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 811-8748
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Wanger Advisors Trust
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Russell L. Kane, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-426-3363
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Date of fiscal year end: December 31, 2003
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Date of reporting period: June 30, 2003
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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. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
2003 Semiannual Report
Wanger U.S. Smaller Companies
Wanger International Small Cap
Wanger Twenty
Wanger Foreign Forty
Logo: Squirrel
Wanger Advisors Funds
managed by Liberty Wanger Asset Management, L.P.
Logo: Squirrel
WANGER ADVISORS FUNDS
2003 SEMIANNUAL REPORT
CONTENTS
2 Energy Resources In 2030
5 A Letter from Chuck McQuaid
6 Performance Review
Wanger U.S. Smaller
Companies
8 Performance Review
Wanger International
Small Cap
10 Performance Review
Wanger Twenty
12 Performance Review
Wanger Foreign Forty
14 Statement of Investments
Wanger U.S. Smaller
Companies
20 Statement of Investments
Wanger International
Small Cap
25 Portfolio Diversification
Wanger International
Small Cap
26 Statement of Investments
Wanger Twenty
28 Statement of Investments
Wanger Foreign Forty
30 Portfolio Diversification
Wanger Foreign Forty
32 Statements of Assets
and Liabilities
33 Statements of Operations
34 Statements of Changes in
Net Assets
36 Financial Highlights
Wanger U.S. Smaller
Companies
37 Financial Highlights
Wanger International
Small Cap
38 Financial Highlights
Wanger Twenty
39 Financial Highlights
Wanger Foreign Forty
40 Notes to Financial Statements
LIBERTY WANGER ASSET
MANAGEMENT, L.P. ("LIBERTY WAM")
IS ONE OF THE LEADING GLOBAL SMALL-
CAP EQUITY MANAGERS IN THE U.S.
WITH MORE THAN 30 YEARS OF SMALL-
CAP INVESTMENT EXPERIENCE. LIBERTY
WAM MANAGES MORE THAN $11.8
BILLION IN EQUITIES AND IS THE
INVESTMENT ADVISER TO WANGER
U.S. SMALLER COMPANIES, WANGER
INTERNATIONAL SMALL CAP, WANGER
TWENTY, WANGER FOREIGN FORTY AND
THE LIBERTY ACORN FAMILY OF FUNDS.
FOR MORE COMPLETE INFORMATION
ABOUT OUR FUNDS, INCLUDING THE
LIBERTY ACORN FUNDS, OUR FEES,
RISKS ASSOCIATED WITH INVESTING, OR
EXPENSES, CALL 1-800-4-WANGER
FOR A PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
THIS REPORT IS NOT AN OFFER OF THE
SHARES OF THE LIBERTY ACORN
FUND FAMILY.
Wanger Advisors Trust 2003 Semiannual Report
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Logo: Squirrel
ENERGY RESOURCES IN 2030
"I sell here, Sir, what all the world desires to have - Power."
This epigram was told to James Boswell (yes, Samuel Johnson's Boswell) by
Matthew Boulton, British inventor and partner in the steam engine business with
James Watt. Boulton's steam engine fired up the industrial revolution. The last
200 years has seen vast increases in energy use and dramatic changes in every
category of power.
John Maynard Kenyes wrote an essay in 1930 based on a 100-year forecast of the
future. We analyzed that forecast in the 2002 Annual Report. If we look at 2030
today, it is "only" a 27-year outlook so it might be practical to pick up on
trends that could have investment significance. In this report, we consider the
prospects for energy in 2030.
Today, energy sources are mainly fossil fuels. We get three-eighths of our
energy from petroleum, one-fourth from natural gas, one-fourth coal, and
one-eighth from all other sources (hydro, nuclear, and renewables such as solar
and wind power). All of these sources are useful, and each has problems. For
instance, petroleum, natural gas, and coal often have sulphur content that has
to be removed before the fuel can be used. All three fuels produce carbon
dioxide, a greenhouse gas believed to cause global warming. Hydro sites are
rare, and spoil the ecology in a river basin. Nuclear power is in decline due to
popular hostility. Solar and wind power only work intermittently. We must expand
the 1% share of solar and wind power, but it is hard to project more than 8% of
the total energy supply coming from renewables by 2030.
Energy sources are always in the wrong place, so energy has to be transported to
where we want to use it. Electricity, for instance, is not an energy source
(there are no electric mines) but is an excellent way to get coal or hydro
energy transported to our houses. Fertilizer can be thought of as a way to
transport energy (sourced from natural gas) delivered to farms. There is a lot
of excitement today about using hydrogen to run fuel cells for automobiles and
other uses. There are no hydrogen mines either, so hydrogen is an energy
transport system rather than an energy source.
President Bush spent years in the oil industry, and I knew Secretary of Commerce
Don Evans when he ran the Tom Brown oil company for 16 years. Why are these
oilmen pushing hydrogen as a vehicle fuel? After all, gasoline is a great
vehicle fuel, with high energy per cubic foot of gas tank, easily handled (you
pump your own gas very nicely), and the infrastructure of pipelines, refineries,
and filling stations is in place. It will cost hundreds of billions of dollars
to switch to hydrogen fuel.
We are many years away from having hydrogen-powered fuel cells as automobile
power. Fuel cells are still way too costly to be practical. Lots of research and
development money and time will be needed to make fuel cell cars as cheap and
reliable as the gas buggies we have now. Hydrogen is very hard to handle,
because it is the smallest molecule in the universe. Hydrogen will leak through
very small holes in pipes or tanks; leaks obviously waste fuel and create fire
hazards. Storing hydrogen in a car means keeping it under very high pressure in
a tank made largely out of carbon fiber. That kind of tank is expensive and
subject to sudden rupture that would blow up the car. There are other
alternatives for hydrogen storage (we own Millennium Cell1, a company that has a
proprietary system for transporting hydrogen as sodium borohydride, a solid
fuel) but these alternatives are not cost-effective at the present time.
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Wanger Advisors Trust 2003 Semiannual Report
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We see many stories claiming that hydrogen is a good fuel because it produces
only water as a combustion product, and no carbon dioxide, a bad greenhouse gas.
The authors of these stories, however, tend to skip over the fact that hydrogen,
as explained above, is only an energy transport mechanism, not an energy source.
Coal, oil, or gas would be burned to make the hydrogen, creating carbon dioxide
at the hydrogen refinery. The only large-scale alternative to making hydrogen
without fossil fuels would be to build more nuclear plants, and no one wants to
go down that road at this time. Alternatives such as solar and wind aren't
expected to be of sufficient scale to run the vehicle fuel system by 2030. What
problem does the government foresee that creates a need for a whole new system
for fuel refining and delivery?
I think that the administration wants hydrogen fuel-cell cars to be common by
2030 not to reduce carbon dioxide but for another reason; we won't have enough
gasoline. By our target forecast date, 2030, the world petroleum industry will
not be completely out of oil, but production levels will be dropping each year.
The demand for oil, if unconstrained, is going to rise every year. Increased
demand is expected to be slower in the United States, Europe and Japan (perhaps
as low as 0.7% per year vs. 1.2% per year in the 1990s), but the rest of the
world will want to use more oil at a growth rate of at least 2%. Think about 800
million Chinese and Indians entering the middle class and desiring cars and air
conditioners. The demand for oil will be constrained, either by government
rationing or by very high price.
The American geologist King Hubbert did studies in the 1950s showing that U.S.
oil production would peak around 1970, and it did. The same math tells us that
world oil production will peak too. Various experts pick different years; a few
have guessed it will happen before 2010 but most energy experts think this is
too pessimistic. The Hubbert's Peak advocates include lots of academics,
ecologists, and bureaucrats, but they aren't the only ones who agree with his
predictions. I have talked to experienced financial analysts who have followed
the oil and gas industry for decades, and they believe that an oil production
peak is going to occur before 2030.
Petroleum supplies will be augmented by other sources of liquid hydrocarbons.
Natural gas liquids are important, and high-cost liquids (deep ocean floor oil,
tar sands) are another. Including these, total available oil ever on the planet
was about 2,500 to 3,000 billion barrels. If the total is around 2,700, the oil
industry divides neatly; 900 billion barrels produced in all the years up to
now, 900 billion barrels to be produced in the next 30 years, and 900 billion
for all the future after that. By 2030, oil production will be no higher than it
is today, despite the many more people who would like to use it. By 2050, oil
will be very scarce, and much more valuable as a chemical raw material than as a
fuel.
How about natural gas? There is a lot of gas in the world, but natural gas
production has already gone into decline in the United States and Canada. We
will start importing much bigger quantities of liquified natural gas, a lot from
Russia. We need more gas, but world natural gas production is also likely to
peak by 2030.
Can we discover enough new oil to extend the peak production year beyond 2020?
Most experts think not. Oil exploration has been active the last few years, but
we are using up 28 billion barrels per year and only finding 10 billion.
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Wanger Advisors Trust 2003 Semiannual Report
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CONSEQUENCES
After 2010, the sources of oil are likely to shift. Non-OPEC production has
already peaked (USA, North Sea, Indonesia) or will soon. Even Russian oil, with
all that prospective land in Siberia, appears to have peaked due to very bad
field management during the Soviet era. The swing producers (that should be able
to expand production in the 2010-2020 decade) are Saudi Arabia, Iraq, Iran,
Kuwait, and United Arab Emirates. Whoever controls production from those five
Persian Gulf countries will have enormous economic power. (This has nothing to
do with the conflict in Iraq.)
The first oil reserves to be exploited are those with shallow fields that flow
to the surface easily. As these fields are used up, we have to spend more money
to develop deeper or less productive deposits. In other words, more capital is
needed per barrel. Oil service companies will do well as agents to build
capital-intensive production systems, such as deep-sea production.
We will make fuels out of tar sands in Canada and Venezuela. One can make
gasoline out of coal or oil shale - at a hefty cost. All of these schemes to
make oil from low-grade sources are much more like the mining business than the
oil business.
The way civilized societies live has depended on the ever-increasing use of
Power, in Boulton's sense. Changing the way we live is going to be a challenge.
Houses being built now will still be in use in 2030. Airliners being built now
will still be in the fleet in 2030. Will soaring energy prices make these houses
and planes obsolete in the 2030s? Our fastest-growing cities, such as Phoenix
and Las Vegas, are being built in the desert, requiring massive use of
automobiles, airlines, and air conditioning to be livable. If gasoline becomes
very expensive and almost unattainable, we have a lot of changes to make before
the world of 2030. Can we maintain a high-tech society with economic growth but
that uses less energy?
These potential crises are still 30 years away but our children and
grandchildren will live in that world. Let's hope a new age industrial
revolution emerges.
Photo of: RALPH WANGER
RALPH WANGER
Chief Investment Officer,
Liberty Wanger Asset Management, L.P.
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1 As of June 30, 2003, Millennium Cell was 0.02% of assets in Liberty Acorn
Fund, a retail fund sold through financial advisors. Because the funds are
actively managed, fund holdings will vary with changes in portfolio
investments.
The opinions expressed are those of the contributor and are subject to change.
Since economic and market conditions change frequently, there can be no
assurance that the trends described here will continue or that the forecasts
will come to pass.
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Wanger Advisors Trust 2003 Semiannual Report
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FROM THE DESK OF CHUCK MCQUAID
Dear Shareholders,
I look forward to assuming the role of chief investment officer of Liberty
Wanger Asset Management, L.P., when Ralph Wanger steps down on September 30,
2003.
My association with Ralph dates back to 1978. I remember reading one of Ralph's
early shareholder reports, which featured a "vice vs. virtue" portfolio
comparison. At that point I knew I was not working for an ordinary money manager
and subsequently realized I had hitched my wagon to a star.
Be assured that as I take on this new responsibility not much will change. I'm
in the fortunate position of being named head coach of an exceptional team with
a winning record. Ralph Wanger created Liberty Wanger Asset Management's
investment process more than three decades ago and it's worked time and again.
Over the last 33 years, we've seen other highly rated, small-cap funds come and
go. What sets us apart and has allowed us to succeed where others have failed is
our team-oriented investment process. We don't just have one or two analysts or
managers looking for winning stocks in a hot industry. That method may bring in
assets for a while but may be doomed to fail when the market inevitably shifts.
Instead, we have a team of analysts, each responsible for knowing the ins and
outs of specific industries or international regions. Our senior analysts in
effect run sub portfolios within their areas of expertise and have the authority
to buy and sell stocks within our guidelines. Portfolio managers control
industry, region and cash allocations and monitor all trades to confirm they are
in line with our process and strategy.
In my role as chief investment officer, I will become directly responsible for
our international investment team. Leah Zell steps down from this position at
the end of September. I became more involved with the international management
team at the beginning of the year as part of our succession planning. I spent
considerable time studying the international stocks we hold across our
international products. I liked what I found - stocks in growing, smaller
companies that we can hold for a while. While we wonbe altering our approach to
investing in international markets, we have already begun to fine-tune our
research on earnings drivers for foreign stocks. Our nine-person international
investment team works together to put the best stock ideas into our portfolios.
Each of our international analysts speak several languages and has a first-hand
understanding of the cultural, political and economic issues that color the
diverse, international investment universe.
I would like to thank you for the confidence you have shown in Liberty Wanger
Asset Management and assure you that, thanks to Ralph's genius and the firm's
strong leadership, we will continue to operate using an investment process that
has been successful over the long-term.
Photo of: CHARLES P. MCQUAID
CHARLES P. MCQUAID
Chief Investment Officer,
Liberty Wanger Asset Management, L.P.,
effective October 1, 2003
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Wanger Advisors Trust 2003 Semiannual Report
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Logo: Squirrel
PERFORMANCE REVIEW WANGER U.S. SMALLER COMPANIES
Wanger U.S. Smaller Companies was up 16.75% for the semiannual period. This
compares to a 17.88% six-month return for the Russell 2000.
Western Wireless was the Fund's top-performer for the six months. Up over 117%,
this rural cellular service provider is adding new subscribers at a fast pace
and is operating with positive free cash flow, a rarity in the cellular
business. Technology winners included software companies Micros Systems and
Kronos, and Integrated Circuit Systems, a manufacturer of silicon timing devices
used in computers. In our current economic environment, 10% revenue growth for a
technology stock is considered to be very strong and Kronos and Integrated
Circuit Systems are both growing at better than a 10% rate.
Navigant Consulting, an independent litigation and management-consulting firm,
also was strong over the period, up 101%. Navigant benefited from an increase in
the consulting services needed by companies facing more stringent regulatory
requirements, and from accounting and auditing firms being forced to exit the
consulting business. Boosted by the strong performance of companies expected to
benefit from economic growth, loan provider World Acceptance increased 114%
during the six-month period.
Women's fashion retailer Christopher & Banks also provided strong year-to-date
returns. Up 78%, the market responded favorably to continued strong sales within
this growing franchise.
Despite mixed signals on the economy, the perception that a recovery is imminent
fueled a rally late in the period of more speculative names. We are pleased that
we posted competitive returns vs. the benchmark without having a portfolio
loaded with fundamentally questionable stocks. Our stocks have real earnings or
fill a niche that we believe is primed for future success. The majority of the
companies in Wanger U.S. Smaller Companies' portfolio have been generating real
value even during the downturn of the last three years.
Small-cap stocks are often more volatile and less liquid than the stocks of
larger companies. Small companies may have a shorter history of operations than
larger companies and may have a less diversified product line, making them more
susceptible to market pressure.
As of 6/30/03, the Fund's positions in the holdings mentioned were: Western
Wireless, 2.1%; Micros Systems, 2.5%; Kronos, 3.8%; Integrated Circuit Systems,
0.7%; Navigant Consulting, 1.2%; World Acceptance, 0.7%; Christopher & Banks,
1.1%.
