese Generic Drug Manufacturer
 

$

4,496,473
 
  35,326     BitAuto – ADR (b)
Automotive Information Website for Buyers & Dealers
  2,487,304
 
  3,022,000     AMVIG Holdings
Chinese Tobacco Packaging Material Supplier
  1,305,500
 
  1,507,000     CIMC Enric
Produces Tanks & Equipment to Supply Natural
Gas & Liquefied Natural Gas
  1,189,075
 
  2,840,000     NewOcean Energy
Southern China Liquefied Petroleum Gas Distributor
  1,090,409
 
 

         

17,465,017

   
   

Hong Kong – 2.5%

 
  150,000     Melco Crown Entertainment – ADR
Macau Casino Operator
  3,810,000
 
  4,645,000     Mapletree Greater China Commercial Trust
Retail & Office Property Landlord
  3,324,409
 
  1,200,000     Melco International
Macau Casino Operator
  2,626,943
 
  1,144,500     Lifestyle International
Mid- to High-end Department Store Operator in
Hong Kong & China
  2,408,650
 
  2,968,000     Sa Sa International (a)
Cosmetics Retailer
  2,070,508
 
  626,000     MGM China Holdings
Macau Casino Operator
  1,580,597
 
  380,500     Kingboard Chemicals
Paper & Glass Laminates, PCB, Specialty
Chemicals & Properties
  638,906
 
 

         

16,460,013

   
   

Indonesia – 1.7%

 
  2,880,000     Tower Bersama Infrastructure
Communications Towers
  2,252,496
 
  1,666,000     Matahari Department Store
Department Store Chain in Indonesia
  2,007,465
 
  28,339,700     Ace Indonesia
Home Improvement Retailer
  1,791,611
 
  4,623,721     Surya Citra Media
Free to Air TV Station in Indonesia
  1,304,827
 
  18,253,400     Arwana Citramulia
Ceramic Tiles for Home Decoration
  1,276,187
 

See accompanying notes to financial statements.
8



Wanger International 2014 Annual Report

Wanger International

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Indonesia – 1.7% (cont)

 
  3,031,000     Link Net (b)
Fixed Broadband & CATV Service Provider
 

$

1,204,079
 
  497,817     Mayora Indah
Consumer Branded Food Manufacturer
  839,911
 
  4,681,000     MNC Skyvision
Satellite Pay TV Operator in Indonesia
  604,731
 
 

         

11,281,307

   
   

Philippines – 1.4%

 
  2,954,000     Puregold Price Club
Supermarket Operator in the Philippines
  2,530,438
 
  1,490,000     Robinsons Retail Holdings
Multi-format Retailer in the Philippines
  2,521,500
 
  6,404,300     Melco Crown (Philippines) Resorts (b)
Integrated Resort Operator in Manila
  1,937,016
 
  430,220     Security Bank
Commercial Bank in the Philippines
  1,457,256
 
  188,190     Universal Robina
Branded Consumer Food Manufacturer in the Philippines
  820,487
 
 

         

9,266,697

   
   

Thailand – 1.1%

 
  366,900     Airports of Thailand
Airport Operator of Thailand
  3,125,911
 
  9,065,572     Home Product Center
Home Improvement Retailer
  2,268,811
 
  1,264,400     Robinson Department Store
Department Store Operator in Thailand
  1,721,040
 
 

         

7,115,762

   
   

Cambodia – 0.6%

 
  5,050,000     Nagacorp
Casino & Entertainment Complex in Cambodia
  4,115,274
 
   

Malaysia – 0.5%

 
  1,969,200     Aeon
Shopping Center & Department Store Operator
  1,768,665
 
  4,052,900     7-Eleven Malaysia Holdings (b)
Exclusive 7-Eleven Franchisor for Malaysia
  1,738,696
 

   

3,507,361

   
 

   

Total Asia

   

283,423,128

   
Number of
Shares
     

Value

 
   

Europe – 30.7%

 
   

United Kingdom – 10.8%

 
  2,000,000     Charles Taylor
Insurance Services
 

$

7,793,005
 
  340,000     Babcock International
Public Sector Outsourcer
  5,569,974
 
  109,394     Spirax Sarco
Steam Systems for Manufacturing &
Processing Industries
  4,869,876
 
  317,000     Jardine Lloyd Thompson Group
International Business Insurance Broker
  4,426,926
 
  204,482     WH Smith
Newsprint, Books & General Stationery Retailer
  4,276,062
 
  116,425     Rightmove
Internet Real Estate Listings
  4,060,109
 
  41,074     Whitbread
UK Hotelier & Coffee Shop
  3,039,733
 
  80,669     Fidessa Group
Software for Financial Trading Systems
  3,004,966
 
  1,210,014     Connect Group
Newspaper & Magazine Distributor
  2,888,185
 
  382,878     Abcam
Online Sales of Antibodies
  2,779,382
 
  113,852     Aggreko
Temporary Power & Temperature Control Services
  2,655,028
 
  242,000     Halma
Health & Safety Sensor Technology
  2,577,768
 
  396,510     Ocado (a) (b)
Online Grocery Retailer
  2,454,362
 
  221,860     Domino's Pizza UK & Ireland
Pizza Delivery in the UK, Ireland & Germany
  2,422,353
 
  132,000     Smith and Nephew
Medical Equipment & Supplies
  2,380,296
 
  2,965,891     Cable and Wireless
Telecommunications Services Provider in the Caribbean
  2,279,757
 
  548,265     Polypipe
Manufacturer of Plastic Piping & Fittings
  2,097,792
 
  2,584,000     Assura
Primary Health Care Property Developer
  2,053,987
 
  273,396     Halfords
UK Retailer for Leisure Goods & Auto Parts
  1,995,051
 
  474,031     Elementis
Specialty Chemicals
  1,921,469
 

See accompanying notes to financial statements.
9



Wanger International 2014 Annual Report

Wanger International

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

United Kingdom – 10.8% (cont)

 
  238,478     PureCircle (b)
Natural Sweeteners
 

$

1,909,258
 
  511,571     RPS Group
Consultant Specializing in Energy, Water, Urban
Planning, Health & Safety
  1,667,228
 
  76,450     AVEVA
Engineering Software
  1,565,697
 
  120,000     Shaftesbury
London Prime Retail REIT
  1,452,125
 
 

         

72,140,389

   
   

Germany – 3.2%

 
  139,940     Wirecard
Online Payment Processing & Risk Management
  6,101,960
 
  11,379     Rational
Commercial Ovens
  3,565,437
 
  39,795     MTU Aero Engines
Airplane Engine Components & Services
  3,458,411
 
  66,899     NORMA Group
Clamps for Automotive & Industrial Applications
  3,193,152
 
  66,899     Aurelius
European Turnaround Investor
  2,531,870
 
  63,747     Elringklinger
Automobile Components
  2,204,092
 
 

         

21,054,922

   
   

Sweden – 3.1%

 
  189,131     Hexagon
Design, Measurement & Visualization
Software & Equipment
  5,834,604
 
  69,762     Unibet
European Online Gaming Operator
  4,407,359
 
  132,956     Swedish Match
Swedish Snus
  4,166,112
 
  273,094     Sweco
Engineering Consultants
  3,713,396
 
  87,076     Mekonomen
Nordic Integrated Wholesaler/Retailer of
Automotive Parts & Service
  2,271,803
 
 

         

20,393,274

   
Number of
Shares
     

Value

 
   

France – 2.4%

 
  110,602     Neopost
Postage Meter Machines
 

$

6,309,603
 
  12,286     Eurofins Scientific
Food, Pharmaceuticals & Materials Screening & Testing
  3,136,029
 
  66,950     Eutelsat
Fixed Satellite Services
  2,165,140
 
  13,387     Norbert Dentressangle
European Logistics & Transport Group
  1,973,206
 
  60,811     Saft
Niche Battery Manufacturer
  1,844,530
 
  164,869     Hi-Media (a) (b)
Online Advertiser in Europe
  494,703
 
 

         

15,923,211

   
   

Netherlands – 2.1%

 
  204,144     Aalberts Industries
Flow Control & Heat Treatment
  6,020,420
 
  68,863     Arcadis
Engineering Consultants
  2,065,382
 
  33,905     Vopak
Operator of Petroleum & Chemical Storage Terminals
  1,759,059
 
  100,000     Brunel
Temporary Specialist & Energy Staffing
  1,637,520
 
  19,708     Gemalto
Digital Security Solutions
  1,608,418
 
  9,960     Core Labs (a)
Oil & Gas Reservoir Consulting
  1,198,586
 
 

         

14,289,385

   
   

Spain – 2.1%

 
  658,718     DIA
Discount Retailer in Spain & Latin America
  4,463,527
 
  66,815     Viscofan
Sausage Casings Maker
  3,544,955
 
  573,279     Prosegur
Security Guards
  3,266,129
 
  69,844     Bolsas y Mercados Españoles
Spanish Stock Markets
  2,705,084
 
 

         

13,979,695

   

See accompanying notes to financial statements.
10



Wanger International 2014 Annual Report

Wanger International

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Switzerland – 2.0%

 
  22,174     Partners Group
Private Markets Asset Management
 

$

6,451,243
 
  15,063     Geberit
Plumbing Supplies
  5,095,856
 
  6,011     INFICON
Gas Detection Instruments
  1,863,700
 
 

         

13,410,799

   
   

Denmark – 1.8%

 
  110,724     Novozymes
Industrial Enzymes
  4,660,767
 
  169,227     SimCorp
Software for Investment Managers
  4,468,041
 
  59,662     Jyske Bank (b)
Danish Bank
  3,015,698
 
 

         

12,144,506

   
   

Finland – 1.0%

 
  651,561     Sponda
Office, Retail & Logistics Properties
  2,836,142
 
  140,445     Tikkurila
Decorative & Industrial Paint in Scandinavia &
Central & Eastern Europe
  2,452,932
 
  58,251     Konecranes
Manufacture & Service of Industrial Cranes &
Port Handling Equipment
  1,665,698
 
 

         

6,954,772

   
   

Norway – 0.8%

 
  219,301     Atea
Nordic IT Hardware/Software Reseller &
Installation Company
  2,265,688
 
  315,609     Orkla
Food & Brands, Aluminum, Chemicals Conglomerate
  2,148,498
 
  108,226     Subsea 7
Offshore Subsea Contractor
  1,107,466
 
 

         

5,521,652

   
   

Kazakhstan – 0.6%

 
  432,778     Halyk Savings Bank of Kazakhstan – GDR
Retail Bank & Insurer in Kazakhstan
  3,678,613
 
Number of
Shares
     

Value

 
   

Italy – 0.5%

 
  243,000     Pirelli
Global Tire Supplier
 

$

3,277,439
 
   

Belgium – 0.3%

 
  45,887     EVS Broadcast Equipment
Digital Live Mobile Production Software & Systems
  1,656,754
 
 

   

Total Europe

   

204,425,411

   
   

Other Countries – 17.4%

 
   

South Africa – 4.9%

 
  1,156,714     Coronation Fund Managers
South African Fund Manager
  11,447,282
 
  63,673     Naspers
Media in Africa, China, Russia & other Emerging Markets
  8,236,436
 
  1,766,269     Rand Merchant Insurance
Directly Sold Property & Casualty Insurance;
Holdings in other Insurers
  6,238,875
 
  222,497     Mr. Price
South African Retailer of Apparel, Household &
Sporting Goods
  4,500,866
 
  730,408     Northam Platinum (b)
Platinum Mining in South Africa
  2,302,394
 
 

         

32,725,853

   
   

Australia – 4.6%

 
  570,000     Amcor
Global Leader in Flexible & Rigid Packaging
  6,271,331
 
  3,600,000     Spotless (b)
Facility Management & Catering Company
  5,576,522
 
  1,050,000     Challenger Financial
Annuity Provider in Australia
  5,546,666
 
  255,230     Domino's Pizza Enterprises
Domino's Pizza Operator in Australia & New Zealand
  5,196,747
 
  850,000     IAG
General Insurance Provider
  4,315,889
 
  184,987     Austbrokers
Local Australian Small Business Insurance Broker
  1,532,887
 
  380,000     Estia Health (b)
Residential Aged Care Operator
  1,470,500
 
  976,000     MMA Offshore
Support Vessels for Offshore Oil/Gas Industry
  978,453
 
 

         

30,888,995

   

See accompanying notes to financial statements.
11



Wanger International 2014 Annual Report

Wanger International

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Canada – 4.2%

 
  74,928     CCL Industries
Largest Global Label Converter
 

$

8,117,737
 
  268,267     CAE
Flight Simulator Equipment & Training Centers
  3,482,068
 
  89,849     ShawCor
Oil & Gas Pipeline Products
  3,279,048
 
  41,250     Onex Capital
Private Equity
  2,395,184
 
  190,329     Rona
Canadian Home Improvement Retailer
  2,268,942
 
  43,563     Ag Growth
Manufacturer of Augers & Grain Handling Equipment
  2,118,906
 
  318,000     Canadian Energy Services &
Technology (a)
North American Drilling Fluids & Chemicals
  1,738,079
 
  93,310     Baytex (a)
Oil & Gas Producer in Canada
  1,551,686
 
  182,467    

DeeThree Exploration (b)

   

802,553

   
  158,516     DeeThree Exploration (b) (c)
Canadian Oil & Gas Producer
  683,264
 
  45,839     Black Diamond Group
Provider of Accommodations/Equipment for
Oil Sands Development
  502,659
 
  62,757     Trilogy Energy
Oil & Gas Producer in Canada
  427,275
 
  169,038     Horizon North Logistics (a)
Provider of Diversified Oil Services in Northern Canada
  384,111
 
 

         

27,751,512

   
   

United States – 2.0%

 
  107,063     Textainer Group Holdings (a)
Top International Container Leaser
  3,674,402
 
  29,453     Synageva BioPharma (a) (b)
Biotech Focused on Orphan Diseases
  2,732,944
 
  82,000     Bladex
Latin American Trade Financing House
  2,468,200
 
  60,960     Rowan
Contract Offshore Driller
  1,421,587
 
  53,234     Hornbeck Offshore (b)
Supply Vessel Operator in U.S. Gulf of Mexico
  1,329,253
 
Number of
Shares
     

Value

 
  14,592     FMC Technologies (b)
Oil & Gas Well Head Manufacturer
 

$

683,489
 
  18,934     Chart Industries (b)
Manufacturer of Natural Gas Processing/Storage
Equipment
  647,543
 
 

         

12,957,418

   
   

New Zealand – 1.1%

 
  908,808     Auckland International Airport
Auckland Airport Operator
  2,990,319
 
  352,549     Ryman Healthcare
Retirement Village Operator
  2,338,565
 
  667,250     Sky City Entertainment
Casino & Entertainment Complex
  2,015,905
 
 

         

7,344,789

   
   

Israel – 0.6%

 
  66,562     Caesarstone
Quartz Countertops
  3,981,739
 
 

   

Total Other Countries

   

115,650,306

   
   

Latin America – 3.8%

 
   

Mexico – 1.3%

 
  21,830     Grupo Aeroportuario del Sureste – ADR
Mexican Airport Operator
  2,878,067
 
  1,090,000     Qualitas
Auto Insurer in Mexico & Central America
  2,256,281
 
  180,300     Gruma
Tortilla Producer & Distributor
  1,922,548
 
  889,500     Genomma Lab International (b)
Developer, Marketer & Distributor of Consumer Products
  1,691,731
 
 

         

8,748,627

   
   

Brazil – 1.2%

 
  246,600     Localiza Rent A Car
Car Rental
  3,312,800
 
  570,570     Odontoprev
Dental Insurance
  2,116,402
 
  99,700     Linx
Retail Management Software in Brazil
  1,894,083
 
  4,959,490     Beadell Resources (a) (b)
Gold Mining in Brazil
  898,234
 
 

         

8,221,519

   

See accompanying notes to financial statements.
12



Wanger International 2014 Annual Report

Wanger International

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Colombia – 0.4%

 
  2,046,229     Isagen
Colombian Electricity Provider
 

$

2,552,943
 
   

Uruguay – 0.3%

 
  230,870     Union Agriculture Group (b) (c) (d)
Farmland Operator in Uruguay
  2,107,843
 
   

Chile – 0.3%

 
  86,000     Sociedad Quimica y Minera de
Chile – ADR
Producer of Specialty Fertilizers, Lithium & Iodine
  2,053,680
 
   

Guatemala – 0.3%

 
  136,877     Tahoe Resources
Silver Project in Guatemala
  1,902,706
 
 

   

Total Latin America

   

25,587,318

   
Total Equities
(Cost: $481,527,248) – 94.4%
   

629,086,163

(e)

 

Short-Term Investments – 4.7%

     
$

18,000,000

    JPMorgan U.S. Government Money
Market Fund, IM Shares
(7 day yield of 0.01%)
   

18,000,000

   
  13,385,260     JPMorgan U.S. Government Money
Market Fund, Agency Shares
(7 day yield of 0.01%)
   

13,385,260

   
Total Short-Term Investments
(Cost: $31,385,260) – 4.7%
   

31,385,260

   

Securities Lending Collateral – 1.3%

     
  8,958,469     Dreyfus Government Cash
Management Fund, Institutional Shares
(7 day yield of 0.01%) (f)
   

8,958,469

   
Total Securities Lending Collateral
(Cost: $8,958,469) – 1.3%
   

8,958,469

   
Total Investments
(Cost: $521,870,977)(g) – 100.4%
   

669,429,892

   
Obligation to Return Collateral for
Securities Loaned – (1.3)%
   

(8,958,469

)

 
Number of
Shares
     

Value

 

Cash and Other Assets Less Liabilities – 0.9%

 

$

6,551,464

   

Net Assets – 100.0%

 

$

667,022,887

   

  ADR = American Depositary Receipts

  GDR = Global Depositary Receipts

  REIT = Real Estate Investment Trust

Notes to Statement of Investments

(a)  All or a portion of this security was on loan at December 31, 2014. The total market value of securities on loan at December 31, 2014 was $8,656,060.

(b)  Non-income producing security.

(c)  Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. These securities are valued at fair value determined in good faith under consistently applied procedures established by the Fund's Board of Trustees. At December 31, 2014, the market value of these securities amounted to $2,791,107, which represented 0.42% of total net assets. Additional information on these securities is as follows:


Security
  Acquisition
Dates
  Shares/
Units
 

Cost

 

Value

 

Union Agriculture Group

  12/8/10-
6/27/12
   

230,870

   

$

2,649,999

   

$

2,107,843

   

DeeThree Exploration

 

9/7/10

   

158,516

     

413,939

     

683,264

   

      $3,063,938   $2,791,107  

(d)  Illiquid security.

(e)  On December 31, 2014, the Fund's total equity investments were denominated in currencies as follows:

Currency  

Value

  Percentage of
Net Assets
 

Japanese Yen

 

$

129,399,291

     

19.4

   

Euro

   

75,937,591

     

11.4

   

British Pound

   

72,140,389

     

10.9

   

U.S. Dollar

   

42,049,506

     

6.3

   
Other currencies less
than 5% of total net assets
   

309,559,386

     

46.4

   

Total Equities

 

$

629,086,163

     

94.4

   

(f)  Investment made with cash collateral received from securities lending activity.

(g)  At December 31, 2014, for federal income tax purposes, the cost of investments was $533,511,821 and net unrealized appreciation was $135,918,071 consisting of gross unrealized appreciation of $179,537,505 and gross unrealized depreciation of $43,619,434.

See accompanying notes to financial statements.
13



Wanger International 2014 Annual Report

Wanger International

Statement of Investments, December 31, 2014

  Fair Value Measurements

  Various inputs are used in determining the value of the Fund's investments, following the input prioritization hierarchy established by accounting principles generally accepted in the United States of America (GAAP). These inputs are summarized in the three broad levels listed below:

  Level 1 – quoted prices in active markets for identical securities

  Level 2 – prices determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others)

  Level 3 – prices determined using significant unobservable inputs where quoted prices or observable inputs are unavailable or less reliable (including management's own assumptions about the factors market participants would use in pricing an investment)

  The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

  Examples of the types of securities in which the Fund would typically invest and how they are classified within this hierarchy are as follows. Typical Level 1 securities include exchange traded domestic equities, mutual funds whose NAVs are published each day and exchange traded foreign equities that are not statistically fair valued. Typical Level 2 securities include exchange traded foreign equities that are statistically fair valued, forward foreign currency exchange contracts and short-term investments valued at amortized cost. Additionally, securities fair valued by the Valuation Committee (the Committee) of the Fund's Board of Trustees (the Board) that rely on significant observable inputs are also included in Level 2. Typical Level 3 securities include any security fair valued by the Committee that relies on significant unobservable inputs.

  Under the direction of the Board, the Committee is responsible for overseeing the valuation procedures approved by the Board.

  The Committee meets as necessary, and no less frequently than quarterly, to determine fair values for securities for which market quotations are not readily available or for which the investment manager believes that available market quotations are unreliable, to review the appropriateness of the Trust's Portfolio Pricing Policy and the pricing procedures of the investment manager (the Policies), and to review the continuing appropriateness of the current value of any security subject to the Policies. The Policies address, among other things: circumstances under which market quotations will be deemed readily available; selection of third party pricing vendors; appropriate pricing methodologies; events that require fair valuation and fair value techniques; circumstances under which securities will be deemed to pose a potential for stale pricing, including when securities are illiquid, restricted, or in default; and certain delegations of authority to determine fair values to the Fund's investment manager. The Committee may also meet to discuss additional valuation matters, which may include review of back-testing results, review of time-sensitive information or approval of other valuation related actions, and to review the appropriateness of the Policies.

  For investments categorized as Level 3, the significant unobservable inputs used in the fair value measurement of the Funds' securities may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair value. Significant

changes in any of these factors could result in lower or higher fair value measurements. Various factors impact the frequency of monitoring (which may occur as often as daily), however the Committee may determine that changes to inputs, assumptions and models are not required with the same frequency.

  The following table summarizes the inputs used, as of December 31, 2014, in valuing the Fund's assets:





Investment Type
  Quoted Prices
(Level 1)
  Other
Significant
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

Total

 

Equities

 

Asia

 

$

13,193,560

   

$

270,229,568

   

$

   

$

283,423,128

   

Europe

   

1,198,586

     

203,226,825

     

     

204,425,411

   

Other Countries

   

44,007,405

     

71,642,901

     

     

115,650,306

   

Latin America

   

22,581,241

     

898,234

     

2,107,843

     

25,587,318

   

Total Equities

   

80,980,792

     

545,997,528

     

2,107,843

     

629,086,163

   
Total Short-Term
Investments
   

31,385,260

     

     

     

31,385,260

   
Total Securities
Lending Collateral
   

8,958,469

     

     

     

8,958,469

   

Total Investments

 

$

121,324,521

   

$

545,997,528

   

$

2,107,843

   

$

669,429,892

   

  The Fund's assets assigned to the Level 2 input category are generally valued using a market approach, in which a security's value is determined through its correlation to prices and information from observable market transactions for similar or identical assets. Foreign equities are generally valued at the last sale price on the foreign exchange or market on which they trade. The Fund may use a statistical fair valuation model, in accordance with the policy adopted by the Board, provided by an independent third party to value securities principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for valuation. These models take into account available market data including intraday index, ADR, and ETF movements. Securities acquired via private placement that have a holding period or an extended settlement period are valued at a discount to the same shares that are trading freely on the market. These discounts are determined by the investment manager's experience with similar securities or situations. Factors may include, but are not limited to, trade volume, shares outstanding and stock price.

  There were no transfers of financial assets between levels during the period.

  The Fund does not hold any significant investments (greater than one percent of net assets) categorized as Level 3.

  Certain securities classified as Level 3 are valued at fair value, using a market approach, as determined in good faith under consistently applied procedures established by and under the general supervision of the Board. To determine fair value for these securities, for which no market exists, the Committee utilizes the valuation technique it deems most appropriate in the circumstances, using some unobservable inputs, which may include, but are not limited to estimated earnings of the company and the position of the security within the company's capital structure. The Committee also may use some observable inputs, which may include, but are not limited to, trades of similar securities and market multiples derived from a set of comparable companies. Significant increases or decreases to any of these inputs could result in a significantly lower or higher fair value measurement.

See accompanying notes to financial statements.
14



Wanger International 2014 Annual Report

Wanger International

Portfolio Diversification December 31, 2014

At December 31, 2014, the Fund's portfolio investments as a percentage of net assets were diversified as follows:

   

Value

  Percentage of
Net Assets
 

> Industrial Goods & Services

 

Industrial Materials & Specialty Chemicals

 

$

43,444,652

     

6.5

   

Machinery

   

40,772,662

     

6.1

   

Other Industrial Services

   

35,860,906

     

5.4

   

Outsourcing Services

   

16,050,145

     

2.4

   

Electrical Components

   

15,406,556

     

2.3

   

Conglomerates

   

16,054,574

     

2.3

   

Construction

   

7,193,647

     

1.1

   

Industrial Distribution

   

1,007,450

     

0.2

   
     

175,790,592

     

26.3

   

> Consumer Goods & Services

 

Retail

   

52,386,346

     

7.8

   

Food & Beverage

   

26,203,440

     

3.9

   

Casinos & Gaming

   

23,830,161

     

3.6

   

Nondurables

   

15,288,629

     

2.3

   

Other Durable Goods

   

12,709,979

     

1.9

   

Restaurants

   

10,658,832

     

1.6

   

Consumer Goods Distribution

   

8,331,299

     

1.2

   

Other Consumer Services

   

4,371,291

     

0.7

   

Furniture & Textiles

   

3,981,739

     

0.6

   

Educational Services

   

3,373,814

     

0.5

   

Travel

   

3,312,800

     

0.5

   

Consumer Electronics

   

2,434,792

     

0.4

   

Apparel

   

1,814,336

     

0.3

   
     

168,697,458

     

25.3

   

> Information

 

Business Software

   

18,630,004

     

2.9

   

Internet Related

   

14,783,849

     

2.2

   

Financial Processors

   

9,447,177

     

1.4

   

Semiconductors & Related Equipment

   

8,427,395

     

1.3

   

Computer Hardware & Related Equipment

   

7,746,760

     

1.2

   

Entertainment Programming

   

6,792,562

     

1.0

   

Instrumentation

   

6,714,222

     

1.0

   

Mobile Communications

   

6,162,567

     

0.9

   

Computer Services

   

3,426,218

     

0.5

   

Satellite Broadcasting & Services

   

2,769,871

     

0.4

   

Telephone & Data Services

   

2,279,757

     

0.4

   

Telecommunications Equipment

   

2,170,832

     

0.3

   

Business Information & Marketing Services

   

2,118,185

     

0.3

   

Advertising

   

2,114,318

     

0.3

   

TV Broadcasting

   

1,304,827

     

0.2

   

Cable TV

   

1,204,079

     

0.2

   
     

96,092,623

     

14.5

   
   

Value

  Percentage of
Net Assets
 

> Finance

 

Insurance

 

$

34,355,921

     

5.1

   

Brokerage & Money Management

   

17,898,525

     

2.7

   

Banks

   

17,090,579

     

2.6

   

Finance Companies

   

6,069,586

     

0.9

   

Financial Processors

   

2,705,084

     

0.4

   
     

78,119,695

     

11.7

   

> Other Industries

 

Real Estate

   

35,734,844

     

5.4

   

Transportation

   

14,207,802

     

2.1

   

Regulated Utilities

   

2,552,943

     

0.4

   
     

52,495,589

     

7.9

   

> Health Care

 

Pharmaceuticals

   

13,686,090

     

2.0

   

Medical Supplies

   

7,138,157

     

1.1

   

Medical Equipment & Devices

   

4,706,706

     

0.7

   

Health Care Services

   

3,809,064

     

0.6

   

Biotechnology & Drug Delivery

   

2,732,944

     

0.4

   
     

32,072,961

     

4.8

   

> Energy & Minerals

 

Oil Services

   

11,093,235

     

1.7

   

Mining

   

6,301,920

     

1.0

   

Oil & Gas Producers

   

3,464,779

     

0.5

   

Oil Refining, Marketing & Distribution

   

2,849,468

     

0.4

   

Agricultural Commodities

   

2,107,843

     

0.3

   

   

25,817,245

     

3.9

   

Total Equities:

   

629,086,163

     

94.4

   

Short-Term Investments:

   

31,385,260

     

4.7

   

Securities Lending Collateral:

   

8,958,469

     

1.3

   

Total Investments:

   

669,429,892

     

100.4

   
Obligation to Return Collateral
for Securities Loaned:
   

(8,958,469

)

   

(1.3

)

 
Cash and Other Assets
Less Liabilities:
   

6,551,464

     

0.9

   

Net Assets:

 

$

667,022,887

     

100.0

%

 

See accompanying notes to financial statements.
15




Wanger International 2014 Annual Report

Statement of Assets and Liabilities
December 31, 2014

Assets:

 

Investments, at cost

 

$

521,870,977

   
Investments, at value (including securities on
loan of $8,656,060)
 

$

669,429,892

   

Foreign currency (cost of $649,331)

   

637,019

   

Receivable for:

 

Investments sold

   

859,405

   

Investments sold on a delayed delivery basis

   

2,878,798

   

Fund shares sold

   

1,676,144

   

Securities lending income

   

6,783

   

Dividends

   

715,195

   

Interest

   

43,182

   

Foreign tax reclaims

   

474,108

   

Trustees' deferred compensation plan

   

154,392

   

Prepaid expenses

   

11,853

   

Total Assets

   

676,886,771

   

Liabilities:

 

Collateral on securities loaned

   

8,958,469

   

Payable for:

 

Fund shares redeemed

   

478,895

   

Investment advisory fee

   

16,756

   

Administration fee

   

915

   

Transfer agent fee

   

1

   

Trustees' fees

   

112

   

Custody fee

   

72,065

   

Reports to shareholders

   

117,454

   

Chief compliance officer expenses

   

2,599

   

Trustees' deferred compensation plan

   

154,392

   

Other liabilities

   

62,226

   

Total Liabilities

   

9,863,884

   

Net Assets

 

$

667,022,887

   

Composition of Net Assets:

 

Paid-in capital

 

$

470,589,932

   

Overdistributed net investment income

   

(5,231,819

)

 

Accumulated net realized gain

   

54,171,917

   

Net unrealized appreciation (depreciation) on:

 

Investments

   

147,558,915

   

Foreign currency translations

   

(66,058

)

 

Net Assets

 

$

667,022,887

   

Fund Shares Outstanding

   

22,942,356

   
Net asset value, offering price and redemption
price per share
 

$

29.07

 

Statement of Operations
For the Year Ended December 31, 2014

Investment Income:

 

Dividends (net foreign taxes withheld of $1,980,305)

 

$

15,744,107

   

Interest

   

43,182

   

Income from securities lending—net

   

255,808

   

Total Investment Income

   

16,043,097

   

Expenses:

 

Investment advisory fee

   

6,754,813

   

Transfer agent fees

   

442

   

Administration fee

   

373,738

   

Trustees' fees

   

35,768

   

Custody fees

   

248,126

   

Reports to shareholders

   

183,391

   

Audit fees

   

78,872

   

Legal fees

   

67,144

   

Chief compliance officer expenses

   

31,730

   

Commitment fee for line of credit (Note 5)

   

1,358

   

Other expenses

   

54,595

   

Total Expenses

   

7,829,977

   

Net Investment Income

   

8,213,120

   

Net Realized and Unrealized Gain (Loss) on Investments:

 

Net realized gain (loss) on:

 

Investments

   

63,453,238

   

Foreign currency translations

   

(389,212

)

 

Net realized gain

   

63,064,026

   

Net change in unrealized appreciation (depreciation) on:

 

Investments

   

(101,516,032

)

 

Foreign currency translations

   

(90,874

)

 

Options

   

(269,054

)

 

Net change in unrealized depreciation

   

(101,875,960

)

 

Net realized and unrealized loss

   

(38,811,934

)

 

Net Decrease in Net Assets from Operations

 

$

(30,598,814

)

 

See accompanying notes to financial statements.
16



Wanger International 2014 Annual Report

Statements of Changes in Net Assets

   

Year Ended December 31,

 

Increase (Decrease) in Net Assets

 

2014

 

2013

 

Operations:

 

Net investment income

 

$

8,213,120

   

$

8,799,602

   

Net realized gain (loss) on:

 

Investments

   

63,453,238

     

92,778,035

   

Foreign currency translations

   

(389,212

)

   

(796,528

)

 

Net change in unrealized appreciation (depreciation) on:

 

Investments

   

(101,516,032

)

   

48,742,410

   

Foreign currency translations

   

(90,874

)

   

49,166

   

Options

   

(269,054

)

   

269,054

   

Net Increase (Decrease) in Net Assets from Operations

   

(30,598,814

)

   

149,841,739

   

Distributions to Shareholders From:

 

Net investment income

   

(10,651,101

)

   

(19,498,933

)

 

Net realized gains

   

(82,758,323

)

   

(50,758,012

)

 

Total Distributions to Shareholders

   

(93,409,424

)

   

(70,256,945

)

 

Share Transactions:

 

Subscriptions

   

23,205,601

     

30,958,862

   

Distributions reinvested

   

93,409,424

     

70,256,945

   

Redemptions

   

(110,560,733

)

   

(98,490,431

)

 

Net Increase from Share Transactions

   

6,054,292

     

2,725,376

   

Total Increase (Decrease) in Net Assets

   

(117,953,946

)

   

82,310,170

   

Net Assets:

 

Beginning of period

   

784,976,833

     

702,666,663

   

End of period

 

$

667,022,887

   

$

784,976,833

   

Overdistributed net investment income

 

$

(5,231,819

)

 

$

(8,604,068

)

 

See accompanying notes to financial statements.
17




Wanger International 2014 Annual Report

Financial Highlights

The following table is intended to help you understand the Fund's financial performance. Certain information reflects financial results for a single share held for the periods shown. Per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of the expenses that apply to the variable accounts or contract charges, if any. Total return and portfolio turnover are not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the Fund's portfolio turnover rate may be higher.

   

Year Ended December 31,

 

Selected data for a share outstanding throughout each period

 

2014

 

2013

 

2012

 

2011

 

2010

 

Net Asset Value, Beginning of Period

 

$

34.55

   

$

31.19

   

$

28.79

   

$

36.16

   

$

29.68

   

Income from Investment Operations:

 

Net investment income

   

0.36

     

0.39

     

0.46

     

0.42

     

0.35

   

Net realized and unrealized gain (loss)

   

(1.56

)

   

6.18

     

5.27

     

(5.31

)

   

6.93

   

Reimbursement from affiliate

   

     

     

     

0.00

(a)

   

   

Total from Investment Operations

   

(1.20

)

   

6.57

     

5.73

     

(4.89

)

   

7.28

   

Less Distributions to Shareholders:

 

Net investment income

   

(0.48

)

   

(0.88

)

   

(0.38

)

   

(1.64

)

   

(0.80

)

 

Net realized gains

   

(3.80

)

   

(2.33

)

   

(2.95

)

   

(0.84

)

   

   

Total Distributions to Shareholders

   

(4.28

)

   

(3.21

)

   

(3.33

)

   

(2.48

)

   

(0.80

)

 

Net Asset Value, End of Period

 

$

29.07

   

$

34.55

   

$

31.19

   

$

28.79

   

$

36.16

   

Total Return

   

(4.40

)%

   

22.37

%

   

21.56

%(b)

   

(14.62

)%(b)

   

24.92

%(b)

 

Ratios to Average Net Assets/Supplemental Data:

 

Total gross expenses (c)

   

1.05

%

   

1.07

%

   

1.08

%

   

1.06

%

   

1.07

%

 

Total net expenses (c)

   

1.05

%

   

1.07

%

   

1.05

%(d)

   

1.00

%(d)

   

1.04

%(d)

 

Net investment income

   

1.10

%

   

1.19

%

   

1.51

%

   

1.25

%

   

1.12

%

 

Portfolio turnover rate

   

28

%

   

44

%

   

34

%

   

36

%

   

32

%

 

Net assets, end of period (000s)

 

$

667,023

   

$

784,977

   

$

702,667

   

$

682,217

   

$

925,761

   

Notes to Financial Highlights

(a)  Rounds to zero.

(b)  Had the investment manager and/or its affiliates not waived a portion of expenses, total return would have been reduced.

(c)  In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests, if any. Such indirect expenses are not included in the Fund's reported expense ratios.

(d)  The benefits derived from custody fees paid indirectly had an impact of less than 0.01%.

See accompanying notes to financial statements.
18




Wanger International 2014 Annual Report

Notes to Financial Statements

1.  Nature of Operations

Wanger International (the Fund), a series of Wanger Advisors Trust (the Trust), is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The investment objective of the Fund is to seek long-term capital appreciation. The Fund is available only for allocation to certain life insurance company separate accounts established for the purpose of funding participating variable annuity contracts and variable life insurance policies and may also be offered directly to certain qualified pension and retirement plans.

2.  Summary of Significant Accounting Policies

Basis of Preparation

The Fund is an investment company that applies the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC 946). The financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

Security valuation

Securities of the Fund are valued at market value or, if a market quotation for a security is not readily available or is deemed not to be reliable because of events or circumstances that have occurred between the market quotation and the time as of which the security is to be valued, the security is valued at its fair value determined in good faith under consistently applied procedures established by the Board of Trustees (the Board). A security traded on a securities exchange or in an over-the-counter market in which transaction prices are reported is valued at the last sales price at the time of valuation. A security traded principally on NASDAQ is valued at the NASDAQ official closing price. Exchange traded funds are valued at their closing net asset value as reported on the applicable exchange. A security for which there is no reported sale on the valuation date is valued at the mean of the latest bid and ask quotations.

