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)
227 West Monroe, Suite 3000, Chicago, Illinois 60606
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(Address of principal executive offices) (Zip code)
Vincent Pietropaolo, 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: 1-617-772-3698
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Date of fiscal year end: 12/31/2003
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Date of reporting period: 12/31/2003
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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 Annual Report
Wanger U.S. Smaller Companies
Wanger International Small Cap
Wanger Twenty
Wanger Foreign Forty
Logo: Squirrel
WANGER ADVISOR FUNDS
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managed by Columbia Wanger Asset Management, L.P.
Logo: Squirrel
WANGER ADVISORS FUNDS
2003 ANNUAL REPORT
CONTENTS
2 Don't Bet The Farm
4 Performance Review
Wanger U.S. Smaller
Companies
6 Performance Review
Wanger International
Small Cap
8 Performance Review
Wanger Twenty
10 Performance Review
Wanger Foreign Forty
12 Statement of Investments
Wanger U.S. Smaller
Companies
18 Statement of Investments
Wanger International
Small Cap
23 Portfolio Diversification
Wanger International
Small Cap
24 Statement of Investments
Wanger Twenty
26 Statement of Investments
Wanger Foreign Forty
28 Portfolio Diversification
Wanger Foreign Forty
30 Statements of Assets
and Liabilities
31 Statements of Operations
32 Statements of Changes in
Net Assets
34 Financial Highlights
Wanger U.S. Smaller
Companies
35 Financial Highlights
Wanger International
Small Cap
36 Financial Highlights
Wanger Twenty
37 Financial Highlights
Wanger Foreign Forty
38 Notes to Financial Statements
42 Report of Independent Auditors
43 Federal Income Tax Information
44 Trustees and Management of Wanger
Advisors Funds
COLUMBIA WANGER ASSET MANAGEMENT, L.P. ("COLUMBIA 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. COLUMBIA WAM MANAGES MORE THAN $17.4 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 COLUMBIA
ACORN FAMILY OF FUNDS.
FOR MORE COMPLETE INFORMATION ABOUT OUR FUNDS, INCLUDING THE COLUMBIA 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 COLUMBIA ACORN FUND
FAMILY.
Wanger Advisors Trust 2003 Annual Report
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Logo: Squirrel
DON'T BET THE FARM
How do you run a mutual fund to get good results? Are the investing rules the
same for managing small-cap/mid-cap funds and large-cap funds? Here are some of
my personal opinions on these questions.
We believe some basic principles apply to any stock portfolio. (1)
Diversification reduces risk, so own mid-cap stocks and a small-cap fund. (2)
International stocks add additional beneficial diversification. (3) The market
often over-values growth stocks, so pay close attention to valuation. (4) Big
winners take years to develop, so think long term.
So what are the differences in managing small-, mid- and large-cap funds? Many
large-company portfolios are run according to the rules expressed in Charles
Ellis's book, Winning the Loser's Game.1 He tells us to play it safe. Start with
a portfolio that mirrors the market and try to avoid big losers (fraud such as
Enron and WorldCom, overpriced growth such as Cisco at $80 2). One could say he
starts with the S&P 500 and reduces it to the Ellis 495 by getting rid of some
potential big losers.
The Winning the Loser's Game strategy may work for a big-company portfolio, but
it is not the way we like to run a small-cap fund. Small-cap is a winner's game.
You want to be a Barry Bonds or a Sammy Sosa and hit 50 home runs. If you get
the homers, you are a hero; you can strike out a lot of times but no one will
care very much. As an example, International Game Technology (IGT) has been a
great long-term winner for the funds. In the 2003 season, IGT hit a grand slam -
an additional unrealized gain of $175 million!3 Even if you strike out more
often than you would like, one big winner more than offsets a half-dozen $10
million losers. The funds had fine results in 2003 due to the success we had in
many stocks. Writing about success, however, is less colorful than writing about
failure; there are more plays about Nero than about Marcus Aurelius.