Photo of: ROBERT A. MOHN
ROBERT A. MOHN
Portfolio Manager
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Wanger Advisors Trust 2003 Semiannual Report
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VALUE OF A $10,000 INVESTMENT IN
WANGER U.S. SMALLER COMPANIES*
TOTAL RETURN FOR EACH PERIOD
MAY 3, 1995 THROUGH JUNE 30, 2003
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------
1 Year 3 Years 5 Years Life of fund
3.35% 5.17% 3.22% 14.28%
LINE CHART:
WANGER U.S.
SMALLER COMPANIES: Russell 2000:
5/3/95 $ 10000 $ 10000
9870 10179.4
6/30/95 10770 10707.5
11560 11324.3
11940 11558.6
12060 11765
11380 11238.8
11640 11711
11600 12019.9
11950 12007.1
12580 12381.3
13296.8 12633.3
14689.6 13308.8
15471.1 13833.3
6/30/96 15350.9 13265.3
14529.2 12106.6
15090.4 12809.4
15791.8 13310.1
15902 13105
16423.1 13645
17004.2 14002.6
17475.2 14282.4
16994.2 13936.1
16365.5 13278.5
16355.3 13315.5
17985.7 14796.9
6/30/97 19093.1 15431
20200.6 16149.1
20703 16518.6
22394.9 17727.7
21995 16948.9
21892.5 16839.2
22005.3 17134
21554.1 16863.6
23379.3 18110.6
24865.1 18857.5
25803.2 18961.8
24886.7 17940.6
6/30/98 25361.1 17978.3
23959.3 16522.9
20357.9 13314.5
20875.5 14356.5
21597.9 14942
22600.7 15724.8
23916.2 16697.8
23452.6 16919.8
22223.3 15549.3
22387.9 15792.1
24320.6 17207.2
25004.8 17458.6
6/30/99 26374.5 18248
27216 17747.3
25677.3 17090.5
25388.8 17094.2
26939.5 17163.5
28201.8 18188.3
29908.8 20247.2
28911 19922
30029 23211.9
29076.9 21681.5
26163.7 20376.8
24858.3 19189.2
6/30/00 25545.4 20862
25174.3 20190.8
26672.2 21731.4
26740.9 21092.7
26768.4 20151.1
25146.9 18082.6
27469.2 19635.5
27936.4 20657.8
27469.2 19302.4
26306.2 18358.2
29276.5 19794.3
30472.8 20280.9
6/30/01 31669.2 20981.2
31710.5 19845.5
30307.8 19204.5
26567.5 16619.3
27213.8 17591.9
28987.7 18953.8
30596.6 20123.7
30527.8 19914.4
29634 19368.6
32219.2 20925.3
32246.8 21116
30651.6 20178.8
6/30/02 28753.9 19177.6
25027.3 16281.2
24958.6 16239.7
23225.9 15073.5
24546 15556.8
26498.7 16945.1
25453.6 16001.6
24958.6 15558.8
24601 15088.6
24669.8 15282.9
26815 16732
29125.2 18527.6
6/30/03 29716.5 18862.9
This graph compares the results of $10,000 invested in Wanger U.S. Smaller
Companies on May 3,1995 (the date the Fund began operations) through June 30,
2003 with the Russell 2000. Dividends and capital gains are reinvested. The
performance data quoted is past performance and does not guarantee future
results. The investment return and principal value of an investment will
fluctuate so that investors' shares, when redeemed, may be worth more or less
than their original cost. DUE TO ONGOING MARKET VOLATILITY, PERFORMANCE IS
SUBJECT TO SUBSTANTIAL SHORT-TERM FLUCTUATIONS. Wanger U.S. Smaller Companies is
a diversified fund that invests primarily in the stocks of small- and
medium-size U.S. companies. Smaller company stocks are often more volatile or
less liquid than the stocks of larger companies.
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE
DIFFERENT THAN THAT SHOWN.
=========================================================
RESULTS AS OF JUNE 30, 2003
2nd quarter Year to date 1 year
WANGER U.S.
SMALLER COMPANIES 20.46% 16.75% 3.35%
Russell 2000 23.42 17.88 -1.64
S&P MidCap 400 17.63 12.41 -0.71
S&P 500 15.39 11.76 0.25
N.A.V. AS OF 06/30/03: $21.61
*Wanger U.S. Small Cap was renamed Wanger U.S. Smaller Companies on May 1, 2002.
The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then
eliminating the largest 1,000, leaving a mainly small company index. The S&P
MidCap 400 is a market value-weighted index of 400 U.S. stocks that are in the
next tier down from the S&P 500. The S&P 500 is a broad market-weighted average
of blue-chip U.S. companies. All indexes are unmanaged and include reinvested
dividends. It is not possible to invest directly in an index.
Performance numbers reflect all Fund expenses but do not include any insurance
charge imposed by your insurance company's separate accounts. If performance
included the effect of these additional charges, it would be lower.
Portfolio holdings will vary in the future.
=========================================================
TOP 5 INDUSTRIES
As a % of net assets, as of 06/30/03
Information 35.0%
Health Care 15.9
Consumer Goods/Services 15.3
Finance 11.6
Energy/Minerals 6.0
=========================================================
TOP 10 HOLDINGS
As a % of net assets, as of 06/30/03
1. ITT Educational
Services 4.8%
Post-secondary Degree
Programs
2. Lincare Holdings 4.6%
Home Health Care Services
3. First Health Group 4.2%
PPO Network
4. Kronos 3.8%
Labor Management Solutions
5. Commonwealth
Telephone 2.7%
Rural Phone Franchises & CLEC
6. Micros Systems 2.5%
Information Systems for
Restaurants & Hotels
7. Western Wireless 2.1%
Rural Cellular
Phone Services
8. JDA Software Group 2.0%
Applications/Software &
Services for Retailers
9. Steven Madden 1.8%
Wholesaler/Retailer of
Fashion Footwear
10. Equitable Resources 1.8%
Natural Gas Utility
& Producer
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Wanger Advisors Trust 2003 Semiannual Report
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Logo: Squirrel
PERFORMANCE REVIEW WANGER INTERNATIONAL SMALL CAP
Wanger International Small Cap soared 22.35% in the three months from March
through June and, year-to-date, is up 14.30%. These numbers compare to a 23.19%
quarterly return and a 17.80% year-to-date gain for the Citigroup EMI Global
ex-U.S. Index. So far in 2003, international small caps have outperformed
international large-cap stocks. The large-cap oriented MSCI EAFE Index was up
19.27% for the quarter and just 9.47% for the six months.
Several trends have converged to drive stock prices higher globally in 2003. The
quick end to the war in Iraq, accompanied by a drop in oil prices, lowered the
perceived risk in owning equities. Simultaneously, the Federal Reserve Bank and
central banks elsewhere dropped interest rates to record levels in order to pump
liquidity into the world financial system. With equities deeply oversold by
mid-March, the strong stimulus sparked a powerful rally in share prices from
April through the end of June.
At the company level, we have not seen a convincing improvement in general
fundamentals as of yet but sentiment has clearly turned more positive. Several
of our holdings, such as Sky City Entertainment in New Zealand, have announced
large share buybacks. At the end of June, Perbio Science of Sweden received a
takeover offer from U.S.-based Fisher Scientific. After the period end, another
of our names, JCG Holdings in Hong Kong, announced it is in talks to go private.
This flurry of corporate activity is in sharp contrast to the subdued
environment of the last three years.
Our core strategy of owning companies with solid business models at reasonable
prices remains in place. The appreciation of the euro against the dollar has
tilted our geographic weighting temporarily toward Europe, but we are finding
what we believe to be many good opportunities in Asia to redress the balance.
Favored Asian themes include domestic demand-driven stories. In Europe, we are
overweighted in companies that have the potential to benefit from regulatory
change, such as Rhoen-Klinikum (beneficiary of German health care privatization)
and Tomra Systems of Norway (developer of reverse vending machines for
returnable beverage containers).
Investments in foreign securities have special risks, including political or
economic instability, higher costs, different regulations, accounting standards,
trading practices and levels of information, and currency exchange rate
fluctuations. Small-cap stocks are often more volatile and less liquid than the
stocks of larger companies. Small companies may have a shorter history of
operations than larger companies and may have a less diversified product line,
making them more susceptible to market pressure.
As of 6/30/03 the Fund's positions in the holdings mentioned were: Sky City
Entertainment, 0.6%; Perbio Science, 1.1%; Fisher Scientific, 0.0%; JCG
Holdings, 0.5%; Rhoen-Klinikum, 0.8%; Tomra Systems, 0.4%
Photos of: TODD M. NARTER AND CHRISTOPHER J. OLSON
TODD M. NARTER
Co-Portfolio Manager
CHRISTOPHER J. OLSON
Co-Portfolio Manager
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Wanger Advisors Trust 2003 Semiannual Report
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VALUE OF A $10,000 INVESTMENT IN
WANGER INTERNATIONAL SMALL CAP
TOTAL RETURN FOR EACH PERIOD
MAY 3, 1995 THROUGH JUNE 30, 2003
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------
1 Year 3 Years 5 Years Life of fund
-6.72% -16.72% 3.78% 12.30%
LINE CHART:
WANGER INTERNATIONAL Citigroup EMI
SMALL CAP: Global ex-U.S.:
5/3/95 $ 10000 $ 10000
10790 10000
6/30/95 10970 9889.52
11910 10443.6
12290 10196.5
12910 10265.1
12700 9958.24
12660 10044
13450 10421.5
14260 10667.4
15170 10792
15499.1 11019.5
16251 11587.8
16782.4 11497
6/30/96 17183.4 11491.6
16722.2 11045.5
17023 11155.1
17023 11217.3
17183.4 11145.9
17704.7 11338.3
17754.8 11051.5
18246.1 10892.4
18687.2 11111.1
18357.5 10973
18203.6 10824
18983.4 11462.3
6/30/97 19568.3 11753.3
19558 11639.9
18460.1 11130.5
19363.1 11308.5
18388.3 10760.2
17967.5 10261.7
17495.5 10048.2
18142 10363.6
19588.8 11147.3
21306.5 11686.3
21866.7 11780.8
21887.4 11880.9
6/30/98 21410.2 11462.2
21099 11389.7
17904.1 9892.94
17437.3 9673.65
18101.2 10340.2
19605.3 10696.5
20352.2 10923.1
20694.5 10847
20570 10643.8
21564.1 11104.9
23399.8 11782.2
23726.9 11492.6
6/30/99 25404.3 11939.7
27556.5 12324.9
28928 12541.8
29265.6 12484.8
30088.5 12370.9
36175.8 12815.9
46071.7 13688.2
46799.6 13427.3
56294.6 13943.9
54788.8 14005.8
46480.7 13086.1
42600.5 12812.5
6/30/00 44628 13590.7
43055 13140.4
45583.5 13516.6
41179 12822.6
36797.7 12046.8
33453.5 11515.9
33243.8 11966
34910.1 12188.8
32556.3 11715.2
29861.7 10807.9
30388.6 11515.3
31170.4 11492.1
6/30/01 29742.8 11102.3
28026.2 10776.7
27907.2 10747.1
23692.2 9347.86
24780 9727.68
25748.7 10127.6
26173.6 10211
25714.8 10026.1
25357.8 10193.9
27006.4 10858.1
28179.2 11084.2
28485.1 11438.9
6/30/02 27635.3 10992.8
24729 10053.2
23743.2 9992.95
21142.9 9070.53
21414.8 9275.51
22332.6 9622.17
22553.5 9507.62
22298.6 9347.86
21533.8 9181.06
21069.1 9091.63
22979.8 9948.74
24941.8 10796.8
6/30/03 25777.7 11199.7
This graph compares the results of $10,000 invested in Wanger International
Small Cap on May 3,1995 (the date the Fund began operations) through June 30,
2003 with the Citigroup EMIGlobal ex US. Dividends and capital gains are
reinvested. The performance data quoted is past performance and does not
guarantee future results. The investment return and principal value of an
investment will fluctuate so that investors' shares, when redeemed, may be worth
more or less than their original cost. DUE TO ONGOING MARKET VOLATILITY,
PERFORMANCE IS SUBJECT TO SUBSTANTIAL SHORT-TERM FLUCTUATIONS. Wanger
International Small Cap is a diversified fund that invests primarily in the
stocks of non-U.S. companies with capitalizations of less than $2 billion.
Smaller company stocks are often more volatile or less liquid than the stocks of
larger companies. Investments in foreign securities have special risks,
including political or economic instability, higher costs, different
regulations, accounting standards, trading practices and levels of information
and currency exchange rate fluctuations.
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE
DIFFERENT THAN THAT SHOWN.
==============================================================
RESULTS AS OF JUNE 30, 2003
2nd quarter Year to date 1 year
WANGER INTERNATIONAL
SMALL CAP 22.35% 14.30% -6.72%
Citigroup EMI Global ex-U.S. 23.19 17.80 1.88
MSCI EAFE 19.27 9.47 -6.46
Lipper International
Small Cap Funds Index 23.77 18.39 1.94
N.A.V. AS OF 06/30/03: $15.11
The Citigroup EMI Global ex-U.S. is an index of the bottom 20% of
institutionally investable capital of developed and emerging countries, selected
by the index sponsor, outside the United States. MSCI EAFE is Morgan Stanley's
Europe, Australasia and Far East Index, an index of companies throughout the
world in proportion to world stock market capitalization, excluding the U.S. and
Canada. Lipper Indexes include the largest funds tracked by Lipper, Inc. in the
named category. The Lipper International Small Cap Funds Index is made up of the
10 largest non-U.S. funds investing in small-cap companies. All indexes are
unmanaged and returns include reinvested dividends. It is not possible to invest
directly in an index.
Performance numbers reflect all Fund expenses but do not include any insurance
charge imposed by your insurance company's separate accounts. If performance
included the effect of these additional charges, it would be lower.
Portfolio holdings will vary in the future.
==============================================================
TOP 5 COUNTRIES
As a % of net assets, as of 06/30/03
United Kingdom 15.2%
Japan 8.9
Canada 7.3
Germany 7.1
Hong Kong 6.6
==============================================================
TOP 10 HOLDINGS
As a % of net assets, as of 06/30/03
1. Amplifon 1.8%
Hearing Aid Retailer - Italy
2. AltaGas Services 1.6%
Natural Gas Gatherer &
Processor - Canada
3. Bacou-Dalloz 1.6%
Safety Equipment - France
4. Central European
Distribution 1.4%
Spirits & Wine
Distribution - Poland
5. Anglo Irish Bank 1.4%
Corporate Lending &
Private Banking - Ireland
6. Zapf Creation 1.3%
Toy Manufacturer - Germany
7. Patheon 1.3%
Pharmaceuticals - Canada
8. Hit Entertainment 1.3%
Children's Television
Shows - United Kingdom
9. Arnotts 1.3%
Department Store - Ireland
10. Hexagon 1.2%
Diversified
Engineering - Sweden
9
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
Logo: Squirrel
PERFORMANCE REVIEW WANGER TWENTY
Wanger Twenty gained 16.63% for the six-month period, outperforming the 12.41%
return for the S&P MidCap 400 Index and the S&P 500's 11.76% gain.
The best performing stock for the six months was Guidant, up 41.9%. We purchased
Guidant late last year to replace Boston Scientific, which we sold at the
beginning of this reporting period. Like Boston Scientific, Guidant is a major
player in the cardiac medical device industry. We believe Guidant offers a solid
core business at a discounted valuation. Synopsys, which makes software for the
design of semiconductor chips, gained 34.3%, boosted by strong earnings and a
positive future outlook. We believe both stocks have the potential to increase
further so we are holding the Fund's positions.