Short-term investments maturing in 60 days or less are valued at amortized cost, which approximates market value.

The Trust has retained an independent statistical fair value pricing service that employs a systematic methodology to assist in the fair valuation process for securities principally traded in a foreign market in order to adjust for possible changes in value that may occur between the close of the foreign market and the time as of which the securities are to be valued. If a security is valued at a fair value, that value may be different from the last quoted market price for the security.

Foreign currency translations

Values of investments denominated in foreign currencies are converted into U.S. dollars using the New York 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.

Restricted securities

Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale at the issuer's expense either upon demand by the Fund or in connection with another

registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board.

Effects of derivative transactions in the financial statements

The Fund held a put option in 2014, which was acquired through a transaction between the Fund and PT Rajawali Corpora (Indonesia), in connection with the delisting of the shares of Archipelago Resources in 2013. A put option is often held to decrease exposure to an underlying stock. However, in this case, the put option related to the proposed restructuring of Archipelago Resources and provided the Fund with the ability to sell its shares back to PT Rajawali Corpora (Indonesia) at an agreed upon price or to convert the shares held in Archipelago Resources into shares of the newly restructured company based upon the terms of the put option agreement between the Fund and PT Rajawali Corpora (Indonesia). During 2014, the Fund opted to exercise the put option and sell its shares back to PT Rajawali Corpora (Indonesia) with the exercise delivery expected in the first quarter of 2015. The proceeds from the exercising of the put option are included in "Receivable for Investments sold on a delayed delivery basis" on the Statement of Assets and Liabilities.

The following tables are intended to provide additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the impact of derivative transactions over the period in the Statement of Operations, including realized gains or losses and unrealized gains or losses. The derivative schedules following the Statement of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any.

The following table indicates the effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended December 31, 2014:

Change in Unrealized Appreciation (Depreciation) on Derivatives
Recognized in Income

Risk Exposure Category

 

Options

 

Equity risk

 

$

(269,054

)

 

The following table is a summary of the average outstanding volume by derivative instrument for the year ended December 31, 2014:

Derivative Instrument

 

Average market value*

 

Options contract

 

$

80,515

   

* Based on the ending quarterly outstanding amounts for the year ended December 31, 2014.

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 debt obligations when required for federal income tax purposes. Realized gains and losses from security transactions are recorded on an identified cost basis.

Awards, if any, from class action litigation related to securities owned may be recorded as a reduction of cost of those securities. If the applicable securities are no longer owned, the proceeds are recorded as realized gains.

The Fund may receive distributions from holdings in exchange-traded funds (ETFs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on the character of their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. To the extent actual information has not


19



Wanger International 2014 Annual Report

Notes to Financial Statements (continued)

yet been reported by the REITs, estimates for return of capital may be made by the Fund's management. Return of capital is recorded as a reduction of the cost basis of securities held. If the Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. Management's estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of capital to shareholders. No estimates are made for ETFs and RICs.

Expenses

General expenses of the Trust are allocated to the Fund and the other series of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund.

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 (the 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.

Securities lending

The Fund may lend securities up to one-third of the value of its total assets to certain approved brokers, dealers and other financial institutions to earn additional income. The Fund retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. The Fund also receives a fee for the loan. The Fund has the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by cash that exceeded the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Fund and any additional required collateral is delivered to each Fund on the next business day. The Fund has elected to invest the cash collateral in the Dreyfus Government Cash Management Fund. The income earned from the securities lending program is paid to the Fund, net of any fees remitted to Goldman Sachs Agency Lending, the Fund's lending agent, and borrower rebates. The Fund's investment manager, Columbia Wanger Asset Management, LLC (CWAM), does not retain any fees earned by the lending program. Generally, in the event of borrower default, the Fund has the right to use the collateral to offset any losses incurred. In the event the Fund is delayed or prevented from exercising its right to dispose of the collateral, there may be a potential loss to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of loss with respect to the investment of collateral. The net lending income earned by the Fund as of December 31, 2014, is included in the Statement of Operations.

Offsetting of Financial Assets

The following table presents the Fund's gross and net amount of assets available for offset under a securities lending agreement as well as the related collateral received by the Fund as of December 31, 2014:

    Gross
Amounts of
  Gross Amounts
Offset in the
  Net Amounts of Assets
Presented in the
  Gross Amounts Not Offset in
the Statement of Assets and Liabilities
 
    Recognized
Assets
  Statement of
Assets and Liabilities
  Statement of
Assets and Liabilities
  Financial
Instruments (a)
  Cash Collateral
Received
  Securities
Collateral Received
 

Net Amount (b)

 

Securities Loaned

 

$

8,656,060

   

$

   

$

8,656,060

   

$

   

$

8,656,060

   

$

   

$

   

(a)  Represents the amount of assets that could be offset by liabilities with the same counterparty under master netting or similar agreements that management elects not to offset on the Statement of Assets and Liabilities.

(b)  Represents the net amount due from counterparties in the event of default.

Federal income taxes

The Fund has complied with the provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distributes substantially all its taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.

Foreign capital gains taxes

Gains in certain countries may be subject to foreign taxes at the fund level. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction. The amount, if any, is disclosed as a liability on the Statement of Assets and Liabilities.

Distributions to shareholders

Distributions to shareholders are recorded on the ex-dividend date.

Indemnification

In the normal course of business, the Trust on behalf of the Fund enters into contracts that contain a variety of representations and warranties and that provide general indemnities. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also under the Trust's organizational documents, the trustees and officers of the Trust are indemnified against certain liabilities that may arise out of their duties to the Trust. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.

Recent Accounting Pronouncement

Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures
In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-11,
Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. ASU No. 2014-11 changes the accounting for transactions accounted for as secured borrowings and expands disclosure requirements related to securities lending and similar transactions. The disclosure requirements are effective for interim and annual periods beginning after December 15, 2014. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

3.  Federal Tax Information

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations.

For the year ended December 31, 2014, permanent book and tax basis differences resulting primarily from foreign currency transactions, passive foreign


20



Wanger International 2014 Annual Report

Notes to Financial Statements (continued)

investment company (PFIC) holdings, and distribution reclassifications were identified and reclassified among the components of the Fund's net assets as follows:

Accumulated
Net Investment
Income
  Accumulated
Net Realized
Gain (Loss)
 

Paid-In Capital

 
$

5,810,230

   

$

(5,810,232

)

 

$

2

   

Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification.

The tax character of distributions paid during the years ended December 31, 2014 and December 31, 2013 were as follows:

   

December 31, 2014

 

December 31, 2013

 

Ordinary Income *

 

$

15,292,314

   

$

22,419,581

   

Long-Term Capital Gains

   

78,117,110

     

47,837,364

   

* For tax purposes short-term capital gain distributions, if any, are considered ordinary income distributions.

As of December 31, 2014, the components of distributable earnings on a tax basis were as follows:

Undistributed
Ordinary Income
  Undistributed
Long-Term
Capital Gains
  Net Unrealized
Appreciation
(Depreciation)*
 
$

4,735,691

   

$

55,997,610

   

$

135,918,071

   

* The differences between book-basis and tax-basis net unrealized appreciation/depreciation are primarily due to deferral of losses from wash sales and PFIC adjustments.

Management is required to determine whether a tax position of the Fund is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized by the Fund is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Management is not aware of any tax positions in the Fund for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However, management's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). The Fund's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.

4.  Transactions With Affiliates

CWAM is a wholly owned subsidiary of Columbia Management Investment Advisers, LLC (Columbia Management), which in turn is a wholly owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). CWAM furnishes continuing investment supervision to the Fund and is responsible for the overall management of the Fund's business affairs.

CWAM receives a monthly advisory fee based on the Fund's average daily net assets at the following annual rates:

Average Daily Net Assets

 

Annual Fee Rate

 

Up to $100 million

   

1.10

%

 

$100 million to $250 million

   

0.95

%

 

$250 million to $500 million

   

0.90

%

 

$500 million to $1 billion

   

0.80

%

 
$1 billion and over    

0.72

%

 

For the year ended December 31, 2014, the effective investment advisory fee rate was 0.90% of the Fund's average daily net assets.

CWAM provides administrative services and receives an administration fee from the Fund at the following annual rates:

Wanger Advisors Trust Aggregate
Average Daily Net Assets of the Trust
 

Annual Fee Rate

 

Up to $4 billion

   

0.05

%

 

$4 billion to $6 billion

   

0.04

%

 

$6 billion to $8 billion

   

0.03

%

 
$8 billion and over    

0.02

%

 

For the year ended December 31, 2014, the effective administration fee rate was 0.05% of the Fund's average daily net assets. Columbia Management provides certain sub-administrative services to the Fund.

Columbia Management Investment Distributors, Inc. (CMID), a wholly owned subsidiary of Ameriprise Financial, serves as the Fund's distributor and principal underwriter.

Columbia Management Investment Services Corp. (CMIS), a wholly owned subsidiary of Ameriprise Financial, is the transfer agent to the Fund. For its services, the Fund pays CMIS a monthly fee at the annual rate of $21.00 per open account. CMIS also receives reimbursement from the Fund for certain out-of-pocket expenses.

Certain officers and trustees of the Trust are also officers of CWAM. The Trust makes no direct payments to its officers and trustees who are affiliated with CWAM.

The Board has appointed a Chief Compliance Officer of the Trust in accordance with federal securities regulations. The Fund, along with other affiliated funds, pays its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer.

The Trust offers a deferred compensation plan for its independent trustees. Under that plan, a trustee may elect to defer all or a portion of his or her compensation. Amounts deferred are retained by the Trust and may represent an unfunded obligation of the Trust. The value of amounts deferred is determined by reference to the change in value of Class Z shares of one or more series of Columbia Acorn Trust or a money market fund as specified by the trustee. Benefits under the deferred compensation plan are payable in accordance with the plan.

For the year ended December 31, 2014, the Fund engaged in purchase and sales transactions with funds that have a common investment manager (or affiliated investment managers), common directors/trustees, and/or common officers. Those purchase transactions complied with provisions of Rule 17a-7 under the Investment Company Act of 1940 and were $3,406,515.

5.  Borrowing Arrangements

During the year ended December 31, 2014, the Trust participated in a credit facility with JPMorgan Chase Bank, N.A., along with Columbia Acorn Trust, another trust managed by CWAM, in the amount of $150 million. The credit facility was entered into to facilitate portfolio liquidity. Under the facility, interest is charged to each participating fund based on its borrowings at a rate per annum equal to the Federal Funds Rate plus 1.00%. In addition, a commitment fee of 0.08% per annum of the unutilized line of credit is accrued and apportioned among the participating funds based on their relative net assets. The commitment fee is disclosed as a part of "Commitment fee for line of credit" in the Statement of Operations. The Trust expects to renew this line of credit for one year durations each July at then current market rates and terms.

No amounts were borrowed for the benefit of the Fund under the line of credit during the year ended December 31, 2014.


21



Wanger International 2014 Annual Report

Notes to Financial Statements (continued)

6.  Fund Share Transactions

Proceeds and payments on Fund shares as shown in the Statement of Changes in Net Assets are in respect of the following numbers of shares:

    Year Ended
December 31, 2014
  Year Ended
December 31, 2013
 

Shares sold

   

720,170

     

931,450

   
Shares issued in reinvestment
of dividend distributions
   

2,952,780

     

2,277,261

   

Less shares redeemed

   

(3,448,109

)

   

(3,017,840

)

 

Net increase in shares outstanding

   

224,841

     

190,871

   

7.  Investment Transactions

The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2014, were $203,342,578 and $292,323,307, respectively. The amount of purchase and sales activity impacts the portfolio turnover rate reported in the Financial Highlights.

8.  Shareholder Concentration

At December 31, 2014, two unaffiliated shareholder accounts owned an aggregate of 29.1% of the outstanding shares of the Fund. The Fund has no knowledge about whether any portion of those shares was owned beneficially by such accounts. Affiliated shareholder accounts owned 61.1% of the outstanding shares of the Fund. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund.

9.  Subsequent Events

Management has evaluated the events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.

10.  Information Regarding Pending and Settled Legal Proceedings

Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.

There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial.


22



Wanger International 2014 Annual Report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Wanger International:

In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Wanger International (a series of the Wanger Advisors Trust, hereinafter referred to as the "Fund") at December 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Chicago, Illinois
February 18, 2015


23




Wanger International 2014 Annual Report

Federal Income Tax Information (Unaudited)

The Fund hereby designates the following tax attributes in the fiscal year ended December 31, 2014.

Tax Designations

 

 

Dividends Received Deduction

   

0.00

%

 

Capital Gain Dividend

 

$

58,829,102

   

Foreign Taxes Paid

 

$

1,567,345

   

Foreign Taxes Paid Per Share

 

$

0.07

   

Foreign Source Income

 

$

16,824,192

   

Foreign Source Income Per Share

 

$

0.73

   

Dividends Received Deduction. The percentage of ordinary income distributed during the fiscal year that qualifies for the corporate dividends received deduction.

Capital Gain Dividend. The Fund designates as a capital gain dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.

Foreign Taxes. The Fund makes the election to pass through to shareholders the foreign taxes paid. Eligible shareholders may claim a foreign tax credit. These taxes, and the corresponding foreign source income, are provided.


24




Wanger International 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Each trustee may serve a term of unlimited duration. The Trust's By-laws generally require that a trustee retire at the end of the calendar year in which the trustee attains the age of 75 years. The trustees appoint their own successors, provided that at least two-thirds of the trustees, after such appointment, have been elected by shareholders. Shareholders may remove a trustee, with or without cause, upon the vote of two-thirds of the Trust's outstanding shares at any meeting called for that purpose. A trustee may be removed, with or without cause, upon the vote of a majority of the trustees. The names of the trustees and officers of the Trust, the date each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios in the fund complex they oversee, and other directorships they hold, are shown below. Each trustee serves in such capacity for each of the four series of Wanger Advisors Trust and for each of the eight series of Columbia Acorn Trust.

The address for the trustees and officers of the Trust is Columbia Wanger Asset Management, LLC, 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606. The Funds' Statement of Additional Information includes additional information about the Funds' trustees and officers. You may obtain a free copy of the Statement of Additional Information by writing or calling toll-free:

Columbia Wanger Asset Management, LLC
Shareholder Services Group
227 W. Monroe, Suite 3000
Chicago IL 60606
1-800-922-6769

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Trustees who are not interested persons of Wanger Advisors Trust: (1)               
Laura M. Born, 49,
Trustee and Chair
 

2007

 

Adjunct Associate Professor of Finance, University of Chicago Booth School of Business; Managing Director — Investment Banking, J.P. Morgan Chase & Co. (broker-dealer), 2002 – 2007.

 

12

 

Columbia Acorn Trust.

 
Maureen M. Culhane, 66,
Trustee
 

2007

 

Retired. Formerly, Vice President, Goldman Sachs Asset Management, L.P. (investment adviser), 2005 – 2007; Vice President (Consultant) — Strategic Relationship Management, Goldman, Sachs & Co., 1999 – 2005.

 

12

 

Columbia Acorn Trust.

 
Margaret M. Eisen, 61,
Trustee
 

2002

 

Chief Investment Officer, EAM International LLC (corporate finance and asset management), 2003 – 2013; Managing Director, CFA Institute, 2005 – 2008.

 

12

 

Columbia Acorn Trust; Burnham Investors Trust.

 
Thomas M. Goldstein, 55,
Trustee
 

2014

 

Retired. Formerly, Chief Financial Officer, Allstate Protection Division, 2011 – 2014; Founding Partner, The GRG Group LLC, 2009 – 2011; Managing Director and Chief Financial Officer, Madison Dearborn Partners, 2007 – 2009.

 

12

 

Columbia Acorn Trust; Federal Home Loan Bank — Chicago; Federal Home Loan Mortgage Corporation.

 
John C. Heaton, 55,
Trustee
 

2010

 

Deputy Dean for Faculty, University of Chicago Booth School of Business; Joseph L. Gidwitz Professor of Finance, University of Chicago Booth School of Business since 2000.

 

12

 

Columbia Acorn Trust.

 
Steven N. Kaplan, 55,
Trustee and Vice Chair
 

1999

 

Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance, University of Chicago Booth School of Business; faculty member of the University of Chicago Booth School of Business since 1988.

 

12

 

Columbia Acorn Trust; Accretive Health, Inc. (healthcare management services provider); Morningstar, Inc. (provider of independent investment research).

 
David J. Rudis, 61,
Trustee
 

2010

 

Retired. Formerly, National Checking and Debit Executive, and Illinois President, Bank of America, 2007 – 2009; President, Consumer Banking Group, LaSalle National Bank, 2004 – 2007.

 

12

 

Columbia Acorn Trust.

 
David B. Small, 58,
Trustee (2)
 

2010

 

Managing Director, Grosvenor Capital Management, L.P. (investment adviser) since 1994; Adjunct Associate Professor of Finance, University of Chicago Booth School of Business.

 

12

 

Columbia Acorn Trust.

 


25



Wanger International 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 

Trustees who are interested persons of Wanger Advisors Trust:

             
Charles P. McQuaid, 61,
Trustee and Vice President (3)
 

1992

 

Portfolio manager and/or analyst, CWAM or its predecessors since 1978; Vice President of Columbia Acorn Trust and Wanger Advisors Trust since April 2014; formerly, President and Chief Investment Officer, CWAM or its predecessors, October 2003 – March 2014, and President of Columbia Acorn Trust and Wanger Advisors Trust, October 2003 – March 2014.

 

12

 

Columbia Acorn Trust.

 
Ralph Wanger, 80,
Trustee Emeritus (4)
 

1970

 

Founder, CWAM. Formerly, President, Chief Investment Officer and portfolio manager, CWAM or its predecessors, July 1992 – September 2003; Director, Wanger Investment Company PLC; Consultant to CWAM or its predecessors, September 2003 – September 2005.

 

12

 

Columbia Acorn Trust.

 

Officers of Columbia Acorn Trust:

             
Robert A. Chalupnik, 49,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2000; Vice President Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 
Michael G. Clarke, 45,
Assistant Treasurer
 

2004

 

Vice President — Mutual Fund Treasurer, Columbia Management Investment Advisers, LLC since May 2010; Managing Director of Fund Administration, Columbia Management Advisors, LLC, September 2004 – April 2010; Senior officer, Columbia Funds and affiliated funds since 2002.

 

N/A

 

N/A

 
Joseph F. DiMaria, 46,
Assistant Treasurer
 

2010

 

Vice President — Mutual Fund Administration, Columbia Management Investment Advisers, LLC since May 2010; Director of Fund Administration, Columbia Management Advisors, LLC, January 2006 – April 2010.

 

N/A

 

N/A

 
William J. Doyle, 50,
Vice President
 

2014

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2006; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2014.

 

N/A

 

N/A

 
P. Zachary Egan, 46,
President
 

2014

 

President and International Chief Investment Officer, CWAM since April 2014; portfolio manager and/or analyst, CWAM or its predecessors since 1999; formerly, Director of International Research, CWAM December 2004 – March 2014, and Vice President, Columbia Acorn Trust, 2003 – 2014, and Wanger Advisors Trust, 2007 – 2014.

 

N/A

 

N/A

 
David L. Frank, 51,
Vice President
 

2014

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2002; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2014.

 

N/A

 

N/A

 
Fritz Kaegi, 43,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2004; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 
John M. Kunka, 44,
Treasurer
 

2006

 

Treasurer and Principal Accounting and Financial Officer, Columbia Acorn Trust and Wanger Advisors Trust since 2014; Director of Accounting and Operations, CWAM since May 2006; formerly, Assistant Treasurer, Columbia Acorn Trust and Wanger Advisors Trust 2006 – 2014.

 

N/A

 

N/A

 
Stephen Kusmierczak, 47,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2001; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 


26



Wanger International 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Joseph C. LaPalm, 45,
Vice President
 

2006

 

Chief Compliance Officer, CWAM since 2005.

 

N/A

 

N/A

 
Charles P. McQuaid, 61,
Vice President
 

1992

 

Portfolio manager and/or analyst, CWAM or its predecessors since 1978; Vice President of Columbia Acorn Trust and Wanger Advisors Trust since April 2014; formerly, President and Chief Investment Officer, CWAM or its predecessors, October 2003 – March 2014, and President of Columbia Acorn Trust and Wanger Advisors Trust, October 2003 – March 2014.

 

N/A

 

N/A

 
Louis J. Mendes III, 50,
Vice President
 

2003

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2001; Vice President, Columbia Acorn Trust since 2003 and Wanger Advisors Trust since 2005.

 

N/A

 

N/A

 
Robert A. Mohn, 53,
Vice President
 

1997

 

Domestic Chief Investment Officer, CWAM since April 2014; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 1997; portfolio manager and/or analyst, CWAM or its predecessors since 1992; formerly, Director of Domestic Research, CWAM or its predecessors, March 2004 – March 2014. Mr. Mohn served as Principal Executive Officer of the Funds during Mr. McQuaid's sabbatical from January 14 through March 31, 2011.

 

N/A

 

N/A

 
Christopher J. Olson, 50,
Vice President
 

2001

 

Portfolio manager and/or analyst, CWAM or its predecessors since January 2001; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2001.

 

N/A

 

N/A

 
Christopher O. Petersen, 44,
Assistant Secretary
 

2010

 

Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously, Vice President and Chief Counsel, January 2010 – December 2014 and Vice President and Group Counsel or Counsel, 2004 – 2010); officer, Columbia Funds and affiliated funds since 2007.

 

N/A

 

N/A

 
Scott R. Plummer, 55,
Assistant Secretary
 

2010

 

Senior Vice President, Assistant General Counsel and Head of Global Asset Management, Ameriprise Financial, Inc. since February 2014 (previously, Senior Vice President and Lead Chief Counsel — Asset Management, January 2012 – February 2014; Vice President and Lead Chief Counsel — Asset Management, 2010 – 2012; and Vice President and Chief Counsel — Asset Management, 2005 – 2010); Senior Vice President and Assistant Secretary, Columbia Management Investment Advisers, LLC since June 2005 (previously, Chief Legal Officer, Columbia Management Investment Advisers, LLC, June 2005 – January 2015); Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006; senior officer of Columbia Funds and affiliated funds 2006 – 2014.

 

N/A

 

N/A

 
Robert P. Scales, 62,
Chief Compliance Officer, Chief Legal Officer, Senior Vice President and General Counsel
 

2004

 

Chief Compliance Officer, Chief Legal Officer, Senior Vice President and General Counsel, Columbia Acorn Trust and Wanger Advisors Trust since 2004.

 

N/A

 

N/A

 
Andreas Waldburg-Wolfegg, 49,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2002; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 


27



Wanger International 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Linda Roth-Wiszowaty, 45,
Secretary
 

2006

 

Secretary, Columbia Acorn Trust and Wanger Advisors Trust since 2014; Assistant Secretary, Columbia Acorn Trust and Wanger Advisors Trust, 2006 – 2014; Business support analyst, CWAM since April 2007.

 

N/A

 

N/A

 

*  Dates prior to April 1992 correspond to the date first elected or appointed as a director or officer of The Acorn Fund Inc., the predecessor to Columbia Acorn Trust.

(1)  In addition to the trustees listed below, the Board appointed Charles R. Phillips as a trustee effective January 1, 2015.

(2)  Mr. Small resigned from the Board effective December 31, 2014.

(3)  Mr. McQuaid is an "interested person" of the Trust and of CWAM, as defined in the 1940 Act, because he is an officer of the Trust and an employee of CWAM.

(4)  As permitted under the Trust's Bylaws, Mr. Wanger serves as a non-voting Trustee Emeritus of the Trust.


28




Columbia Wanger Funds

Trustees

Laura M. Born
Chair of the Board

Steven N. Kaplan
Vice Chair of the Board

Maureen M. Culhane
Margaret M. Eisen
Thomas M. Goldstein
John C. Heaton
Charles P. McQuaid
David J. Rudis
David B. Small*
Ralph Wanger (Trustee Emeritus)

Officers

P. Zachary Egan
President

Robert A. Chalupnik
Vice President

Michael G. Clarke
Assistant Treasurer

Joseph F. DiMaria
Assistant Treasurer

William J. Doyle
Vice President

David L. Frank
Vice President

Fritz Kaegi
Vice President

John M. Kunka
Treasurer and Principal Financial and
Accounting Officer

Stephen Kusmierczak
Vice President

Joseph C. LaPalm
Vice President

Charles P. McQuaid
Vice President

Louis J. Mendes III
Vice President

Robert A. Mohn
Vice President

Christopher J. Olson
Vice President

Christopher O. Petersen
Assistant Secretary

Scott R. Plummer
Assistant Secretary

Robert P. Scales
Chief Compliance Officer, Chief Legal Officer, Senior Vice President and
General Counsel

Andreas Waldburg-Wolfegg
Vice President

Linda K. Roth-Wiszowaty
Secretary

Investment Manager

Columbia Wanger Asset Management, LLC
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
1-888-4-WANGER
(1-888-492-6437)

Transfer Agent,
Dividend Disbursing Agent

Columbia Management Investment Services Corp.
P.O. Box 8081
Boston, Massachusetts
02266-8081

Distributor

Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, Massachusetts
02110

Legal Counsel to the Funds

Perkins Coie LLP
Washington, DC

Legal Counsel to the Independent Trustees

Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP
Chicago, Illinois

*  Mr. Small resigned from the Board effective December 31, 2014.

This document contains Global Industry Classification Standard data. The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of MSCI Inc. ("MSCI") and Standard & Poor's Financial Services LLC ("S&P") and is licensed for use by Columbia Wanger Asset Management, LLC ("CWAM"). Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

This report, including the schedules of investments and financial statements, is submitted for the general information of the shareholders of the Wanger Advisors Trust.

A description of the Fund's proxy voting policies and procedures and a copy of the Fund's voting record for the most recent 12-month period ended June 30 are available (i) on our website, columbiamanagement.com, (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 888-492-6437.

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Pubic Reference Room may be obtained by calling 800-SEC-0330. The Fund's complete portfolio holdings are disclosed at www.columbiamanagement.com approximately 30 to 40 days after each month-end.




Columbia Wanger Funds

© 2015 Columbia Management Investment Advisers, LLC. All rights reserved.

C-1456 F (2/15) 1120823




Wanger International Select

2014 Annual Report

Not FDIC insuredNo bank guaranteeMay lose value




  Wanger International Select

  2014 Annual Report

    Table of Contents

 

1

   

Understanding Your Expenses

 
 

2

   

Communications Satellites: Past and Present

 
 

4

   

Performance Review

 
 

6

   

Statement of Investments

 
 

11

   

Statement of Assets and Liabilities

 
 

11

   

Statement of Operations

 
 

12

   

Statement of Changes in Net Assets

 
 

13

   

Financial Highlights

 
 

14

   

Notes to Financial Statements

 
  19    

Report of Independent Registered Public Accounting Firm

 
  20    

Federal Income Tax Information (Unaudited)

 
 

21

   

Board of Trustees and Management of Wanger Advisors Trust

 

Columbia Wanger Asset Management, LLC (CWAM) is one of the leading global small- and mid-cap equity managers in the United States with over 40 years of small- and mid-cap investment experience. As of December 31, 2014, CWAM managed $32 billion in assets. CWAM is the investment manager to Wanger USA, Wanger International, Wanger Select and Wanger International Select (together, the Columbia Wanger Funds) and the Columbia Acorn Family of Funds.

An important note: Columbia Wanger Funds are available only through variable annuity contracts and variable life insurance policies issued by participating insurance companies or certain eligible retirement plans. Columbia Wanger Funds are not offered directly to the public and are not available in all contracts, policies or plans. Contact your financial advisor or insurance representative for more information. Columbia Wanger Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA, and are managed by CWAM.

Investors should carefully consider investment objectives, risks, charges and expenses before investing. For variable fund and variable contract prospectuses, which contain this and other important information, investors should contact their financial advisor or insurance representative. Read the prospectus carefully before investing.

The views expressed in "Communications Satellites: Past and Present" and in the Performance Review reflect the current views of the respective authors. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Wanger Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Wanger Fund. References to specific company securities should not be construed as a recommendation or investment advice.

A Comment on Trading Volumes

Market conditions are always changing and vary by country and industry sector, and investing in international markets involves unique risks. In the wake of the 2007-2009 financial crisis, trading volumes in both emerging and developed international markets declined significantly and have stayed at generally reduced levels since then. Although it is difficult to accurately assess trends in trading volumes in foreign markets, because some amount of activity has migrated to alternative trading venues, a reduction in trading volumes poses challenges to the Fund. This is particularly so because the Fund focuses on small- and mid-cap companies that usually have lower trading volumes and often takes sizeable positions in portfolio companies. As a result of lower trading volumes, it may take longer to buy or sell securities, which can exacerbate the Fund's exposure to volatile markets. The Fund may also be limited in its ability to execute favorable trades in portfolio securities in response to changes in company prices and fundamentals. If the Fund is forced to sell securities to meet redemption requests or other cash needs, or in the case of an event affecting liquidity in a particular market or markets, it may be forced to dispose of those securities under disadvantageous circumstances and at a loss. As the Fund grows in size, these considerations take on increasing significance and may adversely impact performance.




Wanger International Select 2014 Annual Report

Understanding Your Expenses

As a shareholder, you incur three types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing costs, which generally include management fees and other expenses for Wanger International Select (the Fund). Lastly, there may be additional fees or charges imposed by the insurance company that sponsors your variable annuity and/or variable life insurance product. The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.

Analyzing your Fund's expenses

To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in the Fund during the period. The actual and hypothetical information in the table below is based on an initial investment of $1,000 at the beginning of the period indicated and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "Actual" column is calculated using the Fund's actual operating expenses and total return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the results by the expenses paid during the period under the Actual column. The amount listed in the "Hypothetical" column assumes a 5% annual rate of return before expenses (which is not the Fund's actual return) and then applies the Fund's actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the period. See "Compare with other funds" below for details on how to use the hypothetical data.

Compare with other funds

Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing cost of investing in a fund only and do not reflect any transaction costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.

July 1, 2014 – December 31, 2014

  Account value at the
beginning of the period ($)
  Account value at the
end of the period ($)
  Expenses paid during
period ($)
  Fund's annualized
expense ratio (%)*
 
   

Actual

 

Hypothetical

 

Actual

 

Hypothetical

 

Actual

 

Hypothetical

     

Wanger International Select

   

1,000.00

     

1,000.00

     

848.50

     

1,017.80

     

6.85

     

7.48

     

1.47

   

          

*  Expenses paid during the period are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the Fund's most recent fiscal half-year and divided by 365. The Fund's annualized expense ratio for the six months ended December 31, 2014 may be higher or lower than the annualized expense ratio for the year ended December 31, 2014.

It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the Fund. Expenses paid during the period do not include any insurance charges imposed by your insurance company's separate account. The hypothetical example provided is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.


1



Wanger International Select 2014 Annual Report

Communications Satellites: Past and Present

The Soviet Union launched Sputnik, mankind's first satellite, in October 1957. This 184-pound satellite was a 23-inch sphere with four antennas. It transmitted a "beep beep" signal over ham radio frequencies accessible by many around the globe, and its surface was polished so it was visible as it orbited the Earth.1 Sputnik was a propaganda tool that woke up the world.

Prior to the launch of Sputnik, satellites had been theorized for a long time. In the 17th century, Sir Isaac Newton developed his theory of gravitation. In it he stated that a projectile launched at the correct angle at a speed of 17,000 miles per hour would orbit the Earth.2 In 1945, science fiction writer Arthur C. Clarke introduced the concept of geostationary orbit: a satellite orbiting above the Earth's equator at an altitude of about 22,200 miles would remain over the same position, appearing stationary to people on Earth. Clarke thought that within 50 years, there could be three equally spaced geostationary satellites communicating to virtually the whole planet.3

The United States launched its first satellite, Explorer 1, in January 1958. This satellite discovered the Van Allen radiation belts around Earth. In December 1958, the United States launched its first communications satellite, SCORE, which broadcast a tape-recorded holiday message from President Eisenhower.4

Many experiments and innovations in satellites followed. Perhaps the oddest was Echo-1, which inflated into a 100-foot diameter sphere coated in aluminum, enabling it to reflect radio waves.5 This passive communications satellite reflected about one ten-millionth of originating signal sent toward it.6

Telstar-1, launched in 1962, provided the first live TV broadcast from space, as well as the first phone conversation transmitted by satellite. Rather than being a passive reflector like Echo-1, Telstar-1 had an active transponder that received, amplified and re-sent signals. It could communicate a total of one black and white TV

channel along with 600 telephone conversations.7

The first satellites achieved low or medium Earth orbits, far below Arthur C. Clarke's geostationary orbit, and transmitted at low power. As a result, ground antennas needed to be huge, initially 100 feet wide,8 and had to rotate in order to remain pointed at a moving satellite.9 Furthermore, such satellites were in view of the ground antennas for short periods of time; a low Earth orbit satellite 500 miles up is in touch for 12 minutes per orbit, while a medium Earth satellite 5,000 miles up is in view for 30 minutes.10

The first successful geostationary communications satellite, Syncom 3, launched in August 196411 and was stationed over the Pacific Ocean.12 As planned, it remained in constant contact with fixed-position Earth stations within its coverage area. Also, since geostationary satellites are rarely in Earth's shadow, it was primarily powered by solar cells.13 But with a transmitter output of two watts,14 large Earth stations were needed to communicate with it. Other geostationary satellites followed shortly thereafter. In July 1969, Intelsat, a leading provider of satellite services worldwide, had three geostationary satellites covering nearly the entire Earth, fulfilling Clarke's concept some 25 years earlier than he had imagined.

Early communications satellites, continuing to transmit just one TV channel each,15 enabled much of the world to witness milestone events, which in turn drove demand for more communications satellites. Syncom satellites carried the 1964 Tokyo Olympics, while Intelsat allowed much of the world to witness Neil Armstrong walking on the moon.16 Nearly a billion people worldwide watched the 1972 Summer Olympics held in Munich, Germany.

Additional and more powerful communications satellites were launched shortly thereafter, along with improved and less expensive 16- to 33-foot ground antennas. New businesses were created and existing business models were altered. WESTAR I launched in April 1974 and provided

fledgling cable TV programmer Home Box Office the opportunity to broadcast live Muhammad Ali's "Thrilla in Manila" fight in 1975.

When entrepreneur Ted Turner learned that he could broadcast his Atlanta WTCG TV station via satellite everywhere in the country, he signed a million-dollar-a-year contract to do so, and in 1976 reached homes in over 27 states via local cable television (CATV) systems.17 Turner subsequently launched CNN in 1980, creating the first 24-hour news channel. Numerous other CATV channels followed. Satellites enabled cable TV operators to offer additional content, which eventually ended the dominance of the three major U.S. television networks.

As demand for satellite communications rose, the International Telecommunications Union awarded additional radio bandwidth and orbital slots to industry participants. Current communications satellites have far better circuitry, software and solar power, along with innovations such as spot beams, data compression algorithms and fuel-saving electrical propulsion systems. Rather than being simple "bent pipe" mechanisms receiving and transmitting the same signal, today's satellites enhance signals and allocate bandwidth more efficiently.

New satellites continue to be larger, and are broadcasting at higher power and at higher frequencies. Early "C-band" satellite TV signals were transmitted at 10 to 17 watts, while current "Ku-band" satellite TV signals are transmitted at 100 to 200 watts.18 Higher power and higher frequencies, coupled with improved electronics, facilitate still smaller and cheaper ground station equipment. Neiman Marcus offered a 20-foot satellite TV dish in 1979 for $36,500,19 capable of receiving only HBO; today, direct-to-home receivers cost below $100 and can receive hundreds of channels using dishes as small as 18 inches across.20

Satellite technology has extended beyond broadcasting TV signals. The Global Positioning System (GPS) was introduced by the U.S. military


2



Wanger International Select 2014 Annual Report

in 1978, currently consists of 24 satellites in orbit,21 and has been made available for civilian use.22 These satellites transmit precise time signals along with their exact positions. A GPS receiver measures the range from three or four satellites and uses simultaneous equations to calculate its position. Vehicle and handheld GPS navigation systems combine position information with map data, and then provide locations and directions to users. It seems that the smallest satellite receivers may currently be GPS wristwatches!

Internet connection for fixed locations in densely populated areas is dominated by cable, telephone and cell phone service providers. Satellite data cannot compete economically with these technologies, where they are available. However, satellites provide data and Internet access elsewhere, such as in remote areas, on the oceans and in airplanes. These applications have also benefited from improved satellite technology. For example, satellite data speeds have hit 30 megabits per second per aircraft, up 70-fold from prior generation satellite equipment.23

The next generation high-throughput satellites, utilizing even higher power and more frequencies, and providing more spot beams, are launching through 2017. Combined, these satellites will increase bandwidth in the sky by a factor of eight to ten,24 and promise to deliver more data, more quickly, to ever more users.

As much as satellite technology has changed the world, investments in satellite companies have had mixed results. We have tended to shy away from start-up satellite companies that needed to make large up-front investments before earning highly uncertain revenues. That bias proved correct long ago when satellite phone provider Iridium filed for bankruptcy shortly after launch, citing initial subscriber counts dramatically lower than expected.

Instead, we opted to invest either downstream from satellite technology or in proven satellite

service providers. Long ago, our domestic Funds benefited substantially from investments in cable TV channel companies and, more recently, a company providing mapping data. The Funds currently have investments in a company utilizing GPS signals for engineering and construction. Our international Funds have benefited from satellite service providers possessing visible revenue streams within a more consolidated industry.

Charles P. McQuaid

Portfolio Manager, Analyst and Advisor
Columbia Wanger Asset Management, LLC

The information and data provided in this analysis are derived from sources that we deem to be reliable and accurate. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. The views/opinions expressed here are those of the author and not of the Wanger Advisors Trust Board, are subject to change at any time based upon economic, market or other conditions, may differ from views expressed by other Columbia Management associates and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Wanger Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Wanger Fund.