When it comes to investing, there are only a few ways to fail. You can buy a
company that runs into unexpected problems. Sometimes you buy into a speculative
company you know is high risk and the company just doesn't make it. The
unfortunate speculators who bought Cisco at $80 lost mere hundreds of billions
of dollars compared to the more unfortunate speculators gulled by the Enron and
WorldCom frauds. Of course bubbles and speculation have a long history. The
first overpricing bubble on record was the tulip-mania boom in Holland in 1636.
Tulips were a new "high-tech" flower in Europe but the price of strangely
colored varieties went way too high, creating a nasty collapse. Tulip-bulb
farming today is still important to the Dutch but it is no longer high tech.
Farmers can fool you. About 25 years ago there was an Oregon company called
Melridge run by a Dutch farmer. He grew lily bulbs. I planted some bulbs in my
mother's garden and got beautiful lilies. But could history repeat itself? Could
there be a problem with Melridge similar to the problem in the Netherlands more
than 350 years before? Yes. The accounts were falsified and Melridge was plowed
under.
A few years before that, I had put some personal money into Maine Sugar. The
promoter was a potato processor in Aroostook County, Maine. He believed that the
climate and soil there was favorable for growing sugar beets. He floated stock
to build a sugar refinery and invited a planeload of New York analysts to come
see the sugar beet fields under cultivation. The analysts got on a bus and were
driven to a field where the CEO dug up a giant sugar beet. The analysts had
never seen such a large sugar beet (most of them had never seen a farm, for that
matter). They got back on the bus, and after another ten minutes arrived at
another field. The CEO dug up a sugar beet bigger than the first one. The bus
continued to another farm field where again an impressive beet was unearthed.
When the analysts arrived back in New York, they wrote buy reports based on the
great number of farms growing sugar beets. Maine Sugar dissolved a few months
later, and the city-boy analysts realized that they had been shown the same
field three times in a row. (None of our funds owned either Melridge or Maine
Sugar).
2
Wanger Advisors Trust 2003 Annual Report
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The latest foolish farm fraud is Parmalat, an Italian company in the milk
business. (Parma latte, get it?) The funds advised by Columbia Wanger Asset
Management lost a few million dollars in Parmalat. Big banks that did business
with Parmalat could lose hundreds of millions of dollars in bad loans. One of
the centerpieces of the fraud was a made-up bank deposit of 3.95 billion euros
(about $5 billion). The Parmalat officials allegedly handed the auditors a
hastily forged document purporting to be the bank's acknowledgement of the
deposit. The auditors appear to have accepted the false affidavit without making
their own inquiry ("Hey, we are facing a deadline and it's only five billion.")
and allowed the company to continue its fraud for a few more months, roping us
in.
How could we have avoided getting caught? Talking to company management more
often probably would not have helped at all; after all, the bank lenders, the
bond rating agencies, and auditor were fooled, and they had much freer access to
the company's internal records then any outside financial analyst could ever
get. One answer would have been to talk to Parmalat's suppliers, in this case
the dairy farmers. After the collapse, someone did ("Parma Farmers Had One Rule:
Don't Deal With Parmalat," Bloomberg NEWS, January 19, 2004). Achille Coelli,
director of the Union of Parma Farmers said, "Farmers here won't work with
Parmalat. Tanzi [the CEO] never had a good reputation. The company was a slow
payer, so only one percent of the milk produced in Parma province was sold to
Parmalat." Obvious red flag? Sure. Did any analyst do this check before the
collapse? Don't think so.
What conclusions do we want to draw from this crying over spilt milk, besides
the vaguely comforting notion that not all fraud occurs in the USA? First, a
smart crook can fool some of the people all of the time. Second, really
star-quality analytic work could help discover frauds sooner, but much of the
time that doesn't happen. Third, complete skepticism would have you avoid fraud,
but you would avoid the good investments too. An investor must balance
skepticism and credulity just as one balances risk/return or growth/value.
Fourth, diversification dilutes the negative effect of one bad stock. Since
fraud tends to hit you one at a time, it's a strike out, but it doesn't cost you
the season. The benefits you get from big winners far outweigh a few losers.
COLUMBIA WAM NEWS
John Park has been named director of domestic research for Columbia Wanger Asset
Management, L.P. John joined the firm in 1993. He has managed Wanger Twenty
since its 1999 inception. On the retail side, he has been lead portfolio manager
of Columbia Acorn Select since its 1998 start date and he was also named as a
co-portfolio manager of Columbia Acorn Fund in 2003.