On the losing side, fashion retailer Jones Apparel fell 22.2% following the
announcement of the potential loss of an important licensee, Ralph Lauren. We
opted to sell the Fund's position. Long-time holding Harley-Davidson was also
off in the first half of 2003. The stock declined 13.7% in Wanger Twenty due, in
part, to disappointing sales of its new V-Rod. We took advantage of the dip,
adding to the Fund's position.
Looking forward, we continue to like Wanger Twenty's prospects given our stocks'
reasonable valuations combined with what we believe to be the exceptional
business characteristics of the Fund's portfolio companies. We believe our
approach will continue to provide above-average returns with below-average risk
over a long-term investment horizon.
Wanger Twenty is a non-diversified fund. The performance of each of its holdings
will have a greater impact on the Fund's total return, and may make the Fund's
returns more volatile than a more diversified fund. Mid-cap stocks tend to be
more volatile and may be less liquid than the stocks of larger companies.
As of 6/30/03, the Fund's positions in the holdings mentioned were: Guidant,
7.8%; Boston Scientific, 0.0%; Synopsys, 6.0%; Jones Apparel, 0.0%;
Harley-Davidson, 3.5%.
Photo of: JOHN H. PARK
JOHN H. PARK
Portfolio Manager
10
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT IN
WANGER TWENTY
TOTAL RETURN FOR THE PERIOD
FEBRUARY 1, 1999 THROUGH JUNE 30, 2003
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
1 Year 3 Years Life of fund
13.59% 7.72% 13.20%
LINE CHART:
WANGER TWENTY: S&P MidCap 400:
2/1/99 $ 10000 $ 10000
9750 9476.42
10530 9741.15
12150 10509.5
12220 10555.1
6/30/99 12530 11120.2
12510 10883.9
11420 10510.9
11410 10186.3
12250 10705.4
12510 11267.2
13430 11936.9
13090 11600.7
13100 12412.6
13696.7 13451.5
13049.5 12981.8
12694.5 12819.8
6/30/00 13822 13008.1
13404.4 13213.6
14782.4 14688.9
15064.3 14588.3
15126.9 14093.6
13748.9 13029.8
14698.9 14026.6
15231.3 14339
14312.6 13520.7
13790.7 12515.5
14761.5 13896.1
15555 14219.7
6/30/01 15220.9 14162.3
15053.9 13951.4
14427.5 13495
13592.3 11816.4
13895.1 12339.1
15387.9 13257
16035.2 13941.9
15763.8 13869.5
15398.4 13886.5
15920.3 14879.2
15043.4 14809.6
15481.9 14559.9
6/30/02 15210.5 13494.2
14302.2 12187.1
14698.9 12248.4
13978.6 11261.6
14813.8 11749.6
15450.6 12429.3
14813.8 11918.6
14709.4 11570.2
14751.1 11294.7
15022.5 11389.9
15889 12216.9
16786.8 13229.3
6/30/03 17277.5 13398
This graph compares the results of $10,000 invested in Wanger Twenty on February
1, 1999 (the date the Fund began operations) through June 30, 2003, to the S&P
MidCap 400 Index, with dividends and capital gains reinvested. The performance
data quoted is past performance and does not guarantee future results. The
investment return and principal value of an investment will fluctuate so that
investors' shares, when redeemed, may be worth more or less than their original
cost. DUE TO ONGOING MARKET VOLATILITY, PERFORMANCE IS SUBJECT TO SUBSTANTIAL
SHORT-TERM FLUCTUATIONS. Part of the performance shown is due to the Fund's
purchase of securities in IPOs. The impact of IPO purchases declines as a Fund
grows large. Wanger Twenty is a non-diversified fund that invests primarily in
the stocks of medium- to larger-size U.S. companies. Each stock may represent a
significant part of its overall portfolio. The performance of each of these
larger holdings will have a greater impact on Wanger Twenty's total return and
may make the fund's returns more volatile than a more diversified fund. Mid-cap
stocks are more volatile and may be less liquid than large-cap stocks.
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE
DIFFERENT THAN THAT SHOWN.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
==============================================================
RESULTS AS OF JUNE 30, 2003
2nd quarter Year to date 1 year
WANGER TWENTY 15.01% 16.63% 13.59%
S&P MidCap 400 17.63 12.41 -0.71
S&P 500 15.39 11.76 0.25
Lipper Mid-Cap Growth
Funds Index 17.68 15.78 0.22
N.A.V. AS OF 06/30/03: $16.55
The S&P MidCap 400 is a market value-weighted index of 400 U.S. stocks that are
in the next tier down from the S&P 500. The S&P 500 is a broad market-weighted
average of blue-chip U.S. companies. The Lipper Mid-Cap Growth Funds Index
measures the performance of the 30 largest mid-cap growth funds tracked by
Lipper. All indexes are unmanaged and include reinvested dividends. It is not
possible to invest directly in an index.
Performance numbers reflect all Fund expenses but do not include
any insurance charge imposed by your insurance company's separate accounts. If
performance included the effect of these additional charges, it would be lower.
Portfolio holdings will vary in the future.
==============================================================
TOP 5 INDUSTRIES
As a % of net assets, as of 06/30/03
Information 27.8%
Consumer Goods/Services 25.4
Health Care 22.6
Finance 13.7
Industrial Goods/Services 4.6
==============================================================
TOP 10 HOLDINGS
As a % of net assets, as of 06/30/03
1. First Health Group 9.6%
PPO Network
2. Guidant 7.8%
Stents, Defibrillators &
Other Cardiac Medical Devices
3. Synopsys 6.0%
Software for Designing
Semiconductor Chips
4. Interpublic Group 5.2%
Advertising
5. Markel 4.8%
Specialty Insurance
6. Expeditors International
of Washington 4.6%
International Freight Forwarder
7. International Game 4.4%
Technology Slot Machines & Progressive
Jackpots
8. Electronic Arts 4.0%
Entertainment Software
9. Moody's 3.9%
Ratings Service for Credit
Obligations
10. Herman Miller 3.9%
Office Furniture
11
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
Logo: Squirrel
PERFORMANCE REVIEW WANGER FOREIGN FORTY
Wanger Foreign Forty rose 19.58% for the most recent quarter, performing better
than the MSCI EAFE and slightly worse than its Citigroup benchmark. The MSCI
EAFE Index rose 19.27% and the Citigroup World ex-U.S. Cap Range $2-10B rose
19.97%. The markets have rebounded strongly for the quarter and year so far and
the Fund has performed roughly in-line. Year-to-date, Wanger Foreign Forty is up
10.08% vs. 9.47% for the MSCI EAFE Index and 12.81% for the Fund's benchmark.
Germany was one of the best-performing developed markets in the latest quarter
and, for the first half of the year, the average German stock in the benchmark
rose 21%. We were not only overweighted in Germany, but our German stocks have
performed better than the strong German market. Rhoen-Klinikum, a hospital
management company that is one of the Fund's largest holdings, has rebounded
nicely from a weak first quarter in which we saw the share price slide 6.5%. In
the second quarter, the shares were up 32%. For the first half of the year,
Rhoen-Klinikum is up 24%. Deutsche Boerse, the German stock exchange, has
benefited from the strong stock market and was up 32% for the first half of the
year.
In France, Neopost, the world's second largest supplier of postage meter
machines, was up 32% for the six months. We believe high barriers to entry, a
consolidating industry and huge recurring revenues - 60% of sales - make Neopost
very attractive.
On the downside, the Fund's weakest performing holdings so far this year have
been based in Japan. Orix, a financial services firm that provides loans,
insurance and banking services throughout the world, was down 30% year-to-date.
Oriental Land, a Disney Theme park operator in Tokyo, continued to suffer from
the impact of bad weather and light foot traffic into the park. The shares were
off 28% in the first half of 2003. Both of these stocks were sold out of the
Fund.
Wanger Foreign Forty has been underweight in Japan vs. the benchmark for quite
some time. So far, we have been right to be underweight, as Japan has been in a
bear market for the last 10 years. We have not seen a positive change in the
Japanese economic outlook, and we believe better ideas have been found
elsewhere.
As of 2/1/02 Wanger Foreign Forty became a diversified fund. Prior to that,
Wanger Foreign Forty was a non-diversified fund, meaning that the performance of
its holdings would have a greater impact on its total return, and may make the
Fund's returns more volatile than a more diversified fund. Mid-cap stocks tend
to be more volatile and may be less liquid than the stocks of larger companies.
Investments in foreign securities have special risks, including political or
economic instability, higher costs, different regulations, accounting standards,
trading practices and levels of information, and currency exchange rate
fluctuations.
As of 6/30/03, the Fund's positions in the holdings mentioned were:
Rhoen-Klinikum, 3.1%; Deutsche Boerse, 2.5%; Neopost, 2.7%; Orix, 0.0%; Oriental
Land, 0.0%.
Photos of: TODD M. NARTER AND CHRISTOPHER J. OLSON
TODD M. NARTER
Co-Portfolio Manager
CHRISTOPHER J. OLSON
Co-Portfolio Manager
12
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT IN
WANGER FOREIGN FORTY
TOTAL RETURN FOR THE PERIOD
FEBRUARY 1, 1999 THROUGH JUNE 30, 2003
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------
1 Year 3 Years Life of fund
-4.04% -15.04% 4.97%
Line Chart:
WANGER Citigroup World ex-U.S.
FOREIGN FORTY: Cap Range $2-10B:
2/1/99 $ 10000 $ 10000
10020 9749.77
10190 10135.2
10620 10700.9
10480 10249.1
6/30/99 11350 10623.5
11650 11020.5
11800 11144.4
11650 11183.3
12160 11188.5
14530 11507.9
18390 12387.9
17890 11789.1
21580 11940.8
20853 12298.7
20915.8 11806
19303.7 11615.9
6/30/00 20193.5 12231.9
19816.6 11836.4
20863.4 12208.1
19827.1 11802.4
19356 11436.7
17042.5 11096.1
18099.8 11637.7
18884.9 11579.9
16812.2 11159.3
14664.2 10288.7
15748.3 11048.3
15702.7 10953.9
6/30/01 15052.2 10668.9
14333.2 10401.2
14082.2 10306.9
11811.2 9109.73
12404.6 9475.62
12941 9814.29
13283.4 9835.46
12655.7 9545.09
12495.9 9690.43
12918.2 10244.8
13237.7 10432.4
13351.8 10763.9
6/30/02 12906.8 10390.2
11537.3 9459.68
11731.3 9437.26
10864 8592.87
10898.3 8746.3
11217.8 9191.66
11252 8932.62
10704.3 8708.44
10270.6 8545.54
10357.9 8399.58
11343.3 9141.85
12317.2 9797.43
6/30/03 12386 10076.9
This graph compares the results of $10,000 invested in Wanger Foreign Forty on
February 1, 1999 (the date the Fund began operations) through June 30, 2003, to
the Citigroup World ex-U.S. Cap Range $2-10B Index, with dividends and capital
gains reinvested. The performance data quoted is past performance and does not
guarantee future results. The investment return and principal value of an
investment will fluctuate so that investors' shares, when redeemed, may be worth
more or less than their original cost. DUE TO ONGOING MARKET VOLATILITY,
PERFORMANCE IS SUBJECT TO SUBSTANTIAL SHORT-TERM FLUCTUATIONS. Wanger Foreign
Forty is a diversified fund that invests in the stocks of medium- to larger-size
companies with market capitalizations of $2 to $25 billion. Prior to 2/1/02,
Wanger Foreign Forty was a non-diversified fund, meaning that the performance of
its holdings would have a greater impact on Wanger Foreign Forty's total return
and may make the fund's returns more volatile than a more diversified
international fund. Mid-cap stocks are more volatile and may be less liquid than
large-cap stocks. Investments in foreign securities have special risks,
including political or economic instability, higher costs, different
regulations, accounting standards, trading practices and levels of information,
and currency exchange rate fluctuations.
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE
DIFFERENT THAN THAT SHOWN.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
==============================================================
RESULTS AS OF JUNE 30, 2003
2nd quarter Year to date 1 year
WANGER FOREIGN FORTY 19.58% 10.08% -4.04%
Citigroup World ex-U.S.
Cap Range $2-10B 19.97 12.81 -3.02
MSCI EAFE 19.27 9.47 -6.46
Lipper International
Funds Index 19.72 9.18 -6.40
N.A.V. AS OF 06/30/03: $10.81
The Citigroup World ex-U.S. Cap Range $2-10B is a subset of the broad market,
selected by the index sponsor, representing the mid-cap developed market,
excluding the U.S. MSCI EAFE is Morgan Stanley's Europe, Australasia and Far
East Index, a widely recognized international benchmark that comprises 20 major
markets in Europe, Australia and the Far East. Lipper Indexes include the
largest funds tracked by Lipper, Inc. in the named category. The Lipper
International Funds Index is made up of the 30 largest non-U.S. funds. All
indexes are unmanaged and returns include reinvested dividends. It is not
possible to invest directly in an index.
Performance numbers reflect all Fund expenses but do not include
any insurance charge imposed by your insurance company's separate accounts. If
performance included the effect of these additional charges, it would be lower.
Portfolio holdings will vary in the future.
==============================================================
TOP 5 COUNTRIES
As a % of net assets, as of 06/30/03
United Kingdom 19.2%
Ireland 13.8
Canada 8.7
Switzerland 8.3
Japan 8.3
==============================================================
TOP 10 HOLDINGS
As a % of net assets, as of 06/30/03
1. Talisman Energy 4.6%
Oil & Gas Producer - Canada
2. Anglo Irish Bank 4.4%
Corporate Lending &
Private Banking - Ireland
3. Kerry Group 3.8%
Specialty Food Ingredient
Company - Ireland
4. Synthes Stratec 3.6%
Products for Orthopedic
Surgery - Switzerland
5. Rhoen-Klinikum 3.1%
Hospital Management - Germany
6. Depfa Bank 2.9%
International Public Sector
Finance - Ireland
7. Compass Group 2.9%
International Concession &
Contract Caterer - United Kingdom
8. Neopost 2.7%
Postage Meter Machines -
France
9. Lion Nathan 2.7%
Beer Brewer/Distributor
- - Australia
10. Corus Entertainment 2.6%
CATV Programming & Radio
Stations - Canada
13
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
COMMON STOCKS-91.4%
INFORMATION-35.0%
- -----------------------------------------------------------------
TELEVISION PROGRAMMING-1.3%
620,000 Mediacom Communications (b) $6,119,400
Cable Television Franchises
138,500 Gray Television 1,717,400
Mid Market Affiliated TV Stations
- -----------------------------------------------------------------
7,836,800
- -----------------------------------------------------------------
RADIO-2.1%
395,900 Salem Communications (b) 7,922,355
Radio Stations for Religious Programming
130,900 Saga Communications (b) 2,546,005
Radio Stations in Small & Mid-sized Cities
110,000 Cumulus Media, Cl. A (b) 2,082,300
Radio Stations in Small Cities
- -----------------------------------------------------------------
12,550,660
- -----------------------------------------------------------------
TELECOMMUNICATIONS/WIRELINE COMMUNICATIONS-2.7%
356,300 Commonwealth Telephone (b) 15,666,511
Rural Phone Franchises & CLEC
- -----------------------------------------------------------------
MOBILE COMMUNICATIONS-3.8%
1,057,000 Western Wireless (b) 12,187,210
Rural Cellular Phone Services
86,000 Telephone & Data Systems 4,274,200
Cellular & Telephone Services
415,000 Crown Castle International (b) 3,224,550
Communication Towers in USA & UK
351,750 COMARCO (b)(c) 2,497,425
Wireless Network Testing
- -----------------------------------------------------------------
22,183,385
- -----------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT-0.6%
837,800 Aspect Telecommunications (b) 3,242,286
Call Center Equipment
- -----------------------------------------------------------------
BUSINESS INFORMATION/MARKETING SERVICES/
MARKETING-3.3%
580,000 Navigant Consulting (b) 6,873,000
Consulting Firm
153,700 Getty Images (b) 6,347,810
Photographs for Publications & Electronic Media
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
BUSINESS INFORMATION/MARKETING SERVICES/
MARKETING-3.3% (CONT)
192,900 Information Holdings (b) $3,520,425
Scientific & Medical Publications,
Patent Information
200,000 InfoUSA (b) 1,620,000
Business Data for Sales Leads
125,000 Rainbow Technologies (b) 1,051,250
Computer Network Security Products
- -----------------------------------------------------------------
19,412,485
- -----------------------------------------------------------------
BUSINESS/CONSUMER SOFTWARE-12.8%
438,550 Kronos (b) 22,282,726
Labor Management Solutions
442,900 Micros Systems (b) 14,606,842
Information Systems for
Restaurants & Hotels
1,030,000 JDA Software Group (b) 11,525,700
Applications/Software & Services for Retailers
425,000 JD Edwards (b) 6,090,250
Mid Market ERP & Supply Chain Software
515,000 Mapics (b) 4,223,000
Mid Market ERP Software
1,320,000 Novell (b) 4,065,600
Directory, Identity Management &
Authorization Software
429,800 MRO Software (b) 3,709,174
Enterprise Management Software
480,000 E.Piphany (b) 2,452,800
CRM Software
121,800 Group 1 Software (b) 2,249,646
Address Verification Software
90,000 SPSS (b) 1,506,600
Statistical Analysis Software
102,000 Activision (b) 1,317,840
Entertainment Software
72,500 THQ (b) 1,305,000
Entertainment Software
- -----------------------------------------------------------------
75,335,178
- -----------------------------------------------------------------
TRANSACTION PROCESSORS-2.0%
273,440 Global Payments 9,707,120
Credit Card Processor
See accompanying notes to financial statements.