1  Virgil S. Labrador and Peter I. Galace, Heavens Fill with Commerce: A Brief History of the Communications Satellite Industry (Sonoma, California, SATNEWS PUBLISHERS, 2005), p. 23.

2  Ibid., p. 15.

3  Ibid., p. 21.

4  Ibid., p. 36.

5  Ibid., p. 39.

6  Steve Ford, The ARRL Satellite Handbook (ARRL, The National Association for Amateur Radio, 2008-2013), appendix B, p. 5.

7  Labrador, op. cit., p. 42.

8  Bruce Elbert, The Satellite Communication Ground Segment and Earth Station Handbook, Second Edition (Norwood, Massachusetts, Artech House, 2014) p. 10.

9  Labrador, op. cit., p. 43.

10  Elbert, op. cit., p. 77.

11  Labrador, op. cit., p. 46.

12  NASA Technical Report, R-252, Syncom Engineering Report, Volume II, By Syncom Projects Office, Goddard Space Flight Center, Greenbelt, Maryland, April 1967, p. 3.

13  Ibid., p. 10.

14  Ibid., p. 8.

15  Labrador, op. cit., p. 115.

16  Ibid., p. 58.

17  Ibid., p. 119.

18  Ibid., p. 133.

19  Ray B. Browne and Pat Browne, The Guide to United States Popular Culture (Madison, Wisconsin, Popular Press 3, 2001), p. 706.

20  Elbert, op. cit., p. 304.

21  Madhavendra Richharia, Mobile Satellite Communications: Principles and Trends, Second Edition (West Sussex, United Kingdom, John Wiley & Sons, Ltd, 2014), p. 30.

22  Ford, op. cit., p. 5-14.

23  First Edition, The Anatomy of Inflight Connectivity: An Inside Look at What it Takes to Bring Connectivity to Aircraft Around the World (Gogo LLC, an aero-communications service provider, 2014), p. 41.

24  Anne Wainscott-Sargent, "Ground Players Tackle Bandwidth Optimization in an HTS World," Via Satellite, January 2015, p. 16.


3



Wanger International Select 2014 Annual Report

Performance Review Wanger International Select

Christopher J. Olson
Portfolio Manager

Performance data shown represents past performance and is not a guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data shown. Please visit columbiamanagement.com for most recent month-end performance updates.

International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards, operational and settlement risks and other risks associated with future political and economic developments. Due to the Fund's concentration in a limited number of stocks, the Fund's portfolio will tend to diverge significantly from benchmark weightings and may therefore pose greater risk and volatility relative to its benchmark, or in comparison to other Columbia Acorn Fund portfolios. Stocks of small- and mid-cap companies pose special risks, including illiquidity and greater price volatility than stocks of larger, more established companies. Investing in emerging markets may involve greater risks than investing in more developed countries. Please also see "A Comment on Trading Volumes" on the inside front cover of this report.

For the year ended December 31, 2014, Wanger International Select fell 6.96% compared to a 2.10% decline for its primary benchmark, the S&P Developed Ex-U.S. Between $2B and $10B® Index.

Pummeled by falling oil prices, energy stocks were the biggest detractor from returns for the year. The global oil market has been thrown into severe turmoil on concerns about excess supply at a time when demand is weak due to slowing global growth. Canadian oil and gas producer Baytex and U.S.-listed Denbury Resources, an oil producer using Co2 injection, fell 58% and 57%, respectively, in the year. We opted to sell the Fund's position in Denbury Resources during the fourth quarter.

The Fund's overweight position in materials stocks continued to be a drag on returns. Brazilian gold miner Beadell Resources ended the year down 75%. Falling gold prices and poor weather hampered its mining operations. Tahoe Resources, a silver miner operating in Guatemala, fell 16% in 2014, as silver prices dropped, along with most other commodities, and the Guatemalan government doubled its royalty take. Canadian gold miner Goldcorp ended the year down 13%, also declining on the drop in commodity prices.

Up 47%, Canada's CCL Industries, a global label converter, was the top contributor to gains for the year. The company made a well-timed and well-priced acquisition that drove strong performance. CJ Corp, a holding company of Korean consumer conglomerates, had an annual gain of 27% as the market looked favorably on company moves to lower operating costs to drive up margins. In Japan, auto parts manufacturer NGK Spark Plug ended the annual period up 31%, benefiting from strong earnings growth in 2014 assisted by a weaker yen. Naspers, a provider of media to emerging markets, ended the year with a 24% return. Chinese Internet company Tencent is Naspers' primary investment and it continued to report robust revenue and earnings gains.

The Fund's overweight position in financials versus its benchmark was a positive for the year. Coronation Fund

Managers, a South African fund manager, ended the year up 34%, benefiting from the company's strong fund inflows from retail and international investors, which drove continued growth in assets under management and net fees. Ascendas REIT, an industrial property landlord in Singapore, gained 9% in 2014 on steady results and the continued search, on the part of investors, for yield. Partners Group, a Swiss private markets asset manager, was up 12% for the year, as the company continued to report robust increases in assets under management.

International equity and currency markets have seen their share of volatility over the past several years, a trend that is likely to continue given uncertain global growth, government intervention and ongoing geopolitical concerns. We, however, remain consistent in our search for strong, underappreciated businesses that can operate successfully in and through such environments.

Fund's Positions in Mentioned Holdings

As a percentage of net assets, as of 12/31/14

Ascendas REIT

   

5.8

%

 

CCL Industries

   

3.5

   

NGK Spark Plug

   

3.1

   

Partners Group

   

2.9

   

Tahoe Resources

   

2.9

   

Baytex

   

2.3

   

Naspers

   

2.2

   

Goldcorp

   

1.9

   

CJ Corp

   

1.8

   

Coronation Fund Managers

   

1.5

   

Beadell Resources

   

0.7

   

Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. Top holdings exclude short-term holdings and cash, if applicable.


4



Wanger International Select 2014 Annual Report

Growth of a $10,000 Investment in Wanger International Select
February 1, 1999 (inception date) through December 31, 2014

Performance data shown represents past performance and is not a guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data shown. Performance results reflect any fee waivers or reimbursements of Fund expenses by the investment manager and/or any of its affiliates. Absent these fee waivers and/or expense reimbursement arrangements, performance results would have been lower. For most recent month-end performance updates, please visit columbiamanagement.com.

This graph compares the results of $10,000 invested in Wanger International Select on February 1, 1999 (the date the Fund began operations) through December 31, 2014, to the S&P Developed Ex-U.S. Between $2B and $10B Index, with dividends and capital gains reinvested. Although the index is provided for use in assessing the Fund's performance, the Fund's holdings may differ significantly from those in the index.

Top 10 Holdings

As a percentage of net assets, as of 12/31/14

1. Ascendas REIT (Singapore)
Industrial Property Landlord
  5.8
 

%

 
2. Singapore Exchange (Singapore)
Singapore Equity & Derivatives Market Operator
  4.5
 
 
3. Challenger Financial (Australia)
Annuity Provider in Australia
  4.3
 
 
4. CCL Industries (Canada)
Global Label Converter
  3.5
 
 
5. Babcock International (United Kingdom)
Public Sector Outsourcer
  3.4
 
 
6. Swedish Match (Sweden)
Swedish Snus
  3.1
 
 
7. NGK Spark Plug (Japan)
Automobile Parts
  3.1
 
 
8. Partners Group (Switzerland)
Private Markets Asset Management
  2.9
 
 
9. Tahoe Resources (Guatemala)
Silver Project in Guatemala
  2.9
 
 
10. KDDI (Japan)
Mobile & Fixed Line Communication Service Provider in Japan
  2.8
 
 

Top 5 Countries

As a percentage of net assets, as of 12/31/14

Japan

   

21.7

%

 

Singapore

   

10.3

   

Australia

   

8.7

   

Canada

   

7.7

   

United Kingdom

   

7.2

   

Results as of December 31, 2014

 

4th quarter*

 

1 year

 

5 years

 

10 years

 

Wanger International Select

   

-8.26

%

   

-6.96

%

   

7.27

%

   

7.32

%

 
S&P Developed Ex-U.S. Between
$2B and $10B Index**
   

-2.45

     

-2.10

     

7.53

     

6.25

   

MSCI EAFE Index (Net)

   

-3.57

     

-4.90

     

5.33

     

4.43

   

*Not annualized.

**The Fund's primary benchmark.

NAV as of 12/31/14: $17.93

Performance numbers reflect all Fund expenses but do not include any fees and expenses imposed under your variable annuity or life insurance policy or qualified pension or retirement plan. If performance included the effect of these additional charges, it would be lower.

The Fund's annual operating expense ratio of 1.46% is stated as of the Fund's prospectus dated May 1, 2014, and differences in expense ratios disclosed elsewhere in this report may result from including fee waivers and expense reimbursements as well as different time periods used in calculating the ratios.

All results shown assume reinvestment of distributions.

The S&P Developed Ex-U.S. Between $2B and $10B Index is a subset of the broad market selected by the index sponsor representing the mid-cap developed market, excluding the United States. The MSCI Europe, Australasia, Far East (EAFE) Index (Net) is a capitalization-weighted index that tracks the total return of common stocks in 22 developed-market countries within Europe, Australasia and the Far East. The returns of the MSCI EAFE Index (Net) are presented net of the withholding tax rate applicable to foreign non-resident institutional investors in the foreign companies included in the index who do not benefit from double taxation treaties. The performance of the MSCI EAFE Index (Net) is provided to show how the Fund's performance compares to a widely recognized broad-based index of foreign market performance. Indexes are not managed and do not incur fees or expenses. It is not possible to invest directly in an index.

Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings.


5




Wanger International Select 2014 Annual Report

Wanger International Select

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
       

Equities – 85.8%

         
   

Asia – 36.7%

 
   

Japan – 21.7%

 
  20,500     NGK Spark Plug
Automobile Parts
 

$

622,901
 
  9,000     KDDI
Mobile & Fixed Line Communication
Service Provider in Japan
  565,417
 
  8,900     Secom
Security Services
  511,346
 
  17,000     Recruit Holdings (a)
Recruitment & Media Services
  488,228
 
  215     Nippon Prologis REIT
Logistics REIT in Japan
  466,820
 
  300     Orix JREIT
Diversified REIT
  421,886
 
  14,000     Japan Tobacco
Cigarettes
  385,319
 
  68,000     Seven Bank
ATM Processing Services
  285,429
 
  120     Japan Retail Fund
Retail REIT in Japan
  253,594
 
  16,000     Park24
Parking Lot Operator
  235,542
 
  2,800     Rinnai
Gas Appliances for Home & Commercial Use
  188,138
 
 

         

4,424,620

   
   

Singapore – 10.3%

 
  660,000     Ascendas REIT
Industrial Property Landlord
  1,183,877
 
  156,000     Singapore Exchange
Singapore Equity & Derivatives Market Operator
  917,142
 
 

         

2,101,019

   
   

Korea – 4.7%

 
  1,600     Samsung Fire and Marine
Non-life Insurance
  411,227
 
  2,600     CJ Corp
Holding Company of Korean Consumer
Conglomerate
  368,111
 
  2,400     KT&G
Tobacco & Ginseng Products
  166,640
 

   

945,978

   
 

   

Total Asia

   

7,471,617

   
Number of
Shares
     

Value

 
   

Europe – 24.9%

 
   

United Kingdom – 7.2%

 
  42,000     Babcock International
Public Sector Outsourcer
 

$

688,056
 
  22,000     Jardine Lloyd Thompson Group
International Business Insurance Broker
  307,231
 
  14,000     Smith and Nephew
Medical Equipment & Supplies
  252,456
 
  3,031     Whitbread
UK Hotelier & Coffee Shop
  224,313
 
 

         

1,472,056

   
   

Germany – 4.4%

 
  99,900     Telefonica Deutschland
Mobile & Fixed-line Communications in Germany
  529,455
 
  8,400     Wirecard
Online Payment Processing & Risk Management
  366,274
 
 

         

895,729

   
   

Sweden – 4.2%

 
  20,000     Swedish Match
Market Leader in Swedish Snus
  626,690
 
  7,200     Hexagon
Design, Measurement & Visualization
Software & Equipment
  222,117
 
 

         

848,807

   
   

Switzerland – 2.9%

 
  2,040     Partners Group
Private Markets Asset Management
  593,512
 
   

Denmark – 2.3%

 
  4,700     Jyske Bank (a)
Danish Bank
  237,568
 
  5,500     Novozymes
Industrial Enzymes
  231,515
 
 

         

469,083

   
   

Norway – 1.4%

 
  42,000     Orkla
Food & Brands, Aluminum, Chemicals Conglomerate
  285,914
 
   

Spain – 1.3%

 
  5,000     Viscofan
Sausage Casings Maker
  265,281
 

See accompanying notes to financial statements.
6



Wanger International Select 2014 Annual Report

Wanger International Select

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

France – 1.2%

 
  7,282     Eutelsat
Fixed Satellite Services
 

$

235,497
 
 

   

Total Europe

   

5,065,879

   
   

Other Countries – 20.0%

 
   

Australia – 8.7%

 
  164,000     Challenger Financial
Largest Annuity Provider in Australia
  866,336
 
  100,000     IAG
General Insurance Provider
  507,752
 
  37,000     Amcor
Global Leader in Flexible & Rigid Packaging
  407,086
 
 

         

1,781,174

   
   

Canada – 7.7%

 
  6,500     CCL Industries
Global Label Converter
  704,213
 
  28,000     Baytex (b)
Oil & Gas Producer in Canada
  465,623
 
  21,000     Goldcorp
Gold Mining
  388,920
 
 

         

1,558,756

   
   

South Africa – 3.6%

 
  3,400     Naspers
Media in Africa, China, Russia & other
Emerging Markets
  439,808
 
  30,000     Coronation Fund Managers
South African Fund Manager
  296,891
 

   

736,699

   
 

   

Total Other Countries

   

4,076,629

   
   

Latin America – 4.2%

 
   

Guatemala – 2.9%

 
  42,000     Tahoe Resources
Silver Project in Guatemala
  583,836
 
   

Brazil – 0.7%

 
  817,828     Beadell Resources (a) (b)
Gold Mining in Brazil
  148,120
 
Number of
Shares
     

Value

 
   

Uruguay – 0.6%

 
  13,068     Union Agriculture Group (a) (c) (d)
Farmland Operator in Uruguay
 

$

119,311
 
 

   

Total Latin America

   

851,267

   
Total Equities
(Cost: $15,726,170) – 85.8%
   

17,465,392

(e)

 

Short-Term Investments – 10.3%

     
  2,106,181     JPMorgan U.S. Government Money
Market Fund, IM Shares
(7 day yield of 0.01%)
   

2,106,181

   
Total Short-Term Investments
(Cost: $2,106,181) – 10.3%
   

2,106,181

   

Securities Lending Collateral – 1.8%

     
  362,743     Dreyfus Government Cash
Management Fund,
Institutional Shares
(7 day yield of 0.01%) (f)
   

362,743

   
Total Securities Lending Collateral
(Cost: $362,743) – 1.8%
   

362,743

   
Total Investments
(Cost: $18,195,094)(g) – 97.9%
   

19,934,316

   
Obligation to Return Collateral for
Securities Loaned – (1.8)%
   

(362,743

)

 

Cash and Other Assets Less Liabilities – 3.9%

   

793,812

   

Net Assets – 100.0%

 

$

20,365,385

   

  REIT = Real Estate Investment Trust

Notes to Statement of Investments

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at December 31, 2014. The total market value of securities on loan at December 31, 2014 was $344,276.

(c)  Illiquid security.

(d)  Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. This security is valued at fair value determined in good faith under consistently applied procedures established by the Fund's Board of Trustees. At December 31, 2014, the

See accompanying notes to financial statements.
7



Wanger International Select 2014 Annual Report

Wanger International Select

Statement of Investments, December 31, 2014

market value of this security amounted to $119,311, which represented 0.59% of total net assets. Additional information on this security is as follows:

Acquisition
Security
 

Dates

 

Shares/Units

 

Cost

 

Value

 

Union Agriculture Group

  12/8/10–
6/27/12
   

13,068

   

$

150,000

   

$

119,311

   

(e)  On December 31, 2014, the Fund's total equity investments were denominated in currencies as follows:

Currency  

Value

  Percentage of
Net Assets
 

Japanese Yen

 

$

4,424,621

     

21.7

   

Singapore Dollar

   

2,101,019

     

10.3

   

Australian Dollar

   

1,929,295

     

9.5

   

Canadian Dollar

   

1,753,671

     

8.6

   

British Pound

   

1,472,055

     

7.2

   

Euro

   

1,396,508

     

6.9

   
Other currencies less
than 5% of total net assets
   

4,388,223

     

21.6

   

Total Equities

 

$

17,465,392

     

85.8

   

(f)  Investment made with cash collateral received from securities lending activity.

(g)  At December 31, 2014, for federal income tax purposes, the cost of investments was $18,808,618 and net unrealized appreciation (depreciation) was $1,125,698 consisting of gross unrealized appreciation of $3,016,546 and gross unrealized depreciation of $1,890,848.

  At December 31, 2014, the Fund had entered into the following forward foreign currency exchange contracts:

Forward
Foreign
Currency
Exchange
Contracts
to Buy
  Forward
Foreign
Currency
Exchange
Contracts
to Sell
  Principal
Amount in
Foreign
Currency
  Principal
Amount in
U.S. Dollar
  Settlement
Date
  Unrealized
Appreciation
(Depreciation)
 
  USD      

ZAR

       

7,027,140

   

$

600,000

   

1/15/15

 

$

(6,479

)

 

  The counterparty for all forward foreign currency exchange contracts is Morgan Stanley.

USD = United States Dollar

ZAR = South African Rand

Fair Value Measurements

  Various inputs are used in determining the value of the Fund's investments, following the input prioritization hierarchy established by accounting principles generally accepted in the United States of America (GAAP). These inputs are summarized in the three broad levels listed below:

  Level 1 – quoted prices in active markets for identical securities

  Level 2 – prices determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others)

  Level 3 – prices determined using significant unobservable inputs where quoted prices or observable inputs are unavailable or less reliable (including management's own assumptions about the factors market participants would use in pricing an investment)

  The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

  Examples of the types of securities in which the Fund would typically invest and how they are classified within this hierarchy are as follows. Typical Level 1 securities include exchange traded domestic equities, mutual funds whose NAVs are published each day and exchange traded foreign equities that are not statistically fair valued. Typical Level 2 securities include exchange traded foreign equities that are statistically fair valued, forward foreign currency exchange contracts and short-term investments valued at amortized cost. Additionally, securities fair valued by the Valuation Committee (the Committee) of the Fund's Board of Trustees (the Board) that rely on significant observable inputs are also included in Level 2. Typical Level 3 securities include any security fair valued by the Committee that relies on significant unobservable inputs.

  Under the direction of the Board, the Committee is responsible for overseeing the valuation procedures approved by the Board.

  The Committee meets as necessary, and no less frequently than quarterly, to determine fair values for securities for which market quotations are not readily available or for which the investment manager believes that available market quotations are unreliable, to review the appropriateness of the Trust's Portfolio Pricing Policy and the pricing procedures of the investment manager (the Policies), and to review the continuing appropriateness of the current value of any security subject to the Policies. The Policies address, among other things: circumstances under which market quotations will be deemed readily available; selection of third party pricing vendors; appropriate pricing methodologies; events that require fair valuation and fair value techniques; circumstances under which securities will be deemed to pose a potential for stale pricing, including when securities are illiquid, restricted, or in default; and certain delegations of authority to determine fair values to the Fund's investment manager. The Committee may also meet to discuss additional valuation matters, which may include review of back-testing results, review of time-sensitive information or approval of other valuation related actions, and to review the appropriateness of the Policies.

  For investments and derivatives categorized as Level 3, the significant unobservable inputs used in the fair value measurement of the Funds' securities may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair value. Significant changes in any of these factors could result in lower or higher fair value measurements. Various factors impact the frequency of monitoring (which may occur as often as daily), however the Committee may determine that changes to inputs, assumptions and models are not required with the same frequency.

See accompanying notes to financial statements.
8



Wanger International Select 2014 Annual Report

Wanger International Select

Statement of Investments, December 31, 2014

The following table summarizes the inputs used, as of December 31, 2014, in valuing the Fund's assets:





Investment Type
 


Quoted Prices
(Level 1)
  Other
Significant
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

Total

 

Equities

 

Asia

 

$

   

$

7,471,617

   

$

   

$

7,471,617

   

Europe

   

     

5,065,879

     

     

5,065,879

   

Other Countries

   

1,558,756

     

2,517,873

     

     

4,076,629

   

Latin America

   

583,836

     

148,120

     

119,311

     

851,267

   

Total Equities

   

2,142,592

     

15,203,489

     

119,311

     

17,465,392

   
Total Short-Term
Investments
   

2,106,181

     

     

     

2,106,181

   
Total Securities
Lending Collateral
   

362,743

     

     

     

362,743

   

Total Investments

   

4,611,516

     

15,203,489

     

119,311

     

19,934,316

   

Unrealized Depreciation on:

                 
Forward Foreign
Currency  
Exchange  
Contracts
   

     

(6,479

)

   

     

(6,479

)

 

Total

 

$

4,611,516

   

$

15,197,010

   

$

119,311

   

$

19,927,837

   

  The Fund's assets assigned to the Level 2 input category are generally valued using a market approach, in which a security's value is determined through its correlation to prices and information from observable market transactions for similar or identical assets. Foreign equities are generally

valued at the last sale price on the foreign exchange or market on which they trade. The Fund may use a statistical fair valuation model, in accordance with the policy adopted by the Board, provided by an independent third party to value securities principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for valuation. These models take into account available market data including intraday index, ADR, and ETF movements. Forward foreign currency exchange contracts are valued at the prevailing forward exchange rate of the underlying currencies.

  There were no transfers of financial assets between levels during the period.

The following table reconciles asset balances for the period ending December 31, 2014, in which significant observable and/or unobservable inputs (Level 3) were used in determining value:

Investments in
Securities
  Balance as of
December 31,
2013
  Realized
Gain/(Loss)
  Change in
Unrealized
Appreciation
(Depreciation)
 

Purchases

 

Sales

  Transfers
into
Level 3
  Transfers
out of
Level 3
  Balance as of
December 31,
2014
 

Equities

 

Asia

 

$

674,237

   

$

(117,319

)

 

$

136,749

   

$

   

$

(693,667

)

 

$

   

$

   

$

   

Latin America

   

139,697

     

     

(20,386

)

   

     

     

     

     

119,311

   

Options

 

Asia

   

64,830

     

     

(64,830

)

   

     

     

     

     

   
   

$

878,764

   

$

(117,319

)

 

$

51,533

   

$

   

$

(693,667

)

 

$

   

$

   

$

119,311

   

  The information in the above reconciliation table represents fiscal year to date activity for any securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period.

  The change in unrealized depreciation attributed to securities owned at December 31, 2014, which were valued using significant unobservable inputs (Level 3), amounted to $(20,386).

Quantitative information pertaining to Level 3 unobservable fair value measurements

    Fair Value
at December 31, 2014
 

Valuation Technique(s)

 

Unobservable Input(s)

  Range
(Weighted Average)
 

Equities

 
Latin America  

$

119,311

   

Market comparable companies

 

Discount for lack of marketability

   

8

% to 23%

 

  Certain securities classified as Level 3 are valued at fair value, using a market approach, as determined in good faith under consistently applied procedures established by and under the general supervision of the Board. To determine fair value for these securities, for which no market exists, the Committee utilizes the valuation technique it deems most appropriate in the circumstances, using some unobservable inputs, which may include, but are not limited to estimated earnings of the company and the position of the security within the company's capital structure. The Committee also may use some observable inputs, which may include, but are not limited to, trades of similar securities and market multiples derived from a set of comparable companies. Significant increases or decreases to any of these inputs could result in a significantly lower or higher fair value measurement.

See accompanying notes to financial statements.
9



Wanger International Select 2014 Annual Report

Wanger International Select

Portfolio Diversification December 31, 2014

At December 31, 2014, the Fund's portfolio investments as a percentage of net assets were diversified as follows:

   

Value

  Percentage of
Net Assets
 

Information

 

Financial Processors

 

$

1,283,417

     

6.3

   

Mobile Communications

   

565,416

     

2.8

   

Telephone & Data Services

   

529,455

     

2.6

   

Advertising

   

488,228

     

2.4

   

Internet Related

   

439,808

     

2.2

   

Satellite Broadcasting & Services

   

235,497

     

1.1

   

Business Software

   

222,117

     

1.1

   
     

3,763,938

     

18.5

   

Finance

 

Insurance

   

2,092,546

     

10.3

   

Brokerage & Money Management

   

890,404

     

4.4

   

Banks

   

522,997

     

2.5

   
     

3,505,947

     

17.2

   

Consumer Goods & Services

 

Nondurables

   

1,256,172

     

6.2

   

Food & Beverage

   

891,972

     

4.4

   

Other Durable Goods

   

811,039

     

4.0

   

Restaurants

   

224,313

     

1.1

   
     

3,183,496

     

15.7

   

Industrial Goods & Services

 

Other Industrial Services

   

746,888

     

3.7

   

Outsourcing Services

   

688,055

     

3.4

   

Conglomerates

   

654,025

     

3.2

   

Industrial Materials & Specialty Chemicals

   

638,601

     

3.1

   
     

2,727,569

     

13.4

   
   

Value

  Percentage of
Net Assets
 

Other Industries

 

Real Estate

 

$

2,326,177

     

11.4

   

   

2,326,177

     

11.4

   

Energy & Minerals

 

Mining

   

1,120,876

     

5.5

   

Oil & Gas Producers

   

465,622

     

2.3

   

Agricultural Commodities

   

119,311

     

0.6

   

   

1,705,809

     

8.4

   

Health Care

 

Medical Equipment & Devices

   

252,456

     

1.2

   
     

252,456

     

1.2

   

Total Equities:

   

17,465,392

     

85.8

   

Short-Term Investments:

   

2,106,181

     

10.3

   

Securities Lending Collateral:

   

362,743

     

1.8

   

Total Investments:

   

19,934,316

     

97.9

   
Obligation to Return Collateral
for Securities Loaned:
   

(362,743

)

   

(1.8

)

 
Cash and Other Assets
Less Liabilities:
   

793,812

     

3.9

   

Net Assets:

 

$

20,365,385

     

100.0

%

 

See accompanying notes to financial statements.
10




Wanger International Select 2014 Annual Report

Statement of Assets and Liabilities
December 31, 2014

Assets:

 

Investments, at cost

 

$

18,195,094

   
Investments, at value (including securities on loan
of $344,276)
 

$

19,934,316

   

Foreign currency (cost of $5)

   

6

   

Receivable for:

 

Investments sold on a delayed delivery basis

   

693,667

   

Fund shares sold

   

107,030

   

Securities lending income

   

130

   

Dividends

   

34,096

   

Interest

   

10,405

   

Foreign tax reclaims

   

11,873

   

Prepaid expenses

   

392

   

Total Assets

   

20,791,915

   

Liabilities:

 

Collateral on securities loaned

   

362,743

   
Unrealized depreciation on forward foreign
currency exchange contracts
   

6,479

   

Payable for:

 

Investment advisory fee

   

524

   

Administration fee

   

28

   

Trustees' fees

   

9,137

   

Custody fee

   

2,954

   

Reports to shareholders

   

11,105

   

Chief compliance officer expenses

   

88

   

Other liabilities

   

33,472

   

Total Liabilities

   

426,530

   

Net Assets

 

$

20,365,385

   

Composition of Net Assets:

 

Paid-in capital

 

$

17,805,418

   

Overdistributed net investment income

   

(358,209

)

 

Accumulated net realized gain

   

1,186,971

   

Net unrealized appreciation (depreciation) on:

 

Investments

   

1,739,222

   

Foreign currency translations

   

(1,538

)

 

Forward foreign currency exchange contracts

   

(6,479

)

 

Net Assets

 

$

20,365,385

   

Fund Shares Outstanding

   

1,136,011

   
Net asset value, offering price and redemption
price per share
 

$

17.93

 

Statement of Operations
For the Year Ended December 31, 2014

Investment Income:

 

Dividends (net foreign taxes withheld of $73,736)

 

$

584,505

   

Interest

   

10,501

   

Income from securities lending – net

   

5,500

   

Total Investment Income

   

600,506

   

Expenses:

 

Investment advisory fee

   

227,100

   

Transfer agent fees

   

168

   

Administration fee

   

12,080

   

Trustees' fees

   

3,929

   

Custody fees

   

16,580

   

Reports to shareholders

   

26,782

   

Audit fees

   

39,071

   

Legal fees

   

2,165

   

Chief compliance officer expenses

   

1,023

   

Commitment fee for line of credit (Note 5)

   

42

   

Other expenses

   

14,448

   

Total Expenses

   

343,388

   

Net Investment Income

   

257,118

   
Net Realized and Unrealized Gain (Loss) on
Investments:
 

Net realized gain (loss) on:

 

Investments

   

1,432,817

   

Foreign currency translations

   

(12,926

)

 

Forward foreign currency exchange contracts

   

31,269

   

Net realized gain

   

1,451,160

   

Net change in unrealized appreciation (depreciation) on:

 

Investments

   

(3,148,383

)

 

Foreign currency translations

   

(1,653

)

 

Forward foreign currency exchange contracts

   

(10,867

)

 

Options

   

(64,830

)

 

Net change in unrealized depreciation

   

(3,225,733

)

 

Net realized and unrealized loss

   

(1,774,573

)

 

Net Decrease in Net Assets from Operations

 

$

(1,517,455

)

 

See accompanying notes to financial statements.
11



Wanger International Select 2014 Annual Report

Statements of Changes in Net Assets

   

Year Ended December 31,

 

Increase (Decrease) in Net Assets

 

2014

 

2013

 

Operations:

 

Net investment income

 

$

257,118

   

$

260,434

   

Net realized gain (loss) on:

 

Investments

   

1,432,817

     

1,722,334

   

Foreign currency translations

   

(12,926

)

   

(1,571

)

 

Forward foreign currency exchange contracts

   

31,269

     

98,992

   

Net change in unrealized appreciation (depreciation) on:

 

Investments

   

(3,148,383

)

   

1,069,705

   

Foreign currency translations

   

(1,653

)

   

397

   

Forward foreign currency exchange contracts

   

(10,867

)

   

33,211

   

Options

   

(64,830

)

   

64,830

   

Net Increase (Decrease) in Net Assets from Operations

   

(1,517,455

)

   

3,248,332

   

Distributions to Shareholders From:

 

Net investment income

   

(328,166

)

   

(1,451,610

)

 

Net realized gains

   

(1,083,089

)

   

(876,210

)

 

Total Distributions to Shareholders

   

(1,411,255

)

   

(2,327,820

)

 

Share Transactions:

 

Subscriptions

   

2,223,810

     

1,509,200

   

Distributions reinvested

   

1,411,255

     

2,327,820

   

Redemptions

   

(5,267,340

)

   

(4,650,985

)

 

Net Decrease from Share Transactions

   

(1,632,275

)

   

(813,965

)

 

Increase from regulatory settlements

   

3,626

     

   

Total Increase (Decrease) in Net Assets

   

(4,557,359

)

   

106,547

   

Net Assets:

 

Beginning of period

   

24,922,744

     

24,816,197

   

End of period

 

$

20,365,385

   

$

24,922,744

   

Overdistributed net investment income

 

$

(358,209

)

 

$

(539,656

)

 

See accompanying notes to financial statements.
12




Wanger International Select 2014 Annual Report

Financial Highlights

The following table is intended to help you understand the Fund's financial performance. Certain information reflects financial results for a single share held for the periods shown. Per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of the expenses that apply to the variable accounts or contract charges, if any. Total return and portfolio turnover are not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the Fund's portfolio turnover rate may be higher.

   

Year Ended December 31,

 

Selected data for a share outstanding throughout each period

 

2014

 

2013

 

2012

 

2011

 

2010

 

Net Asset Value, Beginning of Period

 

$

20.45

   

$

19.83

   

$

16.44

   

$

18.57

   

$

15.42

   

Income from Investment Operations:

 

Net investment income

   

0.22

     

0.21

     

0.29

     

0.14

     

0.09

   

Net realized and unrealized gain (loss)

   

(1.51

)

   

2.37

     

3.32

     

(1.99

)

   

3.28

   

Total from Investment Operations

   

(1.29

)

   

2.58

     

3.61

     

(1.85

)

   

3.37

   

Less Distributions to Shareholders:

 

Net investment income

   

(0.29

)

   

(1.22

)

   

(0.22

)

   

(0.28

)

   

(0.22

)

 

Net realized gains

   

(0.94

)

   

(0.74

)

   

     

     

   

Total Distributions to Shareholders

   

(1.23

)

   

(1.96

)

   

(0.22

)

   

(0.28

)

   

(0.22

)

 

Increase from regulatory settlements

   

0.00

(a)

   

     

     

     

   

Net Asset Value, End of Period

 

$

17.93

   

$

20.45

   

$

19.83

   

$

16.44

   

$

18.57

   

Total Return

   

(6.96

)%(b)

   

14.04

%(c)

   

22.00

%

   

(10.11

)%(c)

   

22.09

%

 

Ratios to Average Net Assets/Supplemental Data:

 

Total gross expenses (d)

   

1.42

%

   

1.51

%

   

1.43

%

   

1.45

%

   

1.38

%

 

Total net expenses (d)

   

1.42

%

   

1.45

%

   

1.42

%(e)

   

1.40

%(e)

   

1.38

%(e)

 

Net investment income

   

1.06

%

   

1.05

%

   

1.57

%

   

0.77

%

   

0.57

%

 

Portfolio turnover rate

   

61

%

   

74

%

   

58

%

   

44

%

   

37

%

 

Net assets, end of period (000s)

 

$

20,365

   

$

24,923

   

$

24,816

   

$

24,019

   

$

31,669

   

Notes to Financial Highlights

(a)  Rounds to zero.

(b)  The Fund received proceeds from regulatory settlements. Had the Fund not received these proceeds, the total return would have been lower by 0.01%.

(c)  Had the investment manager and/or its affiliates not waived a portion of expenses, total return would have been reduced.

(d)  In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests, if any. Such indirect expenses are not included in the Fund's reported expense ratios.

(e)  The benefits derived from custody fees paid indirectly had an impact of less than 0.01%.

See accompanying notes to financial statements.
13




Wanger International Select 2014 Annual Report

Notes to Financial Statements

1. Nature of Operations

Wanger International Select (the Fund), a series of Wanger Advisors Trust (the Trust), is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The investment objective of the Fund is to seek long-term capital appreciation. The Fund is available only for allocation to certain life insurance company separate accounts established for the purpose of funding participating variable annuity contracts and variable life insurance policies and may also be offered directly to certain qualified pension and retirement plans.

2. Summary of Significant Accounting Policies

Basis of Preparation

The Fund is an investment company that applies the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services – Investment Companies (ASC 946). The financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

Security valuation

Securities of the Fund are valued at market value or, if a market quotation for a security is not readily available or is deemed not to be reliable because of events or circumstances that have occurred between the market quotation and the time as of which the security is to be valued, the security is valued at its fair value determined in good faith under consistently applied procedures established by the Board of Trustees (the Board). A security traded on a securities exchange or in an over-the-counter market in which transaction prices are reported is valued at the last sales price at the time of valuation. A security traded principally on NASDAQ is valued at the NASDAQ official closing price. Exchange traded funds are valued at their closing net asset value as reported on the applicable exchange. A security for which there is no reported sale on the valuation date is valued at the mean of the latest bid and ask quotations.

Short-term investments maturing in 60 days or less are valued at amortized cost, which approximates market value.

Forward foreign currency exchange contracts are marked-to-market based upon foreign currency exchange rates provided by a pricing service.

The Trust has retained an independent statistical fair value pricing service that employs a systematic methodology to assist in the fair valuation process for securities principally traded in a foreign market in order to adjust for possible changes in value that may occur between the close of the foreign market and the time as of which the securities are to be valued. If a security is valued at a fair value, that value may be different from the last quoted market price for the security.

Foreign currency translations

Values of investments denominated in foreign currencies are converted into U.S. dollars using the New York 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.

Restricted securities

Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board.

Derivative instruments

The Fund invests in forward foreign currency exchange contracts on a very limited basis, as detailed below. Forward foreign currency exchange contracts are derivative instruments whose values depend on, or are derived from, in whole or in part, the value of one or more other assets, in this case, currencies. Derivatives may involve various risks, including the potential inability of the counterparty to fulfill its obligation under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell, including at favorable prices) and the potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statements of Assets and Liabilities.

The Fund held a put option in 2014, which was acquired through a transaction between the Fund and PT Rajawali Corpora (Indonesia), in connection with the delisting of the shares of Archipelago Resources in 2013. A put option is often held to decrease exposure to an underlying stock. However, in this case, the put option related to the proposed restructuring of Archipelago Resources and provided the Fund with the ability to sell its shares back to PT Rajawali Corpora (Indonesia) at an agreed upon price or to convert the shares held in Archipelago Resources into shares of the newly restructured company based upon the terms of the put option agreement between the Fund and PT Rajawali Corpora (Indonesia). During 2014, the Fund opted to exercise the put option and sell its shares back to PT Rajawali Corpora (Indonesia) with the exercise delivery expected in the first quarter of 2015. The proceeds from the exercising of the put option are included in "Receivable for Investments sold on a delayed delivery basis" on the Statement of Assets and Liabilities.