14
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
TRANSACTION PROCESSORS-2.0% (CONT)
206,000 Euronet Worldwide (b) $2,226,860
ATM Processor
- -----------------------------------------------------------------
11,933,980
- -----------------------------------------------------------------
COMPUTER HARDWARE/RELATED SYSTEMS-1.6%
415,800 Seachange International (b) 3,966,732
Systems for Video on Demand & Ad Insertion
31,600 Zebra Technologies (b) 2,376,004
Bar Code Printing Hardware,
Supplies & Software
40,000 Rogers (b) 1,332,000
PCB Laminates & High Performance Foams
35,000 Applied Films (b) 905,800
Thin-Film Glass Coating Equipment
301,205 SensAble Technologies (b) 698,796
Sensory Devices for Computer Based Sculpting
- -----------------------------------------------------------------
9,279,332
- -----------------------------------------------------------------
CONTRACT MANUFACTURING-0.4%
220,000 Plexus (b) 2,536,600
Electronic Manufacturing Services
- -----------------------------------------------------------------
SEMICONDUCTORS/RELATED EQUIPMENT-1.3%
135,000 Integrated Circuit Systems (b) 4,243,050
Silicon Timing Devices
70,000 LittelFuse (b) 1,565,200
Little Fuses
68,600 Microsemi (b) 1,097,600
Analog/Mixed Signal Semiconductors
95,900 IXYS (b) 764,323
Power Semiconductors
- -----------------------------------------------------------------
7,670,173
- -----------------------------------------------------------------
INSTRUMENTATION-1.4%
288,000 Tektronix (b) 6,220,800
Analytical Instruments
60,000 Trimble Navigation (b) 1,375,800
GPS-Based Instruments
25,000 Mettler Toledo (b) 916,250
Laboratory Equipment
- -----------------------------------------------------------------
8,512,850
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
COMPUTER SERVICES-1.7%
753,000 RCM Technologies (b)(c) $2,936,700
Technology Staffing Services
137,000 American Management Systems (b) 1,956,360
Software Development Services
170,000 Pomeroy Computer Resources (b) 1,880,200
Network Integration Services
670,000 AnswerThink Consulting (b) 1,293,100
IT Integrator for Fortune 2000
149,700 Ciber (b) 1,050,894
Software Services & Staffing
256,600 Analysts International (b) 639,447
Technology Staffing Services
- -----------------------------------------------------------------
9,756,701
- -----------------------------------------------------------------
INFORMATION-TOTAL 205,916,941
HEALTH CARE-15.9%
- -----------------------------------------------------------------
BIOTECHNOLOGY/DRUG DELIVERY-1.9%
540,000 Nektar Therapeutics (b) 4,984,200
Pulmonary Drug Delivery
278,000 Enzon (b) 3,480,560
Polymer Delivery Technology for Improved Drugs
250,000 Locus Discovery, Series D. Pfd. (b) 1,000,000
High Throughput Rational Drug Design
90,000 Applera Celera Genomics (b) 928,800
Diagnostics & Drug Development
42,000 Myriad Genetics (b) 571,620
Gene Discovery & Diagnostic Products
154,231 SYRRX, Series C (b) 348,562
X-ray Crystallography
- -----------------------------------------------------------------
11,313,742
- -----------------------------------------------------------------
MEDICAL EQUIPMENT-3.2%
219,000 Edwards Lifesciences (b) 7,038,660
Heart Valves
136,000 Orthofix International (b) 4,452,640
Bone Fixation & Stimulation Devices
213,600 Visx (b) 3,705,960
Laser Eye Surgery
See accompanying notes to financial statements.
15
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
MEDICAL EQUIPMENT-3.2% (CONT)
338,000 Novost (b) $2,028,000
Radiation Catheters for In-Stent Restenosis
30,000 Diagnostic Products 1,231,500
Immunodiagnostic Kits
25,000 Viasys Healthcare (b) 517,500
Respiratory & Neurology Medical Equipment
- -----------------------------------------------------------------
18,974,260
- -----------------------------------------------------------------
MEDICAL SUPPLIES-0.6%
100,700 Techne (b) 3,055,238
Cytokines, Antibodies, Other Reagents
For Life Sciences
- -----------------------------------------------------------------
SERVICES-10.2%
866,000 Lincare Holdings (b) 27,287,660
Home Health Care Services
903,000 First Health Group (b) 24,922,800
PPO Network
381,300 NDCHealth Group 6,996,855
Health Claims Processing & Drug
Marketing Services
44,000 Medquist (b) 890,560
Medical Transcription Services
- -----------------------------------------------------------------
60,097,875
- -----------------------------------------------------------------
HEALTH CARE-TOTAL 93,441,115
CONSUMER GOODS/SERVICES-15.3%
- -----------------------------------------------------------------
RETAIL-5.0%
176,100 Christopher & Banks (b) 6,513,939
Specialty Women's Retailer at
Moderate Price Levels
99,000 Zale Corp (b) 3,960,000
Specialty Retailer of Jewelry
135,500 Aeropostale (b) 2,910,540
Mall Based Teen Retailer
143,000 Genesco (b) 2,531,100
Multi-Concept Branded Footwear Retailer
80,500 Hot Topic (b) 2,166,255
Music Inspired Retailer of Apparel,
Accessories & Gifts
58,300 Urban Outfitters (b) 2,092,970
Eclectic Home & Apparel Retailer
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
RETAIL-5.0% (CONT)
50,000 Michaels Stores $1,903,000
Craft & Hobby Specialty Retailer
75,000 Petco Animal Supplies (b) 1,630,500
Pet Supplies & Services
50,000 Ann Taylor (b) 1,447,500
Women's Apparel Retailer
50,000 Abercrombie & Fitch (b) 1,420,500
Teen Apparel Retailer
67,000 Borders (b) 1,179,870
Bookstores
150,000 Gaiam (b) 892,500
Healthy Living Catalog & E-Commerce
105,000 Gadzooks (b) 596,400
Teen Apparel Retailer
- -----------------------------------------------------------------
29,245,074
- -----------------------------------------------------------------
APPAREL-2.8%
485,400 Steven Madden (b) 10,601,136
Wholesaler/Retailer of Fashion Footwear
96,000 Coach (b) 4,775,040
Designer & Retailer of Branded
Leather Accessories
28,000 Oxford Industries 1,162,560
Branded & Private Label Apparel
- -----------------------------------------------------------------
16,538,736
- -----------------------------------------------------------------
ENTERTAINMENT-0.9%
51,300 International Speedway Motors 2,026,863
Largest Motorsport Racetrack Owner & Operator
90,000 Action Performance 1,710,000
Motorsport Collectibles & Merchandising
45,000 Speedway Motors 1,206,000
Motorsport Racetrack Owner & Operator
- -----------------------------------------------------------------
4,942,863
- -----------------------------------------------------------------
CASINOS-0.4%
75,000 Alliance Gaming (b) 1,418,250
Diversified Gaming Company
107,700 Monarch Casino & Resort (b) 1,003,764
Casino/Hotel in Reno
- -----------------------------------------------------------------
2,422,014
See accompanying notes to financial statements.
16
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
FURNITURE & TEXTILES-0.6%
33,000 Mohawk Industries (b) $1,832,490
Carpet & Flooring Manufacturer
85,000 Herman Miller 1,717,850
Office Furniture
- -----------------------------------------------------------------
3,550,340
- -----------------------------------------------------------------
DURABLE GOODS-0.3%
42,000 American Woodmark 1,955,520
Kitchen Cabinet
- -----------------------------------------------------------------
NON-DURABLES-0.4%
47,000 Scotts Company (b) 2,326,500
Consumer Lawn & Garden Products
- -----------------------------------------------------------------
TRAVEL-0.1%
150,000 LaQuinta (b) 646,500
Owner/Franchiser of Mid-Priced Hotels
- -----------------------------------------------------------------
CONSUMER SERVICES-4.8%
970,000 ITT Educational Services (b) 28,372,500
Post-secondary Degree Programs
- -----------------------------------------------------------------
CONSUMER GOODS/SERVICES-TOTAL 90,000,047
FINANCE-11.6%
- -----------------------------------------------------------------
BANKS/SAVINGS & LOANS-2.7%
114,350 Texas Regional Bancshares 3,967,945
TexMex Bank
80,000 Downey Financial 3,304,000
California Home Lender
105,500 Chittenden 2,885,425
Vermont & Western Massachusetts Bank
72,000 TCF Financial 2,868,480
Great Lakes Bank
85,200 Anchor Bancorp Wisconsin 2,035,428
Wisconsin Thrift
34,800 Peoples Bank Bridgeport 1,008,852
Connecticut Savings & Loan
- -----------------------------------------------------------------
16,070,130
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
FINANCE COMPANIES-2.1%
975,400 AmeriCredit (b) $8,339,670
Auto Lending
247,000 World Acceptance (b) 4,021,160
Personal Loans
- -----------------------------------------------------------------
12,360,830
- -----------------------------------------------------------------
INSURANCE-4.6%
347,000 HCC Insurance Holdings 10,260,790
Aviation Insurance
39,000 Markel (b) 9,984,000
Specialty Insurance
92,000 Leucaudia National 3,415,040
Insurance Holding Company
97,000 Harleysville Group 2,232,940
Commercial & Personal Lines of
Insurance
35,000 Philadelphia Consolidated Holding (b) 1,414,000
Specialty Insurance
- -----------------------------------------------------------------
27,306,770
- -----------------------------------------------------------------
MONEY MANAGEMENT-2.2%
321,000 SEI Investments 10,272,000
Mutual Fund Administration
60,900 Neuberger Berman 2,430,519
Major Asset Management Company
- -----------------------------------------------------------------
12,702,519
- -----------------------------------------------------------------
FINANCE-TOTAL 68,440,249
INDUSTRIAL GOODS/SERVICES-5.4%
- -----------------------------------------------------------------
INDUSTRIAL GOODS-1.0%
98,000 Clarcor 3,777,900
Mobile & Industrial Filters
45,100 Mine Safety Appliances 1,967,262
Safety Equipment
10,300 Intermagnetics General (b) 204,352
Superconducting Wire
- -----------------------------------------------------------------
5,949,514
- -----------------------------------------------------------------
MACHINERY-0.8%
59,000 Esco Technologies (b) 2,596,000
Filtration & Test Equipment
See accompanying notes to financial statements.
17
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
MACHINERY-0.8% (CONT)
50,000 Ametek $1,832,500
Aerospace/Industrial Instruments
- -----------------------------------------------------------------
4,428,500
- -----------------------------------------------------------------
WATER-1.0%
133,000 Cuno (b) 4,803,960
Filtration & Fluids Clarification
70,000 Insituform Technologies (b) 1,237,600
Water/Sewer Pipe Repair
- -----------------------------------------------------------------
6,041,560
- -----------------------------------------------------------------
CONSTRUCTION-0.2%
30,000 Florida Rock Industries 1,238,400
Concrete & Aggregates
- -----------------------------------------------------------------
SPECIALTY CHEMICALS & INDUSTRIAL MATERIALS-0.6%
95,000 Spartech 2,014,950
Plastics Distribution & Compounding
70,000 Schulman 1,124,200
Plastics Distribution & Compounding
- -----------------------------------------------------------------
3,139,150
- -----------------------------------------------------------------
INDUSTRIAL DISTRIBUTION-0.2%
100,000 NuCo2 (b) 941,000
Bulk CO2 Gas Distribution to Restaurants
- -----------------------------------------------------------------
LOGISTICS-0.5%
174,000 Hub Group (b) 1,527,720
Truck & Rail Freight Forwarder
59,600 Forward Air (b) 1,512,052
Freight Transportation Between Airports
- -----------------------------------------------------------------
3,039,772
- -----------------------------------------------------------------
OTHER INDUSTRIAL SERVICES-1.1%
412,100 Insurance Auto Auctions (b) 5,175,976
Auto Salvage Services
125,000 Clark/Bardes Consulting (b) 1,493,750
Executive Compensation & Benefits
Consulting
- -----------------------------------------------------------------
6,669,726
- -----------------------------------------------------------------
INDUSTRIAL GOODS/SERVICES-TOTAL 31,447,622
- -----------------------------------------------------------------
Number of Value
Shares
ENERGY/MINERALS-6.0%
- -----------------------------------------------------------------
OIL/GAS PRODUCERS-1.6%
265,000 Ultra Petroleum (b) $3,421,150
Natural Gas Producer
80,000 Western Gas 3,168,000
Oil Producer & Coal Seam Gas Producer
108,400 Southwestern Energy (b) 1,627,084
Oil & Gas Exploration/Production
20,000 Evergreen Resources (b) 1,086,200
Coal Seam Gas Producer
- -----------------------------------------------------------------
9,302,434
- -----------------------------------------------------------------
OIL SERVICES-1.8%
941,000 Newpark Resources (b) 5,156,680
Oilfield Fluid Management &
Equipment Rental
219,700 FMC Technologies (b) 4,624,684
Deep Water Oil & Gas Well Head
Manufacturer
22,000 CARBO Ceramics 819,500
Natural Gas Well Stimulants
- -----------------------------------------------------------------
10,600,864
- -----------------------------------------------------------------
DISTRIBUTION/MARKETING/REFINING-2.6%
259,000 Equitable Resources 10,551,660
Natural Gas Utility & Producer
168,000 Atmos Energy 4,166,400
Natural Gas Utility
115,000 Aquila (b) 711,850
Electric Utility Holding Company
- -----------------------------------------------------------------
15,429,910
- -----------------------------------------------------------------
ENERGY/MINERALS-TOTAL 35,333,208
OTHER INDUSTRIES-2.2%
- -----------------------------------------------------------------
REAL ESTATE-1.6%
152,000 Chelsea Property Group 6,127,120
Outlet Malls
47,000 The Rouse Company 1,790,700
Regional Shopping Malls
100,000 Crescent Real Estate Equities 1,661,000
Class A Office Buildings
- -----------------------------------------------------------------
9,578,820
See accompanying notes to financial statements.