Forward foreign currency exchange contracts

Forward foreign currency exchange contracts are agreements between two parties to buy and sell a currency at a set price on a future date. The Fund utilized forward foreign currency exchange contracts to hedge the currency exposure associated with some or all of the Fund's securities. These instruments may be used for other purposes in the future. The Fund's use of forward foreign currency exchange contracts was not material to the net assets of the Fund.

The values of forward foreign currency exchange contracts fluctuate daily with changes in foreign currency exchange rates. Changes in the value of these contracts are recorded as unrealized appreciation or depreciation until the contracts is exercised or has expired. The Fund will realize a gain or loss when the forward foreign currency exchange contract is closed or expires.

The use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. The risks of forward foreign currency exchange contracts include movement in the values of the foreign currencies relative to the U.S. dollar (or other foreign currencies) and the possibility that counterparties will not complete their contractual obligations, which may be in excess of the amount reflected, if any, in the Statement of Assets and Liabilities.


14



Wanger International Select 2014 Annual Report

Notes to Financial Statements, continued

Offsetting of Derivative Assets and Derivative Liabilities

The following table presents the Fund's gross and net amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of December 31, 2014:

    Gross
Amounts of
  Gross Amounts
Offset in the
  Net Amounts of Liabilities
Presented in the
  Gross Amounts Not Offset in
the Statement of Assets and Liabilities
 
    Recognized
Liabilities
  Statement of
Assets and Liabilities
  Statement of
Assets and Liabilities
  Financial
Instruments (a)
  Cash Collateral
Pledged
  Securities
Collateral Pledged
 

Net Amount (b)

 

Liability Derivatives:

 

Forward Foreign Currency Exchange Contracts

 

$

6,479

   

$

   

$

6,479

   

$

   

$

   

$

   

$

6,479

   

(a)   Represents the amount of liabilities that could be offset by assets with the same counterparty under master netting or similar agreements that management elects not to offset on the Statement of Assets and Liabilities.

(b)   Represents the net amount due to counterparties in the event of default.

Effects of derivative transactions in the financial statements

The following tables are intended to provide additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the impact of derivative transactions over the period in the Statement of Operations, including realized gains or losses and unrealized gains or losses. The derivative schedules following the Statement of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any.

The following table is a summary of the fair value of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at December 31, 2014:

   

Liability Derivatives

 

Risk Exposure Category

  Statement of Assets
and Liabilities Location
  Fair
Value
 
Foreign exchange risk
 
 
 
  Unrealized depreciation
on forward foreign
currency exchange
contracts
 

$

6,479

   

The following table indicates the effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended December 31, 2014:

Amount of Realized Gain (Loss) on Derivatives Recognized in Income

Risk Exposure Category

  Forward Foreign Currency
Exchange Contracts
 

Foreign exchange risk

 

$

31,269

   

Change in Unrealized Appreciation (Depreciation) on Derivatives
Recognized in Income

Risk Exposure Category

  Forward Foreign
Currency Exchange
Contracts
 

Options

 

Total

 

Equity risk

 

$

   

$

(64,830

)

 

$

(64,830

)

 

Foreign exchange risk

   

(10,867

)

   

     

(10,867

)

 

Total

 

$

(10,867

)

 

$

(64,830

)

 

$

(75,697

)

 

The following table is a summary of the average outstanding volume by derivative instrument for the year ended December 31, 2014:

Derivate Instrument

  Average
market value*
 

Options contract

 

$

19,401

   

Derivate Instrument

  Average
unrealized
appreciation*
  Average
unrealized
depreciation*
 

Forward foreign currency exchange contracts

 

$

3,619

   

$

(5,965

)

 

*  Based on ending quarterly outstanding amounts for the year ended December 31, 2014.

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 debt obligations when required for federal income tax purposes. Realized gains and losses from security transactions are recorded on an identified cost basis.

Awards, if any, from class action litigation related to securities owned may be recorded as a reduction of cost of those securities. If the applicable securities are no longer owned, the proceeds are recorded as realized gains.

The Fund may receive distributions from holdings in exchange-traded funds (ETFs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on the character of their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. To the extent actual information has not yet been reported by the REITs, estimates for return of capital may be made by the Fund's management. Return of capital is recorded as a reduction of the cost basis of securities held. If the Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. Management's estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of capital to shareholders. No estimates are made for ETFs and RICs.

Expenses

General expenses of the Trust are allocated to the Fund and the other series of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund.

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 (the 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.


15



Wanger International Select 2014 Annual Report

Notes to Financial Statements, continued

Securities lending

The Fund may lend securities up to one-third of the value of its total assets to certain approved brokers, dealers and other financial institutions to earn additional income. The Fund retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. The Fund also receives a fee for the loan. The Fund has the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by cash that exceeded the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Fund and any additional required collateral is delivered to each Fund on the next business day. The Fund has elected to invest the cash collateral in the Dreyfus Government Cash

Management Fund. The income earned from the securities lending program is paid to the Fund, net of any fees remitted to Goldman Sachs Agency Lending, the Fund's lending agent, and borrower rebates. The Fund's investment manager, Columbia Wanger Asset Management, LLC (CWAM), does not retain any fees earned by the lending program. Generally, in the event of borrower default, the Fund has the right to use the collateral to offset any losses incurred. In the event the Fund is delayed or prevented from exercising its right to dispose of the collateral, there may be a potential loss to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of loss with respect to the investment of collateral. The net lending income earned by the Fund as of December 31, 2014, is included in the Statement of Operations.

Offsetting of Financial Assets

The following table presents the Fund's gross and net amount of assets available for offset under a securities lending agreement as well as the related collateral received by the Fund as of December 31, 2014:

    Gross
Amounts of
  Gross Amounts
Offset in the
  Net Amounts of Assets
Presented in the
  Gross Amounts Not Offset in
the Statement of Assets and Liabilities
 
    Recognized
Assets
  Statement of
Assets and Liabilities
  Statement of
Assets and Liabilities
  Financial
Instruments (a)
  Cash Collateral
Received
  Securities
Collateral Received
 
Net Amount (b)
 

Securities Loaned

 

$

344,276

   

$

   

$

344,276

   

$

   

$

344,276

   

$

   

$

   

(a)  Represents the amount of assets that could be offset by liabilities with the same counterparty under master netting or similar agreements that management elects not to offset on the Statement of Assets and Liabilities.

(b) Represents the net amount due from counterparties in the event of default.

Federal income taxes

The Fund has complied with the provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distributes substantially all its taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.

Foreign capital gains taxes

Gains in certain countries may be subject to foreign taxes at the fund level. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction. The amount, if any, is disclosed as a liability on the Statement of Assets and Liabilities.

Distributions to shareholders

Distributions to shareholders are recorded on the ex-dividend date.

Indemnification

In the normal course of business, the Trust on behalf of the Fund enters into contracts that contain a variety of representations and warranties and that provide general indemnities. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also under the Trust's organizational documents, the trustees and officers of the Trust are indemnified against certain liabilities that may arise out of their duties to the Trust. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.

Recent Accounting Pronouncement

Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures

In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. ASU No. 2014-11 changes the accounting for transactions accounted

for as secured borrowings and expands disclosure requirements related to securities lending and similar transactions. The disclosure requirements are effective for interim and annual periods beginning after December 15, 2014. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

3. Federal Tax Information

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations.

For the year ended December 31, 2014, permanent book and tax basis differences resulting primarily from foreign currency transactions and passive foreign investment company (PFIC) holdings were identified and reclassified among the components of the Fund's net assets as follows:

Accumulated
Net Investment
Income
  Accumulated
Net Realized
Gain (Loss)
 

Paid-In Capital

 
$

252,495

   

$

(252,495

)

 

$

0

   

Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification.

The tax character of distributions paid during the years ended December 31, 2014 and December 31, 2013 were as follows:

   

December 31, 2014

 

December 31, 2013

 

Ordinary Income *

 

$

328,166

   

$

1,451,610

   

Long-Term Capital Gains

   

1,083,089

     

876,210

   

* For tax purposes short-term capital gain distributions, if any, are considered ordinary income distributions.


16



Wanger International Select 2014 Annual Report

Notes to Financial Statements, continued

As of December 31, 2014, the components of distributable earnings on a tax basis were as follows:

Undistributed
Ordinary
Income
  Undistributed
Long-Term
Capital Gains
  Net Unrealized
Appreciation
(Depreciation)*
 
$

197,886

   

$

1,246,910

   

$

1,125,698

   

* The differences between book-basis and tax-basis net unrealized appreciation/depreciation are primarily due to deferral of losses from wash sales and PFIC adjustments.

Management is required to determine whether a tax position of the Fund is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized by the Fund is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Management is not aware of any tax positions in the Fund for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However, management's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). The Fund's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.

4. Transactions With Affiliates

CWAM is a wholly owned subsidiary of Columbia Management Investment Advisers, LLC (Columbia Management), which in turn is a wholly owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). CWAM furnishes continuing investment supervision to the Fund and is responsible for the overall management of the Fund's business affairs.

CWAM receives a monthly advisory fee based on the Fund's average daily net assets at the following annual rates:

Average Daily Net Assets

 

Annual Fee Rate

 

Up to $500 million

   

0.94

%

 
$500 million and over    

0.89

%

 

For the year ended December 31, 2014, the effective investment advisory fee rate was 0.94% of the Fund's average daily net assets.

Through April 30, 2015, CWAM has contractually agreed to bear a portion of the Fund's expenses so that its ordinary operating expenses (excluding transaction costs and certain other investment-related expenses, interest and fees on borrowings and expenses associated with the Fund's investment in other investment companies, if any), after giving effect to any balance credits from the Fund's custodian, do not exceed the annual rate of 1.45% of the Fund's average daily net assets. For the year ended December 31, 2014, the Fund was not reimbursed any expenses by CWAM.

CWAM provides administrative services and receives an administration fee from the Fund at the following annual rates:

Wanger Advisors Trust Aggregate
Average Daily Net Assets of the Trust
 

Annual Fee Rate

 

Up to $4 billion

   

0.05

%

 

$4 billion to $6 billion

   

0.04

%

 

$6 billion to $8 billion

   

0.03

%

 
$8 billion and over    

0.02

%

 

For the year ended December 31, 2014, the effective administration fee rate was 0.05% of the Fund's average daily net assets. Columbia Management provides certain sub-administrative services to the Fund.

Columbia Management Investment Distributors, Inc. (CMID), a wholly owned subsidiary of Ameriprise Financial, serves as the Fund's distributor and principal underwriter.

Columbia Management Investment Services Corp. (CMIS), a wholly owned subsidiary of Ameriprise Financial, is the transfer agent to the Fund. For its services, the Fund pays CMIS a monthly fee at the annual rate of $21.00 per open account. CMIS also receives reimbursement from the Fund for certain out-of-pocket expenses.

Certain officers and trustees of the Trust are also officers of CWAM. The Trust makes no direct payments to its officers and trustees who are affiliated with CWAM.

The Board has appointed a Chief Compliance Officer of the Trust in accordance with federal securities regulations. The Fund, along with other affiliated funds, pays its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer.

The Trust offers a deferred compensation plan for its independent trustees. Under that plan, a trustee may elect to defer all or a portion of his or her compensation. Amounts deferred are retained by the Trust and may represent an unfunded obligation of the Trust. The value of amounts deferred is determined by reference to the change in value of Class Z shares of one or more series of Columbia Acorn Trust or a money market fund as specified by the trustee. Benefits under the deferred compensation plan are payable in accordance with the plan.

For the year ended December 31, 2014, the Fund engaged in purchase and sales transactions with funds that have a common investment manager (or affiliated investment managers), common directors/trustees, and/or common officers. Those sale transactions complied with provisions of Rule 17a-7 under the Investment Company Act of 1940 were $211,900.

5. Borrowing Arrangements

During the year ended December 31, 2014, the Trust participated in a credit facility with JPMorgan Chase Bank, N.A., along with Columbia Acorn Trust, another trust managed by CWAM, in the amount of $150 million. The credit facility was entered into to facilitate portfolio liquidity. Under the facility, interest is charged to each participating fund based on its borrowings at a rate per annum equal to the Federal Funds Rate plus 1.00%. In addition, a commitment fee of 0.08% per annum of the unutilized line of credit is accrued and apportioned among the participating funds based on their relative net assets. The commitment fee is disclosed as a part of "Commitment fee for line of credit" in the Statement of Operations. The Trust expects to renew this line of credit for one year durations each July at then current market rates and terms.

No amounts were borrowed for the benefit of the Fund under the line of credit during the year ended December 31, 2014.

6. Fund Share Transactions

Proceeds and payments on Fund shares as shown in the Statement of Changes in Net Assets are in respect of the following numbers of shares:

    Year Ended
December 31, 2014
  Year Ended
December 31, 2013
 

Shares sold

   

109,349

     

76,127

   
Shares issued in reinvestment
of dividend distributions
   

69,611

     

124,831

   

Less shares redeemed

   

(261,572

)

   

(233,547

)

 

Net decrease in shares outstanding

   

(82,612

)

   

(32,589

)

 

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2014, were $13,690,809 and $17,851,147, respectively. The amount of purchase and sales activity impacts the portfolio turnover rate reported in the Financial Highlights.


17



Wanger International Select 2014 Annual Report

Notes to Financial Statements, continued

8. Regulatory Settlements

During the year ended December 31, 2014, the Fund received $3,626 as a result of a regulatory settlement proceeding brought by the Securities and Exchange Commission against an unaffiliated third party relating to market timing and/or late trading of mutual funds. This amount represented the Fund's portion of the proceeds from the settlement (the Fund was not a party to the proceeding). The payments have been included in "Proceeds from regulatory settlements" in the Statement of Changes in Net Assets.

9. Shareholder Concentration

At December 31, 2014, two unaffiliated shareholder accounts owned an aggregate of 100.0% of the outstanding shares of the Fund. The Fund has no knowledge about whether any portion of those shares was owned beneficially by such accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund.

10. Subsequent Events

Management has evaluated the events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.

11. Information Regarding Pending and Settled Legal Proceedings

Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.

There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial.


18



Wanger International Select 2014 Annual Report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Wanger International Select:

In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Wanger International Select (a series of the Wanger Advisors Trust, hereinafter referred to as the "Fund") at December 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Chicago, Illinois
February 18, 2015


19



Wanger International Select 2014 Annual Report

Federal Income Tax Information (Unaudited)

The Fund hereby designates the following tax attributes for the fiscal year ended December 31, 2014 and additional tax attributes for the fiscal year ended December 31, 2013.

Tax Designations

 

2014

 

2013

 

Dividends Received Deduction

   

0.84

%

   

   

Capital Gain Dividend

 

$

1,315,550

     

   

Foreign Taxes Paid

 

$

49,628

   

$

12,174

   

Foreign Taxes Paid Per Share

 

$

0.04

   

$

0.01

   

Foreign Source Income

 

$

651,607

     

   

Foreign Source Income Per Share

 

$

0.57

     

   

Dividends Received Deduction. The percentage of ordinary income distributed during the fiscal year that qualifies for the corporate dividends received deduction.

Capital Gain Dividend. The Fund designates as a capital gain dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.

Foreign Taxes. The Fund makes the election to pass through to shareholders the foreign taxes paid. Eligible shareholders may claim a foreign tax credit/ These taxes, and the corresponding foreign source income, are provided.


20




Wanger International Select 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Each trustee may serve a term of unlimited duration. The Trust's By-laws generally require that a trustee retire at the end of the calendar year in which the trustee attains the age of 75 years. The trustees appoint their own successors, provided that at least two-thirds of the trustees, after such appointment, have been elected by shareholders. Shareholders may remove a trustee, with or without cause, upon the vote of two-thirds of the Trust's outstanding shares at any meeting called for that purpose. A trustee may be removed, with or without cause, upon the vote of a majority of the trustees. The names of the trustees and officers of the Trust, the date each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios in the fund complex they oversee, and other directorships they hold, are shown below. Each trustee serves in such capacity for each of the four series of Wanger Advisors Trust and for each of the eight series of Columbia Acorn Trust.

The address for the trustees and officers of the Trust is Columbia Wanger Asset Management, LLC, 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606. The Funds' Statement of Additional Information includes additional information about the Funds' trustees and officers. You may obtain a free copy of the Statement of Additional Information by writing or calling toll-free:

Columbia Wanger Asset Management, LLC
Shareholder Services Group
227 W. Monroe, Suite 3000
Chicago IL 60606
1-800-922-6769

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Trustees who are not interested persons of Wanger Advisors Trust: (1)               
Laura M. Born, 49,
Trustee and Chair
 

2007

 

Adjunct Associate Professor of Finance, University of Chicago Booth School of Business; Managing Director — Investment Banking, J.P. Morgan Chase & Co. (broker-dealer), 2002 – 2007.

 

12

 

Columbia Acorn Trust.

 
Maureen M. Culhane, 66,
Trustee
 

2007

 

Retired. Formerly, Vice President, Goldman Sachs Asset Management, L.P. (investment adviser), 2005 – 2007; Vice President (Consultant) — Strategic Relationship Management, Goldman, Sachs & Co., 1999 – 2005.

 

12

 

Columbia Acorn Trust.

 
Margaret M. Eisen, 61,
Trustee
 

2002

 

Chief Investment Officer, EAM International LLC (corporate finance and asset management), 2003 – 2013; Managing Director, CFA Institute, 2005 – 2008.

 

12

 

Columbia Acorn Trust; Burnham Investors Trust.

 
Thomas M. Goldstein, 55,
Trustee
 

2014

 

Retired. Formerly, Chief Financial Officer, Allstate Protection Division, 2011 – 2014; Founding Partner, The GRG Group LLC, 2009 – 2011; Managing Director and Chief Financial Officer, Madison Dearborn Partners, 2007 – 2009.

 

12

 

Columbia Acorn Trust; Federal Home Loan Bank — Chicago; Federal Home Loan Mortgage Corporation.

 
John C. Heaton, 55,
Trustee
 

2010

 

Deputy Dean for Faculty, University of Chicago Booth School of Business; Joseph L. Gidwitz Professor of Finance, University of Chicago Booth School of Business since 2000.

 

12

 

Columbia Acorn Trust.

 
Steven N. Kaplan, 55,
Trustee and Vice Chair
 

1999

 

Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance, University of Chicago Booth School of Business; faculty member of the University of Chicago Booth School of Business since 1988.

 

12

 

Columbia Acorn Trust; Accretive Health, Inc. (healthcare management services provider); Morningstar, Inc. (provider of independent investment research).

 
David J. Rudis, 61,
Trustee
 

2010

 

Retired. Formerly, National Checking and Debit Executive, and Illinois President, Bank of America, 2007 – 2009; President, Consumer Banking Group, LaSalle National Bank, 2004 – 2007.

 

12

 

Columbia Acorn Trust.

 
David B. Small, 58,
Trustee (2)
 

2010

 

Managing Director, Grosvenor Capital Management, L.P. (investment adviser) since 1994; Adjunct Associate Professor of Finance, University of Chicago Booth School of Business.

 

12

 

Columbia Acorn Trust.

 


21



Wanger International Select 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 

Trustees who are interested persons of Wanger Advisors Trust:

             
Charles P. McQuaid, 61,
Trustee and Vice President (3)
 

1992

 

Portfolio manager and/or analyst, CWAM or its predecessors since 1978; Vice President of Columbia Acorn Trust and Wanger Advisors Trust since April 2014; formerly, President and Chief Investment Officer, CWAM or its predecessors, October 2003 – March 2014, and President of Columbia Acorn Trust and Wanger Advisors Trust, October 2003 – March 2014.

 

12

 

Columbia Acorn Trust.

 
Ralph Wanger, 80,
Trustee Emeritus (4)
 

1970

 

Founder, CWAM. Formerly, President, Chief Investment Officer and portfolio manager, CWAM or its predecessors, July 1992 – September 2003; Director, Wanger Investment Company PLC; Consultant to CWAM or its predecessors, September 2003 – September 2005.

 

12

 

Columbia Acorn Trust.

 

Officers of Columbia Acorn Trust:

             
Robert A. Chalupnik, 49,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2000; Vice President Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 
Michael G. Clarke, 45,
Assistant Treasurer
 

2004

 

Vice President — Mutual Fund Treasurer, Columbia Management Investment Advisers, LLC since May 2010; Managing Director of Fund Administration, Columbia Management Advisors, LLC, September 2004 – April 2010; Senior officer, Columbia Funds and affiliated funds since 2002.

 

N/A

 

N/A

 
Joseph F. DiMaria, 46,
Assistant Treasurer
 

2010

 

Vice President — Mutual Fund Administration, Columbia Management Investment Advisers, LLC since May 2010; Director of Fund Administration, Columbia Management Advisors, LLC, January 2006 – April 2010.

 

N/A

 

N/A

 
William J. Doyle, 50,
Vice President
 

2014

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2006; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2014.

 

N/A

 

N/A

 
P. Zachary Egan, 46,
President
 

2014

 

President and International Chief Investment Officer, CWAM since April 2014; portfolio manager and/or analyst, CWAM or its predecessors since 1999; formerly, Director of International Research, CWAM December 2004 – March 2014, and Vice President, Columbia Acorn Trust, 2003 – 2014, and Wanger Advisors Trust, 2007 – 2014.

 

N/A

 

N/A

 
David L. Frank, 51,
Vice President
 

2014

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2002; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2014.

 

N/A

 

N/A

 
Fritz Kaegi, 43,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2004; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 
John M. Kunka, 44,
Treasurer
 

2006

 

Treasurer and Principal Accounting and Financial Officer, Columbia Acorn Trust and Wanger Advisors Trust since 2014; Director of Accounting and Operations, CWAM since May 2006; formerly, Assistant Treasurer, Columbia Acorn Trust and Wanger Advisors Trust 2006 – 2014.

 

N/A

 

N/A

 
Stephen Kusmierczak, 47,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2001; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 


22



Wanger International Select 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Joseph C. LaPalm, 45,
Vice President
 

2006

 

Chief Compliance Officer, CWAM since 2005.

 

N/A

 

N/A

 
Charles P. McQuaid, 61,
Vice President
 

1992

 

Portfolio manager and/or analyst, CWAM or its predecessors since 1978; Vice President of Columbia Acorn Trust and Wanger Advisors Trust since April 2014; formerly, President and Chief Investment Officer, CWAM or its predecessors, October 2003 – March 2014, and President of Columbia Acorn Trust and Wanger Advisors Trust, October 2003 – March 2014.

 

N/A

 

N/A

 
Louis J. Mendes III, 50,
Vice President
 

2003

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2001; Vice President, Columbia Acorn Trust since 2003 and Wanger Advisors Trust since 2005.

 

N/A

 

N/A

 
Robert A. Mohn, 53,
Vice President
 

1997

 

Domestic Chief Investment Officer, CWAM since April 2014; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 1997; portfolio manager and/or analyst, CWAM or its predecessors since 1992; formerly, Director of Domestic Research, CWAM or its predecessors, March 2004 – March 2014. Mr. Mohn served as Principal Executive Officer of the Funds during Mr. McQuaid's sabbatical from January 14 through March 31, 2011.

 

N/A

 

N/A

 
Christopher J. Olson, 50,
Vice President
 

2001

 

Portfolio manager and/or analyst, CWAM or its predecessors since January 2001; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2001.

 

N/A

 

N/A

 
Christopher O. Petersen, 44,
Assistant Secretary
 

2010

 

Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously, Vice President and Chief Counsel, January 2010 – December 2014 and Vice President and Group Counsel or Counsel, 2004 – 2010); officer, Columbia Funds and affiliated funds since 2007.

 

N/A

 

N/A

 
Scott R. Plummer, 55,
Assistant Secretary
 

2010

 

Senior Vice President, Assistant General Counsel and Head of Global Asset Management, Ameriprise Financial, Inc. since February 2014 (previously, Senior Vice President and Lead Chief Counsel — Asset Management, January 2012 – February 2014; Vice President and Lead Chief Counsel — Asset Management, 2010 – 2012; and Vice President and Chief Counsel — Asset Management, 2005 – 2010); Senior Vice President and Assistant Secretary, Columbia Management Investment Advisers, LLC since June 2005 (previously, Chief Legal Officer, Columbia Management Investment Advisers, LLC, June 2005 – January 2015); Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006; senior officer of Columbia Funds and affiliated funds 2006 – 2014.

 

N/A

 

N/A

 
Robert P. Scales, 62,
Chief Compliance Officer, Chief Legal Officer, Senior Vice President and General Counsel
 

2004

 

Chief Compliance Officer, Chief Legal Officer, Senior Vice President and General Counsel, Columbia Acorn Trust and Wanger Advisors Trust since 2004.

 

N/A

 

N/A

 
Andreas Waldburg-Wolfegg, 49,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2002; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 


23



Wanger International Select 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Linda Roth-Wiszowaty, 45,
Secretary
 

2006

 

Secretary, Columbia Acorn Trust and Wanger Advisors Trust since 2014; Assistant Secretary, Columbia Acorn Trust and Wanger Advisors Trust, 2006 – 2014; Business support analyst, CWAM since April 2007.

 

N/A

 

N/A

 

*  Dates prior to April 1992 correspond to the date first elected or appointed as a director or officer of The Acorn Fund Inc., the predecessor to Columbia Acorn Trust.

(1)  In addition to the trustees listed below, the Board appointed Charles R. Phillips as a trustee effective January 1, 2015.

(2)  Mr. Small resigned from the Board effective December 31, 2014.

(3)  Mr. McQuaid is an "interested person" of the Trust and of CWAM, as defined in the 1940 Act, because he is an officer of the Trust and an employee of CWAM.

(4)  As permitted under the Trust's Bylaws, Mr. Wanger serves as a non-voting Trustee Emeritus of the Trust.


24




Wanger International Select 2014 Annual Report

Columbia Wanger Funds

Trustees

Laura M. Born
Chair of the Board

Steven N. Kaplan
Vice Chair of the Board

Maureen M. Culhane
Margaret M. Eisen
Thomas M. Goldstein
John C. Heaton
Charles P. McQuaid
David J. Rudis
David B. Small*
Ralph Wanger (Trustee Emeritus)

Officers

P. Zachary Egan
President

Robert A. Chalupnik
Vice President

Michael G. Clarke
Assistant Treasurer

Joseph F. DiMaria
Assistant Treasurer

William J. Doyle
Vice President

David L. Frank
Vice President

Fritz Kaegi
Vice President

John M. Kunka
Treasurer and Principal
Financial and
Accounting Officer

Stephen Kusmierczak
Vice President

Joseph C. LaPalm
Vice President

Charles P. McQuaid
Vice President

Louis J. Mendes III
Vice President

Robert A. Mohn
Vice President

Christopher J. Olson
Vice President

Christopher O. Petersen
Assistant Secretary

Scott R. Plummer
Assistant Secretary

Robert P. Scales
Chief Compliance Officer, Chief Legal Officer,
Senior Vice President and
General Counsel

Andreas Waldburg-Wolfegg
Vice President

Linda K. Roth-Wiszowaty
Secretary

Investment Manager

Columbia Wanger Asset Management, LLC
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
1-888-4-WANGER
(1-888-492-6437)

Transfer Agent,
Dividend Disbursing Agent

Columbia Management Investment Services Corp.
P.O.Box 8081
Boston, Massachusetts
02266-8081

Distributor

Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, Massachusetts
02110

Legal Counsel to the Funds

Perkins Coie LLP
Washington, DC

Legal Counsel to the Independent Trustees

Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP
Chicago, Illinois

*  Mr. Small resigned from the Board effective December 31, 2014.

This document contains Global Industry Classification Standard data. The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of MSCI Inc. ("MSCI") and Standard & Poor's Financial Services LLC ("S&P") and is licensed for use by Columbia Wanger Asset Management, LLC ("CWAM"). Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

This report, including the schedules of investments and financial statements, is submitted for the general information of the shareholders of the Wanger Advisors Trust.

A description of the Fund's proxy voting policies and procedures and a copy of the Fund's voting record for the most recent 12-month period ended June 30 are available (i) on our website, columbiamanagement.com, (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 888-492-6437.

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Pubic Reference Room may be obtained by calling 800-SEC-0330. The Fund's complete portfolio holdings are disclosed at www.columbiamanagement.com approximately 30 to 40 days after each month-end.




Columbia Wanger Funds

© 2015 Columbia Management Investment Advisers, LLC. All rights reserved.

C-1451 F (2/15) 1120800




Wanger Select

2014 Annual Report

Not FDIC insuredNo bank guaranteeMay lose value




  Wanger Select

  2014 Annual Report

    Table of Contents

 

1

   

Understanding Your Expenses

 
 

2

   

Communications Satellites: Past and Present

 
 

4

   

Performance Review

 
  6    

Statement of Investments

 
  11    

Statement of Assets and Liabilities

 
  11    

Statement of Operations

 
 

12

   

Statement of Changes in Net Assets

 
  13    

Financial Highlights

 
  14    

Notes to Financial Statements

 
 

17

   

Report of Independent Registered Public Accounting Firm

 
  18    

Federal Income Tax Information (Unaudited)

 
  19    

Board of Trustees and Management of Wanger Advisors Trust

 

Columbia Wanger Asset Management, LLC (CWAM) is one of the leading global small- and mid-cap equity managers in the United States with over 40 years of small- and mid-cap investment experience. As of December 31, 2014, CWAM managed $32 billion in assets. CWAM is the investment manager to Wanger USA, Wanger International, Wanger Select and Wanger International Select (together, the Columbia Wanger Funds) and the Columbia Acorn Family of Funds.

An important note: Columbia Wanger Funds are available only through variable annuity contracts and variable life insurance policies issued by participating insurance companies or certain eligible retirement plans. Columbia Wanger Funds are not offered directly to the public and are not available in all contracts, policies or plans. Contact your financial advisor or insurance representative for more information. Columbia Wanger Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA, and are managed by CWAM.

Investors should carefully consider investment objectives, risks, charges and expenses before investing. For variable fund and variable contract prospectuses, which contain this and other important information, investors should contact their financial advisor or insurance representative. Read the prospectus carefully before investing.

The views expressed in "Communications Satellites: Past and Present" and in the Performance Review reflect the current views of the respective authors. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Wanger Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Wanger Fund. References to specific company securities should not be construed as a recommendation or investment advice.

A Comment on Trading Volumes

Market conditions are always changing and vary by country and industry sector, and investing in international markets involves unique risks. In the wake of the 2007-2009 financial crisis, trading volumes in both emerging and developed international markets declined significantly and have stayed at generally reduced levels since then. Although it is difficult to accurately assess trends in trading volumes in foreign markets, because some amount of activity has migrated to alternative trading venues, a reduction in trading volumes poses challenges to the Fund. This is particularly so because the Fund focuses on small- and mid-cap companies that usually have lower trading volumes and often takes sizeable positions in portfolio companies. As a result of lower trading volumes, it may take longer to buy or sell securities, which can exacerbate the Fund's exposure to volatile markets. The Fund may also be limited in its ability to execute favorable trades in portfolio securities in response to changes in company prices and fundamentals. If the Fund is forced to sell securities to meet redemption requests or other cash needs, or in the case of an event affecting liquidity in a particular market or markets, it may be forced to dispose of those securities under disadvantageous circumstances and at a loss. As the Fund grows in size, these considerations take on increasing significance and may adversely impact performance.




Wanger Select 2014 Annual Report

Understanding Your Expenses

As a shareholder, you incur three types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing costs, which generally include management fees and other expenses for Wanger Select (the Fund). Lastly, there may be additional fees or charges imposed by the insurance company that sponsors your variable annuity and/or variable life insurance product. The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.

Analyzing your Fund's expenses

To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in the Fund during the period. The actual and hypothetical information in the table below is based on an initial investment of $1,000 at the beginning of the period indicated and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "Actual" column is calculated using the Fund's actual operating expenses and total return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the results by the expenses paid during the period under the Actual column. The amount listed in the "Hypothetical" column assumes a 5% annual rate of return before expenses (which is not the Fund's actual return) and then applies the Fund's actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the period. See "Compare with other funds" below for details on how to use the hypothetical data.

Compare with other funds

Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing cost of investing in a fund only and do not reflect any transaction costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.

July 1, 2014 - December 31, 2014

  Account value at the
beginning of the period ($)
  Account value at the
end of the period ($)
  Expenses paid during
period ($)
  Fund's annualized
expense ratio (%)*
 

 

Actual

 

Hypothetical

 

Actual

 

Hypothetical

 

Actual

 

Hypothetical

 

 

Wanger Select

   

1,000.00

     

1,000.00

     

1,017.00

     

1,020.52

     

4.73

     

4.74

     

0.93

   

          

* Expenses paid during the period are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the Fund's most recent fiscal half-year and divided by 365.

It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the Fund. Expenses paid during the period do not include any insurance charges imposed by your insurance company's separate account. The hypothetical example provided is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.


1



Wanger Select 2014 Annual Report

Communications Satellites: Past and Present

The Soviet Union launched Sputnik, mankind's first satellite, in October 1957. This 184-pound satellite was a 23-inch sphere with four antennas. It transmitted a "beep beep" signal over ham radio frequencies accessible by many around the globe, and its surface was polished so it was visible as it orbited the Earth.1 Sputnik was a propaganda tool that woke up the world.

Prior to the launch of Sputnik, satellites had been theorized for a long time. In the 17th century, Sir Isaac Newton developed his theory of gravitation. In it he stated that a projectile launched at the correct angle at a speed of 17,000 miles per hour would orbit the Earth.2 In 1945, science fiction writer Arthur C. Clarke introduced the concept of geostationary orbit: a satellite orbiting above the Earth's equator at an altitude of about 22,200 miles would remain over the same position, appearing stationary to people on Earth. Clarke thought that within 50 years, there could be three equally spaced geostationary satellites communicating to virtually the whole planet.3

The United States launched its first satellite, Explorer 1, in January 1958. This satellite discovered the Van Allen radiation belts around Earth. In December 1958, the United States launched its first communications satellite, SCORE, which broadcast a tape-recorded holiday message from President Eisenhower.4

Many experiments and innovations in satellites followed. Perhaps the oddest was Echo-1, which inflated into a 100-foot diameter sphere coated in aluminum, enabling it to reflect radio waves.5 This passive communications satellite reflected about one ten-millionth of originating signal sent toward it.6

Telstar-1, launched in 1962, provided the first live TV broadcast from space, as well as the first phone conversation transmitted by satellite. Rather than being a passive reflector like Echo-1, Telstar-1 had an active transponder that received, amplified and re-sent signals. It could communicate a total of one black and white TV

channel along with 600 telephone conversations.7

The first satellites achieved low or medium Earth orbits, far below Arthur C. Clarke's geostationary orbit, and transmitted at low power. As a result, ground antennas needed to be huge, initially 100 feet wide,8 and had to rotate in order to remain pointed at a moving satellite.9 Furthermore, such satellites were in view of the ground antennas for short periods of time; a low Earth orbit satellite 500 miles up is in touch for 12 minutes per orbit, while a medium Earth satellite 5,000 miles up is in view for 30 minutes.10

The first successful geostationary communications satellite, Syncom 3, launched in August 196411 and was stationed over the Pacific Ocean.12 As planned, it remained in constant contact with fixed-position Earth stations within its coverage area. Also, since geostationary satellites are rarely in Earth's shadow, it was primarily powered by solar cells.13 But with a transmitter output of two watts,14 large Earth stations were needed to communicate with it. Other geostationary satellites followed shortly thereafter. In July 1969, Intelsat, a leading provider of satellite services worldwide, had three geostationary satellites covering nearly the entire Earth, fulfilling Clarke's concept some 25 years earlier than he had imagined.

Early communications satellites, continuing to transmit just one TV channel each,15 enabled much of the world to witness milestone events, which in turn drove demand for more communications satellites. Syncom satellites carried the 1964 Tokyo Olympics, while Intelsat allowed much of the world to witness Neil Armstrong walking on the moon.16 Nearly a billion people worldwide watched the 1972 Summer Olympics held in Munich, Germany.

Additional and more powerful communications satellites were launched shortly thereafter, along with improved and less expensive 16- to 33-foot ground antennas. New businesses were created and existing business models were altered. WESTAR I launched in April 1974 and provided

fledgling cable TV programmer Home Box Office the opportunity to broadcast live Muhammad Ali's "Thrilla in Manila" fight in 1975.

When entrepreneur Ted Turner learned that he could broadcast his Atlanta WTCG TV station via satellite everywhere in the country, he signed a million-dollar-a-year contract to do so, and in 1976 reached homes in over 27 states via local cable television (CATV) systems.17 Turner subsequently launched CNN in 1980, creating the first 24-hour news channel. Numerous other CATV channels followed. Satellites enabled cable TV operators to offer additional content, which eventually ended the dominance of the three major U.S. television networks.

As demand for satellite communications rose, the International Telecommunications Union awarded additional radio bandwidth and orbital slots to industry participants. Current communications satellites have far better circuitry, software and solar power, along with innovations such as spot beams, data compression algorithms and fuel-saving electrical propulsion systems. Rather than being simple "bent pipe" mechanisms receiving and transmitting the same signal, today's satellites enhance signals and allocate bandwidth more efficiently.

New satellites continue to be larger, and are broadcasting at higher power and at higher frequencies. Early "C-band" satellite TV signals were transmitted at 10 to 17 watts, while current "Ku-band" satellite TV signals are transmitted at 100 to 200 watts.18 Higher power and higher frequencies, coupled with improved electronics, facilitate still smaller and cheaper ground station equipment. Neiman Marcus offered a 20-foot satellite TV dish in 1979 for $36,500,19 capable of receiving only HBO; today, direct-to-home receivers cost below $100 and can receive hundreds of channels using dishes as small as 18 inches across.20

Satellite technology has extended beyond broadcasting TV signals. The Global Positioning System (GPS) was introduced by the U.S. military


2



Wanger Select 2014 Annual Report

in 1978, currently consists of 24 satellites in orbit,21 and has been made available for civilian use.22 These satellites transmit precise time signals along with their exact positions. A GPS receiver measures the range from three or four satellites and uses simultaneous equations to calculate its position. Vehicle and handheld GPS navigation systems combine position information with map data, and then provide locations and directions to users. It seems that the smallest satellite receivers may currently be GPS wristwatches!

Internet connection for fixed locations in densely populated areas is dominated by cable, telephone and cell phone service providers. Satellite data cannot compete economically with these technologies, where they are available. However, satellites provide data and Internet access elsewhere, such as in remote areas, on the oceans and in airplanes. These applications have also benefited from improved satellite technology. For example, satellite data speeds have hit 30 megabits per second per aircraft, up 70-fold from prior generation satellite equipment.23

The next generation high-throughput satellites, utilizing even higher power and more frequencies, and providing more spot beams, are launching through 2017. Combined, these satellites will increase bandwidth in the sky by a factor of eight to ten,24 and promise to deliver more data, more quickly, to ever more users.

As much as satellite technology has changed the world, investments in satellite companies have had mixed results. We have tended to shy away from start-up satellite companies that needed to make large up-front investments before earning highly uncertain revenues. That bias proved correct long ago when satellite phone provider Iridium filed for bankruptcy shortly after launch, citing initial subscriber counts dramatically lower than expected.

Instead, we opted to invest either downstream from satellite technology or in proven satellite service providers. Long ago, our domestic Funds

benefited substantially from investments in cable TV channel companies and, more recently, a company providing mapping data. The Funds currently have investments in a company utilizing GPS signals for engineering and construction. Our international Funds have benefited from satellite service providers possessing visible revenue streams within a more consolidated industry.

Charles P. McQuaid

Portfolio Manager, Analyst and Advisor
Columbia Wanger Asset Management, LLC

The information and data provided in this analysis are derived from sources that we deem to be reliable and accurate. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. The views/opinions expressed here are those of the author and not of the Wanger Advisors Trust Board, are subject to change at any time based upon economic, market or other conditions, may differ from views expressed by other Columbia Management associates and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Wanger Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Wanger Fund.

1  Virgil S. Labrador and Peter I. Galace, Heavens Fill with Commerce: A Brief History of the Communications Satellite Industry (Sonoma, California, SATNEWS PUBLISHERS, 2005), p. 23.

2  Ibid., p. 15.

3  Ibid., p. 21.

4  Ibid., p. 36.

5  Ibid., p. 39.

6  Steve Ford, The ARRL Satellite Handbook (ARRL, The National Association for Amateur Radio, 2008-2013), appendix B, p. 5.

7  Labrador, op. cit., p. 42.

8  Bruce Elbert, The Satellite Communication Ground Segment and Earth Station Handbook, Second Edition (Norwood, Massachusetts, Artech House, 2014) p. 10.

9  Labrador, op. cit., p. 43.

10  Elbert, op. cit., p. 77.

11  Labrador, op. cit., p. 46.

12  NASA Technical Report, R-252, Syncom Engineering Report, Volume II, By Syncom Projects Office, Goddard Space Flight Center, Greenbelt, Maryland, April 1967, p. 3.

13  Ibid., p. 10.

14  Ibid., p. 8.

15  Labrador, op. cit., p. 115.

16  Ibid., p. 58.

17  Ibid., p. 119.

18  Ibid., p. 133.

19  Ray B. Browne and Pat Browne, The Guide to United States Popular Culture (Madison, Wisconsin, Popular Press 3, 2001), p. 706.

20  Elbert, op. cit., p. 304.

21  Madhavendra Richharia, Mobile Satellite Communications: Principles and Trends, Second Edition (West Sussex, United Kingdom, John Wiley & Sons, Ltd, 2014), p. 30.

22  Ford, op. cit., p. 5-14.

23  First Edition, The Anatomy of Inflight Connectivity: An Inside Look at What it Takes to Bring Connectivity to Aircraft Around the World (Gogo LLC, an aero-communications service provider, 2014), p. 41.

24  Anne Wainscott-Sargent, "Ground Players Tackle Bandwidth Optimization in an HTS World," Via Satellite, January 2015, p. 16.


3



Wanger Select 2014 Annual Report

Performance Review Wanger Select

Robert A. Chalupnik
Portfolio Manager

Performance data shown represents past performance and is not a guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data shown. Please visit columbiamanagement.com for most recent month-end performance updates.

Risks include stock market fluctuations due to economic and business developments. The Fund also has potentially greater price volatility due to the Fund's concentration in a limited number of stocks of mid-size companies. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards, operational and settlement risks and other risks associated with future political and economic developments.

For the annual period ended December 31, 2014, Wanger Select gained 3.17% versus a 9.77% gain of its primary benchmark, the S&P MidCap 400 Index. Energy holdings were the largest detractor from performance for the year. Our energy strategy includes holding a basket of small exploration and production companies, many of which have operations outside of the United States in areas that the large-cap energy companies have mostly ignored. Unfortunately, the recent decline in oil prices caused investors to flee this space and the Fund's energy holdings were hit particularly hard. Fund energy stocks and energy-exposed industrial holdings accounted for over half the Fund's underperformance for the year.

Looking at what helped performance during the annual period, F5 Networks, a provider of Internet traffic management equipment, gained 43%. F5 has had success with its network security offering and gained market share as Cisco exited the market. Post Properties, a real estate investment trust (REIT) focused on multifamily properties, ended the year up 35% on general strength in the REIT market. Amphenol, an electronic connector manufacturer, gained 22% for the year. Amphenol has benefited from an advanced sensor acquisition made in late 2013, which opened up a new market for the company.

Other top contributors for the period included Mettler-Toledo International, a manufacturer of laboratory equipment, which ended the year up 25%. The company enjoyed accelerated growth in both laboratory and industrial products due to market share gains. Blackhawk Network, a third-party distributor of prepaid content like gift cards, gained 55% during the year on solid financial results and on its acquisition of Parago, a provider of global incentive solutions.

As noted above, the Fund's main detractors were largely energy names or industrials with significant exposure to the energy sector. The Fund's energy investment averaged 5.2% of Fund assets for the year, in line with the energy weight of the benchmark. Canacol, an oil producer in South America, saw its stock drop 68% for the year. ShaMaran Petroleum, an oil producer and explorer operating in Kurdistan, ended the year down 78%. Consumable cutting tools manufacturer Kennametal is classified as an industrial stock but has exposure to both coal mining and oil and gas well drilling. Its stock fell 30% for the period.

During the second half of the year, we sold out of seven stocks and added five new names to the portfolio. Looking at several of these changes, budget hotel brand Choice Hotels was sold when its stock met our price target. We also exited the Fund's position in Antero Resources, an oil and gas producer in the Utica and Marcellus shale, to swap into Core Labs, an oil and gas reservoir consulting company. Three of the additions were biotech-related

companies. VWR is a distributor of lab supplies with leading market share in Europe and a number two market-share position in the United States. We believe the company should benefit from accelerating spending by well-funded biopharmaceutical companies. Intercept Pharmaceuticals is a biotech firm developing drugs for several diseases. In public clinical trials, its lead drug, OCA, has shown strong efficacy in a liver disease known as NASH, which has no approved treatment. Synageva BioPharma, a biotech focused on orphan diseases, has an experienced management team and strong pricing power because the drugs it has in development generally have little to no competition.

At the writing of this report, oil prices were just below $50 per barrel versus the $100 mark where they hovered for most of the past five years. Certainly the additional supply of oil from U.S. shale formations is a major contributor to the price decline, but weaker economies in Europe and China are also a factor. Fortunately, the U.S. economy continues to be relatively strong. We remain bullish on the prospects for U.S. mid-cap companies.

Fund's Positions in Mentioned Holdings

As a percentage of net assets, as of 12/31/14

Amphenol

   

4.4

%

 

Mettler-Toledo International

   

3.9

   

F5 Networks

   

3.7

   

Post Properties

   

3.1

   

Synageva BioPharma

   

1.9

   

Blackhawk Network

   

1.7

   

Kennametal

   

1.4

   

VWR

   

1.2

   

Canacol

   

0.5

   

Core Labs

   

0.5

   

Intercept Pharmaceuticals

   

0.4

   

ShaMaran Petroleum

   

0.3

   

Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. Top holdings exclude short-term holdings and cash, if applicable.


4



Wanger Select 2014 Annual Report

Growth of a $10,000 Investment in Wanger Select
February 1, 1999 (inception date) through December 31, 2014

Performance data shown represents past performance and is not a guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data shown. Performance results reflect any fee waivers or reimbursements of Fund expenses by the investment manager and/or any of its affiliates. Absent these fee waivers and/or expense reimbursement arrangements, performance results would have been lower. For most recent month-end performance updates, please visit columbiamanagement.com.

This graph compares the results of $10,000 invested in Wanger Select on February 1, 1999 (the date the Fund began operations) through December 31, 2014, to the S&P MidCap 400 Index, with dividends and capital gains reinvested. Although the index is provided for use in assessing the Fund's performance, the Fund's holdings may differ significantly from those in the index.

Top 10 Holdings

As a percentage of net assets, as of 12/31/14

1. Ametek
Aerospace/Industrial Instruments
  6.0

%

 
2. Donaldson
Industrial Air Filtration
  4.4
 
3. Amphenol
Electronic Conductors
  4.4
 
4. Mettler-Toledo International
Laboratory Equipment
  3.9
 
5. SEI Investments
Mutual Fund Administration & Investment Management
  3.8
 
6. WNS – ADR (India)
Offshore Business Process Outsourcing Services
  3.8
 
7. F5 Networks
Internet Traffic Management Equipment
  3.7
 
8. LKQ
Alternative Auto Parts Distribution
  3.3
 
9. Nordson
Dispensing Systems for Adhesives & Coatings
  3.2
 
10. Post Properties
Multifamily Properties
  3.1
 

Top 5 Industries

As a percentage of net assets, as of 12/31/14

Industrial Goods & Services

   

26.4

%

 

Information

   

24.4

   

Consumer Goods & Services

   

14.3

   

Finance

   

14.0

   

Health Care

   

7.6

   

Results as of December 31, 2014

 

4th quarter*

 

1 year

 

5 years

 

10 years

 

Wanger Select

   

3.19

%

   

3.17

%

   

11.37

%

   

7.70

%

 

S&P MidCap 400 Index**

   

6.35

     

9.77

     

16.54

     

9.71

   

S&P 500 Index

   

4.93

     

13.69

     

15.45

     

7.67

   

*Not annualized.

**The Fund's primary benchmark.

NAV as of 12/31/14: $32.99

Performance numbers reflect all Fund expenses but do not include any fees and expenses imposed under your variable annuity or life insurance policy or qualified pension or retirement plan. If performance included the effect of these additional charges, it would be lower.

The Fund's annual operating expense ratio of 0.93% is stated as of the Fund's prospectus dated May 1, 2014, and differences in expense ratios disclosed elsewhere in this report may result from including fee waivers and expense reimbursements as well as different time periods used in calculating the ratios.

All results shown assume reinvestment of distributions.

The S&P MidCap 400 Index is a market value-weighted index that tracks the performance of 400 mid-cap U.S. companies. The S&P 500 Index tracks the performance of 500 widely-held large capitalization U.S. stocks. Although the Fund typically invests in companies with market caps under $20 billion at the time of investment, the comparison to the S&P 500 Index is presented to show performance against a widely recognized market index. Indexes are not managed and do not incur fees or expenses. It is not possible to invest directly in an index.

Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings.


5




Wanger Select 2014 Annual Report

Wanger Select

Statement of Investments, December 31, 2014

Number
of Shares
     

Value

 
   

Equities – 97.3%

 
   

Industrial Goods & Services – 26.4%

 
   

Machinery – 17.7%

 
 

220,000

    Ametek
Aerospace/Industrial Instruments
 

$

11,578,600
 
 

220,000

    Donaldson
Industrial Air Filtration
  8,498,600
 
 

79,000

    Nordson
Dispensing Systems for Adhesives & Coatings
  6,158,840
 
 

49,000

    Pall
Life Science, Water & Industrial Filtration
  4,959,290
 
 

76,000

    Kennametal
Consumable Cutting Tools
  2,720,040
 
             

33,915,370

   
   

Other Industrial Services – 3.3%

 
 

226,000

    LKQ (a)
Alternative Auto Parts Distribution
  6,355,120
 
   

Industrial Distribution – 3.1%

 
 

51,000

    Airgas
Industrial Gas Distributor
  5,874,180
 
   

Outsourcing Services – 2.3%

 
 

155,000

    Quanta Services (a)
Electrical Transmission & Pipeline Contracting Services
  4,400,450
 
       

Total Industrial Goods & Services

   

50,545,120

   
   

Information – 24.4%

 
   

Instrumentation – 5.9%

 
 

24,500

    Mettler-Toledo International (a)
Laboratory Equipment
  7,410,270
 
 

148,000

    Trimble Navigation (a)
GPS-based Instruments
  3,927,920
 
             

11,338,190

   
   

Computer Hardware & Related Equipment – 4.4%

 
 

156,000

    Amphenol
Electronic Connectors
  8,394,360
 
   

Computer Services – 3.8%

 
 

348,551

    WNS–ADR (India) (a)
Offshore Business Process Outsourcing Services
  7,201,064
 
Number
of Shares
     

Value

 
   

Business Software – 3.7%

 
 

55,000

    Ansys (a)
Simulation Software for Engineers & Designers
 

$

4,510,000
 
 

70,000

    Informatica (a)
Enterprise Data Integration Software
  2,669,450
 
             

7,179,450

   
   

Telecommunications Equipment – 3.7%

 
 

54,000

    F5 Networks (a)
Internet Traffic Management Equipment
  7,045,110
 
   

Mobile Communications – 1.3%

 
 

23,000

    SBA Communications (a)
Communications Towers
  2,547,480
 
   

Internet Related – 0.9%

 
 

475,000

    Vonage (a)
Business & Consumer Internet Telephony
  1,809,750
 
   

Semiconductors & Related Equipment – 0.7%

 
 

155,000

    Atmel (a)
Microcontrollers, Radio Frequency & Memory
Semiconductors
  1,301,225
 
       

Total Information

   

46,816,629

   
   

Consumer Goods & Services – 14.3%

 
   

Retail – 6.0%

 
 

125,000

    The Fresh Market (a) (b)
Specialty Food Retailer
  5,150,000
 
 

32,000

    ULTA (a)
Specialty Beauty Product Retailer
  4,090,880
 
 

25,761

    Casey's General Stores
Owner/Operator of Convenience Stores
  2,326,734
 
             

11,567,614

   
   

Travel – 3.4%

 
 

60,000

    Vail Resorts
Ski Resort Operator & Developer
  5,467,800
 
 

39,000

    Hertz (a)
U.S. Rental Car Operator
  972,660
 
             

6,440,460

   

See accompanying notes to financial statements.
6



Wanger Select 2014 Annual Report

Wanger Select

Statement of Investments, December 31, 2014

Number
of Shares
     

Value

 
   

Other Consumer Services – 1.7%

 
 

86,000

    Blackhawk Network (a)
Third-party Distributer of Prepaid Content,
Mostly Gift Cards
 

$

3,241,340
 
   

Apparel – 1.6%

 
 

24,000

    PVH
Apparel Wholesaler & Retailer
  3,076,080
 
   

Consumer Goods Distribution – 1.6%

 
 

39,000

    United Natural Foods (a)
Distributor of Natural/Organic Foods to Grocery
Stores
  3,015,675
 
   

Food & Beverage – %

 
 

307,000

    GLG Life Tech (Canada) (a)
Producer of an All-natural Sweetener Extracted from
the Stevia Plant
  84,558
 
       

Total Consumer Goods & Services

   

27,425,727

   
   

Finance – 14.0%

 
   

Banks – 4.3%

 
 

59,000

    City National
Bank & Asset Manager
  4,767,790
 
 

185,000

    Associated Banc-Corp
Midwest Bank
  3,446,550
 
             

8,214,340

   
   

Brokerage & Money Management – 3.7%

 
 

180,000

    SEI Investments
Mutual Fund Administration & Investment
Management
  7,207,200
 
   

Credit Cards – 3.1%

 
 

90,000

    Discover Financial Services
Credit Card Company
  5,894,100
 
   

Insurance – 2.9%

 
 

320,000

    CNO Financial Group
Life, Long-term Care & Medical Supplement
Insurance
  5,510,400
 
       

Total Finance

   

26,826,040

   
Number
of Shares
     

Value

 
   

Health Care – 7.6%

 
   

Medical Supplies – 4.6%

 
 

90,500

    Cepheid (a)
Molecular Diagnostics
 

$

4,899,670
 
 

90,000

    VWR (a) (b)
Distributor of Lab Supplies
  2,328,300
 
 

12,000

    Henry Schein (a)
Large Distributor of Dental, Vet & Medical Products
  1,633,800
 
             

8,861,770

   
   

Biotechnology & Drug Delivery – 3.0%

 
 

39,000

    Synageva BioPharma (a) (b)
Biotech Focused on Orphan Diseases
  3,618,810
 
 

40,000

    Seattle Genetics (a) (b)
Antibody-based Therapies for Cancer
  1,285,200
 
 

5,000

    Intercept Pharmaceuticals (a) (b)
Biotech Developing Drugs for Several Diseases
  780,000
 
     

5,684,010

   
       

Total Health Care

   

14,545,780

   
   

Other Industries – 7.0%

 
   

Real Estate – 7.0%

 
 

102,000

    Post Properties
Multifamily Properties
  5,994,540
 
 

65,000

    Extra Space Storage
Self Storage Facilities
  3,811,600
 
 

100,000

    EdR
Student Housing
  3,659,000
 
     

13,465,140

   
       

Total Other Industries

   

13,465,140

   
   

Energy & Minerals – 3.6%

 
   

Agricultural Commodities – 1.2%

 
 

261,363

    Union Agriculture Group
(Uruguay) (a) (c) (d)
Farmland Operator in Uruguay
  2,386,244

 

See accompanying notes to financial statements.
7



Wanger Select 2014 Annual Report

Wanger Select

Statement of Investments, December 31, 2014

Number
of Shares
     

Value

 
   

Oil & Gas Producers – 1.2%

 
 

465,000

    Canacol (Colombia) (a) (b)
Oil Producer in South America
 

$

992,598
 
 

6,008,500

    ShaMaran Petroleum (Iraq) (a)
Oil Exploration & Production in Kurdistan
  568,889
 
 

3,600,000

    Canadian Overseas Petroleum
(Canada) (a) (d)
  294,371
 
 

184,000

    Canadian Overseas Petroleum
(Canada) (a)
  15,837
 
       

Oil & Gas Exploration Offshore West Africa

         
 

4,575,000

    Petromanas (Canada) (a) (b)
Exploring for Oil in Albania
  236,271
 
 

871,400

    Petrodorado Energy (Colombia) (a)
Oil & Gas Exploration & Production in Colombia,
Peru & Paraguay
  101,256
 
     

2,209,222

   
   

Oil Services – 0.6%

 
 

49,000

    Rowan
Contract Offshore Driller
  1,142,680
 
   

Mining – 0.5%

 
 

8,000

    Core Labs (Netherlands) (b)
Oil & Gas Reservoir Consulting
  962,720
 
   

Alternative Energy – 0.1%

 
 

220,000

    Synthesis Energy Systems (China) (a) (b)
Owner/Operator of Gasification
Plants/Technology Licenses
  208,340
 
       

Total Energy & Minerals

   

6,909,206

   
Total Equities
(Cost: $127,020,185) – 97.3%
   

186,533,642

(e)

 
Number
of Shares
     

Value

 

Short-Term Investments – 2.6%

 
 

4,926,890

    JPMorgan U.S. Government Money
Market Fund, IM Shares (7 day yield
of 0.01%)
 

$

4,926,890

   
Total Short-Term Investments
(Cost: $4,926,890) – 2.6%
   

4,926,890

   

Securities Lending Collateral – 4.4%

 
 

8,507,405

    Dreyfus Government Cash Management
Fund, Institutional Shares (7 day yield
of 0.01%) (f)
   

8,507,405

   
Total Securities Lending Collateral
(Cost: $8,507,405) – 4.4%
   

8,507,405

   
Total Investments
(Cost: $140,454,480) (g) – 104.3%
   

199,967,937

   
Obligation to Return Collateral for
Securities Loaned – (4.4)%
   

(8,507,405

)

 

Cash and Other Assets Less Liabilities – 0.1%

   

185,992

   

Net Assets – 100.0%

 

$

191,646,524

   

  ADR  American Depositary Receipts

> Notes to Statement of Investments

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at December 31, 2014. The total market value of securities on loan at December 31, 2014 was $8,314,188.

(c)  Illiquid security.

(d)  Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. These securities are valued at fair value determined in good faith under consistently applied procedures established by the Fund's Board of Trustees. At December 31, 2014, the market value of these securities amounted to $2,680,615, which represented 1.40% of total net assets. Additional information on these securities is as follows:

Acquisition
Security
  Shares/
Dates
 

Units

 

Cost

 

Value

 

Union Agriculture Group

  12/8/10–
6/27/12
   

261,363

   

$

2,999,999

   

$

2,386,244

   
Canadian Overseas
Petroleum
 

11/24/10

   

3,600,000

     

1,539,065

     

294,371

   
        $4,539,064   $2,680,615  

See accompanying notes to financial statements.
8



Wanger Select 2014 Annual Report

Wanger Select

Statement of Investments, December 31, 2014

(e)  On December 31, 2014, the market value of foreign securities represented 6.81% of total net assets. The Fund's foreign portfolio was diversified as follows:

Country

 

Value

  Percentage of
Net Assets
 

India

 

$

7,201,064

     

3.76

   

Uruguay

   

2,386,244

     

1.24

   

Colombia

   

1,093,854

     

0.57

   

Netherlands

   

962,720

     

0.50

   

Canada

   

631,037

     

0.33

   

Iraq

   

568,889

     

0.30

   

China

   

208,340

     

0.11

   

Total Foreign Portfolio

 

$

13,052,148

     

6.81

   

(f)  Investment made with cash collateral received from securities lending activity.

(g)  At December 31, 2014, for federal income tax purposes, the cost of investments was $140,686,108 and net unrealized appreciation was $59,281,829 consisting of gross unrealized appreciation of $71,138,048 and gross unrealized depreciation of $11,856,219.

Fair Value Measurements

  Various inputs are used in determining the value of the Fund's investments, following the input prioritization hierarchy established by accounting principles generally accepted in the United States of America (GAAP). These inputs are summarized in the three broad levels listed below:

  Level 1 – quoted prices in active markets for identical securities

  Level 2 – prices determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others)

  Level 3 – prices determined using significant unobservable inputs where quoted prices or observable inputs are unavailable or less reliable (including management's own assumptions about the factors market participants would use in pricing an investment)

  The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

  Examples of the types of securities in which the Fund would typically invest and how they are classified within this hierarchy are as follows. Typical Level 1 securities include exchange traded domestic equities, mutual funds whose NAVs are published each day and exchange traded foreign equities that are not statistically fair valued. Typical Level 2 securities include exchange traded foreign equities that are statistically fair valued, forward foreign currency exchange contracts and short-term investments valued at amortized cost. Additionally, securities fair valued by the Valuation Committee (the Committee) of the Fund's Board of Trustees (the Board) that rely on significant observable inputs are also included in Level 2. Typical Level 3 securities include any security fair valued by the Committee that relies on significant unobservable inputs.

  Under the direction of the Board, the Committee is responsible for overseeing the valuation procedures approved by the Board.

  The Committee meets as necessary, and no less frequently than quarterly, to determine fair values for securities for which market quotations are not readily available or for which the investment manager believes that available market quotations are unreliable, to review the appropriateness of the Trust's Portfolio Pricing Policy and the pricing procedures of the

investment manager (the Policies), and to review the continuing appropriateness of the current value of any security subject to the Policies. The Policies address, among other things: circumstances under which market quotations will be deemed readily available; selection of third party pricing vendors; appropriate pricing methodologies; events that require fair valuation and fair value techniques; circumstances under which securities will be deemed to pose a potential for stale pricing, including when securities are illiquid, restricted, or in default; and certain delegations of authority to determine fair values to the Fund's investment manager. The Committee may also meet to discuss additional valuation matters, which may include review of back-testing results, review of time-sensitive information or approval of other valuation related actions, and to review the appropriateness of the Policies.

  For investments categorized as Level 3, the significant unobservable inputs used in the fair value measurement of the Funds' securities may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair value. Significant changes in any of these factors could result in lower or higher fair value measurements. Various factors impact the frequency of monitoring (which may occur as often as daily), however the Committee may determine that changes to inputs, assumptions and models are not required with the same frequency.

The following table summarizes the inputs used, as of December 31, 2014, in valuing the Fund's assets:

Investment Type

  Other
Quoted Prices
(Level 1)
  Significant
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

Total

 

Equities

 
Industrial Goods &
Services
 

$

50,545,120

   

$

   

$

   

$

50,545,120

   

Information

   

46,816,629

     

     

     

46,816,629

   
Consumer Goods &
Services
   

27,425,727

     

     

     

27,425,727

   

Finance

   

26,826,040

     

     

     

26,826,040

   

Health Care

   

14,545,780

     

     

     

14,545,780

   

Other Industries

   

13,465,140

     

     

     

13,465,140

   

Energy & Minerals

   

4,228,591

     

294,371

     

2,386,244

     

6,909,206

   

Total Equities

   

183,853,027

     

294,371

     

2,386,244

     

186,533,642

   
Total Short-Term
Investments
   

4,926,890

     

     

     

4,926,890

   
Total Securities
Lending Collateral
   

8,507,405

     

     

     

8,507,405

   

Total Investments

 

$

197,287,322

   

$

294,371

   

$

2,386,244

   

$

199,967,937

   

  The Fund's assets assigned to the Level 2 input category are generally valued using a market approach, in which a security's value is determined through its correlation to prices and information from observable market transactions for similar or identical assets. Securities acquired via private placement that have a holding period or an extended settlement period are valued at a discount to the same shares that are trading freely on the market. These discounts are determined by the investment manager's experience with similar securities or situations. Factors may include, but are not limited to, trade volume, shares outstanding and stock price.

  There were no transfers of financial assets between levels during the period.

See accompanying notes to financial statements.
9



Wanger Select 2014 Annual Report

Wanger Select

Statement of Investments, December 31, 2014

The following table reconciles asset balances for the period ending December 31, 2014, in which significant observable and/or unobservable inputs (Level 3) were used in determining value:

Investments in
Securities
  Balance as of
December 31,
2013
  Realized
Gain/(Loss)
  Change in
Unrealized
Appreciation
(Depreciation)
 

Purchases

 

Sales

  Transfers
into
Level 3
  Transfers
out of
Level 3
  Balance as of
December 31,
2014
 

Equities

 

Energy & Minerals

 

$

2,793,970

   

$

   

$

(407,726

)

 

$

   

$

   

$

   

$

   

$

2,386,244

   

  The information in the above reconciliation table represents fiscal year to date activity for any securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period.

  The change in unrealized depreciation attributed to securities owned at December 31, 2014, which were valued using significant unobservable inputs (Level 3), amounted to $407,726.

Quantitative information pertaining to Level 3 unobservable fair value measurements

    Fair Value
at December 31, 2014
 

Valuation Technique(s)

 

Unobservable Input(s)

  Range
(Weighted
Average)
 

Energy & Minerals

 

$

2,386,244

   

Market comparable companies

 

Discount for lack of marketability

   

8

% to 23%

 

  Certain securities classified as Level 3 are valued at fair value, using a market approach, as determined in good faith under consistently applied procedures established by and under the general supervision of the Board. To determine fair value for these securities, for which no market exists, the Committee utilizes the valuation technique it deems most appropriate in the circumstances, using some unobservable inputs, which may include, but are not limited to estimated earnings of the company and the position of the security within the company's capital structure. The Committee also may use some observable inputs, which may include, but are not limited to, trades of similar securities and market multiples derived from a set of comparable companies. Significant increases or decreases to any of these inputs could result in a significantly lower or higher fair value measurement.

See accompanying notes to financial statements.
10




Wanger Select  2014 Annual Report

Statement of Assets and Liabilities
December 31, 2014

Assets:

 

Investments, at cost

 

$

140,454,480

   
Investments, at value (including securities on
loan of $8,314,188)
 

$

199,967,937

   

Receivable for:

 

Investments sold

   

749,704

   

Fund shares sold

   

7,743

   

Securities lending income

   

2,059

   

Dividends

   

145,780

   

Prepaid expenses

   

3,291

   

Total Assets

   

200,876,514

   

Liabilities:

 

Collateral on securities loaned

   

8,507,405

   

Payable for:

 

Fund shares redeemed

   

619,326

   

Investment advisory fee

   

4,252

   

Administration fee

   

266

   

Transfer agent fee

   

1

   

Trustees' fees

   

39,629

   

Custody fee

   

1,428

   

Reports to shareholders

   

20,675

   

Chief compliance officer expenses

   

731

   

Other liabilities

   

36,277

   

Total Liabilities

   

9,229,990

   

Net Assets

 

$

191,646,524

   

Composition of Net Assets:

 

Paid-in capital

 

$

86,177,132

   

Overdistributed net investment income

   

(39,494

)

 

Accumulated net realized gain

   

45,995,429

   

Net unrealized appreciation (depreciation) on:

 

Investments

   

59,513,457

   

Net Assets

 

$

191,646,524

   

Fund Shares Outstanding

   

5,810,041

   
Net asset value, offering price and redemption
price per share
 

$

32.99

   

Statement of Operations
For the Year Ended December 31, 2014

Investment Income:

 

Dividends (net foreign taxes withheld of $2,822)

 

$

1,569,219

   

Income from securities lending – net

   

19,581

   

Total Investment Income

   

1,588,800

   

Expenses:

 

Investment advisory fee

   

1,757,272

   

Transfer agent fees

   

231

   

Administration fee

   

109,830

   

Trustees' fees

   

11,905

   

Custody fees

   

4,488

   

Reports to shareholders

   

60,652

   

Audit fees

   

33,369

   

Legal fees

   

19,199

   

Interest expense (Note 5)

   

1,554

   

Chief compliance officer expenses

   

9,342

   

Commitment fee for line of credit (Note 5)

   

324

   

Other expenses

   

25,275

   

Total Expenses

   

2,033,441

   

Net Investment Loss

   

(444,641

)

 

Net Realized and Unrealized Gain (Loss) on Investments:

 

Net realized gain (loss) on:

 

Investments

   

47,154,484

   

Foreign currency translations

   

(1,001

)

 

Net realized gain

   

47,153,483

   

Net change in unrealized appreciation (depreciation) on:

 

Investments

   

(41,047,938

)

 

Net change in unrealized depreciation

   

(41,047,938

)

 

Net realized and unrealized gain

   

6,105,545

   

Net Increase in Net Assets from Operations

 

$

5,660,904

   

See accompanying notes to financial statements.
11



Wanger Select  2014 Annual Report

Statements of Changes in Net Assets

   

Year Ended December 31,

 

Increase (Decrease) in Net Assets

 

2014

 

2013

 

Operations:

 

Net investment loss

 

$

(444,641

)

 

$

(368,225

)

 

Net realized gain (loss) on:

 

Investments

   

47,154,484

     

28,096,712

   

Foreign currency translations

   

(1,001

)

   

(1,321

)

 

Net change in unrealized appreciation (depreciation) on:

 

Investments

   

(41,047,938

)

   

45,647,821

   

Net Increase in Net Assets from Operations

   

5,660,904

     

73,374,987

   

Distributions to Shareholders From:

 

Net investment income

   

     

(705,314

)

 

Net realized gains

   

(27,182,215

)

   

(3,568,085

)

 

Total Distributions to Shareholders

   

(27,182,215

)

   

(4,273,399

)

 

Share Transactions:

 

Subscriptions

   

3,027,845

     

6,139,599

   

Distributions reinvested

   

27,182,215

     

4,273,399

   

Redemptions

   

(74,952,830

)

   

(56,758,691

)

 

Net Decrease from Share Transactions

   

(44,742,770

)

   

(46,345,693

)

 

Total Increase (Decrease) in Net Assets

   

(66,264,081

)

   

22,755,895

   

Net Assets:

 

Beginning of period

   

257,910,605

     

235,154,710

   

End of period

 

$

191,646,524

   

$

257,910,605

   

Overdistributed net investment income

 

$

(39,494

)

 

$

(68,314

)

 

See accompanying notes to financial statements.
12




Wanger Select 2014 Annual Report

Financial Highlights

The following table is intended to help you understand the Fund's financial performance. Certain information reflects financial results for a single share held for the periods shown. Per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of the expenses that apply to the variable accounts or contract charges, if any. Total return and portfolio turnover are not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the Fund's portfolio turnover rate may be higher.

   

Year Ended December 31,

 

Selected data for a share outstanding throughout each period

 

2014

 

2013

 

2012

 

2011

 

2010

 

Net Asset Value, Beginning of Period

 

$

36.41

   

$

27.54

   

$

23.35

   

$

28.99

   

$

23.05

   

Income from Investment Operations:

 

Net investment income (loss)

   

(0.07

)

   

(0.05

)

   

0.16

     

(0.06

)

   

(0.09

)

 

Net realized and unrealized gain (loss)

   

1.07

     

9.46

     

4.15

     

(4.99

)

   

6.17

   

Total from Investment Operations

   

1.00

     

9.41

     

4.31

     

(5.05

)

   

6.08

   

Less Distributions to Shareholders:

 

Net investment income

   

     

(0.09

)

   

(0.12

)

   

(0.59

)

   

(0.14

)

 

Net realized gains

   

(4.42

)

   

(0.45

)

   

     

     

   

Total Distributions to Shareholders

   

(4.42

)

   

(0.54

)

   

(0.12

)

   

(0.59

)

   

(0.14

)

 

Net Asset Value, End of Period

 

$

32.99

   

$

36.41

   

$

27.54

   

$

23.35

   

$

28.99

   

Total Return

   

3.17

%

   

34.58

%

   

18.46

%

   

(17.68

)%

   

26.57

%

 

Ratios to Average Net Assets/Supplemental Data:

 

Total gross expenses (a)

   

0.93

%(b)

   

0.93

%

   

0.92

%

   

0.93

%

   

0.93

%

 

Total net expenses (a)

   

0.93

%(b)

   

0.93

%

   

0.91

%(c)

   

0.93

%(c)

   

0.93

%(c)

 

Net investment income (loss)

   

(0.20

)%

   

(0.15

)%

   

0.60

%

   

(0.24

)%

   

(0.38

)%

 

Portfolio turnover rate

   

18

%

   

24

%

   

20

%

   

23

%

   

30

%

 

Net assets, end of period (000s)

 

$

191,647

   

$

257,911

   

$

235,155

   

$

242,543

   

$

345,960

   

Notes to Financial Highlights

(a)  In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests, if any. Such indirect expenses are not included in the Fund's reported expense ratios.

(b)  Ratios include line of credit interest expense which is less than 0.01%.

(c)  The benefits derived from custody fees paid indirectly had an impact of less than 0.01%.

See accompanying notes to financial statements.
13




Wanger Select 2014 Annual Report

Notes to Financial Statements

1.  Nature of Operations

Wanger Select (the Fund), a series of Wanger Advisors Trust (the Trust), is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The investment objective of the Fund is to seek long-term capital appreciation. The Fund is available only for allocation to certain life insurance company separate accounts established for the purpose of funding participating variable annuity contracts and variable life insurance policies and may also be offered directly to certain qualified pension and retirement plans.

2.  Summary of Significant Accounting Policies

Basis of Preparation

The Fund is an investment company that applies the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC 946). The financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

Security valuation

Securities of the Fund are valued at market value or, if a market quotation for a security is not readily available or is deemed not to be reliable because of events or circumstances that have occurred between the market quotation and the time as of which the security is to be valued, the security is valued at its fair value determined in good faith under consistently applied procedures established by the Board of Trustees (the Board). A security traded on a securities exchange or in an over-the-counter market in which transaction prices are reported is valued at the last sales price at the time of valuation. A security traded principally on NASDAQ is valued at the NASDAQ official closing price. Exchange traded funds are valued at their closing net asset value as reported on the applicable exchange. A security for which there is no reported sale on the valuation date is valued at the mean of the latest bid and ask quotations.

Short-term investments maturing in 60 days or less are valued at amortized cost, which approximates market value.

The Trust has retained an independent statistical fair value pricing service that employs a systematic methodology to assist in the fair valuation process for securities principally traded in a foreign market in order to adjust for possible changes in value that may occur between the close of the foreign market and the time as of which the securities are to be valued. If a security is valued at a fair value, that value may be different from the last quoted market price for the security.

Foreign currency translations

Values of investments denominated in foreign currencies are converted into U.S. dollars using the New York 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.

Restricted securities

Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale at the issuer's expense either upon demand by the Fund or in connection with another

registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board.

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 debt obligations when required for federal income tax purposes. Realized gains and losses from security transactions are recorded on an identified cost basis.

Awards, if any, from class action litigation related to securities owned may be recorded as a reduction of cost of those securities. If the applicable securities are no longer owned, the proceeds are recorded as realized gains.

The Fund may receive distributions from holdings in exchange-traded funds (ETFs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on the character of their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. To the extent actual information has not yet been reported by the REITs, estimates for return of capital may be made by the Fund's management. Return of capital is recorded as a reduction of the cost basis of securities held. If the Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. Management's estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of capital to shareholders. No estimates are made for ETFs and RICs.

Expenses

General expenses of the Trust are allocated to the Fund and the other series of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund.

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 (the 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.