18
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
REGULATED UTILITIES-0.6%
175,000 Unisource Energy $3,290,000
Electric Utility in Arizona
- -----------------------------------------------------------------
OTHER INDUSTRIES-TOTAL 12,868,820
TOTAL COMMON STOCKS
(COST: $411,707,243)-91.4% 537,448,002
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Principal Value
Amount
SHORT-TERM OBLIGATIONS-8.3%
- -----------------------------------------------------------------
$48,000,000 Household Finance Corp.,
1.03% - 1.31%,
due 07/01/03 - 07/02/03 $47,999,199
854,000 Repurchase agreement with State
Street Bank & Trust Co., dated
06/30/03, due 07/01/03 at 1.10%
collateralized by Federal National
Mortgage Association Notes,
maturing 03/24/05, market
value $875,457
(repurchase proceeds: $854,026) 854,000
- -----------------------------------------------------------------
(AMORTIZED COST: $48,853,199) 48,853,199
TOTAL INVESTMENTS (COST:
$460,560,442)-99.7% (a) 586,301,201
- -----------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES-0.3% 1,740,684
- -----------------------------------------------------------------
TOTAL NET ASSETS-100% $588,041,885
=================================================================
NOTES TO STATEMENT OF INVESTMENTS:
(a) At June 30, 2003, cost for both financial statement and federal income tax
purposes is the same. The net unrealized appreciation was $125,740,759
consisting of gross unrealized appreciation of $169,667,574 and gross
unrealized depreciation of $43,926,815.
(b) Non-income producing security.
(c) At June 30, 2003, the Fund held the following percentages of the outstanding
voting shares of the companies listed below:
RCM Technologies 7.10%
COMARCO 5.01%
The aggregate cost and value of these companies at June 30, 2003, was
$9,598,816 and $5,434,125, respectively. Investments in affiliated companies
represent 0.92% of total net assets at June 30, 2003. The change in
unrealized gain (loss) in these companies amounted to $(1,633,959) during
the period ended June 30, 2003. There was no other investment activity
during the period.
19
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
COMMON STOCKS-95.9%
EUROPE-59.8%
- -----------------------------------------------------------------
GERMANY/AUSTRIA-7.8%
90,000 Zapf Creation $3,354,130
Toy Manufacturer
43,574 Beru 2,513,568
Auto Parts & Electronics
383,000 Takkt 1,995,673
Mail Order Retailer of Office &
Warehouse Durables
115,000 DIS - Deutscher Industrie Services 1,984,182
Temporary Employment
50,000 Rhoen-Klinikum 1,941,047
Hospital Management
23,000 Mayr Melnhof (Austria) 1,918,307
Cartonboard & Packaging
100,000 GFK 1,886,410
Market Research Services
91,000 Hugo Boss Designs 1,346,092
Fashion Apparel
80,000 Software AG (b) 1,105,160
Database Software
50,000 Kali & Salz 1,018,547
Potash Products, Fertilizers, Salt
& Waste Management
27,650 Rational 1,017,741
Commercial Oven Manufacturer
- -----------------------------------------------------------------
20,080,857
- -----------------------------------------------------------------
DENMARK-0.5%
17,500 Kobenhavns Lufthavne 1,422,126
Copenhagen Airport Manager
- -----------------------------------------------------------------
NORWAY-1.3%
180,000 Ekornes 2,407,935
Niche Furniture Manufacturer
215,000 Tomra Systems 923,943
Reverse Vending Machines
- -----------------------------------------------------------------
3,331,878
- -----------------------------------------------------------------
FINLAND-1.2%
60,000 Amer Group 1,837,180
Branded Sporting Goods
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
FINLAND-1.2% (CONT)
64,600 Jaakko Poyry $1,140,600
Engineering Consultants in
Forestry & Energy
- -----------------------------------------------------------------
2,977,780
- -----------------------------------------------------------------
SWEDEN-3.7%
144,500 Hexagon 3,189,945
Diversified Engineering
155,000 Perbio Science (b) 2,888,608
Consumables to Biotech/Pharmaceutical
Industries
200,000 Nobia 1,500,901
Kitchen Interiors Manufacturing
& Distribution
202,000 Intrum Justitia (b) 1,101,561
Receivables Management & Debt
Collection
52,000 Castellum 894,287
Office, Warehouse & Retail
Property Company
- -----------------------------------------------------------------
9,575,302
- -----------------------------------------------------------------
FRANCE/BELGIUM-7.4%
41,000 Bacou-Dalloz (b) 4,022,770
Safety Equipment
100,000 Rubis 3,174,691
Tank Storage & LPG Supplier
75,500 Omega Pharma (Belgium) 2,301,363
OTC Products, Pharmacy & Dental
Supplies
40,000 Camaieu 2,272,895
Women's Apparel Retailer
120,000 Fininfo 2,138,085
Data Feeds for French Banks & Brokers
20,000 Vallourec 1,306,684
Seamless Tubes
145,000 Cerep (b) 1,244,226
Health Care
15,029 Bonduelle 1,201,454
Producer of Canned, Frozen &
Fresh Vegetables
43,417 Grandvision 898,928
European Eyeglass Retailer
3,766 Algeco 308,644
Modular Construction
3,110 Groupe Bourbon 235,564
Food Retailer
- -----------------------------------------------------------------
19,105,304
See accompanying notes to financial statements.
20
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
UNITED KINGDOM/IRELAND-20.0%
400,000 Anglo Irish Bank (Ireland) $3,542,771
Corporate Lending & Private Banking
800,000 Hit Entertainment 3,269,041
Children's Television Shows
201,500 Arnotts (Ireland) (b) 3,244,856
Department Store
700,000 Grafton Group (Ireland) 3,099,925
Builders, Wholesalers & DIY Retailing
150,000 French Connection 3,074,395
Clothing Wholesaler & Retailer
625,000 Expro International 2,911,895
Offshore Oil Field Services
650,000 Charles Taylor Group 2,900,841
Insurance
695,000 International Greetings 2,848,940
Private Label Greeting Products
640,000 Bloomsbury Publishing 2,485,963
Publishing
300,000 Torex 2,479,351
Application Software for Hospital
Management & Retail
790,000 Care UK 2,304,722
Nursing Home & Psychiatric Care
Facilities
500,000 Nestor Healthcare Group 2,300,673
Healthcare Staffing Company
1,000,000 RPS Group 2,256,210
Environmental Consulting
314,000 Spectris 2,143,515
Electronic Instruments & Controls
300,000 Business Post Group 2,057,861
UK Parcel & Express Mail Service
325,000 Ricardo 1,987,613
Auto Engine Design
20,000 Depfa Bank (Ireland) 1,558,589
International Public Sector Finance
1,050,000 Tullow Oil (b) 1,370,387
Oil & Gas Producer
340,000 TDG Group 1,031,245
Logistics & Storage Company
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
UNITED KINGDOM/IRELAND-20.0% (CONT)
220,000 Umeco $1,022,732
Aerospace Parts Distributor
100,000 Jurys Doyle Hotel (Ireland) 969,661
Hotel Group
100,000 McCarthy & Stone 811,574
Builder of Retirement Apartments
156,500 SSL International 757,929
Medical & Footcare Products
2,000,000 Incepta Group 512,399
Business Information & Marketing Services
50,000 Topps Tiles 309,092
Retail Tile Company
12,700 Intermediate Capital 204,041
European Provider of Mezzanine Capital
40,019 Metal Bulletin 101,867
Publisher - Metals, Derivatives,
Hedge Fund Journals
- -----------------------------------------------------------------
51,558,088
- -----------------------------------------------------------------
SWITZERLAND-2.9%
8,000 BKW Energie 1,935,484
Electric Utility
8,000 Hiestand Holding 1,894,051
Bakery Goods
6,000 Geberit International 1,851,139
Plumbing Supplies
12,700 Kaba Holdings 1,813,480
Building Security Systems
- -----------------------------------------------------------------
7,494,154
- -----------------------------------------------------------------
ITALY-3.3%
242,000 Amplifon 4,562,330
Hearing Aid Retailer
320,000 Granitifiandre 2,495,583
Leading Innovator in the Stoneware
Industry
300,000 De Longhi 1,321,638
Consumer Appliances for Heating,
Air Conditioning & Cooking
- -----------------------------------------------------------------
8,379,551
See accompanying notes to financial statements.
21
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
SPAIN-4.3%
110,000 Gamesa (b) $2,460,961
Wind Turbines
356,000 Cortefiel 2,456,935
Apparel Retailer
142,512 Prosegur 2,109,708
Security Guards
72,000 Zardoya Otis (b) 1,084,915
72,000 Zardoya Otis Bonus Rights (b) 107,662
Elevator Maintenance & Service Provider
244,100 Abengoa 1,460,036
Engineering & Construction
100,000 Red Electrica 1,311,285
Spanish Power Grid
- -----------------------------------------------------------------
10,991,502
- -----------------------------------------------------------------
NETHERLANDS-6.0%
96,400 OPG Groep 2,935,103
Pharmaceutical Wholesaler & Retailer
165,000 Aalberts Industries 2,903,807
Flow Control & Heat Treatment
69,276 Fugro 2,868,651
Survey & GPS Services
129,000 IM Tech 2,393,406
Technical Engineering
69,135 Hunter Douglas 2,306,154
Decorative Window Coverings
182,122 United Services Group 2,147,230
Temporary Staffing Services
- -----------------------------------------------------------------
15,554,351
- -----------------------------------------------------------------
POLAND-1.4%
182,850 Central European Distribution (b) 3,682,599
Spirits & Wine Distribution
- -----------------------------------------------------------------
EUROPE-TOTAL 154,153,492
ASIA-23.7%
- -----------------------------------------------------------------
HONG KONG/CHINA-8.1%
7,128,000 Global Bio-Chem Technology Group 2,308,009
Corn-Based Food Products
- ------------------------------------------------------------------
Number of Value
Shares
- ------------------------------------------------------------------
HONG KONG/CHINA-8.1% (CONT)
7,900,000 Ngai Lik Industrial $2,304,713
China Based A/V Contract Manufacturer
8,000,000 Convenience Retail 1,856,851
Exclusive Circle K Franchisee
1,046,150 Techtronic Industries 1,750,705
Power Tool Manufacturer
7,178,000 Vitasoy 1,693,674
Soy Food Brands
6,000,000 Sinotrans (China) (b) 1,692,709
Integrated Logistics in China
10,000,000 Lerado Group 1,667,062
Baby Paraphernalia
5,000,000 Linmark 1,506,768
Apparel/Hard Goods Sourcing Agent
3,000,000 Hainan Meilan Airport (China) (b) 1,413,797
Chinese Airport Operator
3,000,000 JCG Holdings (b) 1,404,179
Consumer Finance
4,000,000 Harbin Brewery (b) 1,333,650
China Brewery
3,600,000 Aeon Credit Service 1,246,449
Credit Card Issuer
1,185,000 Lianhua Supermarket (China) (b) 630,630
Chinese Supermarket Chain
- ------------------------------------------------------------------
20,809,196
- ------------------------------------------------------------------
JAPAN-8.9%
82,000 ARRK 2,866,631
Prototypes & Molds for New
Product Development
56,000 Sugi Pharmacy 2,284,761
Drugstores
75,000 C-Two Network 2,115,056
Discount Food Retailer
55,000 Eneserve 1,986,984
In-house Power Generators
180,000 NIFCO 1,934,337
Molded Plastic Components
625,000 OMC Card (b) 1,913,771
Credit Cards
60,000 Drake Beam Morin 1,907,305
Employment Outplacement Services
See accompanying notes to financial statements.
22
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
JAPAN-8.9% (CONT)
191,700 Toyo Technica $1,884,132
Value Added Reseller of
Imported Instrumentation
63,000 Goldcoast 1,655,751
Apartment Developer
60,000 Taisei Lamick 1,404,197
Packaging Materials & Machinery
77,000 Daiseki 1,160,252
Waste Disposal & Recycling
37,500 Fuji Seal 1,151,391
Packaging Materials & Machinery
4,000 Bellsystem 24 642,443
Call Centers
- -----------------------------------------------------------------
22,907,011
- -----------------------------------------------------------------
TAIWAN-2.1%
425,000 ASE Test (b) 2,337,500
Semiconductor Packaging & Test Services
2,461,000 Chroma Ate 1,543,014
Test & Measurement Instruments
1,657,000 Phoenixtec Power 1,393,201
Uninterruptable Power Supplies
- -----------------------------------------------------------------
5,273,715
- -----------------------------------------------------------------
SOUTH KOREA-2.6%
135,000 S1 Corporation 2,554,207
Security Services
52,505 Yuhan 2,492,284
Ethical Drug Producer
160,000 Samyoung Heat Exchange 1,593,972
Power Plant Related Machinery
- -----------------------------------------------------------------
6,640,463
- -----------------------------------------------------------------
SINGAPORE-1.4%
4,161,427 Comfort Group (b) 1,902,569
Taxi Service
1,700,000 Sembcorp Logistics 1,815,136
Logistic Services for Marine Transport
- -----------------------------------------------------------------
3,717,705
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
THAILAND-0.6%
2,559,600 Thai Union Frozen Products $1,581,878
Canned Tuna Fish
- -----------------------------------------------------------------
ASIA-TOTAL 60,929,968
LATIN AMERICA-1.2%
- -----------------------------------------------------------------
MEXICO-1.0%
1,250,000 Consorcio ARA (b) 2,482,176
Low/Medium Income House Builder
- -----------------------------------------------------------------
BRAZIL-0.2%
154,900 Cia De Consessoes Rodoviaria (b) 492,408
Brazilian Tollroads
- -----------------------------------------------------------------
LATIN AMERICA-TOTAL 2,974,584
OTHER COUNTRIES-11.2%
- -----------------------------------------------------------------
AUSTRALIA/NEW ZEALAND-3.9%
600,000 Billabong International 2,473,622
Surfwear Apparel Manufacturer
100,000 Perpetual Trustees 2,061,352
Investment Management
650,000 The Warehouse Group (New Zealand) 1,975,588
Warehouse Club
1,500,000 Computershare 1,883,417
Financial Software/Services
300,000 Sky City Entertainment (New Zealand) 1,659,916
Casino/Entertainment Complex
- -----------------------------------------------------------------
10,053,895
- -----------------------------------------------------------------
CANADA-7.3%
533,100 AltaGas Services 4,227,051
Natural Gas Gatherer & Processor
300,000 Patheon (b) 3,319,196
Pharmaceuticals
187,000 Northbridge Financial (b) 2,627,586
Insurance
135,000 Corus Entertainment (b) 2,265,351
CATV Programming & Radio Stations
185,000 Kingsway Financial (b) 2,231,053
Auto & Specialty Insurance
See accompanying notes to financial statements.
23
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
CANADA-7.3% (CONT)
1,000,000 Esprit Exploration (b) $1,770,238
Natural Gas Producer
140,000 Shawcor 1,548,958
Oil & Gas Pipeline Products
199,998 Silent Witness (b) 708,088
Security Camera Manufacturer
- -----------------------------------------------------------------
18,697,521
- -----------------------------------------------------------------
OTHER-TOTAL 28,751,416
TOTAL COMMON STOCKS
(COST: $235,568,511)-95.9% 246,809,460
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Principal Value
Amount
SHORT-TERM OBLIGATIONS-1.8%
- -----------------------------------------------------------------
$4,716,000 Repurchase agreement with State
Street Bank & Trust Co., dated
06/30/03 due 07/01/03 at 1.10%,
collateralized by Federal National
Mortgage Association Notes, maturing
03/24/05, market value $4,815,016
(repurchase proceeds: $4,716,144) $4,716,000
- -----------------------------------------------------------------
(AMORTIZED COST: $4,716,000) 4,716,000
TOTAL INVESTMENTS
(COST: $240,284,511)-97.7% (a) 251,525,460
- -----------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES-2.3% 5,895,111
- -----------------------------------------------------------------
TOTAL NET ASSETS-100% $257,420,571
=================================================================
NOTES TO STATEMENT OF INVESTMENTS:
(a) At June 30, 2003, cost for both financial statement and federal income tax
purposes is the same. The net unrealized appreciation was $11,240,949
consisting of gross unrealized appreciation of $39,640,367 and gross
unrealized depreciation of $28,399,418.