Securities lending

The Fund may lend securities up to one-third of the value of its total assets to certain approved brokers, dealers and other financial institutions to earn additional income. The Fund retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. The Fund also receives a fee for the loan. The Fund has the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by cash that exceeded the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Fund and any additional required collateral is delivered to each Fund on the next business day. The Fund has elected to invest the cash collateral in the Dreyfus Government Cash Management Fund. The income earned from the securities lending program is paid to the Fund, net of any fees remitted to Goldman Sachs Agency Lending, the Fund's lending agent, and borrower rebates. The Fund's investment manager, Columbia Wanger Asset Management, LLC (CWAM), does not retain any fees earned by the lending program. Generally, in the event of borrower default, the Fund has the right to use the collateral to offset any losses incurred. In the event the Fund is delayed or prevented from exercising its right to dispose of the collateral, there may be a potential loss to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of loss with respect to the investment of collateral. The net lending income earned by the Fund as of December 31, 2014, is included in the Statement of Operations.


14



Wanger Select 2014 Annual Report

Notes to Financial Statements, continued

Offsetting of Financial Assets

The following table presents the Fund's gross and net amount of assets available for offset under a securities lending agreement as well as the related collateral received by the Fund as of December 31, 2014:

    Gross
Amounts of
  Gross Amounts
Offset in the
  Net Amounts of Assets
Presented in the
  Gross Amounts Not Offset in
the Statement of Assets and Liabilities
 
    Recognized
Assets
  Statement of
Assets and Liabilities
  Statement of
Assets and Liabilities
  Financial
Instruments (a)
  Cash Collateral
Received
  Securities
Collateral Received
 

Net Amount (b)

 

Securities Loaned

 

$

8,314,188

   

$

   

$

8,314,188

   

$

   

$

8,314,188

   

$

   

$

   

(a)  Represents the amount of assets that could be offset by liabilities with the same counterparty under master netting or similar agreements that management elects not to offset on the Statement of Assets and Liabilities.

(b)  Represents the net amount due from counterparties in the event of default.

Federal income taxes

The Fund has complied with the provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distributes substantially all its taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.

Foreign capital gains taxes

Gains in certain countries may be subject to foreign taxes at the fund level. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction. The amount, if any, is disclosed as a liability on the Statement of Assets and Liabilities.

Distributions to shareholders

Distributions to shareholders are recorded on the ex-dividend date.

Indemnification

In the normal course of business, the Trust on behalf of the Fund enters into contracts that contain a variety of representations and warranties and that provide general indemnities. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also under the Trust's organizational documents, the trustees and officers of the Trust are indemnified against certain liabilities that may arise out of their duties to the Trust. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.

Recent Accounting Pronouncement

Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures

In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. ASU No. 2014-11 changes the accounting for transactions accounted for as secured borrowings and expands disclosure requirements related to securities lending and similar transactions. The disclosure requirements are effective for interim and annual periods beginning after December 15, 2014. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

3.  Federal Tax Information

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations.

For the year ended December 31, 2014, permanent book and tax basis differences resulting primarily from net operating loss reclassification, foreign

currency transactions and passive foreign investment company (PFIC) holdings were identified and reclassified among the components of the Fund's net assets as follows:

Accumulated
Net Investment
Income
  Accumulated
Net Realized
Gain (Loss)
 

Paid-In Capital

 
$

473,461

   

$

183,523

   

$

(656,984

)

 

Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification.

The tax character of distributions paid during the years ended December 31, 2014 and December 31, 2013 were as follows:

   

December 31, 2014

 

December 31, 2013

 

Ordinary Income *

 

$

   

$

693,525

   

Long-Term Capital Gains

   

27,182,215

     

3,579,874

   

* For tax purposes short-term capital gain distributions, if any, are considered ordinary income distributions.

As of December 31, 2014, the components of distributable earnings on a tax basis were as follows:

Undistributed
Ordinary
Income
  Undistributed
Long-Term
Capital Gains
  Net Unrealized
Appreciation
(Depreciation)*
 
$

   

$

46,227,057

   

$

59,281,829

   

* The differences between book-basis and tax-basis net unrealized appreciation/depreciation are primarily due to deferral of losses from wash sales and passive foreign investment company (PFIC) adjustments.

Management is required to determine whether a tax position of the Fund is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized by the Fund is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Management is not aware of any tax positions in the Fund for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However, management's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). The Fund's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.

4.  Transactions With Affiliates

CWAM is a wholly owned subsidiary of Columbia Management Investment Advisers, LLC (Columbia Management), which in turn is a wholly owned subsidiary of Ameriprise


15



Wanger Select 2014 Annual Report

Notes to Financial Statements, continued

Financial, Inc. (Ameriprise Financial). CWAM furnishes continuing investment supervision to the Fund and is responsible for the overall management of the Fund's business affairs.

CWAM receives a monthly advisory fee based on the Fund's average daily net assets at the following annual rates:

Average Daily Net Assets

 

Annual Fee Rate

 

Up to $500 million

   

0.80

%

 
$500 million and over    

0.78

%

 

For the year ended December 31, 2014, the effective investment advisory fee rate was 0.80% of the Fund's average daily net assets.

Through April 30, 2015, CWAM has contractually agreed to bear a portion of the Fund's expenses so that its ordinary operating expenses (excluding transaction costs and certain other investment-related expenses, interest and fees on borrowings and expenses associated with the Fund's investment in other investment companies, if any), after giving effect to any balance credits from the Fund's custodian, do not exceed the annual rate of 1.35% of the Fund's average daily net assets. For the year ended December 31, 2014, the Fund was not reimbursed any expenses by CWAM.

CWAM provides administrative services and receives an administration fee from the Fund at the following annual rates:

Wanger Advisors Trust Aggregate
Average Daily Net Assets of the Trust
 

Annual Fee Rate

 

Up to $4 billion

   

0.05

%

 

$4 billion to $6 billion

   

0.04

%

 

$6 billion to $8 billion

   

0.03

%

 
$8 billion and over    

0.02

%

 

For the year ended December 31, 2014, the effective administration fee rate was 0.05% of the Fund's average daily net assets. Columbia Management provides certain sub-administrative services to the Fund.

Columbia Management Investment Distributors, Inc. (CMID), a wholly owned subsidiary of Ameriprise Financial, serves as the Fund's distributor and principal underwriter.

Columbia Management Investment Services Corp. (CMIS), a wholly owned subsidiary of Ameriprise Financial, is the transfer agent to the Fund. For its services, the Fund pays CMIS a monthly fee at the annual rate of $21.00 per open account. CMIS also receives reimbursement from the Fund for certain out-of-pocket expenses.

Certain officers and trustees of the Trust are also officers of CWAM. The Trust makes no direct payments to its officers and trustees who are affiliated with CWAM.

The Board has appointed a Chief Compliance Officer of the Trust in accordance with federal securities regulations. The Fund, along with other affiliated funds, pays its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer.

The Trust offers a deferred compensation plan for its independent trustees. Under that plan, a trustee may elect to defer all or a portion of his or her compensation. Amounts deferred are retained by the Trust and may represent an unfunded obligation of the Trust. The value of amounts deferred is determined by reference to the change in value of Class Z shares of one or more series of Columbia Acorn Trust or a money market fund as specified by the trustee. Benefits under the deferred compensation plan are payable in accordance with the plan.

5.  Borrowing Arrangements

During the year ended December 31, 2014, the Trust participated in a credit facility with JPMorgan Chase Bank, N.A., along with Columbia Acorn Trust, another trust managed by CWAM, in the amount of $150 million. The credit facility was entered into to facilitate portfolio liquidity. Under the facility, interest is charged to each participating fund based on its borrowings at a rate per annum equal to the Federal Funds Rate plus 1.00%. In addition, a commitment fee of 0.08% per annum of the unutilized line of credit is accrued and apportioned among the participating funds based on their relative net assets. The commitment fee is disclosed as a part of

"Commitment fee for line of credit" in the Statement of Operations. The Trust expects to renew this line of credit for one year durations each July at then current market rates and terms.

The Fund borrowed under the line of credit for the period February 20, 2014 through February 23, 2014. The average daily loan balance outstanding during this period was $12,100,000 at a weighted average interest rate of 1.16%.

6.  Fund Share Transactions

Proceeds and payments on Fund shares as shown in the Statement of Changes in Net Assets are in respect of the following numbers of shares:

    Year ended
December 31, 2014
  Year Ended
December 31, 2013
 

Shares sold

   

89,274

     

193,184

   
Shares issued in reinvestment
of dividend distributions
   

852,642

     

140,711

   

Less shares redeemed

   

(2,214,780

)

   

(1,790,102

)

 

Net decrease in shares outstanding

   

(1,272,864

)

   

(1,456,207

)

 

7.  Investment Transactions

The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2014, were $39,059,491 and $110,860,499, respectively. The amount of purchase and sales activity impacts the portfolio turnover rate reported in the Financial Highlights.

8.  Shareholder Concentration

At December 31, 2014, two unaffiliated shareholder accounts owned an aggregate of 91.5% of the outstanding shares of the Fund. The Fund has no knowledge about whether any portion of those shares was owned beneficially by such accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund.

9.  Subsequent Events

Management has evaluated the events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.

10.  Information Regarding Pending and Settled Legal Proceedings

Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.

There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial.


16



Wanger Select 2014 Annual Report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Wanger Select:

In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Wanger Select (a series of the Wanger Advisors Trust, hereinafter referred to as the "Fund") at December 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Chicago, Illinois
February 18, 2015


17



Wanger Select 2014 Annual Report

Federal Income Tax Information (Unaudited)

The Fund hereby designates the following tax attributes in the fiscal year ended December 31, 2014.

Tax Designations

 

Capital Gain Dividend

 

$

48,569,928

   

Capital Gain Dividend. The Fund designates as a capital gain dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.


18




Wanger Select 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Each trustee may serve a term of unlimited duration. The Trust's By-laws generally require that a trustee retire at the end of the calendar year in which the trustee attains the age of 75 years. The trustees appoint their own successors, provided that at least two-thirds of the trustees, after such appointment, have been elected by shareholders. Shareholders may remove a trustee, with or without cause, upon the vote of two-thirds of the Trust's outstanding shares at any meeting called for that purpose. A trustee may be removed, with or without cause, upon the vote of a majority of the trustees. The names of the trustees and officers of the Trust, the date each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios in the fund complex they oversee, and other directorships they hold, are shown below. Each trustee serves in such capacity for each of the four series of Wanger Advisors Trust and for each of the eight series of Columbia Acorn Trust.

The address for the trustees and officers of the Trust is Columbia Wanger Asset Management, LLC, 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606. The Funds' Statement of Additional Information includes additional information about the Funds' trustees and officers. You may obtain a free copy of the Statement of Additional Information by writing or calling toll-free:

Columbia Wanger Asset Management, LLC
Shareholder Services Group
227 W. Monroe, Suite 3000
Chicago IL 60606
1-800-922-6769

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Trustees who are not interested persons of Wanger Advisors Trust: (1)               
Laura M. Born, 49,
Trustee and Chair
 

2007

 

Adjunct Associate Professor of Finance, University of Chicago Booth School of Business; Managing Director — Investment Banking, J.P. Morgan Chase & Co. (broker-dealer), 2002 – 2007.

 

12

 

Columbia Acorn Trust.

 
Maureen M. Culhane, 66,
Trustee
 

2007

 

Retired. Formerly, Vice President, Goldman Sachs Asset Management, L.P. (investment adviser), 2005 – 2007; Vice President (Consultant) — Strategic Relationship Management, Goldman, Sachs & Co., 1999 – 2005.

 

12

 

Columbia Acorn Trust.

 
Margaret M. Eisen, 61,
Trustee
 

2002

 

Chief Investment Officer, EAM International LLC (corporate finance and asset management), 2003 – 2013; Managing Director, CFA Institute, 2005 – 2008.

 

12

 

Columbia Acorn Trust; Burnham Investors Trust.

 
Thomas M. Goldstein, 55,
Trustee
 

2014

 

Retired. Formerly, Chief Financial Officer, Allstate Protection Division, 2011 – 2014; Founding Partner, The GRG Group LLC, 2009 – 2011; Managing Director and Chief Financial Officer, Madison Dearborn Partners, 2007 – 2009.

 

12

 

Columbia Acorn Trust; Federal Home Loan Bank — Chicago; Federal Home Loan Mortgage Corporation.

 
John C. Heaton, 55,
Trustee
 

2010

 

Deputy Dean for Faculty, University of Chicago Booth School of Business; Joseph L. Gidwitz Professor of Finance, University of Chicago Booth School of Business since 2000.

 

12

 

Columbia Acorn Trust.

 
Steven N. Kaplan, 55,
Trustee and Vice Chair
 

1999

 

Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance, University of Chicago Booth School of Business; faculty member of the University of Chicago Booth School of Business since 1988.

 

12

 

Columbia Acorn Trust; Accretive Health, Inc. (healthcare management services provider); Morningstar, Inc. (provider of independent investment research).

 
David J. Rudis, 61,
Trustee
 

2010

 

Retired. Formerly, National Checking and Debit Executive, and Illinois President, Bank of America, 2007 – 2009; President, Consumer Banking Group, LaSalle National Bank, 2004 – 2007.

 

12

 

Columbia Acorn Trust.

 
David B. Small, 58,
Trustee (2)
 

2010

 

Managing Director, Grosvenor Capital Management, L.P. (investment adviser) since 1994; Adjunct Associate Professor of Finance, University of Chicago Booth School of Business.

 

12

 

Columbia Acorn Trust.

 


19



Wanger Select 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 

Trustees who are interested persons of Wanger Advisors Trust:

             
Charles P. McQuaid, 61,
Trustee and Vice President (3)
 

1992

 

Portfolio manager and/or analyst, CWAM or its predecessors since 1978; Vice President of Columbia Acorn Trust and Wanger Advisors Trust since April 2014; formerly, President and Chief Investment Officer, CWAM or its predecessors, October 2003 – March 2014, and President of Columbia Acorn Trust and Wanger Advisors Trust, October 2003 – March 2014.

 

12

 

Columbia Acorn Trust.

 
Ralph Wanger, 80,
Trustee Emeritus (4)
 

1970

 

Founder, CWAM. Formerly, President, Chief Investment Officer and portfolio manager, CWAM or its predecessors, July 1992 – September 2003; Director, Wanger Investment Company PLC; Consultant to CWAM or its predecessors, September 2003 – September 2005.

 

12

 

Columbia Acorn Trust.

 

Officers of Columbia Acorn Trust:

             
Robert A. Chalupnik, 49,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2000; Vice President Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 
Michael G. Clarke, 45,
Assistant Treasurer
 

2004

 

Vice President — Mutual Fund Treasurer, Columbia Management Investment Advisers, LLC since May 2010; Managing Director of Fund Administration, Columbia Management Advisors, LLC, September 2004 – April 2010; Senior officer, Columbia Funds and affiliated funds since 2002.

 

N/A

 

N/A

 
Joseph F. DiMaria, 46,
Assistant Treasurer
 

2010

 

Vice President — Mutual Fund Administration, Columbia Management Investment Advisers, LLC since May 2010; Director of Fund Administration, Columbia Management Advisors, LLC, January 2006 – April 2010.

 

N/A

 

N/A

 
William J. Doyle, 50,
Vice President
 

2014

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2006; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2014.

 

N/A

 

N/A

 
P. Zachary Egan, 46,
President
 

2014

 

President and International Chief Investment Officer, CWAM since April 2014; portfolio manager and/or analyst, CWAM or its predecessors since 1999; formerly, Director of International Research, CWAM December 2004 – March 2014, and Vice President, Columbia Acorn Trust, 2003 – 2014, and Wanger Advisors Trust, 2007 – 2014.

 

N/A

 

N/A

 
David L. Frank, 51,
Vice President
 

2014

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2002; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2014.

 

N/A

 

N/A

 
Fritz Kaegi, 43,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2004; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 
John M. Kunka, 44,
Treasurer
 

2006

 

Treasurer and Principal Accounting and Financial Officer, Columbia Acorn Trust and Wanger Advisors Trust since 2014; Director of Accounting and Operations, CWAM since May 2006; formerly, Assistant Treasurer, Columbia Acorn Trust and Wanger Advisors Trust 2006 – 2014.

 

N/A

 

N/A

 
Stephen Kusmierczak, 47,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2001; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 


20



Wanger Select 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Joseph C. LaPalm, 45,
Vice President
 

2006

 

Chief Compliance Officer, CWAM since 2005.

 

N/A

 

N/A

 
Charles P. McQuaid, 61,
Vice President
 

1992

 

Portfolio manager and/or analyst, CWAM or its predecessors since 1978; Vice President of Columbia Acorn Trust and Wanger Advisors Trust since April 2014; formerly, President and Chief Investment Officer, CWAM or its predecessors, October 2003 – March 2014, and President of Columbia Acorn Trust and Wanger Advisors Trust, October 2003 – March 2014.

 

N/A

 

N/A

 
Louis J. Mendes III, 50,
Vice President
 

2003

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2001; Vice President, Columbia Acorn Trust since 2003 and Wanger Advisors Trust since 2005.

 

N/A

 

N/A

 
Robert A. Mohn, 53,
Vice President
 

1997

 

Domestic Chief Investment Officer, CWAM since April 2014; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 1997; portfolio manager and/or analyst, CWAM or its predecessors since 1992; formerly, Director of Domestic Research, CWAM or its predecessors, March 2004 – March 2014. Mr. Mohn served as Principal Executive Officer of the Funds during Mr. McQuaid's sabbatical from January 14 through March 31, 2011.

 

N/A

 

N/A

 
Christopher J. Olson, 50,
Vice President
 

2001

 

Portfolio manager and/or analyst, CWAM or its predecessors since January 2001; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2001.

 

N/A

 

N/A

 
Christopher O. Petersen, 44,
Assistant Secretary
 

2010

 

Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously, Vice President and Chief Counsel, January 2010 – December 2014 and Vice President and Group Counsel or Counsel, 2004 – 2010); officer, Columbia Funds and affiliated funds since 2007.

 

N/A

 

N/A

 
Scott R. Plummer, 55,
Assistant Secretary
 

2010

 

Senior Vice President, Assistant General Counsel and Head of Global Asset Management, Ameriprise Financial, Inc. since February 2014 (previously, Senior Vice President and Lead Chief Counsel — Asset Management, January 2012 – February 2014; Vice President and Lead Chief Counsel — Asset Management, 2010 – 2012; and Vice President and Chief Counsel — Asset Management, 2005 – 2010); Senior Vice President and Assistant Secretary, Columbia Management Investment Advisers, LLC since June 2005 (previously, Chief Legal Officer, Columbia Management Investment Advisers, LLC, June 2005 – January 2015); Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006; senior officer of Columbia Funds and affiliated funds 2006 – 2014.

 

N/A

 

N/A

 
Robert P. Scales, 62,
Chief Compliance Officer, Chief Legal Officer, Senior Vice President and General Counsel
 

2004

 

Chief Compliance Officer, Chief Legal Officer, Senior Vice President and General Counsel, Columbia Acorn Trust and Wanger Advisors Trust since 2004.

 

N/A

 

N/A

 
Andreas Waldburg-Wolfegg, 49,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2002; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 


21



Wanger Select 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Linda Roth-Wiszowaty, 45,
Secretary
 

2006

 

Secretary, Columbia Acorn Trust and Wanger Advisors Trust since 2014; Assistant Secretary, Columbia Acorn Trust and Wanger Advisors Trust, 2006 – 2014; Business support analyst, CWAM since April 2007.

 

N/A

 

N/A

 

*  Dates prior to April 1992 correspond to the date first elected or appointed as a director or officer of The Acorn Fund Inc., the predecessor to Columbia Acorn Trust.

(1)  In addition to the trustees listed below, the Board appointed Charles R. Phillips as a trustee effective January 1, 2015.

(2)  Mr. Small resigned from the Board effective December 31, 2014.

(3)  Mr. McQuaid is an "interested person" of the Trust and of CWAM, as defined in the 1940 Act, because he is an officer of the Trust and an employee of CWAM.

(4)  As permitted under the Trust's Bylaws, Mr. Wanger serves as a non-voting Trustee Emeritus of the Trust.


22



Wanger Select 2014 Annual Report

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23



Wanger Select 2014 Annual Report

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24




Wanger Select 2014 Annual Report

Columbia Wanger Funds

Trustees

Laura M. Born
Chair of the Board

Steven N. Kaplan
Vice Chair of the Board

Maureen M. Culhane
Margaret M. Eisen
Thomas M. Goldstein
John C. Heaton
Charles P. McQuaid
David J. Rudis
David B. Small*
Ralph Wanger (Trustee Emeritus)

Officers

P. Zachary Egan
President

Robert A. Chalupnik
Vice President

Michael G. Clarke
Assistant Treasurer

Joseph F. DiMaria
Assistant Treasurer

William J. Doyle
Vice President

David L. Frank
Vice President

Fritz Kaegi
Vice President

John M. Kunka
Treasurer and Principal Financial and
Accounting Officer

Stephen Kusmierczak
Vice President

Joseph C. LaPalm
Vice President

Charles P. McQuaid
Vice President

Louis J. Mendes III
Vice President

Robert A. Mohn
Vice President

Christopher J. Olson
Vice President

Christopher O. Petersen
Assistant Secretary

Scott R. Plummer
Assistant Secretary

Robert P. Scales
Chief Compliance Officer, Chief Legal Officer, Senior Vice President and
General Counsel

Andreas Waldburg-Wolfegg
Vice President

Linda K. Roth-Wiszowaty
Secretary

Investment Manager

Columbia Wanger Asset Management, LLC
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
1-888-4-WANGER
(1-888-492-6437)

Transfer Agent,
Dividend Disbursing Agent

Columbia Management Investment Services Corp.
P.O. Box 8081
Boston, Massachusetts
02266-8081

Distributor

Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, Massachusetts
02110

Legal Counsel to the Funds

Perkins Coie LLP
Washington, DC

Legal Counsel to the Independent Trustees

Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP
Chicago, Illinois

*  Mr. Small resigned from the Board effective December 31, 2014.

This document contains Global Industry Classification Standard data. The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of MSCI Inc. ("MSCI") and Standard & Poor's Financial Services LLC ("S&P") and is licensed for use by Columbia Wanger Asset Management, LLC ("CWAM"). Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

This report, including the schedules of investments and financial statements, is submitted for the general information of the shareholders of the Wanger Advisors Trust.

A description of the Fund's proxy voting policies and procedures and a copy of the Fund's voting record for the most recent 12-month period ended June 30 are available (i) on our website, columbiamanagement.com, (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 888-492-6437.

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Pubic Reference Room may be obtained by calling 800-SEC-0330. The Fund's complete portfolio holdings are disclosed at www.columbiamanagement.com approximately 30 to 40 days after each month-end.




Columbia Wanger Funds

© 2015 Columbia Management Investment Advisers, LLC. All rights reserved.

C-1461 F (2/15) 1120784




Wanger USA

2014 Annual Report

Not FDIC insuredNo bank guaranteeMay lose value




  Wanger USA

  2014 Annual Report

    Table of Contents

 

1

   

Understanding Your Expenses

 
 

2

   

Communications Satellites: Past and Present

 
 

4

   

Performance Review

 
  6    

Statement of Investments

 
  13    

Statement of Assets and Liabilities

 
  13    

Statement of Operations

 
  14    

Statement of Changes in Net Assets

 
  15    

Financial Highlights

 
  16    

Notes to Financial Statements

 
  19    

Report of Independent Registered Public Accounting Firm

 
  20    

Federal Income Tax Information (Unaudited)

 
  21    

Board of Trustees and Management of Wanger Advisors Trust

 

Columbia Wanger Asset Management, LLC (CWAM) is one of the leading global small- and mid-cap equity managers in the United States with over 40 years of small- and mid-cap investment experience. As of December 31, 2014, CWAM managed $32 billion in assets. CWAM is the investment manager to Wanger USA, Wanger International, Wanger Select and Wanger International Select (together, the Columbia Wanger Funds) and the Columbia Acorn Family of Funds.

An important note: Columbia Wanger Funds are available only through variable annuity contracts and variable life insurance policies issued by participating insurance companies or certain eligible retirement plans. Columbia Wanger Funds are not offered directly to the public and are not available in all contracts, policies or plans. Contact your financial advisor or insurance representative for more information. Columbia Wanger Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA, and are managed by CWAM.

Investors should carefully consider investment objectives, risks, charges and expenses before investing. For variable fund and variable contract prospectuses, which contain this and other important information, investors should contact their financial advisor or insurance representative. Read the prospectus carefully before investing.

The views expressed in "Communications Satellites: Past and Present" and in the Performance Review reflect the current views of the respective authors. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Wanger Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Wanger Fund. References to specific company securities should not be construed as a recommendation or investment advice.




Wanger USA 2014 Annual Report

Understanding Your Expenses

As a shareholder, you incur three types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing costs, which generally include management fees and other expenses for Wanger USA (the Fund). Lastly, there may be additional fees or charges imposed by the insurance company that sponsors your variable annuity and/or variable life insurance product. The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.

Analyzing your Fund's expenses

To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in the Fund during the period. The actual and hypothetical information in the table below is based on an initial investment of $1,000 at the beginning of the period indicated and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "Actual" column is calculated using the Fund's actual operating expenses and total return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the results by the expenses paid during the period under the Actual column. The amount listed in the "Hypothetical" column assumes a 5% annual rate of return before expenses (which is not the Fund's actual return) and then applies the Fund's actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the period. See "Compare with other funds" below for details on how to use the hypothetical data.

Compare with other funds

Since all mutual funds are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing cost of investing in a fund only and do not reflect any transaction costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.

July 1, 2014 – December 31, 2014

  Account value at the
beginning of the period ($)
  Account value at the
end of the period ($)
  Expenses paid during
period ($)
  Fund's annualized
expense ratio (%)*
 

 

Actual

 

Hypothetical

 

Actual

 

Hypothetical

 

Actual

 

Hypothetical

     

Wanger USA

   

1,000.00

     

1,000.00

     

1,013.20

     

1,020.37

     

4.87

     

4.89

     

0.96

   

          

*Expenses paid during the period are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the Fund's most recent fiscal half-year and divided by 365.

It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the Fund. Expenses paid during the period do not include any insurance charges imposed by your insurance company's separate account. The hypothetical example provided is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction costs.


1



Wanger USA 2014 Annual Report

Communications Satellites: Past and Present

The Soviet Union launched Sputnik, mankind's first satellite, in October 1957. This 184-pound satellite was a 23-inch sphere with four antennas. It transmitted a "beep beep" signal over ham radio frequencies accessible by many around the globe, and its surface was polished so it was visible as it orbited the Earth.1 Sputnik was a propaganda tool that woke up the world.

Prior to the launch of Sputnik, satellites had been theorized for a long time. In the 17th century, Sir Isaac Newton developed his theory of gravitation. In it he stated that a projectile launched at the correct angle at a speed of 17,000 miles per hour would orbit the Earth.2 In 1945, science fiction writer Arthur C. Clarke introduced the concept of geostationary orbit: a satellite orbiting above the Earth's equator at an altitude of about 22,200 miles would remain over the same position, appearing stationary to people on Earth. Clarke thought that within 50 years, there could be three equally spaced geostationary satellites communicating to virtually the whole planet.3

The United States launched its first satellite, Explorer 1, in January 1958. This satellite discovered the Van Allen radiation belts around Earth. In December 1958, the United States launched its first communications satellite, SCORE, which broadcast a tape-recorded holiday message from President Eisenhower.4

Many experiments and innovations in satellites followed. Perhaps the oddest was Echo-1, which inflated into a 100-foot diameter sphere coated in aluminum, enabling it to reflect radio waves.5 This passive communications satellite reflected about one ten-millionth of originating signal sent toward it.6

Telstar-1, launched in 1962, provided the first live TV broadcast from space, as well as the first phone conversation transmitted by satellite. Rather than being a passive reflector like Echo-1, Telstar-1 had an active transponder that received, amplified and re-sent signals. It could communicate a total of one black and white TV

channel along with 600 telephone conversations.7

The first satellites achieved low or medium Earth orbits, far below Arthur C. Clarke's geostationary orbit, and transmitted at low power. As a result, ground antennas needed to be huge, initially 100 feet wide,8 and had to rotate in order to remain pointed at a moving satellite.9 Furthermore, such satellites were in view of the ground antennas for short periods of time; a low Earth orbit satellite 500 miles up is in touch for 12 minutes per orbit, while a medium Earth satellite 5,000 miles up is in view for 30 minutes.10

The first successful geostationary communications satellite, Syncom 3, launched in August 196411 and was stationed over the Pacific Ocean.12 As planned, it remained in constant contact with fixed-position Earth stations within its coverage area. Also, since geostationary satellites are rarely in Earth's shadow, it was primarily powered by solar cells.13 But with a transmitter output of two watts,14 large Earth stations were needed to communicate with it. Other geostationary satellites followed shortly thereafter. In July 1969, Intelsat, a leading provider of satellite services worldwide, had three geostationary satellites covering nearly the entire Earth, fulfilling Clarke's concept some 25 years earlier than he had imagined.

Early communications satellites, continuing to transmit just one TV channel each,15 enabled much of the world to witness milestone events, which in turn drove demand for more communications satellites. Syncom satellites carried the 1964 Tokyo Olympics, while Intelsat allowed much of the world to witness Neil Armstrong walking on the moon.16 Nearly a billion people worldwide watched the 1972 Summer Olympics held in Munich, Germany.

Additional and more powerful communications satellites were launched shortly thereafter, along with improved and less expensive 16- to 33-foot ground antennas. New businesses were created and existing business models were altered. WESTAR I launched in April 1974 and provided

fledgling cable TV programmer Home Box Office the opportunity to broadcast live Muhammad Ali's "Thrilla in Manila" fight in 1975.

When entrepreneur Ted Turner learned that he could broadcast his Atlanta WTCG TV station via satellite everywhere in the country, he signed a million-dollar-a-year contract to do so, and in 1976 reached homes in over 27 states via local cable television (CATV) systems.17 Turner subsequently launched CNN in 1980, creating the first 24-hour news channel. Numerous other CATV channels followed. Satellites enabled cable TV operators to offer additional content, which eventually ended the dominance of the three major U.S. television networks.

As demand for satellite communications rose, the International Telecommunications Union awarded additional radio bandwidth and orbital slots to industry participants. Current communications satellites have far better circuitry, software and solar power, along with innovations such as spot beams, data compression algorithms and fuel-saving electrical propulsion systems. Rather than being simple "bent pipe" mechanisms receiving and transmitting the same signal, today's satellites enhance signals and allocate bandwidth more efficiently.

New satellites continue to be larger, and are broadcasting at higher power and at higher frequencies. Early "C-band" satellite TV signals were transmitted at 10 to 17 watts, while current "Ku-band" satellite TV signals are transmitted at 100 to 200 watts.18 Higher power and higher frequencies, coupled with improved electronics, facilitate still smaller and cheaper ground station equipment. Neiman Marcus offered a 20-foot satellite TV dish in 1979 for $36,500,19 capable of receiving only HBO; today, direct-to-home receivers cost below $100 and can receive hundreds of channels using dishes as small as 18 inches across.20

Satellite technology has extended beyond broadcasting TV signals. The Global Positioning System (GPS) was introduced by the U.S. military


2



Wanger USA 2014 Annual Report

in 1978, currently consists of 24 satellites in orbit,21 and has been made available for civilian use.22 These satellites transmit precise time signals along with their exact positions. A GPS receiver measures the range from three or four satellites and uses simultaneous equations to calculate its position. Vehicle and handheld GPS navigation systems combine position information with map data, and then provide locations and directions to users. It seems that the smallest satellite receivers may currently be GPS wristwatches!

Internet connection for fixed locations in densely populated areas is dominated by cable, telephone and cell phone service providers. Satellite data cannot compete economically with these technologies, where they are available. However, satellites provide data and Internet access elsewhere, such as in remote areas, on the oceans and in airplanes. These applications have also benefited from improved satellite technology. For example, satellite data speeds have hit 30 megabits per second per aircraft, up 70-fold from prior generation satellite equipment.23

The next generation high-throughput satellites, utilizing even higher power and more frequencies, and providing more spot beams, are launching through 2017. Combined, these satellites will increase bandwidth in the sky by a factor of eight to ten,24 and promise to deliver more data, more quickly, to ever more users.

As much as satellite technology has changed the world, investments in satellite companies have had mixed results. We have tended to shy away from start-up satellite companies that needed to make large up-front investments before earning highly uncertain revenues. That bias proved correct long ago when satellite phone provider Iridium filed for bankruptcy shortly after launch, citing initial subscriber counts dramatically lower than expected.

Instead, we opted to invest either downstream from satellite technology or in proven satellite service providers. Long ago, our domestic Funds

benefited substantially from investments in cable TV channel companies and, more recently, a company providing mapping data. The Funds currently have investments in a company utilizing GPS signals for engineering and construction. Our international Funds have benefited from satellite service providers possessing visible revenue streams within a more consolidated industry.

Charles P. McQuaid

Portfolio Manager, Analyst and Advisor
Columbia Wanger Asset Management, LLC

The information and data provided in this analysis are derived from sources that we deem to be reliable and accurate. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. The views/opinions expressed here are those of the author and not of the Wanger Advisors Trust Board, are subject to change at any time based upon economic, market or other conditions, may differ from views expressed by other Columbia Management associates and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Wanger Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Wanger Fund.

1  Virgil S. Labrador and Peter I. Galace, Heavens Fill with Commerce: A Brief History of the Communications Satellite Industry (Sonoma, California, SATNEWS PUBLISHERS, 2005), p. 23.

2  Ibid., p. 15.

3  Ibid., p. 21.

4  Ibid., p. 36.

5  Ibid., p. 39.

6  Steve Ford, The ARRL Satellite Handbook (ARRL, The National Association for Amateur Radio, 2008-2013), appendix B, p. 5.

7  Labrador, op. cit., p. 42.

8  Bruce Elbert, The Satellite Communication Ground Segment and Earth Station Handbook, Second Edition (Norwood, Massachusetts, Artech House, 2014) p. 10.

9  Labrador, op. cit., p. 43.

10  Elbert, op. cit., p. 77.

11  Labrador, op. cit., p. 46.

12  NASA Technical Report, R-252, Syncom Engineering Report, Volume II, By Syncom Projects Office, Goddard Space Flight Center, Greenbelt, Maryland, April 1967, p. 3.

13  Ibid., p. 10.

14  Ibid., p. 8.

15  Labrador, op. cit., p. 115.

16  Ibid., p. 58.

17  Ibid., p. 119.

18  Ibid., p. 133.

19  Ray B. Browne and Pat Browne, The Guide to United States Popular Culture (Madison, Wisconsin, Popular Press 3, 2001), p. 706.

20  Elbert, op. cit., p. 304.

21  Madhavendra Richharia, Mobile Satellite Communications: Principles and Trends, Second Edition (West Sussex, United Kingdom, John Wiley & Sons, Ltd, 2014), p. 30.

22  Ford, op. cit., p. 5-14.

23  First Edition, The Anatomy of Inflight Connectivity: An Inside Look at What it Takes to Bring Connectivity to Aircraft Around the World (Gogo LLC, an aero-communications service provider, 2014), p. 41.

24  Anne Wainscott-Sargent, "Ground Players Tackle Bandwidth Optimization in an HTS World," Via Satellite, January 2015, p. 16.


3



Wanger USA 2014 Annual Report

Performance Review Wanger USA

 

 
Robert A. Mohn
Lead Portfolio Manager
  William J. Doyle
Co-Portfolio Manager
 

Performance data shown represents past performance and is not a guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data shown. Please visit columbiamanagement.com for most recent month-end performance updates.

Stocks of small- and mid-cap companies pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies.

For the annual period ended December 31, 2014, Wanger USA gained 4.78%. This compares to a 4.89% gain for its primary benchmark, the Russell 2000 Index. While Fund gains were nearly in line with the benchmark, relative performance was impacted by the dramatic decline in energy prices, which hurt the portfolio's energy and energy-related stocks. In addition, within the information technology sector, the Fund had a 3% gain for the year but fell short of the benchmark's 8% return, further dampening relative returns.

The top contributor to Fund gains for the year was car rental company Avis Budget Group. Gaining 63% for the 12-month period, the company has benefited from improved volume and pricing within the industry. Enjoying strong sales growth and interest from investors looking for a yield substitute in a low-rate environment, self-storage facility owner Extra Space Storage was another top contributor to performance, rising 44% in 2014.

Other winners included several health care stocks. Akorn, a developer, manufacturer and distributor of specialty generic drugs, doubled its revenues over the prior year, aided by an acquisition and drug price increases. Its stock was up 48% for the year. Synageva BioPharma, a biotech focused on orphan diseases, initiated a new trial for a drug to treat a rare neurological disease called Sanfilippo syndrome. Its stock ended the year up 44%. Laboratory equipment manufacturer Mettler-Toledo International's sales growth reached a two-year high, driving an annual gain of 25%. Up 16% for the year, Cepheid, a molecular diagnostics company, saw its installed base of automated genetic testing instruments grow 47% year-over-year.

As noted, the laggards for the year were largely energy-related positions. The Fund's average weight in the energy sector was 4.8% of Fund assets in 2014, slightly below the benchmark weight of 5.4%. The drop in oil prices from $100 to $50 a barrel hurt both oil and gas producers, as well as oil service providers. Five of the energy stocks in Wanger USA had their stock prices fall roughly 50% or more during the annual period, in line with the 50% drop in oil in the second half of 2014. Several industrial stocks with exposure to energy were also impacted. Consumable cutting tools manufacturer

Kennametal, for example, has exposure to both coal mining and oil and gas well drilling. Coal mining has been weak due to cheaper natural gas for electricity production and large stockpiles of coal have led to much lower mining of coal. Now, with oil prices down, investors are concerned about drilling in the United States. Kennametal's stock fell 30% for the period.