(b) Non-income producing security.
(c) At June 30, 2003, $89,505,148 or 34.8% of the Fund's net assets was
denominated in the Euro currency.
See accompanying notes to financial statements.
24
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP
PORTFOLIO DIVERSIFICATION (Unaudited) JUNE 30, 2003
AT JUNE 30, 2003, THE FUND'S PORTFOLIO INVESTMENTS AS A
PERCENT OF NET ASSETS WAS DIVERSIFIED AS FOLLOWS:
Value Percent
- ----------------------------------------------------
INFORMATION TECHNOLOGY
Business Information &
Marketing Services $7,435,547 2.9%
Instrumentation 6,278,749 2.4
Television Programming 5,534,392 2.2
Publishing 2,587,830 1.0
Computer Services 2,479,351 1.0
Semiconductors and
Related Equipment 2,337,500 0.9
Contract Manufacturing 2,304,713 0.9
Financial Processors 1,883,417 0.7
Computer Hardware 1,393,201 0.6
Business Software 1,105,160 0.4
- ----------------------------------------------------
33,339,860 13.0
- ----------------------------------------------------
HEALTHCARE
Services 9,841,861 3.8
Pharmaceuticals 6,569,409 2.6
Biotechnology/Drug Delivery 4,132,834 1.6
Hospital Management 1,941,047 0.7
- ----------------------------------------------------
22,485,151 8.7
- ----------------------------------------------------
CONSUMER GOODS/SERVICES
Retail 23,284,517 9.0
Durable Goods 10,148,241 4.0
Food 8,914,630 3.5
Furniture and Textiles 6,524,082 2.5
Non Durable Goods 4,253,137 1.7
Goods Distribution 3,682,599 1.4
Entertainment 3,354,130 1.3
Apparels 2,852,860 1.1
Leisure Products 1,837,180 0.7
Consumer Services 1,667,062 0.7
Casinos 1,659,916 0.6
Beverage 1,333,650 0.5
Travel 969,661 0.4
- ----------------------------------------------------
70,481,665 27.4
Value Percent
- ----------------------------------------------------
FINANCE
Insurance $7,759,480 3.0%
Banks 5,101,360 2.0
Finance Companies 2,709,781 1.1
Money Management 2,061,352 0.8
Credit Cards 1,913,771 0.7
Savings & Loans 1,246,449 0.5
- ----------------------------------------------------
20,792,193 8.1
- ----------------------------------------------------
INDUSTRIAL GOODS/SERVICES
Industrial Services 20,395,858 7.9
Industrial Materials 12,364,977 4.8
Outsourcing & Training
Services 11,806,373 4.6
Conglomerates 7,553,788 2.9
Construction 5,724,979 2.2
Machinery 4,728,233 1.9
- ----------------------------------------------------
62,574,208 24.3
- ----------------------------------------------------
ENERGY/MINERALS
Oil Services 8,636,188 3.4
Oil Refining/Marketing/
Distribution 7,401,742 2.9
Independent Power 4,447,945 1.7
Oil/Gas Producers 3,140,625 1.2
- ----------------------------------------------------
23,626,500 9.2
- ----------------------------------------------------
OTHER
Transportation 5,230,900 2.0
Real Estate 5,032,214 1.9
Regulated Utilities 3,246,769 1.3
- ----------------------------------------------------
13,509,883 5.2
- ----------------------------------------------------
TOTAL COMMON STOCKS 246,809,460 95.9
- ----------------------------------------------------
SHORT-TERM OBLIGATIONS 4,716,000 1.8
- ----------------------------------------------------
TOTAL INVESTMENTS 251,525,460 97.7
- ----------------------------------------------------
CASH AND OTHER ASSETS
LESS LIABILITIES 5,895,111 2.3
- ----------------------------------------------------
NET ASSETS 257,420,571 100.0%
====================================================
See accompanying notes to financial statements.
25
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER TWENTY
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
COMMON STOCKS-94.1%
INFORMATION-27.8%
- -----------------------------------------------------------------
BUSINESS INFORMATION/ADVERTISING-9.1%
145,000 Interpublic Group (b) $1,940,100
Advertising
28,000 Moody's 1,475,880
Ratings Service for Credit Obligations
- -----------------------------------------------------------------
3,415,980
- -----------------------------------------------------------------
BUSINESS/CONSUMER SOFTWARE-12.5%
36,000 Synopsys (b) 2,226,600
Software for Designing Semiconductor Chips
20,000 Electronic Arts (b) 1,479,800
Entertainment Software
67,000 JD Edwards (b) 960,110
Mid Market ERP & Supply Chain Software
- -----------------------------------------------------------------
4,666,510
- -----------------------------------------------------------------
GAMING EQUIPMENT-4.4%
16,000 International Game Technology (b) 1,637,280
Slot Machines & Progressive Jackpots
- -----------------------------------------------------------------
INSTRUMENTATION-1.8%
30,000 Tektronix (b) 648,000
Analytical Instruments
- -----------------------------------------------------------------
INFORMATION -TOTAL 10,367,770
CONSUMER GOODS/SERVICES-25.4%
- -----------------------------------------------------------------
ENTERTAINMENT-2.5%
24,000 International Speedway Motors 948,240
Largest Motorsport Racetrack
Owner & Operator
- -----------------------------------------------------------------
RETAIL-9.3%
40,000 Costco (b) 1,464,000
Warehouse Superstores
57,000 Safeway (b) 1,166,220
Retail Food & Drug Stores
30,000 Abercrombie & Fitch (b) 852,300
Teen Apparel Retailer
- -----------------------------------------------------------------
3,482,520
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
APPAREL-2.7%
20,000 Coach (b) $994,800
Designer & Retailer of Branded
Leather Accessories
- -----------------------------------------------------------------
FURNITURE/TEXTILES-7.4%
73,000 Herman Miller 1,475,330
Office Furniture
23,000 Mohawk Industries (b) 1,277,190
Carpet & Flooring
- -----------------------------------------------------------------
2,752,520
- -----------------------------------------------------------------
LEISURE VEHICLES-3.5%
33,000 Harley-Davidson 1,315,380
Motorcycles & Related Merchandise
- -----------------------------------------------------------------
CONSUMER GOODS/SERVICES-TOTAL 9,493,460
HEALTH CARE-22.6%
- -----------------------------------------------------------------
HOSPITAL/LABORATORY SUPPLIES-2.4%
29,000 Techne (b) 879,860
Cytokines, Antibodies, Other
Reagents For Life Sciences
- -----------------------------------------------------------------
MEDICAL EQUIPMENT-7.8%
66,000 Guidant (b) 2,929,740
Stents, Defibrillators & Other
Cardiac Medical Devices
- -----------------------------------------------------------------
SERVICES-12.4%
130,000 First Health Group (b) 3,588,000
PPO Network
33,000 Lincare Holdings (b) 1,039,830
Home Health Care Services
- -----------------------------------------------------------------
4,627,830
- -----------------------------------------------------------------
HEALTH CARE-TOTAL 8,437,430
FINANCE-13.7%
- -----------------------------------------------------------------
MONEY MANAGEMENT-2.0%
23,000 SEI Investments 736,000
Mutual Fund Administration
- -----------------------------------------------------------------
INSURANCE-4.8%
7,000 Markel (b) 1,792,000
Specialty Insurance
See accompanying notes to financial statements.
26
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER TWENTY
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
BANKS-6.9%
30,000 TCF Financial $1,195,200
Great Lakes Bank
38,000 Associated Banc-Corp 1,401,440
Midwest Bank
- -----------------------------------------------------------------
2,596,640
- -----------------------------------------------------------------
FINANCE-TOTAL 5,124,640
INDUSTRIAL GOODS/SERVICES-4.6%
- -----------------------------------------------------------------
LOGISTICS-4.6%
50,000 Expeditors International of Washington 1,732,000
International Freight Forwarder
- -----------------------------------------------------------------
INDUSTRIAL GOODS/SERVICES-TOTAL 1,732,000
TOTAL COMMON STOCKS
(COST: $28,691,700)-94.1% 35,155,300
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Principal Value
Amount
SHORT-TERM OBLIGATIONS-5.6%
- -----------------------------------------------------------------
$1,000,000 Citicorp $999,822
1.07%, due 07/07/03
1,089,000 Repurchase agreement with State
Street Bank &Trust Co., dated
06/30/03 due 07/01/03 at 1.10%
collateralized by Federal National
Mortgage Association Notes, maturing
03/24/04, market value $1,111,932
(repurchase proceeds $1,089,033) 1,089,000
- -----------------------------------------------------------------
(AMORTIZED COST: $2,088,822) 2,088,822
TOTAL INVESTMENTS
(COST: $30,780,522)-99.7% (a) 37,244,122
- -----------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES-0.3% 127,679
- -----------------------------------------------------------------
TOTAL NET ASSETS-100% $37,371,801
=================================================================
NOTES TO STATEMENT OF INVESTMENTS:
(a) At June 30, 2003, cost for both financial statement and federal
income tax purposes is the same. The net unrealized appreciation
was $6,463,600 consisting of gross unrealized appreciation of
$6,702,097 and gross unrealized depreciation of $238,497.
(b) Non-income producing security.
See accompanying notes to financial statements.
27
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER FOREIGN FORTY
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
COMMON STOCKS-91.0%
EUROPE-67.1%
- -----------------------------------------------------------------
GERMANY-6.5%
12,500 Rhoen-Klinikum $502,516
Hospital Management
7,500 Deutsche Boerse 397,958
Trading, Clearing & Settlement Services
for Financial Markets
2,400 Henkel 148,824
Chemicals, Detergents & Non-Food
Consumer Brands
- -----------------------------------------------------------------
1,049,298
- -----------------------------------------------------------------
NORWAY-2.5%
80,300 DNB Holding 396,288
Bank
- -----------------------------------------------------------------
FRANCE-6.5%
10,300 Neopost 438,360
Postage Meter Machines
16,000 Euronext 397,342
Trading, Clearing & Settlement Services
for Financial Markets
5,200 Essilor International 209,824
Eyeglass Lenses
- -----------------------------------------------------------------
1,045,526
- -----------------------------------------------------------------
UNITED KINGDOM/IRELAND-33.0%
80,000 Anglo Irish Bank (Ireland) 708,554
Corporate Lending & Private Banking
40,000 Kerry Group (Ireland) 619,295
Specialty Food Ingredient Company
6,000 Depfa Bank (Ireland) 467,577
International Public Sector Finance
85,000 Compass Group 459,073
International Concession & Contract Caterer
90,000 BG Group 399,423
Oil & Gas Producer
40,000 Reed Elsevier 333,390
Scientific, Legal, Education &
Business Publisher
30,000 British Sky Broadcasting (b) 332,977
Digital Satellite Broadcasting
80,000 Hit Entertainment 326,904
Children's Television Shows
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
UNITED KINGDOM/IRELAND-33.0% (CONT)
70,000 Grafton Group (Ireland) $309,992
Builders, Wholesalers & DIY Retailing
50,000 Smith & Nephew 287,811
Medical Equipment & Supplies
40,000 Bunzl 280,828
Supplier of Business to Business Consumables
25,000 Exel 257,026
Global Freight Forwarding
20,000 Amersham 150,331
Health & Biosciences
10,000 Irish Life & Permanent (Ireland) 108,124
Savings Products
8,000 Cobham 152,782
Aerospace
110,000 Marconi (b) 111,819
Telecom Equipment Manufacturer
- -----------------------------------------------------------------
5,305,906
- -----------------------------------------------------------------
SWITZERLAND-8.3%
800 Synthes-Stratec 575,910
Products for Orthopedic Surgery
800 Givaudan 337,378
Industrial Fragrances & Flavors
1,700 Schindler (b) 274,194
Elevator Manufacturer & Maintenance
500 Geberit International 154,262
Plumbing Supplies
- -----------------------------------------------------------------
1,341,744
- -----------------------------------------------------------------
ITALY-4.0%
30,000 Autogrill (b) 327,821
Restaurants & Catering for Travelers
100,000 Parmalat Finanziaria 315,168
Dairy Producer
- -----------------------------------------------------------------
642,989
- -----------------------------------------------------------------
SPAIN-2.0%
25,000 Red Electrica 327,821
Spanish Power Grid
See accompanying notes to financial statements.
28
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER FOREIGN FORTY
STATEMENT OF INVESTMENTS (Unaudited) JUNE 30, 2003
- -----------------------------------------------------------------
Number of Value
Shares
- -----------------------------------------------------------------
NETHERLANDS-2.1%
27,863 Wolters Kluwer $336,519
Legal & Business Publisher
- -----------------------------------------------------------------
LUXEMBOURG-2.2%
14,000 Tenaris 357,000
Steel Pipe for Oil Wells & Pipelines
- -----------------------------------------------------------------
EUROPE-TOTAL 10,803,091
ASIA-12.5%
- -----------------------------------------------------------------
HONG KONG-2.4%
110,000 TVB 392,850
Television Programming & Broadcasting
- -----------------------------------------------------------------
JAPAN-8.3%
5,000 Hoya 345,000
Opto-Electrical Components &
Eyeglass Lenses
16,500 Terumo 274,644
Medical Supplies
5,000 USS 253,640
Used Car Auctioneer
11,000 Daito Trust Construction 231,738
Apartment Builder
3,500 Nidec 231,571
Hard Disk Drive Spindle Motor
Manufacturer
- -----------------------------------------------------------------
1,336,593
- -----------------------------------------------------------------
SINGAPORE-1.8%
31,000 Venture 283,459
Electronic Contract Manufacturer
- -----------------------------------------------------------------
ASIA-TOTAL 2,012,902
OTHER COUNTRIES-11.4%
- -----------------------------------------------------------------
AUSTRALIA-2.7%
120,000 Lion Nathan 431,877
Beer Brewer/Distributor
- -----------------------------------------------------------------
Principal Amount or Value
Number of Shares
- -----------------------------------------------------------------
CANADA-8.7%
16,300 Talisman Energy $739,406
Oil & Gas Producer
25,000 Corus Entertainment (b) 419,510
CATV Programming & Radio Stations
7,500 Power Financial 242,025
Life Insurance & Mutual Funds
- -----------------------------------------------------------------
1,400,941
- -----------------------------------------------------------------
OTHER-TOTAL 1,832,818
TOTAL COMMON STOCKS (COST: $12,857,976)-91.0% 14,648,811
- -----------------------------------------------------------------
SHORT-TERM OBLIGATIONS-6.5%
- -----------------------------------------------------------------
$1,037,000 Repurchase agreement with
State Street Bank &Trust Co.,
dated 06/30/03, due 07/01/03 at
1.10%, collateralized by Federal
National Mortgage Association
Notes, maturing 02/28/05, market
value $1,058,754 (repurchase
proceeds $1,037,032) 1,037,000
- -----------------------------------------------------------------
(AMORTIZED COST: $1,037,000) 1,037,000
TOTAL INVESTMENTS
(COST: $13,894,976)-97.5% (a) 15,685,811
- -----------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES-2.5% 404,688
- -----------------------------------------------------------------
TOTAL NET ASSETS-100% $16,090,499
=================================================================
NOTES TO STATEMENT OF INVESTMENTS:
(a) At June 30, 2003, cost for both financial statement and federal income tax
purposes is the same. The net unrealized appreciation was $1,790,835
consisting of gross unrealized appreciation of $2,040,233 and gross
unrealized depreciation of $249,398.