A couple of retail names were also among the laggards for the year. Down 32%, home furnishings retailer Pier 1 Imports suffered from weakening same-store sales. RetailMeNot, an online digital coupon marketplace, fell 49% as a change in the algorithm used by search engine Google compromised the company's positioning in search results.

The U.S. economy increasingly appears to be mending itself and moving in a positive direction. U.S. job growth seems healthier than it has been in the recent past. At year end, the S&P 500 Index, a U.S. large-cap stock index, was up 13.69%, while the small-cap Russell 2000 Index lagged behind, rising 4.89% for the year. We believe both small-cap and large-cap stocks should continue to benefit from a strong U.S. economy. We remain optimistic that a growing U.S. economy and accelerating merger and acquisition activity will create a more positive environment for Wanger USA's small-cap stocks. We are not deviating from our growth-at-a-reasonable-price philosophy of owning well-managed companies with unique products and a long runway for expansion.

Fund's Positions in Mentioned Holdings

As a percentage of net assets, as of 12/31/14

Mettler-Toledo International

   

4.0

%

 

Avis Budget Group

   

3.8

   

Extra Space Storage

   

3.7

   

Cepheid

   

2.0

   

Synageva BioPharma

   

2.0

   

Akorn

   

1.6

   

Kennametal

   

0.6

   

RetailMeNot

   

0.3

   

Pier 1 Imports

   

0.1

   

Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. Top holdings exclude short-term holdings and cash, if applicable.


4



Wanger USA 2014 Annual Report

Growth of a $10,000 Investment in Wanger USA

May 3, 1995 (inception date) through December 31, 2014

Performance data shown represents past performance and is not a guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data shown. Performance results reflect any fee waivers or reimbursements of Fund expenses by the investment manager and/or any of its affiliates. Absent these fee waivers and/or expense reimbursement arrangements, performance results would have been lower. For most recent month-end performance updates, please visit columbiamanagement.com.

This graph compares the results of $10,000 invested in Wanger USA on May 3, 1995 (the date the Fund began operations) through December 31, 2014, to the Russell 2000 Index, with dividends and capital gains reinvested. Although the index is provided for use in assessing the Fund's performance, the Fund's holdings may differ significantly from those in the index.

Top 10 Holdings

As a percentage of net assets, as of 12/31/14

1. Mettler-Toledo International
Laboratory Equipment
  4.0

%

 
2. Avis Budget Group
Car Rental Company
  3.8
 
3. Extra Space Storage
Self Storage Facilities
  3.7
 
4. Ametek
Aerospace/Industrial Instruments
  3.5
 
5. Nordson
Dispensing Systems for Adhesives & Coatings
  3.3
 
6. Donaldson
Industrial Air Filtration
  2.8
 
7. IPG Photonics
Fiber Lasers
  2.6
 
8. Ansys
Simulation Software for Engineers & Designers
  2.2
 
9. Cepheid
Molecular Diagnostics
  2.0
 
10. Synageva BioPharma
Biotech Focused on Orphan Diseases
  2.0
 

Top 5 Industries

As a percentage of net assets, as of 12/31/14

Information

   

22.1

%

 

Industrial Goods & Services

   

21.9

   

Consumer Goods & Services

   

17.4

   

Finance

   

14.5

   

Health Care

   

12.5

   

Results as of December 31, 2014

 

4th quarter*

 

1 year

 

5 years

 

10 years

 

Wanger USA

   

7.31

%

   

4.78

%

   

14.90

%

   

8.07

%

 

Russell 2000 Index**

   

9.73

     

4.89

     

15.55

     

7.77

   

*  Not annualized.

**  The Fund's primary benchmark.

NAV as of 12/31/14: $37.71

Performance numbers reflect all Fund expenses but do not include any fees and expenses imposed under your variable annuity or life insurance policy or qualified pension or retirement plan. If performance included the effect of these additional charges, it would be lower.

The Fund's annual operating expense ratio of 0.96% is stated as of the Fund's prospectus dated May 1, 2014, and differences in expense ratios disclosed elsewhere in this report may result from including fee waivers and expense reimbursements as well as different time periods used in calculating the ratios.

All results shown assume reinvestment of distributions.

The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. Indexes are not managed and do not incur fees or expenses. It is not possible to invest directly in an index.

Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings.


5




Wanger USA 2014 Annual Report

Wanger USA

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Equities – 96.9%

 
   

Information – 22.1%

 
   

Business Software – 8.1%

 
 

219,000

    Ansys (a)
Simulation Software for Engineers & Designers
 

$

17,958,000
 
 

401,000

    Informatica (a)
Enterprise Data Integration Software
  15,292,135
 
 

163,000

    SPS Commerce (a)
Supply Chain Management Software Delivered via
the Web
  9,230,690
 
 

76,000

    NetSuite (a)
End-to-end IT Systems Solution Delivered via the Web
  8,296,920
 
 

60,300

    DemandWare (a)
E-Commerce Website Platform for Retailers & Apparel
Manufacturers
  3,469,662
 
 

43,000

    Envestnet (a)
Technology Platform for Investment Advisors
  2,113,020
 
 

66,690

    Textura (a) (b)
Construction Vendor Management Software
  1,898,664
 
 

53,271

    Fleetmatics (a) (b)
Fleet Management Software
  1,890,588
 
 

199,010

    InContact (a)
Call Center Systems Delivered via the Web & Telco
Services
  1,749,298
 
 

132,000

    E2Open (a) (b)
Supply Chain Management Software & Supplier/Partner
Network
  1,268,520
 
 

83,159

    Exa (a)
Simulation Software
  979,613
 
 

37,006

    Workiva (a)
Software Platform for Report Creation
  495,880
 
 

52,150

    Five9 (a) (b)
Call Center Software
  233,632
 
 

48,353

    Covisint (a)
Collaboration Software Platform Provider
  128,136
 
             

65,004,758

   
   

Instrumentation – 6.6%

 
 

104,750

    Mettler-Toledo International (a)
Laboratory Equipment
  31,682,685
 
 

277,000

    IPG Photonics (a) (b)
Fiber Lasers
  20,752,840
 
             

52,435,525

   
Number of
Shares
     

Value

 
   

Computer Services – 2.6%

 
 

333,000

    ExlService Holdings (a)
Business Process Outsourcing
 

$

9,560,430
 
 

97,000

    Virtusa (a)
Offshore IT Outsourcing
  4,041,990
 
 

175,000

    WNS—ADR (India) (a)
Offshore Business Process Outsourcing Services
  3,615,500
 
 

208,206

    Hackett Group
IT Integration & Best Practice Research
  1,830,131
 
 

205,000

    RCM Technologies
Technology & Engineering Services
  1,435,000
 
             

20,483,051

   
   

Financial Processors – 1.0%

 
 

91,000

    Global Payments
Credit Card Processor
  7,346,430
 
 

80,000

    Liquidity Services (a)
E-Auctions for Surplus & Salvage Goods
  653,600
 
             

8,000,030

   
   

Business Information & Marketing Services – 0.7%

 
 

291,200

    Navigant Consulting (a)
Financial Consulting Firm
  4,475,744
 
 

113,000

    Bankrate (a)
Internet Advertising for the Insurance, Credit Card &
Banking Markets
  1,404,590
 
             

5,880,334

   
   

Semiconductors & Related Equipment – 0.7%

 
 

83,000

    Monolithic Power Systems
High Performance Analog & Mixed Signal Integrated
Circuits
  4,128,420
 
 

150,000

    Atmel (a)
Microcontrollers, Radio Frequency & Memory
Semiconductors
  1,259,250
 
 

25,328

    Rubicon Technology (a)
Producer of Sapphire for the Lighting, Electronics &
Automotive Industries
  115,749
 
             

5,503,419

   
   

Computer Hardware & Related Equipment – 0.6%

 
 

47,000

    Rogers (a)
Printed Circuit Materials & High-performance Foams
  3,827,680
 

See accompanying notes to financial statements.
6



Wanger USA 2014 Annual Report

Wanger USA

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
    Computer Hardware & Related
Equipment – 0.6% (cont)
 
 

17,000

    Belden
Specialty Cable
 

$

1,339,770
 
             

5,167,450

   
   

Internet Related – 0.5%

 
 

149,847

    RetailMeNot (a) (b)
Digital Coupon Marketplace
  2,190,763
 
 

496,000

    Vonage (a)
Business & Consumer Internet Telephony
  1,889,760
 
             

4,080,523

   
   

Telecommunications Equipment – 0.5%

 
 

267,000

    Infinera (a)
Optical Networking Equipment
  3,930,240
 
   

Contract Manufacturing – 0.5%

 
 

165,000

    Sanmina (a)
Electronic Manufacturing Services
  3,882,450
 
   

Telephone & Data Services – 0.3%

 
 

331,000

    Boingo Wireless (a)
Wholesale & Retail Wi-Fi Networks
  2,538,770
 
       

Total Information

   

176,906,550

   
   

Industrial Goods & Services – 21.9%

 
   

Machinery – 17.6%

 
 

540,000

    Ametek
Aerospace/Industrial Instruments
  28,420,200
 
 

342,000

    Nordson
Dispensing Systems for Adhesives & Coatings
  26,662,320
 
 

580,000

    Donaldson
Industrial Air Filtration
  22,405,400
 

177,000

  Moog (a)
Motion Control Products for Aerospace, Defense &
Industrial Markets
 

13,103,310

 
 

206,000

    HEICO
FAA-approved Aircraft Replacement Parts
  9,756,160
 
 

72,000

    Middleby (a)
Manufacturer of Cooking Equipment
  7,135,200
 
 

183,000

    ESCO Technologies
Industrial Filtration & Advanced Measurement Equipment
  6,752,700
 
Number of
Shares
     

Value

 
 

137,000

    Generac (a) (b)
Standby Power Generators
 

$

6,406,120
 
 

88,736

    Toro
Turf Maintenance Equipment
  5,662,244
 
 

100,000

    Oshkosh Corporation
Specialty Truck Manufacturer
  4,865,000
 
 

124,000

    Kennametal
Consumable Cutting Tools
  4,437,960
 
 

75,325

    Dorman Products (a) (b)
Aftermarket Auto Parts Distributor
  3,635,938
 
 

46,000

    Graham
Designer & Builder of Vacuum & Heat Transfer Equipment
for Process Industries
  1,323,420
 
             

140,565,972

   
   

Industrial Materials & Specialty Chemicals – 2.0%

 
 

234,000

    Drew Industries (a)
RV & Manufactured Home Components
  11,950,380
 
 

114,000

    PolyOne
Intermediate Stage Chemicals Producer
  4,321,740
 
             

16,272,120

   
   

Electrical Components – 1.4%

 
 

52,000

    Acuity Brands
Commercial Lighting Fixtures
  7,283,640
 
 

172,894

    Thermon (a)
Global Engineered Thermal Solutions
  4,182,306
 
             

11,465,946

   
   

Other Industrial Services – 0.3%

 
 

69,000

    KAR Auction Services
Auto Auctions
  2,390,850
 
   

Construction – 0.3%

 
 

234,000

    PGT (a)
Wind Resistant Windows & Doors
  2,253,420
 
   

Industrial Distribution – 0.3%

 
 

26,000

    WESCO International (a)
Industrial Distributor
  1,981,460
 
       

Total Industrial Goods & Services

   

174,929,768

   

See accompanying notes to financial statements.
7



Wanger USA 2014 Annual Report

Wanger USA

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Consumer Goods & Services – 17.4%

 
   

Travel – 5.9%

 
  461,500     Avis Budget Group (a)
Car Rental Company
 

$

30,611,295
 
 

304,000

    Hertz (a)
U.S. Rental Car Operator
  7,581,760
 
 

148,000

    HomeAway (a)
Vacation Rental Online Marketplace
  4,407,440
 
 

42,814

    Choice Hotels
Franchisor of Budget Hotel Brands
  2,398,440
 
 

22,000

    Vail Resorts
Ski Resort Operator & Developer
  2,004,860
 
             

47,003,795

   
   

Retail – 3.6%

 
 

71,228

    Casey's General Stores
Owner/Operator of Convenience Stores
  6,433,313
 
 

108,000

    Burlington Stores (a)
Off-price Apparel Retailer
  5,104,080
 
 

195,281

    Michaels Stores (a)
Craft & Hobby Specialty Retailer
  4,829,299
 
 

102,000

    The Fresh Market (a) (b)
Specialty Food Retailer
  4,202,400
 
 

100,619

    Shutterfly (a)
Internet Photo-centric Retailer
  4,195,309
 
 

70,000

    Kate Spade & Company (a)
Global Lifestyle Brand
  2,240,700
 
 

57,964

    Pier 1 Imports
Home Furnishing Retailer
  892,646
 
 

116,229

    Gaiam (a)
Promoter of Healthy Living through Catalogs,
E-Commerce & Gaiam TV
  828,713
 
             

28,726,460

   
   

Furniture & Textiles – 2.3%

 
 

123,972

    Caesarstone (Israel)
Quartz Countertops
  7,416,005
 
 

230,000

    Knoll
Office Furniture
  4,869,100
 
 

225,000

    Interface
Modular Carpet
  3,705,750
 
 

77,000

    La-Z-Boy
Upholstery Giant
  2,066,680
 
Number of
Shares
     

Value

 
 

5,250

    Wayfair (a) (b)
Online Retailer of Home Furnishings
 

$

104,213
 
             

18,161,748

   
   

Consumer Goods Distribution – 2.0%

 
 

150,000

    Pool
Swimming Pool Supplies & Equipment Distributor
  9,516,000
 
 

61,000

    United Natural Foods (a)
Distributor of Natural/Organic Foods to Grocery Stores
  4,716,825
 
 

78,000

    The Chefs' Warehouse (a)
Distributor of Specialty Foods to Fine Dining Restaurants
  1,797,120
 
             

16,029,945

   
   

Other Durable Goods – 1.4%

 
 

156,000

    Select Comfort (a)
Specialty Mattresses
  4,216,680
 
 

48,000

    Cavco Industries (a)
Manufactured Homes
  3,804,960
 
 

80,000

    Gentex
Manufacturer of Auto Parts
  2,890,400
 
             

10,912,040

   
   

Restaurants – 0.9%

 
 

51,500

    Fiesta Restaurant Group (a)
Owns/Operates Two Restaurant Chains: Pollo
Tropical & Taco Cabana
  3,131,200
 
 

43,000

    Papa John's International
Franchisor of Pizza Restaurants
  2,399,400
 
 

12,000

    Buffalo Wild Wings (a)
Restaurants
  2,164,560
 
             

7,695,160

   
   

Food & Beverage – 0.6%

 
 

320,541

    Boulder Brands (a)
Healthy Food Products
  3,545,183
 
 

47,000

    B&G Foods
Acquirer of Small Food Brands
  1,405,300
 
 

9,000

    Freshpet (a) (b)
Fresh Pet Food Manufacturer & Marketer
  153,540
 
             

5,104,023

   
   

Other Consumer Services – 0.6%

 
 

132,500

    Blackhawk Network (a)
Third-party Distributer of Prepaid Content, Mostly
Gift Cards
  4,993,925
 

See accompanying notes to financial statements.
8



Wanger USA 2014 Annual Report

Wanger USA

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Leisure Products – 0.1%

 

55,395

  Fox Factory Holding (a)
High Performance Suspension Systems for Leisure
Market
 

$

899,061

 
       

Total Consumer Goods & Services

   

139,526,157

   
   

Finance – 14.5%

 
   

Banks – 8.2%

 
 

253,000

    Lakeland Financial
Indiana Bank
  10,997,910
 
 

318,000

    MB Financial
Chicago Bank
  10,449,480
 
 

79,000

    SVB Financial Group (a)
Bank to Venture Capitalists
  9,169,530
 
 

485,000

    Associated Banc-Corp
Midwest Bank
  9,035,550
 
 

81,000

    City National
Bank & Asset Manager
  6,545,610
 
 

161,194

    Hancock Holding
Gulf Coast Bank
  4,948,656
 
 

464,000

    Valley National Bancorp (b)
New Jersey/New York Bank
  4,505,440
 
 

666,200

    First Busey
Illinois Bank
  4,336,962
 
 

97,700

    Sandy Spring Bancorp
Baltimore & Washington, D.C. Bank
  2,548,016
 
 

187,000

    First Commonwealth
Western Pennsylvania Bank
  1,724,140
 
 

100,890

    Guaranty Bancorp
Colorado Bank
  1,456,851
 
             

65,718,145

   
   

Finance Companies – 2.9%

 
 

339,400

    CAI International (a)
International Container Leasing
  7,874,080
 
 

174,900

    McGrath Rentcorp
Mini Rental Conglomerate
  6,271,914
 
 

78,079

    World Acceptance (a) (b)
Personal Loans
  6,203,377
 
 

68,000

    Textainer Group Holdings (b)
Top International Container Leaser
  2,333,760
 
             

22,683,131

   
Number of
Shares
     

Value

 
   

Savings & Loans – 1.2%

 
 

253,600

    ViewPoint Financial
Texas Thrift
 

$

6,048,360
 
 

142,000

    Berkshire Hills Bancorp
Northeast Thrift
  3,785,720
 
             

9,834,080

   
   

Brokerage & Money Management – 1.0%

 
 

206,000

    SEI Investments
Mutual Fund Administration & Investment Management
  8,248,240
 
   

Insurance – 0.8%

 
 

81,000

    Allied World Assurance Company Holdings
Commercial Lines Insurance/Reinsurance
  3,071,520
 
 

18,454

    Enstar Group (a)
Insurance/Reinsurance & Related Services
  2,821,432
 
             

5,892,952

   
   

Diversified Financial Companies – 0.4%

 
 

146,500

    Leucadia National
Holding Company
  3,284,530
 
       

Total Finance

   

115,661,078

   
   

Health Care – 12.5%

 
   

Biotechnology & Drug Delivery – 5.2%

 
 

171,700

    Synageva BioPharma (a) (b)
Biotech Focused on Orphan Diseases
  15,932,043
 
 

196,000

    Seattle Genetics (a)
Antibody-based Therapies for Cancer
  6,297,480
 
 

58,000

    BioMarin Pharmaceutical (a)
Biotech Focused on Orphan Diseases
  5,243,200
 
 

183,200

    Celldex Therapeutics (a) (b)
Biotech Developing Drugs for Cancer
  3,343,400
 
 

179,000

    Sarepta Therapeutics (a) (b)
Biotech Focused on Rare Diseases
  2,590,130
 
 

71,520

    NPS Pharmaceuticals (a)
Orphan Drugs & Healthy Royalties
  2,558,271
 
 

24,900

    Alnylam Pharmaceuticals (a)
Biotech Developing Drugs for Rare Diseases
  2,415,300
 
 

35,632

    Ultragenyx Pharmaceutical (a)
Biotech Focused on "Ultra-Orphan" Drugs
  1,563,532
 
 

10,000

    Intercept Pharmaceuticals (a) (b)
Biotech Developing Drugs for Several Diseases
  1,560,000
 
             

41,503,356

   

See accompanying notes to financial statements.
9



Wanger USA 2014 Annual Report

Wanger USA

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Medical Supplies – 2.9%

 
 

295,000

    Cepheid (a)
Molecular Diagnostics
 

$

15,971,300
 
 

68,500

    Bio-Techne
Cytokines, Antibodies & other Reagents for Life Science
  6,329,400
 
 

52,500

    VWR (a) (b)
Distributor of Lab Supplies
  1,358,175
 
             

23,658,875

   
   

Health Care Services – 1.8%

 
 

96,000

    Medidata Solutions (a)
Cloud-based Software for Drug Studies
  4,584,000
 
 

303,900

    Allscripts Healthcare Solutions (a)
Health Care IT
  3,880,803
 
 

69,000

    HealthSouth
Inpatient Rehabilitation Facilities
  2,653,740
 
 

70,000

    Envision Healthcare Holdings (a)
Provider of Health Care Outsourcing Services
  2,428,300
 
 

44,000

    Castlight Health (a) (b)
Provider of Cloud-based Software for Managing Health
Care Costs
  514,800
 
             

14,061,643

   
   

Pharmaceuticals – 1.6%

 
 

358,712

    Akorn (a)
Developer, Manufacturer & Distributor of Specialty
Generic Drugs
  12,985,374
 
   

Medical Equipment & Devices – 1.0%

 
 

38,000

    Sirona Dental Systems (a)
Manufacturer of Dental Equipment
  3,320,060
 
 

106,000

    Wright Medical Group (a)
Leader in Foot & Ankle Replacement
  2,848,220
 
 

33,000

    Abaxis
Instruments & Tests for Vet & Medical Markets
  1,875,390
 
             

8,043,670

   
       

Total Health Care

   

100,252,918

   
   

Other Industries – 5.6%

 
   

Real Estate – 4.9%

 
 

503,000

    Extra Space Storage
Self Storage Facilities
  29,495,920
 
Number of
Shares
     

Value

 
 

137,300

    EdR
Student Housing
 

$

5,023,807
 
 

85,250

    DCT Industrial Trust
Industrial Properties
  3,040,015
 
 

83,936

    St. Joe (a)
Florida Panhandle Landowner
  1,543,583
 
             

39,103,325

   
   

Transportation – 0.7%

 
 

184,487

    Rush Enterprises (a)
Truck Sales & Service
  5,912,808
 
       

Total Other Industries

   

45,016,133

   
   

Energy & Minerals – 2.9%

 
   

Oil & Gas Producers – 1.7%

 
 

67,000

    Carrizo Oil & Gas (a)
Oil & Gas Producer
  2,787,200
 
 

40,000

    Clayton Williams (a)
Oil & Gas Producer
  2,552,000
 
 

61,000

    SM Energy
Oil & Gas Producer
  2,353,380
 
 

90,000

    Rosetta Resources (a)
Oil & Gas Producer Exploring in Texas
  2,007,900
 
 

43,000

    PDC Energy (a)
Oil & Gas Producer in the U.S.
  1,774,610
 
 

106,000

    WPX Energy (a)
Oil & Gas Produced in the U.S. & Argentina
  1,232,780
 
 

26,000

    Bonanza Creek Energy (a)
Oil & Gas Producer in Western U.S.
  624,000
 
             

13,331,870

   
   

Oil Services – 0.7%

 
 

56,000

    Gulfport Energy (a)
Oil & Gas Producer Focused on Utica Shale in Ohio
  2,337,440
 
 

80,000

    Hornbeck Offshore (a)
Supply Vessel Operator in U.S. Gulf of Mexico
  1,997,600
 
 

43,000

    Chart Industries (a)
Manufacturer of Natural Gas Processing/Storage
Equipment
  1,470,600
 
             

5,805,640

   

See accompanying notes to financial statements.
10



Wanger USA 2014 Annual Report

Wanger USA

Statement of Investments, December 31, 2014

Number of
Shares
     

Value

 
   

Mining – 0.5%

 
 

30,000

    Core Labs (Netherlands) (b)
Oil & Gas Reservoir Consulting
 

$

3,610,200
 
 

27,000

    US Silica (b)
Provider of Frac Sand & Industrial Sand in U.S.
  693,630
 
             

4,303,830

   
       

Total Energy & Minerals

   

23,441,340

   
Total Equities
(Cost: $394,617,406) – 96.9%
   

775,733,944

(c)

 

Short-Term Investments – 3.0%

     
24,403,875
  
  
  JPMorgan U.S. Government
Money Market Fund, Agency
Shares (7 day yield of 0.01%)
   

24,403,875

   
Total Short-Term Investments
(Cost: $24,403,875) – 3.0%
   

24,403,875

   

Securities Lending Collateral – 6.3%

     
50,690,725
   
   
   
  Dreyfus Government Cash
Management Fund,
Institutional Shares
(7 day yield of 0.01%) (d)
   

50,690,725

   
Total Securities Lending Collateral
(Cost: $50,690,725) – 6.3%
   

50,690,725

   
Total Investments
(Cost: $469,712,006) (e) – 106.2%
   

850,828,544

   
Obligation to Return Collateral for
Securities Loaned – (6.3)%
   

(50,690,725

)

 

Cash and Other Assets Less Liabilities – 0.1%

   

794,964

   

Net Assets – 100.0%

 

$

800,932,783

   

ADR = American Depositary Receipts

Notes to Statement of Investments

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at December 31, 2014. The total market value of securities on loan at December 31, 2014 was $49,269,291.

(c)  On December 31, 2014, the market value of foreign securities represented 1.83% of total net assets. The Fund's foreign portfolio was diversified as follows:

Country

 

Value

  Percentage of
Net Assets
 

Israel

 

$

7,416,005

     

0.93

   

India

   

3,615,500

     

0.45

   

Netherlands

   

3,610,200

     

0.45

   

Total Foreign Portfolio

 

$

14,641,705

     

1.83

   

(d)  Investment made with cash collateral received from securities lending activity.

(e)  At December 31, 2014, for federal income tax purposes, the cost of investments was $471,771,866 and net unrealized appreciation was $379,056,678 consisting of gross unrealized appreciation of $400,767,019 and gross unrealized depreciation of $21,710,341.

See accompanying notes to financial statements.
11



Wanger USA 2014 Annual Report

Wanger USA

Statement of Investments, December 31, 2014

Fair Value Measurements

  Various inputs are used in determining the value of the Fund's investments, following the input prioritization hierarchy established by accounting principles generally accepted in the United States of America (GAAP). These inputs are summarized in the three broad levels listed below:

  Level 1quoted prices in active markets for identical securities

  Level 2prices determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others)

  Level 3prices determined using significant unobservable inputs where quoted prices or observable inputs are unavailable or less reliable (including management's own assumptions about the factors market participants would use in pricing an investment)

  The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

  Examples of the types of securities in which the Fund would typically invest and how they are classified within this hierarchy are as follows. Typical Level 1 securities include exchange traded domestic equities, mutual funds whose NAVs are published each day and exchange traded foreign equities that are not statistically fair valued. Typical Level 2 securities include exchange traded foreign equities that are statistically fair valued, forward foreign currency exchange contracts and short-term investments valued at amortized cost. Additionally, securities fair valued by the Valuation Committee (the Committee) of the Fund's Board of Trustees (the Board) that rely on significant observable inputs are also included in Level 2. Typical Level 3 securities include any security fair valued by the Committee that relies on significant unobservable inputs.

  Under the direction of the Board, the Committee is responsible for overseeing the valuation procedures approved by the Board.

  The Committee meets as necessary, and no less frequently than quarterly, to determine fair values for securities for which market quotations are not readily available or for which the investment manager believes that available market quotations are unreliable, to review the appropriateness of the Trust's Portfolio Pricing Policy and the pricing procedures of the investment manager (the Policies), and to review the continuing appropriateness of the current value of any security subject to the Policies. The Policies address, among other things: circumstances under which market quotations will be deemed readily available; selection of third party pricing vendors; appropriate pricing methodologies; events that require fair valuation and fair value techniques; circumstances under which securities will be deemed to pose a potential for stale pricing, including when securities are illiquid, restricted, or in default; and certain delegations of authority to determine fair values to the Fund's investment manager. The Committee may also meet to discuss additional valuation matters, which may include review of back-testing results, review of time-sensitive information or approval of other valuation related actions, and to review the appropriateness of the Policies.

  For investments categorized as Level 3, the significant unobservable inputs used in the fair value measurement of the Funds' securities may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair value. Significant

changes in any of these factors could result in lower or higher fair value measurements. Various factors impact the frequency of monitoring (which may occur as often as daily), however the Committee may determine that changes to inputs, assumptions and models are not required with the same frequency.

The following table summarizes the inputs used, as of December 31, 2014, in valuing the Fund's assets:

Investment Type

  Other
Quoted Prices
(Level 1)
  Significant
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

Total

 

Equities

 

Information

 

$

176,906,550

   

$

   

$

   

$

176,906,550

   
Industrial Goods &
Services
   

174,929,768

     

     

     

174,929,768

   
Consumer Goods &
Services
   

139,526,157

     

     

     

139,526,157

   

Finance

   

115,661,078

     

     

     

115,661,078

   

Health Care

   

100,252,918

     

     

     

100,252,918

   

Other Industries

   

45,016,133

     

     

     

45,016,133

   

Energy & Minerals

   

23,441,340

     

     

     

23,441,340

   

Total Equities

   

775,733,944

     

     

     

775,733,944

   
Total Short-Term
Investments
   

24,403,875

     

     

     

24,403,875

   
Total Securities
Lending Collateral
   

50,690,725

     

     

     

50,690,725

   

Total Investments

 

$

850,828,544

   

$

   

$

   

$

850,828,544

   

  There were no transfers of financial assets between levels during the period.

See accompanying notes to financial statements.
12




Wanger USA 2014 Annual Report

Statement of Assets and Liabilities
December 31, 2014

Assets:

 

Investments, at cost

 

$

469,712,006

   
Investments, at value
(including securities on loan of $49,269,291)
 

$

850,828,544

   

Receivable for:

 

Investments sold

   

2,594,740

   

Fund shares sold

   

227

   

Securities lending income

   

23,617

   

Dividends

   

363,713

   

Trustees' deferred compensation plan

   

138,203

   

Prepaid expenses

   

12,923

   

Total Assets

   

853,961,967

   

Liabilities:

 

Collateral on securities loaned

   

50,690,725

   

Payable for:

 

Investments purchased

   

10,961

   

Fund shares redeemed

   

2,039,578

   

Investment advisory fee

   

19,103

   

Administration fee

   

1,109

   

Transfer agent fee

   

2

   

Trustees' fees

   

58

   

Custody fee

   

2,699

   

Reports to shareholders

   

64,428

   

Chief compliance officer expenses

   

2,803

   

Trustees' deferred compensation plan

   

138,203

   

Other liabilities

   

59,515

   

Total Liabilities

   

53,029,184

   

Net Assets

 

$

800,932,783

   

Composition of Net Assets:

 

Paid-in capital

 

$

296,427,289

   

Overdistributed net investment income

   

(136,344

)

 

Accumulated net realized gain

   

123,525,300

   

Net unrealized appreciation (depreciation) on:

 

Investments

   

381,116,538

   

Net Assets

 

$

800,932,783

   

Fund Shares Outstanding

   

21,241,126

   
Net asset value, offering price and redemption
price per share
 

$

37.71

   

Statement of Operations
For the Year Ended December 31, 2014

Investment Income:

 

Dividends (net foreign taxes withheld of $25,821)

 

$

6,370,739

   

Income from securities lending—net

   

394,818

   

Total Investment Income

   

6,765,557

   

Expenses:

 

Investment advisory fee

   

7,217,201

   

Transfer agent fees

   

587

   

Administration fee

   

419,179

   

Trustees' fees

   

33,471

   

Custody fees

   

12,789

   

Reports to shareholders

   

151,984

   

Audit fees

   

45,989

   

Legal fees

   

74,206

   

Chief compliance officer expenses

   

35,320

   

Commitment fee for line of credit (Note 5)

   

1,429

   

Other expenses

   

37,278

   

Total Expenses

   

8,029,433

   

Net Investment Loss

   

(1,263,876

)

 

Net Realized and Unrealized Gain (Loss) on Investments:

 

Net realized gain (loss) on:

     

Investments

   

126,938,117

   

Net realized gain

   

126,938,117

   

Net change in unrealized appreciation (depreciation) on:

 

Investments

   

(89,118,632

)

 

Net change in unrealized depreciation

   

(89,118,632

)

 

Net realized and unrealized gain

   

37,819,485

   

Net Increase in Net Assets from Operations

 

$

36,555,609

   

See accompanying notes to financial statements.
13



Wanger USA 2014 Annual Report

Statements of Changes in Net Assets

   

Year Ended December 31,

 

Increase (Decrease) in Net Assets

 

2014

 

2013

 

Operations:

 

Net investment loss

 

$

(1,263,876

)

 

$

(1,051,168

)

 

Net realized gain (loss) on:

 

Investments

   

126,938,117

     

105,713,380

   

Net change in unrealized appreciation (depreciation) on:

 

Investments

   

(89,118,632

)

   

143,376,891

   

Net Increase in Net Assets from Operations

   

36,555,609

     

248,039,103

   

Distributions to Shareholders From:

 

Net investment income

   

     

(1,173,697

)

 

Net realized gains

   

(104,323,181

)

   

(74,442,456

)

 

Total Distributions to Shareholders

   

(104,323,181

)

   

(75,616,153

)

 

Share Transactions:

 

Subscriptions

   

7,982,236

     

24,527,584

   

Distributions reinvested

   

104,323,181

     

75,616,153

   

Redemptions

   

(155,747,913

)

   

(142,645,763

)

 

Net Decrease from Share Transactions

   

(43,442,496

)

   

(42,502,026

)

 

Total Increase (Decrease) in Net Assets

   

(111,210,068

)

   

129,920,924

   

Net Assets:

 

Beginning of period

   

912,142,851

     

782,221,927

   

End of period

 

$

800,932,783

   

$

912,142,851

   

Overdistributed net investment income

 

$

(136,344

)

 

$

(117,058

)

 

See accompanying notes to financial statements.
14




Wanger USA 2014 Annual Report

Financial Highlights

The following table is intended to help you understand the Fund's financial performance. Certain information reflects financial results for a single share held for the periods shown. Per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of the expenses that apply to the variable accounts or contract charges, if any. Total return and portfolio turnover are not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the Fund's portfolio turnover rate may be higher.

   

Year Ended December 31,

 

Selected data for a share outstanding throughout each period

 

2014

 

2013

 

2012

 

2011

 

2010

 

Net Asset Value, Beginning of Period

 

$

41.13

   

$

33.84

   

$

29.80

   

$

33.86

   

$

27.45

   

Income from Investment Operations:

 

Net investment income (loss)

   

(0.06

)

   

(0.05

)

   

0.15

     

(0.13

)

   

(0.10

)

 

Net realized and unrealized gain (loss)

   

1.70

     

10.79

     

5.63

     

(0.82

)

   

6.51

   

Total from Investment Operations

   

1.64

     

10.74

     

5.78

     

(0.95

)

   

6.41

   

Less Distributions to Shareholders:

 

Net investment income

   

     

(0.06

)

   

(0.11

)

   

     

   

Net realized gains

   

(5.06

)

   

(3.39

)

   

(1.63

)

   

(3.11

)

   

   

Total Distributions to Shareholders

   

(5.06

)

   

(3.45

)

   

(1.74

)

   

(3.11

)

   

   

Net Asset Value, End of Period

 

$

37.71

   

$

41.13

   

$

33.84

   

$

29.80

   

$

33.86

   

Total Return

   

4.78

%

   

33.75

%

   

20.02

%(a)

   

(3.49

)%(a)

   

23.35

%(a)

 

Ratios to Average Net Assets/Supplemental Data:

 

Total gross expenses (b)

   

0.96

%

   

0.96

%

   

0.96

%

   

0.94

%

   

0.98

%(c)

 

Total net expenses (b)

   

0.96

%

   

0.96

%

   

0.96

%(d)

   

0.93

%(d)

   

0.97

%(c)(d)

 

Net investment income (loss)

   

(0.15

)%

   

(0.12

)%

   

0.45

%

   

(0.40

)%

   

(0.35

)%

 

Portfolio turnover rate

   

14

%

   

15

%

   

12

%

   

10

%

   

27

%

 

Net assets, end of period (000s)

 

$

800,933

   

$

912,143

   

$

782,222

   

$

757,562

   

$

911,424

   

Notes to Financial Highlights

(a)  Had the investment manager and/or its affiliates not waived a portion of expenses, total return would have been reduced.

(b)  In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests, if any. Such indirect expenses are not included in the Fund's reported expense ratios.

(c)  Ratios include line of credit interest expense which is less than 0.01%.

(d)  The benefits derived from custody fees paid indirectly had an impact of less than 0.01%.

See accompanying notes to financial statements.
15




Wanger USA 2014 Annual Report

Notes to Financial Statements

1.  Nature of Operations

Wanger USA (the Fund), a series of Wanger Advisors Trust (the Trust), is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The investment objective of the Fund is to seek long-term capital appreciation. The Fund is available only for allocation to certain life insurance company separate accounts established for the purpose of funding participating variable annuity contracts and variable life insurance policies and may also be offered directly to certain qualified pension and retirement plans.

2.  Summary of Significant Accounting Policies

Basis of Preparation

The Fund is an investment company that applies the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC 946). The financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

Security valuation

Securities of the Fund are valued at market value or, if a market quotation for a security is not readily available or is deemed not to be reliable because of events or circumstances that have occurred between the market quotation and the time as of which the security is to be valued, the security is valued at its fair value determined in good faith under consistently applied procedures established by the Board of Trustees (the Board). A security traded on a securities exchange or in an over-the-counter market in which transaction prices are reported is valued at the last sales price at the time of valuation. A security traded principally on NASDAQ is valued at the NASDAQ official closing price. Exchange traded funds are valued at their closing net asset value as reported on the applicable exchange. A security for which there is no reported sale on the valuation date is valued at the mean of the latest bid and ask quotations.

Short-term investments maturing in 60 days or less are valued at amortized cost, which approximates market value.

The Trust has retained an independent statistical fair value pricing service that employs a systematic methodology to assist in the fair valuation process for securities principally traded in a foreign market in order to adjust for possible changes in value that may occur between the close of the foreign market and the time as of which the securities are to be valued. If a security is valued at a fair value, that value may be different from the last quoted market price for the security.

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 debt obligations when required for federal income tax

purposes. Realized gains and losses from security transactions are recorded on an identified cost basis.

Awards, if any, from class action litigation related to securities owned may be recorded as a reduction of cost of those securities. If the applicable securities are no longer owned, the proceeds are recorded as realized gains.