(b) Non-income producing security.
(c) At June 30, 2003, $5,615,696 or 34.9% of the Fund's net assets were
denominated in the Euro currency.
See accompanying notes to financial statements.
29
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER FOREIGN FORTY
PORTFOLIO DIVERSIFICATION (Unaudited) JUNE 30, 2003
AT JUNE 30, 2003, THE FUND'S PORTFOLIO INVESTMENTS AS A
PERCENT OF NET ASSETS WAS DIVERSIFIED AS FOLLOWS:
Value Percent
- -----------------------------------------------------
INFORMATION TECHNOLOGY
Computer Related Hardware
Computer Hardware $669,932 4.2%
Semiconductors and
Related Equipment 345,000 2.1
Contract Manufacturing 283,459 1.8
- -----------------------------------------------------
1,298,391 8.1
Media
TV Broadcasting 746,414 4.6
TV Programming 725,826 4.5
- -----------------------------------------------------
1,472,240 9.1
Software and Services
Transaction Processors 795,300 4.9
Publishing 669,909 4.2
- -----------------------------------------------------
1,465,209 9.1
- -----------------------------------------------------
4,235,840 26.3
- -----------------------------------------------------
HEALTH CARE
Medical Equipment 1,073,545 6.7
Hospital Management 502,516 3.1
Hospital/ Laboratory Supplies 424,975 2.6
- -----------------------------------------------------
2,001,036 12.4
- -----------------------------------------------------
CONSUMER GOODS/SERVICES
Food 934,463 5.8
Restaurants 786,894 4.9
Beverage 431,877 2.7
Consumer Goods Distribution 253,640 1.6
Nondurables 148,824 0.9
- -----------------------------------------------------
2,555,698 15.9
Value Percent
- -----------------------------------------------------
FINANCE
Banks $1,572,419 9.8%
Money Management 242,025 1.5
Insurance 108,124 0.7
- -----------------------------------------------------
1,922,568 12.0
- -----------------------------------------------------
INDUSTRIAL GOODS/SERVICES
Industrial Services 531,220 3.3
Steel 357,000 2.2
Specialty Chemicals 337,378 2.1
Industrial Distribution 309,992 1.9
Outsourcing & Training
Services 280,828 1.8
Electrical Components 264,601 1.6
Industrial Materials 154,262 1.0
- -----------------------------------------------------
2,235,281 13.9
- -----------------------------------------------------
ENERGY/MINERALS
Oil/Gas Producers 1,138,829 7.1
- -----------------------------------------------------
1,138,829 7.1
- -----------------------------------------------------
OTHER
Regulated Utilities 327,821 2.0
Real Estate 231,738 1.4
- -----------------------------------------------------
559,559 3.4
- -----------------------------------------------------
TOTAL COMMON STOCKS 14,648,811 91.0
- -----------------------------------------------------
SHORT-TERM OBLIGATIONS 1,037,000 6.5
- -----------------------------------------------------
TOTAL INVESTMENTS 15,685,811 97.5
- -----------------------------------------------------
CASH AND OTHER ASSETS
LESS LIABILITIES 404,688 2.5
- -----------------------------------------------------
NET ASSETS $16,090,499 100.0%
=====================================================
See accompanying notes to financial statements.
30
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER ADVISORS FUNDS
> STATEMENTS OF ASSETS AND LIABILITIES
> STATEMENTS OF OPERATIONS
> STATEMENTS OF CHANGES IN NET ASSETS
> FINANCIAL HIGHLIGHTS
> NOTES TO FINANCIAL STATEMENTS
31
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
JUNE 30, 2003
WANGER WANGER WANGER WANGER
U.S. SMALLER INTERNATIONAL TWENTY FOREIGN
COMPANIES SMALL CAP FORTY
- -------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost: Wanger U.S. $586,301,201 $251,525,460 $37,244,122 $15,685,811
Smaller Companies $460,560,442; Wanger
International Small Cap $240,284,511; Wanger
Twenty $30,780,522; Wanger Foreign
Forty $13,894,976)
Cash 3,241 598,807 459 879
Foreign currency (cost: Wanger International
Small Cap $5,713,226; Wanger Foreign Forty $23,047) -- 5,729,381 -- 23,034
Receivable for:
Investments sold -- 1,850,819 -- 390,628
Fund shares sold 2,509,206 270,215 167,151 213,294
Dividends and interest 141,704 565,848 773 31,211
Prepaid insurance 2,504 1,289 -- 833
- -------------------------------------------------------------------------------------------------------------
Total Assets 588,957,856 260,541,819 37,412,505 16,345,690
LIABILITIES
Payable for:
Investments purchased 95,639 1,014,074 -- --
Fund shares repurchased 550,646 1,910,954 17,455 229,649
Transfer agent fee 687 1,362 1,441 1,432
Custody fee 2,646 39,171 816 5,616
Reports to shareholders 194,994 114,910 5,560 9,754
Legal and audit fee 45,578 26,431 5,672 5,437
Trustees' fees 17,907 9,295 1,158 1,412
Other liabilities 7,874 5,051 8,602 1,891
- -------------------------------------------------------------------------------------------------------------
Total Liabilities 915,971 3,121,248 40,704 255,191
- -------------------------------------------------------------------------------------------------------------
Net Assets $588,041,885 $257,420,571 $37,371,801 $16,090,499
=============================================================================================================
COMPOSITION OF NET ASSETS
Paid in capital $506,991,845 $345,597,818 $30,954,957 $22,419,050
Undistributed net investment income (Accumulated
net investment loss) (1,303,270) 1,920,880 (92,248) 84,698
Accumulated net realized gain (loss) (43,387,449) (101,366,369) 45,492 (8,206,957)
Net unrealized appreciation on:
Investments 125,740,759 11,240,949 6,463,600 1,790,835
Foreign currency transactions -- 27,293 -- 2,873
- -------------------------------------------------------------------------------------------------------------
Net Assets $588,041,885 $257,420,571 $37,371,801 $16,090,499
=============================================================================================================
Fund shares outstanding 27,205,901 17,031,417 2,258,445 1,488,564
=============================================================================================================
Net asset value, offering price and
redemption price per share $21.61 $15.11 $16.55 $10.81
=============================================================================================================
See accompanying notes to financial statements.
32
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2003
WANGER WANGER WANGER WANGER
U.S. SMALLER INTERNATIONAL TWENTY FOREIGN
COMPANIES SMALL CAP FORTY
- -------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income (net of foreign taxes of $970,535 $3,504,919 $64,644 $179,681
$424,453 for Wanger International Small Cap
and $18,925 for Wanger Foreign Forty)
Interest income 217,160 49,580 8,810 4,801
- -------------------------------------------------------------------------------------------------------------
Total investment income 1,187,695 3,554,499 73,454 184,482
EXPENSES:
Management fees 2,298,516 1,385,999 139,230 68,594
Custody fees 10,291 122,571 2,374 15,954
Legal and audit fees 52,222 28,870 9,238 8,777
Reports to shareholders 86,557 54,089 3,221 4,415
Transfer agent fees 10,110 10,405 9,311 9,276
Trustees' fees 34,622 16,280 1,693 1,337
Other expenses 12,138 11,772 645 628
- -------------------------------------------------------------------------------------------------------------
Total Expenses 2,504,456 1,629,986 165,712 108,981
Less custody fees paid indirectly (202) (86) (10) (47)
Less expenses reimbursed by Advisor -- -- -- (9,472)
- -------------------------------------------------------------------------------------------------------------
Net Expenses 2,504,254 1,629,900 165,702 99,462
- -------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (1,316,559) 1,924,599 (92,248) 85,020
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
PORTFOLIO POSITIONS:
Net realized gain (loss) on:
Investments 8,449,516 (9,264,753) 557,711 (880,114)
Foreign currency transactions -- 33,927 -- 4,885
- -------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 8,449,516 (9,230,826) 557,711 (875,229)
- -------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on:
Investments 73,885,252 40,021,632 4,308,942 2,167,702
Foreign currency transactions -- (3,493) -- 194
- -------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) 73,885,252 40,018,139 4,308,942 2,167,896
- -------------------------------------------------------------------------------------------------------------
Net Gain 82,334,768 30,787,313 4,866,653 1,292,667
- -------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $81,018,209 $32,711,912 $4,774,405 $1,377,687
=============================================================================================================
See accompanying notes to financial statements.
33
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
WANGER U.S. SMALLER COMPANIES WANGER INTERNATIONAL SMALL CAP
(Unaudited) (Unaudited)
Six Months Year ended Six Months Year ended
ended December 31, ended December 31,
INCREASE (DECREASE) IN NET ASSETS June 30, 2003 2002 June 30, 2003 2002
==================================================================================================================================
FROM OPERATIONS:
Net investment income (loss) $(1,316,559) $(2,320,011) $1,924,599 $1,068,839
Net realized gain (loss) on investments and
foreign currency transactions 8,449,516 (17,795,068) (9,230,826) (29,381,289)
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions 73,885,252 (74,506,422) 40,018,139 (3,856,903)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 81,018,209 (94,621,501) 32,711,912 (32,169,353)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- (778,511) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders -- -- (778,511) --
SHARE TRANSACTIONS:
Subscriptions 68,500,225 140,977,765 82,563,983 334,085,769
Distributions reinvested -- -- 778,511 --
Redemptions (33,202,543) (72,816,413) (73,938,888) (316,459,265)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase from Share Transactions 35,297,682 68,161,352 9,403,606 17,626,504
- ----------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 116,315,891 (26,460,149) 41,337,007 (14,542,849)
NET ASSETS:
Beginning of period 471,725,994 498,186,143 216,083,564 230,626,413
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $588,041,885 $471,725,994 $257,420,571 $216,083,564
- ----------------------------------------------------------------------------------------------------------------------------------
Undistributed Net Investment Income (Accumulated Net Investment Loss) $(1,303,270) $13,289 $1,920,880 $774,792
==================================================================================================================================
WANGER TWENTY WANGER FOREIGN FORTY
(Unaudited) (Unaudited)
Six Months Year ended Six Months Year ended
ended December 31, ended December 31,
INCREASE (DECREASE) IN NET ASSETS June 30, 2003 2002 June 30, 2003 2002
==================================================================================================================================
FROM OPERATIONS:
Net investment income (loss) $(92,248) $(148,168) $85,020 $51,954
Net realized gain (loss) on investments
and foreign currency transactions 557,711 726,558 (875,229) (2,982,769)
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions 4,308,942 (2,604,955) 2,167,896 635,281
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 4,774,405 (2,026,565) 1,377,687 (2,295,534)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- (50,019) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders -- -- (50,019) --
SHARE TRANSACTIONS:
Subscriptions 9,059,625 12,257,973 4,343,558 32,503,614
Distributions reinvested -- -- 50,019 --
Redemptions (2,586,149) (5,536,933) (3,713,554) (31,556,395)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase from Share Transactions 6,473,476 6,721,040 680,023 947,219
- ----------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 11,247,881 4,694,475 2,007,691 (1,348,315)
NET ASSETS:
Beginning of period 26,123,920 21,429,445 14,082,808 15,431,123
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $37,371,801 $26,123,920 $16,090,499 $14,082,808
- ----------------------------------------------------------------------------------------------------------------------------------
Undistributed Net Investment Income (Accumulated Net Investment Loss) $(92,248) -- $84,698 $49,697
==================================================================================================================================
See accompanying notes to financial statements.
34-35 SPREAD
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES FINANCIAL HIGHLIGHTS
(Unaudited)
Six Months Ended
SELECTED DATA FOR A SHARE OUTSTANDING June 30, Year Ended December 31,
THROUGHOUT EACH PERIOD 2003 2002 2001 2000 1999 1998
=============================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $18.51 $22.25 $19.99 $24.88 $22.18 $21.46
- -----------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) (0.05) (0.10) (0.04) 0.02 0.03 (0.05)
Net realized and unrealized gain (loss)
on investments 3.15 (3.64) 2.31 (1.82) 4.79 1.93
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.10 (3.74) 2.27 (1.80) 4.82 1.88
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- -- (0.01) (0.03) -- --
From net realized capital gains -- -- -- (3.06) (2.12) (1.16)
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions Declared to Shareholders -- -- (0.01) (3.09) (2.12) (1.16)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $21.61 $18.51 $22.25 $19.99 $24.88 $22.18
=============================================================================================================================
Total Return (b) 16.75%(c) (16.81)% 11.39% (8.16)% 25.06% 8.68%
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.02%(d)(e) 1.05%(d) 0.99% 1.00%(d) 1.02%(d) 1.02%(d)
Net investment income (loss) (0.53)%(d)(e) (0.47)%(d) (0.20)% 0.07%(d) 0.14%(d) (0.25)%(d)
Portfolio turnover rate 7%(c) 16% 18% 36% 35% 34%
Net assets, end of period (000's) $588,042 $471,726 $498,186 $403,306 $390,709 $339,119
- --------------------------------------------------------------------------------
(a) Net investment income (loss) per share was based upon the average shares
outstanding during the period.
(b) Total return at net asset value assuming all distributions are reinvested.
(c) Not annualized.
(d) The benefits derived from custody fees paid indirectly had no impact.
(e) Annualized.
See accompanying notes to financial statements.
36
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP FINANCIAL HIGHLIGHTS
(Unaudited)
Six Months Ended
SELECTED DATA FOR A SHARE OUTSTANDING June 30, Year Ended December 31,
THROUGHOUT EACH PERIOD 2003 2002 2001 2000 1999 1998
=============================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $13.27 $15.40 $28.53 $43.67 $19.62 $17.05
- -----------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) 0.12 0.07 0.02 (0.26) (0.13) 0.03
Net realized and unrealized gain (loss)
on investments
and foreign currency transactions 1.77 (2.20) (5.12) (9.75) 24.52 2.76
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.89 (2.13) (5.10) (10.01) 24.39 2.79
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.05) -- -- -- (0.34) (0.22)
From net realized gain and unrealized gain reportable
for federal income taxes -- -- (8.03) (5.13) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions Declared to Shareholders (0.05) -- (8.03) (5.13) (0.34) (0.22)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $15.11 $13.27 $15.40 $28.53 $43.67 $19.62
=============================================================================================================================
Total Return (b) 14.30%(c) (13.83)% (21.27)% (27.84)% 126.37% 16.33%
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (d) 1.46%(e) 1.47% 1.43% 1.41% 1.49% 1.55%
Net investment income (loss) (d) 1.73%(e) 0.46% 0.10% (0.68)% (0.49)% 0.16%
Portfolio turnover rate 27%(c) 54% 56% 67% 75% 56%
Net assets, end of period (000's) $257,421 $216,084 $230,626 $271,675 $311,331 $141,253
- --------------------------------------------------------------------------------
(a) Net investment income (loss) per share was based upon the average shares
outstanding during the period.
(b) Total return at net asset value assuming all distributions are reinvested.
(c) Not annualized.
(d) The benefits derived from custody fees paid indirectly had no impact.
(e) Annualized.
See accompanying notes to financial statements.