The Fund may receive distributions from holdings in exchange-traded funds (ETFs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on the character of their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. To the extent actual information has not yet been reported by the REITs, estimates for return of capital may be made by the Fund's management. Return of capital is recorded as a reduction of the cost basis of securities held. If the Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. Management's estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of capital to shareholders. No estimates are made for ETFs and RICs.

Expenses

General expenses of the Trust are allocated to the Fund and the other series of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund.

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 (the 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.

Securities lending

The Fund may lend securities up to one-third of the value of its total assets to certain approved brokers, dealers and other financial institutions to earn additional income. The Fund retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. The Fund also receives a fee for the loan. The Fund has the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by cash that exceeded the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Fund and any additional required collateral is delivered to each Fund on the next business day. The Fund has elected to invest the cash collateral in the Dreyfus Government Cash Management Fund. The income earned from the securities lending program is paid to the Fund, net of any fees remitted to Goldman Sachs Agency Lending, the Fund's lending agent, and borrower rebates. The Fund's investment manager, Columbia Wanger Asset Management, LLC (CWAM), does not retain any fees earned by the lending program. Generally, in the event of borrower default, the Fund has the right to use the collateral to offset any losses incurred. In the event the Fund is delayed or prevented from exercising its right to dispose of the collateral, there may be a potential loss to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of loss with respect to the investment of collateral. The net lending income earned by the Fund as of December 31, 2014, is included in the Statement of Operations.

Offsetting of Financial Assets

The following table presents the Fund's gross and net amount of assets available for offset under a securities lending agreement as well as the related collateral received by the Fund as of December 31, 2014:

    Gross
Amounts of
  Gross Amounts
Offset in the
  Net Amounts of Assets
Presented in the
  Gross Amounts Not Offset in
the Statement of Assets and Liabilities
 
    Recognized
Assets
  Statement of
Assets and Liabilities
  Statement of
Assets and Liabilities
  Financial
Instruments (a)
  Cash Collateral
Received
  Securities
Collateral Received
 

Net Amount (b)

 

Securities Loaned

 

$

49,269,291

   

$

   

$

49,269,291

   

$

   

$

49,269,291

   

$

   

$

   

(a)  Represents the amount of assets that could be offset by liabilities with the same counterparty under master netting or similar agreements that management elects not to offset on the Statement of Assets and Liabilities.

(b)  Represents the net amount due from counterparties in the event of default.


16



Wanger USA 2014 Annual Report

Notes to Financial Statements, continued

Federal income taxes

The Fund has complied with the provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distributes substantially all its taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.

Foreign capital gains taxes

Gains in certain countries may be subject to foreign taxes at the fund level. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction. The amount, if any, is disclosed as a liability on the Statement of Assets and Liabilities.

Distributions to shareholders

Distributions to shareholders are recorded on the ex-dividend date.

Indemnification

In the normal course of business, the Trust on behalf of the Fund enters into contracts that contain a variety of representations and warranties and that provide general indemnities. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also under the Trust's organizational documents, the trustees and officers of the Trust are indemnified against certain liabilities that may arise out of their duties to the Trust. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.

Recent Accounting Pronouncement

Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures

In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. ASU No. 2014-11 changes the accounting for transactions accounted for as secured borrowings and expands disclosure requirements related to securities lending and similar transactions. The disclosure requirements are effective for interim and annual periods beginning after December 15, 2014. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

3.  Federal Tax Information

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations.

For the year ended December 31, 2014, permanent book and tax basis differences resulting primarily from re-characterization of distributions for investments and net operating loss reclassification were identified and reclassified among the components of the Fund's net assets as follows:

Accumulated
Net Investment
Income
  Accumulated
Net Realized
Gain (Loss)
 

Paid-In Capital

 
$

1,244,590

   

$

(1,244,590

)

 

$

0

   

Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by this reclassification.

The tax character of distributions paid during the years ended December 31, 2014 and December 31, 2013 were as follows:

   

December 31, 2014

 

December 31, 2013

 

Ordinary Income*

 

$

1,514,705

   

$

1,467,670

   

Long-Term Capital Gains

   

102,808,476

     

74,148,483

   

* For tax purposes short-term capital gain distributions, if any, are considered ordinary income distributions.

As of December 31, 2014, the components of distributable earnings on a tax basis were as follows:

Undistributed
Ordinary
Income
  Undistributed
Long-Term
Capital Gains
  Net Unrealized
Appreciation
(Depreciation)*
 
$

658,774

   

$

124,926,386

   

$

379,056,678

   

* The differences between book-basis and tax-basis net unrealized appreciation/depreciation are primarily due to deferral of losses from wash sales.

Management is required to determine whether a tax position of the Fund is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized by the Fund is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Management is not aware of any tax positions in the Fund for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However, management's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). The Fund's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.

4.  Transactions with Affiliates

CWAM is a wholly owned subsidiary of Columbia Management Investment Advisers, LLC (Columbia Management), which in turn is a wholly owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). CWAM furnishes continuing investment supervision to the Fund and is responsible for the overall management of the Fund's business affairs.

CWAM receives a monthly advisory fee based on the Fund's average daily net assets at the following annual rates:

Average Daily Net Assets

 

Annual Fee Rate

 

Up to $100 million

   

0.94

%

 

$100 million to $250 million

   

0.89

%

 

$250 million to $2 billion

   

0.84

%

 
$2 billion and over    

0.80

%

 

For the year ended December 31, 2014, the effective investment advisory fee rate was 0.86% of the Fund's average daily net assets.

CWAM provides administrative services and receives an administration fee from the Fund at the following annual rates:

Wanger Advisors Trust Aggregate
Average Daily Net Assets of the Trust
 

Annual Fee Rate

 

Up to $4 billion

   

0.05

%

 

$4 billion to $6 billion

   

0.04

%

 

$6 billion to $8 billion

   

0.03

%

 
$8 billion and over    

0.02

%

 


17



Wanger USA 2014 Annual Report

Notes to Financial Statements, continued

For the year ended December 31, 2014, the effective administration fee rate was 0.05% of the Fund's average daily net assets. Columbia Management provides certain sub-administrative services to the Fund.

Columbia Management Investment Distributors, Inc. (CMID), a wholly owned subsidiary of Ameriprise Financial, serves as the Fund's distributor and principal underwriter.

Columbia Management Investment Services Corp. (CMIS), a wholly owned subsidiary of Ameriprise Financial, is the transfer agent to the Fund. For its services, the Fund pays CMIS a monthly fee at the annual rate of $21.00 per open account. CMIS also receives reimbursement from the Fund for certain out-of-pocket expenses.

Certain officers and trustees of the Trust are also officers of CWAM. The Trust makes no direct payments to its officers and trustees who are affiliated with CWAM.

The Board has appointed a Chief Compliance Officer of the Trust in accordance with federal securities regulations. The Fund, along with other affiliated funds, pays its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer.

The Trust offers a deferred compensation plan for its independent trustees. Under that plan, a trustee may elect to defer all or a portion of his or her compensation. Amounts deferred are retained by the Trust and may represent an unfunded obligation of the Trust. The value of amounts deferred is determined by reference to the change in value of Class Z shares of one or more series of Columbia Acorn Trust or a money market fund as specified by the trustee. Benefits under the deferred compensation plan are payable in accordance with the plan.

5.  Borrowing Arrangements

During the year ended December 31, 2014, the Trust participated in a credit facility with JPMorgan Chase Bank, N.A., along with Columbia Acorn Trust, another trust managed by CWAM, in the amount of $150 million. The credit facility was entered into to facilitate portfolio liquidity. Under the facility, interest is charged to each participating fund based on its borrowings at a rate per annum equal to the Federal Funds Rate plus 1.00%. In addition, a commitment fee of 0.08% per annum of the unutilized line of credit is accrued and apportioned among the participating funds based on their relative net assets. The commitment fee is disclosed as a part of "Commitment fee for line of credit" in the Statement of Operations. The Trust expects to renew this line of credit for one year durations each July at then current market rates and terms.

No amounts were borrowed for the benefit of the Fund under the line of credit during the year ended December 31, 2014.

6.  Fund Share Transactions

Proceeds and payments on Fund shares as shown in the Statement of Changes in Net Assets are in respect of the following numbers of shares:

    Year ended
December 31, 2014
  Year ended
December 31, 2013
 

Shares sold

   

208,916

     

666,599

   
Shares issued in reinvestment
of dividend distributions
   

2,944,487

     

2,203,910

   

Less shares redeemed

   

(4,090,881

)

   

(3,806,028

)

 

Net decrease in shares outstanding

   

(937,478

)

   

(935,519

)

 

7.  Investment Transactions

The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2014, were $115,565,467 and $280,291,738, respectively. The amount of purchase and sales activity impacts the portfolio turnover rate reported in the Financial Highlights.

8.  Shareholder Concentration

At December 31, 2014, two unaffiliated shareholder accounts owned an aggregate of 32.3% of the outstanding shares of the Fund. The Fund has no knowledge about whether any portion of those shares was owned beneficially by such accounts.

Affiliated shareholder accounts owned 60.8% of the outstanding shares of the Fund. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund.

9.  Subsequent Events

Management has evaluated the events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.

10.  Information Regarding Pending and Settled Legal Proceedings

Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.

There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Fund. Further, although we believe proceedings are not likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial.


18



Wanger USA 2014 Annual Report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Wanger USA:

In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Wanger USA (a series of the Wanger Advisors Trust, hereinafter referred to as the "Fund") at December 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Chicago, Illinois
February 18, 2015


19



Wanger USA 2014 Annual Report

Federal Income Tax Information (Unaudited)

The Fund hereby designates the following tax attributes in the fiscal year ended December 31, 2014.

Tax Designations

 

Dividends Received Deduction

   

100.00

%

 

Capital Gain Dividend

 

$

131,241,004

   

Dividends Received Deduction. The percentage of ordinary income distributed during the fiscal year that qualifies for the corporate dividends received deduction.

Capital Gain Dividend. The Fund designates as a capital gain dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.


20




Wanger USA 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Each trustee may serve a term of unlimited duration. The Trust's By-laws generally require that a trustee retire at the end of the calendar year in which the trustee attains the age of 75 years. The trustees appoint their own successors, provided that at least two-thirds of the trustees, after such appointment, have been elected by shareholders. Shareholders may remove a trustee, with or without cause, upon the vote of two-thirds of the Trust's outstanding shares at any meeting called for that purpose. A trustee may be removed, with or without cause, upon the vote of a majority of the trustees. The names of the trustees and officers of the Trust, the date each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios in the fund complex they oversee, and other directorships they hold, are shown below. Each trustee serves in such capacity for each of the four series of Wanger Advisors Trust and for each of the eight series of Columbia Acorn Trust.

The address for the trustees and officers of the Trust is Columbia Wanger Asset Management, LLC, 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606. The Funds' Statement of Additional Information includes additional information about the Funds' trustees and officers. You may obtain a free copy of the Statement of Additional Information by writing or calling toll-free:

Columbia Wanger Asset Management, LLC
Shareholder Services Group
227 W. Monroe, Suite 3000
Chicago IL 60606
1-800-922-6769

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Trustees who are not interested persons of Wanger Advisors Trust: (1)               
Laura M. Born, 49,
Trustee and Chair
 

2007

 

Adjunct Associate Professor of Finance, University of Chicago Booth School of Business; Managing Director — Investment Banking, J.P. Morgan Chase & Co. (broker-dealer), 2002 – 2007.

 

12

 

Columbia Acorn Trust.

 
Maureen M. Culhane, 66,
Trustee
 

2007

 

Retired. Formerly, Vice President, Goldman Sachs Asset Management, L.P. (investment adviser), 2005 – 2007; Vice President (Consultant) — Strategic Relationship Management, Goldman, Sachs & Co., 1999 – 2005.

 

12

 

Columbia Acorn Trust.

 
Margaret M. Eisen, 61,
Trustee
 

2002

 

Chief Investment Officer, EAM International LLC (corporate finance and asset management), 2003 – 2013; Managing Director, CFA Institute, 2005 – 2008.

 

12

 

Columbia Acorn Trust; Burnham Investors Trust.

 
Thomas M. Goldstein, 55,
Trustee
 

2014

 

Retired. Formerly, Chief Financial Officer, Allstate Protection Division, 2011 – 2014; Founding Partner, The GRG Group LLC, 2009 – 2011; Managing Director and Chief Financial Officer, Madison Dearborn Partners, 2007 – 2009.

 

12

 

Columbia Acorn Trust; Federal Home Loan Bank — Chicago; Federal Home Loan Mortgage Corporation.

 
John C. Heaton, 55,
Trustee
 

2010

 

Deputy Dean for Faculty, University of Chicago Booth School of Business; Joseph L. Gidwitz Professor of Finance, University of Chicago Booth School of Business since 2000.

 

12

 

Columbia Acorn Trust.

 
Steven N. Kaplan, 55,
Trustee and Vice Chair
 

1999

 

Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance, University of Chicago Booth School of Business; faculty member of the University of Chicago Booth School of Business since 1988.

 

12

 

Columbia Acorn Trust; Accretive Health, Inc. (healthcare management services provider); Morningstar, Inc. (provider of independent investment research).

 
David J. Rudis, 61,
Trustee
 

2010

 

Retired. Formerly, National Checking and Debit Executive, and Illinois President, Bank of America, 2007 – 2009; President, Consumer Banking Group, LaSalle National Bank, 2004 – 2007.

 

12

 

Columbia Acorn Trust.

 
David B. Small, 58,
Trustee (2)
 

2010

 

Managing Director, Grosvenor Capital Management, L.P. (investment adviser) since 1994; Adjunct Associate Professor of Finance, University of Chicago Booth School of Business.

 

12

 

Columbia Acorn Trust.

 


21



Wanger USA 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 

Trustees who are interested persons of Wanger Advisors Trust:

             
Charles P. McQuaid, 61,
Trustee and Vice President (3)
 

1992

 

Portfolio manager and/or analyst, CWAM or its predecessors since 1978; Vice President of Columbia Acorn Trust and Wanger Advisors Trust since April 2014; formerly, President and Chief Investment Officer, CWAM or its predecessors, October 2003 – March 2014, and President of Columbia Acorn Trust and Wanger Advisors Trust, October 2003 – March 2014.

 

12

 

Columbia Acorn Trust.

 
Ralph Wanger, 80,
Trustee Emeritus (4)
 

1970

 

Founder, CWAM. Formerly, President, Chief Investment Officer and portfolio manager, CWAM or its predecessors, July 1992 – September 2003; Director, Wanger Investment Company PLC; Consultant to CWAM or its predecessors, September 2003 – September 2005.

 

12

 

Columbia Acorn Trust.

 

Officers of Columbia Acorn Trust:

             
Robert A. Chalupnik, 49,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2000; Vice President Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 
Michael G. Clarke, 45,
Assistant Treasurer
 

2004

 

Vice President — Mutual Fund Treasurer, Columbia Management Investment Advisers, LLC since May 2010; Managing Director of Fund Administration, Columbia Management Advisors, LLC, September 2004 – April 2010; Senior officer, Columbia Funds and affiliated funds since 2002.

 

N/A

 

N/A

 
Joseph F. DiMaria, 46,
Assistant Treasurer
 

2010

 

Vice President — Mutual Fund Administration, Columbia Management Investment Advisers, LLC since May 2010; Director of Fund Administration, Columbia Management Advisors, LLC, January 2006 – April 2010.

 

N/A

 

N/A

 
William J. Doyle, 50,
Vice President
 

2014

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2006; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2014.

 

N/A

 

N/A

 
P. Zachary Egan, 46,
President
 

2014

 

President and International Chief Investment Officer, CWAM since April 2014; portfolio manager and/or analyst, CWAM or its predecessors since 1999; formerly, Director of International Research, CWAM December 2004 – March 2014, and Vice President, Columbia Acorn Trust, 2003 – 2014, and Wanger Advisors Trust, 2007 – 2014.

 

N/A

 

N/A

 
David L. Frank, 51,
Vice President
 

2014

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2002; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2014.

 

N/A

 

N/A

 
Fritz Kaegi, 43,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2004; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 
John M. Kunka, 44,
Treasurer
 

2006

 

Treasurer and Principal Accounting and Financial Officer, Columbia Acorn Trust and Wanger Advisors Trust since 2014; Director of Accounting and Operations, CWAM since May 2006; formerly, Assistant Treasurer, Columbia Acorn Trust and Wanger Advisors Trust 2006 – 2014.

 

N/A

 

N/A

 
Stephen Kusmierczak, 47,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2001; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 


22



Wanger USA 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Joseph C. LaPalm, 45,
Vice President
 

2006

 

Chief Compliance Officer, CWAM since 2005.

 

N/A

 

N/A

 
Charles P. McQuaid, 61,
Vice President
 

1992

 

Portfolio manager and/or analyst, CWAM or its predecessors since 1978; Vice President of Columbia Acorn Trust and Wanger Advisors Trust since April 2014; formerly, President and Chief Investment Officer, CWAM or its predecessors, October 2003 – March 2014, and President of Columbia Acorn Trust and Wanger Advisors Trust, October 2003 – March 2014.

 

N/A

 

N/A

 
Louis J. Mendes III, 50,
Vice President
 

2003

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2001; Vice President, Columbia Acorn Trust since 2003 and Wanger Advisors Trust since 2005.

 

N/A

 

N/A

 
Robert A. Mohn, 53,
Vice President
 

1997

 

Domestic Chief Investment Officer, CWAM since April 2014; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 1997; portfolio manager and/or analyst, CWAM or its predecessors since 1992; formerly, Director of Domestic Research, CWAM or its predecessors, March 2004 – March 2014. Mr. Mohn served as Principal Executive Officer of the Funds during Mr. McQuaid's sabbatical from January 14 through March 31, 2011.

 

N/A

 

N/A

 
Christopher J. Olson, 50,
Vice President
 

2001

 

Portfolio manager and/or analyst, CWAM or its predecessors since January 2001; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2001.

 

N/A

 

N/A

 
Christopher O. Petersen, 44,
Assistant Secretary
 

2010

 

Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously, Vice President and Chief Counsel, January 2010 – December 2014 and Vice President and Group Counsel or Counsel, 2004 – 2010); officer, Columbia Funds and affiliated funds since 2007.

 

N/A

 

N/A

 
Scott R. Plummer, 55,
Assistant Secretary
 

2010

 

Senior Vice President, Assistant General Counsel and Head of Global Asset Management, Ameriprise Financial, Inc. since February 2014 (previously, Senior Vice President and Lead Chief Counsel — Asset Management, January 2012 – February 2014; Vice President and Lead Chief Counsel — Asset Management, 2010 – 2012; and Vice President and Chief Counsel — Asset Management, 2005 – 2010); Senior Vice President and Assistant Secretary, Columbia Management Investment Advisers, LLC since June 2005 (previously, Chief Legal Officer, Columbia Management Investment Advisers, LLC, June 2005 – January 2015); Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006; senior officer of Columbia Funds and affiliated funds 2006 – 2014.

 

N/A

 

N/A

 
Robert P. Scales, 62,
Chief Compliance Officer, Chief Legal Officer, Senior Vice President and General Counsel
 

2004

 

Chief Compliance Officer, Chief Legal Officer, Senior Vice President and General Counsel, Columbia Acorn Trust and Wanger Advisors Trust since 2004.

 

N/A

 

N/A

 
Andreas Waldburg-Wolfegg, 49,
Vice President
 

2011

 

Portfolio manager and/or analyst, CWAM or its predecessors since 2002; Vice President, Columbia Acorn Trust and Wanger Advisors Trust since 2011.

 

N/A

 

N/A

 


23



Wanger USA 2014 Annual Report

Board of Trustees and Management of Wanger Advisors Trust

Name, Position
Held with the
Wanger Advisors Trust
and Age at
December 31, 2014
  Year First
Appointed
or Elected to
a Board in
the Columbia
Funds
Complex*
  Principal Occupation(s) During
the Past Five Years
  Number of
Funds in the
Columbia
Funds Complex
Overseen
  Other
Directorships
in addition to
Wanger Advisors Trust
 
Linda Roth-Wiszowaty, 45,
Secretary
 

2006

 

Secretary, Columbia Acorn Trust and Wanger Advisors Trust since 2014; Assistant Secretary, Columbia Acorn Trust and Wanger Advisors Trust, 2006 – 2014; Business support analyst, CWAM since April 2007.

 

N/A

 

N/A

 

*  Dates prior to April 1992 correspond to the date first elected or appointed as a director or officer of The Acorn Fund Inc., the predecessor to Columbia Acorn Trust.

(1)  In addition to the trustees listed below, the Board appointed Charles R. Phillips as a trustee effective January 1, 2015.

(2)  Mr. Small resigned from the Board effective December 31, 2014.

(3)  Mr. McQuaid is an "interested person" of the Trust and of CWAM, as defined in the 1940 Act, because he is an officer of the Trust and an employee of CWAM.

(4)  As permitted under the Trust's Bylaws, Mr. Wanger serves as a non-voting Trustee Emeritus of the Trust.


24



Wanger USA 2014 Annual Report

Columbia Wanger Funds

Trustees

Laura M. Born
Chair of the Board

Steven N. Kaplan
Vice Chair of the Board

Maureen M. Culhane
Margaret M. Eisen
Thomas M. Goldstein
John C. Heaton
Charles P. McQuaid
David J. Rudis
David B. Small*
Ralph Wanger (Trustee Emeritus)

Officers

P. Zachary Egan
President

Robert A. Chalupnik
Vice President

Michael G. Clarke
Assistant Treasurer

Joseph F. DiMaria
Assistant Treasurer

William J. Doyle
Vice President

David L. Frank
Vice President

Fritz Kaegi
Vice President

John M. Kunka
Treasurer and Principal Financial and
Accounting Officer

Stephen Kusmierczak
Vice President

Joseph C. LaPalm
Vice President

Charles P. McQuaid
Vice President

Louis J. Mendes III
Vice President

Robert A. Mohn
Vice President

Christopher J. Olson
Vice President

Christopher O. Petersen
Assistant Secretary

Scott R. Plummer
Assistant Secretary

Robert P. Scales
Chief Compliance Officer, Chief Legal Officer,
Senior Vice President and
General Counsel

Andreas Waldburg-Wolfegg
Vice President

Linda K. Roth-Wiszowaty
Secretary

Investment Manager

Columbia Wanger Asset Management,LLC
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
1-888-4-WANGER
(1-888-492-6437)

Transfer Agent,
Dividend Disbursing Agent

Columbia Management Investment Services Corp.
P.O.Box 8081
Boston, Massachusetts
02266-8081

Distributor

Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, Massachusetts
02110

Legal Counsel to the Funds

Perkins Coie LLP
Washington, DC

Legal Counsel to the Independent Trustees

Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP
Chicago, Illinois

*  Mr. Small resigned from the Board effective December 31, 2014.

This document contains Global Industry Classification Standard data. The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of MSCI Inc. ("MSCI") and Standard & Poor's Financial Services LLC ("S&P") and is licensed for use by Columbia Wanger Asset Management, LLC ("CWAM"). Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

This report, including the schedules of investments and financial statements, is submitted for the general information of the shareholders of the Wanger Advisors Trust.

A description of the Fund's proxy voting policies and procedures and a copy of the Fund's voting record for the most recent 12-month period ended June 30 are available (i) on our website, columbiamanagement.com, (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 888-492-6437.

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Pubic Reference Room may be obtained by calling 800-SEC-0330. The Fund's complete portfolio holdings are disclosed at www.columbiamanagement.com approximately 30 to 40 days after each month end.




Columbia Wanger Funds

© 2015 Columbia Management Investment Advisers, LLC. All rights reserved.

C-1466 F (2/15) 1120817




 

Item 2. Code of Ethics.

 

(a)         The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.

 

(b)         During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above.

 

(c)          During the period covered by this report, there were no waivers, including any implicit waivers, from a provision of the code of ethics described in 2(a) above that relates to one or more of the items set forth in paragraph (b) of this item’s instructions.

 

Item 3. Audit Committee Financial Expert.

 

The registrant’s Board of Trustees has determined that Thomas Goldstein, a member of the registrant’s Board of Trustees and Audit Committee, qualifies as an audit committee financial expert.  Mr. Goldstein is an independent trustee, as defined in paragraph (a)(2) of this item’s instructions

 

Item 4. Principal Accountant Fees and Services.

 

(a) Audit Fees. Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2014 and December 31, 2013 are approximately as follows:

 

2014

 

2013

 

$

110,900

 

$

104,200

 

 

Audit Fees include amounts related to the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.

 

(b) Audit-Related Fees. Aggregate Audit-Related Fees billed to the registrant by the principal accountant for professional services rendered during the fiscal years ended December 31, 2014 and December 31, 2013 are approximately as follows:

 



 

2014

 

2013

 

$

22,700

 

$

18,200

 

 

Audit-Related Fees include amounts for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported in Audit Fees above.  In both fiscal years 2014 and 2013, Audit-Related Fees consist of agreed-upon procedures performed for other audit-related additional testing.

 

During the fiscal years ended December 31, 2014 and December 31, 2013, there were no Audit-Related Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant.

 

(c) Tax Fees. Aggregate Tax Fees billed by the principal accountant to the registrant for professional services rendered during the fiscal years ended December 31, 2014 and December 31, 2013 are approximately as follows:

 

2014

 

2013

 

$

26,800

 

$

26,000

 

 

Tax Fees incurred in both fiscal years 2014 and 2013 relate to the review of annual tax returns, the review of required shareholder distribution calculations and include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning.

 

During the fiscal years ended December 31, 2014 and December 31, 2013, there were no Tax Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant.

 

(d) All Other Fees. Aggregate All Other Fees billed by the principal accountant to the registrant for professional services rendered during the fiscal years ended December 31, 2014 and December 31, 2013 are as follows:

 

2014

 

2013

 

$

0

 

$

0

 

 

All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above.

 



 

Aggregate All Other Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant during the fiscal years ended December 31, 2014 and December 31, 2013 are approximately as follows:

 

2014

 

2013

 

$

325,000

 

$

135,000

 

 

In both fiscal years 2014 and 2013, All Other Fees primarily consist of professional services rendered for internal control reviews.

 

(e)(1) Audit Committee Pre-Approval Policies and Procedures

 

The policy of the registrant’s Audit Committee is to specifically pre-approve (i) all audit and non-audit (including audit related, tax and all other) services provided by the registrant’s independent auditor to the registrant and individual funds (collectively “Fund Services”) and (ii) all non-audit services provided by the registrant’s independent auditor to the funds’ adviser or a control affiliate of the adviser, that relate directly to the funds’ operations and financial reporting (collectively “Fund-related Adviser Services”).  A “control affiliate” is an entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the funds, and the term “adviser” is deemed to exclude any unaffiliated sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser.

 

If such Fund Services or Fund-related Adviser Services are required during the period between the Audit Committee’s regularly scheduled meetings, the Chairman of the Audit Committee has the authority to pre-approve the service, with reporting to the full Audit Committee at the next regularly scheduled meeting.

 

The Audit Committee will waive pre-approval of Fund Services or Fund-related Adviser Services provided that the requirements under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are met.

 

(e)(2) The percentage of services described in paragraphs (b) through (d) of this Item approved pursuant to the “de minimis” exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X during both fiscal years ended December 31, 2014 and December 31, 2013 was zero.

 

(f) Not applicable.

 

(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is

 



 

subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the fiscal years ended December 31, 2014 and December 31, 2013 are approximately as follows:

 

2014

 

2013

 

$

374,500

 

$

179,200

 

 

(h) The registrant’s Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant’s adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant’s independence.

 

Item 5. Audit Committee of Listed Registrants.

 

Not applicable.

 

Item 6. Investments

 

(a)         The registrant’s “Schedule I — Investments in securities of unaffiliated issuers” (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form N-CSR.

 

(b)         Not applicable

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

 

Not applicable.

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

 

Not applicable.

 

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

 

Not applicable.

 

Item 10. Submission of Matters to a Vote of Security Holders.

 

There were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.

 



 

Item 11. Controls and Procedures.

 

(a)         The registrant’s principal executive officer and principal financial officers, based on their evaluation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing of this report, have concluded that such controls and procedures are adequately designed to ensure that material information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant’s management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

(b)         There was no change in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12. Exhibits.

 

(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH.

 

(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.

 

(a)(3) Not applicable.

 

(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(registrant)

 

Wanger Advisors Trust

 

 

 

 

 

 

 

By (Signature and Title)

 

/s/ P. Zachary Egan

 

 

P. Zachary Egan, President

 

 

 

 

 

 

Date

 

February 19, 2015

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

By (Signature and Title)

 

/s/ P. Zachary Egan

 

 

P. Zachary Egan, President

 

 

 

 

 

 

Date

 

February 19, 2015

 

 

 

 

 

 

 

By (Signature and Title)

 

/s/ John M. Kunka

 

 

John M. Kunka, Treasurer

 

 

 

 

 

 

Date

 

February 19, 2015

 

 


EX-99.CODEETH 2 a15-1023_5ex99dcodeeth.htm EX-99.CODEETH

Exhibit 99.CODEETH

 

COLUMBIA WANGER ASSET MANAGEMENT ADVISED FUNDS

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE

AND SENIOR FINANCIAL OFFICERS

 

I.                       Covered Officers/Purpose of the Code

 

This Code of Ethics (the “Code”) for the investment companies within the Columbia Wanger Asset Management fund complex (collectively the “Funds” and each, a “Fund”) applies the Funds’ Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer (the “Covered Officers”) for the purpose of promoting:

 

·                  honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

·                  full, fair, accurate, timely and understandable disclosure in reports and documents that a Fund files with, or submits to, the Securities and Exchange Commission (“SEC”), and in other public communications made by a Fund;

·                  compliance with applicable laws and governmental rules and regulations;

·                  the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

·                  accountability for adherence to the Code.

 

Each Covered Officer shall adhere to a high standard of business ethics and shall be sensitive to situations that may give rise to actual or apparent conflicts of interest.

 

II.                  Administration of the Code

 

The Code shall be administered by the Columbia Wanger Asset Management Compliance Department.  The Boards of Trustees of the Funds (collectively, the “Board”) shall designate an individual to be primarily responsible for the administration of the Code (the “Code Officer”).  In the absence of the Code Officer, his or her designee shall serve as the Code Officer, but only on a temporary basis.

 

Each Fund has designated a chief legal officer (the “Chief Legal Officer”) for purposes of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder.  The Chief Legal Officer shall assist the Code Officer in administration of this Code.  The Chief Legal Officer is responsible for applying this Code to specific situations in which questions are presented under it (in consultation with Fund counsel, where appropriate) and has the authority to interpret this Code in any particular situation.  However, any waivers sought by

 



 

a Covered Officer must be approved by each Audit Committee of the Funds (collectively, the “Audit Committee”).

 

III.             Managing Conflicts of Interest

 

Overview.  A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his/her service to, a Fund. For example, a conflict of interest would arise if a Covered Officer, or a family member, receives improper personal benefits as a result of the Covered Officer’s position with a Fund.

 

Certain conflicts of interest arise out of the relationships between Covered Officers and a Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (the “Company Act”) and the Investment Advisers Act of 1940 (the “Advisers Act”).  For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Fund because of their status as “affiliated persons” of the Fund.  A Fund’s and its investment adviser’s compliance programs and procedures are designed to prevent, or identify and correct, violations of those provisions.  This Code does not, and is not intended to, repeat or replace those programs and procedures, and such conflicts fall outside of the parameters of this Code.

 

Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between a Fund and its investment adviser, administrator, pricing and bookkeeping agent and/or transfer agent (each, a “Service Provider”) of which the Covered Officers are also officers or employees.  As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for a Fund or for a Service Provider, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Service Provider and a Fund.  The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the Service Provider and is consistent with the performance by the Covered Officers of their duties as officers of a Fund.  In addition, it is recognized by the Board that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.

 

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions of the Company Act and the Advisers Act.  The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive.  The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of a Fund.

 



 

Each Covered Officer must:

 

·                  not use personal influence or personal relationships to influence investment decisions or financial reporting by a Fund whereby the Covered Officer or a family member would benefit personally to the detriment of a Fund;

·                  not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer or a family member rather than the benefit of the Fund.

 

There are some conflict of interest situations that must be approved by the Code Officer, after consultation with the Chief Legal Officer.  Those situations include, but are not limited to,:

 

·                  service as director on the board of any public or private company;

·                  the receipt of any gifts in excess of $100 in the aggregate from a third party that does or seeks to do business with the Funds during any 12-month period;

·                  the receipt of any entertainment from any company with which a Fund has current or prospective business dealings, unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety;

·                  any material ownership interest in, or any consulting or employment relationship with, any Fund service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof;

·                  a direct or indirect material financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

 

IV.              Disclosure and Compliance

 

Each Covered Officer shall:

 

·                  be familiar with the disclosure requirements generally applicable to the Funds;

·                  not knowingly misrepresent, or cause others to misrepresent, facts about any Fund to others, whether within or outside the Fund, including to the Fund’s trustees and auditors, and to governmental regulators and self-regulatory organizations;

·                  to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable

 



 

disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and

·                  promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

 

V.                   Reporting and Accountability

 

Each Covered Officer must:

 

·                  upon adoption of the Code (or after becoming a Covered Officer), affirm in writing to the Board that he/she has received, read and understands the Code;

·                  annually affirm to the Board compliance with the requirements of the Code;

·                  not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith;

·                  notify the Chief Legal Officer and the Code Officer promptly if he/she knows of any violation of this Code; and

·                  respond to the trustee and officer questionnaires circulated periodically in connection with the preparation of disclosure documents for the Funds.

 

The Code Officer shall maintain records of all activities related to this Code.

 

The Funds will follow the procedures set forth below in investigating and enforcing this Code:

 

·                  The Chief Legal Officer and/or the Code Officer will take all appropriate action to investigate any potential violation reported to him/her;

·                  If, after such investigation, the Chief Legal Officer and the Code Officer believes that no violation has occurred, the Code Officer will notify the person(s) reporting the potential violation, and no further action is required;

·                  Any matter that the Chief Legal Officer and/or the Code Officer believes is a violation will be reported to the Audit Committee;

·                  If the Audit Committee concurs that a violation has occurred, it will inform and make a recommendation to the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to the Chief Executive Officer of Columbia Management Investment Advisers, LLC; or a recommendation to sanction or dismiss the Covered Officer;

·                  The Audit Committee will be responsible for granting waivers in its sole discretion;

 



 

·                  Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

 

The Chief Legal Officer shall:

 

·                  report to the Audit Committee quarterly any approvals provided in accordance with Section II of this Code; and

·                  report to the Audit Committee quarterly any violations of, or material issues arising under, this Code.

 

VI.              Other Policies and Procedures

 

This Code shall be the sole code of ethics adopted by the Funds for the purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder.  Insofar as other policies or procedures of the Funds or the Funds’ Service Providers govern or purport to govern the behavior or activities (including, but not limited to, personal trading activities) of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code.  The Funds’ and their investment advisers’ and principal underwriter’s codes of ethics under Rule 17j-1 under the Company Act and any policies and procedures of the Service Providers are separate requirements applicable to the Covered Officers and are not part of this Code.

 

VII.         Amendments

 

All material amendments to this Code must be approved or ratified by the Board, including a majority of independent directors.

 

VIII.    Confidentiality

 

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly.  Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Board, the Covered Officers, the Chief Legal Officer, outside audit firms and legal counsel to the Funds, and senior management of Columbia Management Investment Advisers, LLC.

 

IX.             Internal Use

 

The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion.

 



 

COLUMBIA WANGER ASSET MANAGEMENT ADVISED FUNDS

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE

AND SENIOR FINANCIAL OFFICERS (“CODE”) – AFFIRMATION

 

I affirm that:

 

1.              Upon the adoption of the Code, I have received, read and understand the Code and have complied with the Code since its adoption on September 23, 2003.

 

 

 

 

 

 

 

 

Signature

 

Date

 

 


EX-99.CERT 3 a15-1023_5ex99dcert.htm EX-99.CERT

Exhibit 99.CERT

 

I, P. Zachary Egan, certify that:

 

1.                                      I have reviewed this report on Form N-CSR of Wanger Advisors Trust;

 

2.                                      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.                                      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.                                      The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

(a)                                 designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)                                 designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)                                  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

(d)                                 disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.                                      The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)                                 all significant deficiencies and material weaknesses  in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

(b)                                 any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date:

February 19, 2015

 

/s/ P. Zachary Egan

 

 

 

P. Zachary Egan, President

 



 

I, John M. Kunka, certify that:

 

1.                                      I have reviewed this report on Form N-CSR of Wanger Advisors Trust;

 

2.                                      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.                                      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.                                      The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

(a)                                 designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)                                 designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)                                  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

(d)                                 disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.                                      The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)                                 all significant deficiencies and material weaknesses  in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

(b)                                 any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date:

February 19, 2015

 

/s/ John M. Kunka

 

 

 

John M. Kunka, Treasurer

 


EX-99.906CERT 4 a15-1023_5ex99d906cert.htm EX-99.906CERT

Exhibit 99.906CERT

 

CERTIFICATION PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Certified Shareholder Report of Wanger Advisors Trust (the “Trust”) on Form N-CSR for the period ending December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), the undersigned hereby certifies that, to his knowledge:

 

1.              The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.              The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

 

 

Date: February 19, 2015

/s/ P. Zachary Egan

 

P. Zachary Egan, President

 

 

 

 

Date: February 19, 2015

/s/ John M. Kunka

 

John M. Kunka, Treasurer

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the “Commission”) or its staff upon request.

 

This certification is being furnished to the Commission solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Form N-CSR with the Commission.

 


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