37
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER TWENTY FINANCIAL HIGHLIGHTS
(Unaudited) February 1,
Six Months Ended 1999 through
SELECTED DATA FOR A SHARE OUTSTANDING June 30, Year Ended December 31, December 31,
THROUGHOUT EACH PERIOD 2003 2002 2001 2000 1999
======================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $14.19 $15.36 $14.08 $13.43 $10.00
- ----------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (a) (0.05) (0.09) (0.05) (0.03) (0.08)
Net realized and unrealized gain (loss)
on investments 2.41 (1.08) 1.33 1.23 3.51
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 2.36 (1.17) 1.28 1.20 3.43
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized capital gains -- -- -- (0.55) --
- ----------------------------------------------------------------------------------------------------------------------
Total Distributions Declared to Shareholders -- -- -- (0.55) --
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $16.55 $14.19 $15.36 $14.08 $13.43
======================================================================================================================
Total Return (b) 16.63%(c) (7.62)% 9.09% 9.45%(d) 34.30%(c)(d)
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.13%(e)(f) 1.18%(f) 1.33%(f) 1.39%(g) 1.41%(e)(g)
Net investment loss (0.63)%(e)(f) (0.62)%(f) (0.34)%(f) (0.24)%(g) (0.77)%(e)(g)
Reimbursement -- -- -- 0.21% 0.71%(e)
Portfolio turnover rate 25%(c) 45% 76% 86% 113%(e)
Net assets, end of period (000's) $37,372 $26,124 $21,429 $12,129 $6,570
- --------------------------------------------------------------------------------
(a) Net investment loss per share was based upon the average shares outstanding
during the period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) Not annualized.
(d) Had the Advisor not reimbursed a portion of its expenses, total return
would have been reduced.
(e) Annualized.
(f) The benefits derived from custody fees paid indirectly had no impact.
(g) In accordance with a requirement of the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custody fees
for cash balances it maintains with the custodian ("custody fees paid
indirectly"). The ratios of expenses to average daily net assets and net
investment income to average daily net assets net of custody fees paid
indirectly would have been 1.35% and (0.20%), respectively, for the year
ended December 31, 2000 and 1.35% and (0.71%), respectively, for the period
ended December 31, 1999.
See accompanying notes to financial statements.
38
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
WANGER FOREIGN FORTY FINANCIAL HIGHLIGHTS
(Unaudited) February 1,
Six Months Ended 1999 through
SELECTED DATA FOR A SHARE OUTSTANDING June 30, Year Ended December 31, December 31,
THROUGHOUT EACH PERIOD 2003 2002 2001 2000 1999
=====================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $9.86 $11.64 $17.29 $18.39 $10.00
- ---------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) 0.06 0.04 (0.03) (0.04) (0.01)
Net realized and unrealized gain (loss)
on investments and
foreign currency transactions 0.93 (1.82) (4.46) (0.10) 8.40
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.99 (1.78) (4.49) (0.14) 8.39
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.04) -- (0.02) (0.01) --
From net realized capital gains -- -- (1.14) (0.95) --
- ----------------------------------------------------------------------------------------------------------------------
Total Distributions Declared to Shareholders (0.04) -- (1.16) (0.96) --
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.81 $9.86 $11.64 $17.29 $18.39
======================================================================================================================
Total Return (b) 10.08%(c)(d) (15.29)%(d) (26.61)% (1.58)%(d) 83.90%(c)(d)
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.45%(e)(f) 1.45%(f) 1.45%(f) 1.45%(f) 1.59 %(e)(g)
Net investment income (loss) 1.24%(e)(f) 0.35%(f) (0.20)%(f) (0.20)%(f) (0.10)%(e)(g)
Reimbursement 0.14%(e) 0.10% -- 0.23% 1.86%(e)
Portfolio turnover rate 46%(c) 113% 72% 96% 91%(e)
Net assets, end of period (000's) $16,090 $14,083 $15,431 $15,496 $5,826
- --------------------------------------------------------------------------------
(a) Net investment income (loss) per share was based upon the average shares
outstanding during the period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) Not annualized.
(d) Had the Advisor not reimbursed a portion of expenses, total return would be
reduced.
(e) Annualized.
(f) The benefits derived from custody fees paid indirectly had no impact.
(g) In accordance with a requirement of the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custody fees
for cash balances it maintains with the custodian ("custody fees paid
indirectly"). The ratios of expenses to average daily net assets and net
investment income to average daily net assets net of custody fees paid
indirectly would have been 1.45% and 0.04%, respectively, for the period
ended December 31, 1999.
See accompanying notes to financial statements.
39
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. NATURE OF OPERATIONS
Wanger U.S. Smaller Companies, Wanger International Small Cap, Wanger Twenty and
Wanger Foreign Forty (the "Funds") are series of Wanger Advisors Trust (the
"Trust"), an open-end management investment company organized as a Massachusetts
business trust. The investment objective of each Fund is to seek long-term
growth of capital. The Funds are available only for allocation to certain life
insurance company separate accounts established for the purpose of funding
qualified and non-qualified variable annuity contracts, and may also be offered
directly to certain types of pension plans and retirement arrangements.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Investments are stated at fair value. Securities traded on securities exchanges
or in over-the-counter markets in which transaction prices are reported are
valued at the last sales price at the time of valuation. If a security is traded
principally on the Nasdaq Stock Market Inc., the SEC-approved Nasdaq Official
Closing Price will be applied. Securities for which there are no reported sales
on the valuation date are valued at the latest bid quotation. Money market
instruments having a maturity of 60 days or less from the valuation date are
valued on an amortized cost basis. Securities for which quotations are not
readily available and any other assets are valued as determined in good faith by
the Board of Trustees.
REPURCHASE AGREEMENTS
The Funds may engage in repurchase agreement transactions. The Funds, through
their custodians, receive delivery of underlying securities collateralizing
repurchase agreements. The Funds' investment advisor determines that the value
of the underlying securities is at all times at least equal to the resale price.
In the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings.
FOREIGN CURRENCY TRANSLATIONS
Values of investments denominated in foreign currencies are converted into U.S.
dollars using the spot market rate of exchange at the time of valuation.
Purchases and sales of investments and dividend and interest income are
translated into U.S. dollars using the spot market rate of exchange prevailing
on the respective dates of such transactions. The gain or loss resulting from
changes in foreign exchange rates is included with net realized and unrealized
gain or loss from investments, as appropriate.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as soon as
the information is available to the Fund. Interest income is recorded on the
accrual basis and includes amortization of discounts on money market instruments
and on long-term debt instruments when required for federal income tax purposes.
Realized gains and losses from security transactions are reported on an
identified cost basis.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from those
estimated.
FUND SHARE VALUATION
Fund shares are sold and redeemed on a continuing basis at net asset value. Net
asset value per share is determined daily as of the close of trading on the New
York Stock Exchange on each day the Exchange is open for trading by dividing the
total value of the Fund's investments and other assets, less liabilities, by the
number of Fund shares outstanding.
CUSTODY FEES
Custody fees are reduced based on each Fund's cash balances maintained with the
custodian. The amount is disclosed as a reduction of total expenses in the
Statement of Operations.
FEDERAL INCOME TAXES
The Funds have complied with the special provisions of the Internal Revenue Code
available to regulated investment companies and, in the manner provided therein,
distribute all their taxable income, as well as any net realized gain on sales
of investments and foreign currency transactions reportable for federal income
tax purposes. Accordingly, the Funds paid no federal income taxes and no federal
income tax provision was required.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-date.
3. FEDERAL TAX INFORMATION
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations, which may differ from accounting
principles generally accepted in the United States of America.
The tax character of distributions paid during 2002 and 2001 was as follows:
YEARS ENDED DECEMBER 31,
2002 2001
---------------------------------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM
INCOME CAPITAL GAIN INCOME CAPITAL GAIN
---------------------- ---------------------------
Wanger U.S. Smaller
Companies -- -- $ 275,386 $ --
Wanger International
Small Cap -- -- 25,006,153 53,687,433
Wanger Twenty -- -- -- --
Wanger Foreign Forty -- -- 876,913 454,935
40
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
The following capital loss carryforwards, determined as of December 31, 2002,
are available to reduce taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code:
WANGER WANGER
U.S. SMALLER INTERNATIONAL
YEAR OF EXPIRATION COMPANIES SMALL CAP
----------- -------------
2008 $ 7,245,899 $ --
2009 23,984,483 55,963,354
2010 12,034,012 36,103,589
----------- -----------
Total $43,264,394 $92,066,943
WANGER WANGER
YEAR OF EXPIRATION TWENTY FOREIGN FORTY
---------- -------------
2009 $512,219 $3,168,366
2010 -- 3,638,146
-------- ----------
Total $512,219 $6,806,512
Expired capital loss carryforwards, if any, are recorded as a reduction of
paid-in capital.
Under current tax rules, certain capital losses realized after October 31
may be deferred and treated as occurring on the first day of the following
fiscal year. As of December 31, 2002, for federal income tax purposes,
post-October losses were deferred to January 1, 2003 as follows:
Wanger U.S. Smaller Companies $ 8,177,158
Wanger International Small Cap --
Wanger Twenty --
Wanger Foreign Forty 493,942
4. TRANSACTIONS WITH AFFILIATES
The Funds' investment advisor, Liberty Wanger Asset Management, L.P., ("Liberty
WAM") is a wholly-owned subsidiary of Columbia Management Group, Inc.,
("Columbia"), which in turn, is a wholly-owned subsidiary of Fleet National
Bank, which in turn, is a wholly-owned subsidiary of FleetBoston Financial
Corporation, furnishes continuing investment supervision to each Fund and is
responsible for overall management of each Fund's business affairs. Each Fund
pays Liberty WAM a monthly advisory fee based upon average daily net assets at
the following annual rates:
WANGER U.S. SMALLER COMPANIES
Average Daily Net Assets
For the first $100 million 1.00%
Next $150 million .95%
In excess of $250 million .90%
WANGER INTERNATIONAL SMALL CAP
Average Daily Net Assets
For the first $100 million 1.30%
Next $150 million 1.20%
In excess of $250 million 1.10%
WANGER TWENTY
On average daily net assets .95%
WANGER FOREIGN FORTY
On average daily net assets 1.00%
The investment advisory agreement also provides that Liberty WAM will
reimburse the Funds to the extent that ordinary operating expenses (computed
based on net custodian fees) exceed an annual percentage of average daily net
assets.
Six Months Ended
June 30, 2003
Wanger U.S. Smaller Companies 2.00%
Wanger International Small Cap 2.00%
Wanger Twenty 1.35%
Wanger Foreign Forty 1.45%
Certain officers and trustees of the Trust are also officers of Liberty WAM.
The Trust makes no direct payments to its officers and trustees who are
affiliated with Liberty WAM. The Fund paid the following trustees' fees and
expenses to trustees not affiliated with Liberty WAM:
Six Months Ended
June 30, 2003
Wanger U.S. Smaller Companies $34,622
Wanger International Small Cap 16,280
Wanger Twenty 1,693
Wanger Foreign Forty 1,337
Liberty Funds Distributor, Inc. ("LFD"), a subsidiary of Columbia, serves
as the principal underwriter of the Trust and receives no compensation for its
services.
During the six months ended June 30, 2003, the Funds engaged in purchases and
sales transactions with funds that have a common investment advisor (or
affiliated investment advisors), common Directors/Trustees, and/or common
Officers. These purchase and sale transactions complied with the provisions of
Rule 17a-7 under the Investment Company Act of 1940 and were as follows:
PURCHASES SALES
- -----------------------------------------------
Wanger U.S. Smaller
Companies $ -- $--
Wanger International
Small Cap 4,332,361 598,691
Wanger Twenty -- 39,564
Wanger Foreign Forty -- 16,982
41
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
5. BORROWING ARRANGEMENTS
The Trust participates in a $150,000,000 credit facility, which was entered into
to facilitate portfolio liquidity. No amounts were borrowed under this facility
for the six months ended June 30, 2003.
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:
WANGER U.S. SMALLER Six months ended Year ended
COMPANIES June 30, 2003 December 31, 2002
Shares sold 3,527,121 6,859,016
- ---------------------------------------------------------------
Less shares redeemed 1,800,364 3,775,228
- ---------------------------------------------------------------
Net increase in
shares outstanding 1,726,757 3,083,788
WANGER INTERNATIONAL Six months ended Year ended
SMALL CAP June 30, 2003 December 31, 2002
Shares sold 6,115,546 22,143,427
Shares issued in reinvestment
of dividend distributions 61,737 --
- ---------------------------------------------------------------
6,177,283 22,143,427
Less shares redeemed 5,428,031 20,832,143
- ---------------------------------------------------------------
Net increase in shares outstanding 749,252 1,311,284
WANGER TWENTY Six months ended Year ended
June 30, 2003 December 31, 2002
Shares sold 594,046 842,336
- ---------------------------------------------------------------
Less shares redeemed 177,122 395,508
- ---------------------------------------------------------------
Net increase in shares outstanding 416,924 446,828
WANGER FOREIGN FORTY Six months ended Year ended
June 30, 2003 December 31, 2002
Shares sold 450,733 3,006,672
Shares issued in reinvestment
of dividend distributions 5,608 --
- ---------------------------------------------------------------
456,341 3,006,672
Less shares redeemed 395,951 2,904,415
- ---------------------------------------------------------------
Net increase in shares outstanding 60,390 102,257
7. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales other than short-term
obligations for the six months ended June 30, 2003 were:
---------------------------------------------------------
WANGER U.S. WANGER WANGER WANGER
SMALLER INTERNATIONAL TWENTY FOREIGN FORTY
COMPANIES SMALL CAP
PURCHASES $54,633,609 $69,136,680 $12,564,170 $6,785,050
SALES 31,573,628 58,840,848 7,130,683 6,013,469
42
Wanger Advisors Trust 2003 Semiannual Report
- --------------------------------------------------------------------------------
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43
- --------------------------------------------------------------------------------
Logo: Squirrel
WANGER ADVISORS TRUST
TRUSTEES
Fred D. Hasselbring
P. Michael Phelps
Ralph Wanger
Patricia H. Werhane
OFFICERS
Ralph Wanger
President
Charles P. McQuaid
Senior Vice President
Robert A. Mohn
Vice President
Todd M. Narter
Vice President
Christopher J. Olson
Vice President
John H. Park
Vice President
Leah J. Zell
Vice President
Bruce H. Lauer
Vice President, Secretary and Treasurer
Kenneth A. Kalina
Assistant Treasurer
J. Kevin Connaughton
Assistant Treasurer
Kevin S. Jacobs
Assistant Treasurer
Vincent P. Pietropaolo
Assistant Secretary
TRANSFER AGENT,
DIVIDEND DISBURSING AGENT
Liberty Funds Services, Inc.
P.O. Box 8081
Boston, Massachusetts
02266-8081
DISTRIBUTOR
Liberty Funds Distributor, Inc.
One Financial Center
Boston, Massachusetts
02111-2621
INVESTMENT ADVISOR
Liberty Wanger Asset
Management, L.P.
227 West Monroe Street
Suite 3000
Chicago, Illinois 60606
1-800-4-WANGER
(1-800-492-6437)
LEGAL COUNSEL
Bell, Boyd & Lloyd LLC
Chicago, Illinois
This report, including the
schedules of investments and
financial statements, is submitted
for the general information
of the shareholders of the Wanger
Advisors Trust. This report is not
authorized for distribution unless
preceded or accompanied by
a prospectus.
44
WANGER ADVISORS TRUST
OL2568S ANN-03/6230-0603(08/03) 03/2323
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable at this time.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Registrant's Chief Executive Officer and Chief Financial Officer, based
on their evaluation of the Registrant's disclosure controls and procedures as of
a date within 90 days of the filing date of this report, have concluded that
such controls and procedures are adequately designed to ensure that information
required to be disclosed by the Registrant in its reports that it files or
submits under the Securities Exchange Act of 1934, as amended, is accumulated
and communicated to the Registrant's management, including the Chief Executive
Officer and Chief 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 over the registrant's last fiscal half-year that has
affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 10. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable at
this time.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940 (17 CFR 270.30a-2(a)). Attached hereto as
Exhibit 99.CERT.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by 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
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By (Signature and Title)* /s/ Ralph Wanger
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Ralph Wanger, Trustee and President
Date September 2, 2003
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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/ Ralph Wanger
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Ralph Wanger, Trustee and President
Date September 2, 2003
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By (Signature and Title)* /s/ Bruce H. Lauer
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Bruce H. Lauer, Treasurer
Date September 2, 2003
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