We'd like to welcome two new analysts to the team. John Emerson joined us
mid-year to cover domestic media stocks and Kenneth Wooden joined our
international team in early December to cover Japanese equities.
Photo of: RALPH WANGER
RALPH WANGER
Founder, Advisor and Trustee
Columbia Wanger Asset Management, L.P.
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1 Ellis, Charles D., Winning the Loser's Game: Timeless Strategies for
Successful Investing, McGraw-Hill Trade, 4th Edition, March 14, 2002.
2 No fund advised by Columbia Wanger Asset Management, L.P., owns or has
owned Enron, WorldCom or Cisco.
3 The dollar gain for the one-year period ended December 31, 2003 reflects
the total gain in the stock across all funds/accounts advised by Columbia
Wanger Asset Management, L.P., that held IGT.
3
Wanger Advisors Trust 2003 Annual Report
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Logo: Squirrel
PERFORMANCE REVIEW WANGER U.S. SMALLER COMPANIES
Small caps dominated large caps in 2003. The S&P 500, up 28.68%, had a good year
but did not come close to reaching small-cap returns. The more speculative
small-cap stocks drove the rally. We selectively put money into down-and-out
growth stocks over the year, driving Wanger U.S. Smaller Companies up 43.22% for
the year, just below the Russell 2000's 47.25% gain.
Technology stocks led the rally in 2003. In Wanger U.S. Smaller Companies,
Novell and Micros Systems were among the top moneymakers for the year. Novell,
up 215%, is a leading provider of network printer, directory, and file services.
Security Identity Management and Linux are two fast-growing markets in which
Novell is building a name for itself. Micros had a 93% annual gain. After years
of waiting, hotels are finally starting to upgrade their computer systems.
Micros is benefiting from this initiative with revenue growth in its hotel and
restaurant integration software up nearly 20%. In the financial sector,
AmeriCredit posted top gains, up 104% for the year. Credit loss reports showed
that for the first time in 27 months AmeriCredit had a year-over-year drop in
losses in November. Aspect Communications was another big percentage winner, up
452% for the year. Aspect's next generation products have started to take off
and financing and management problems that plagued the company in the past have
been worked out, benefiting stockholders.
The notable poor performer was First Health Group, down 20% in the year. First
Health's competition aggressively lowered prices, putting pressure on the
company. Home health care service provider Lincare also fell as the government
moved to cut oxygen reimbursement rates, a major source of revenue for Lincare.
Disappointing sales marked down the stock price for retailer Gadzooks.
What a difference a year makes. Last year, all areas of the market - small, mid,
large - ended the year down in double digits. This year, small-cap gains neared
50%, mid caps cleared 35% and large caps came in at about 30%. So, what's next?
Small caps did so well in 2003 that there is some concern that they are getting
overpriced. We still believe that small caps are in for a very long period of
outperformance. As for valuations, we have a list of stocks that are attractive
to buy at current levels. Today that list is smaller than it was six months ago
but we believe there continue to be small-cap stocks to buy at good prices.
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 12/31/03, the Fund's positions in the holdings mentioned were: Novell,
1.7%; Micros Systems, 2.3%; AmeriCredit, 2.2%; Aspect Communications, 1.6%;
First Health Group, 2.2%; Lincare, 3.2%; Gadzooks, 0.1%.
Photo of:
ROBERT A. MOHN
ROBERT A. MOHN
Portfolio Manager
4
Wanger Advisors Trust 2003 Annual Report
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VALUE OF A $10,000 INVESTMENT IN TOTAL RETURN FOR EACH PERIOD,
WANGER U.S. SMALLER COMPANIES MAY 3, 1995 THROUGH DECEMBER 31, 2003
AVERAGE ANNUAL RETURN
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1 year 5 years Life of fund
43.22% 8.80% 16.10%
LINE CHART:
WANGER U.S.
SMALLER
COMPANIES RUSSELL 2000
5/3/95 10000 10000
5/31/95 9870 10179.4
6/30/95 10770 10707.5
11560 11324.3
11940 11558.6
12060 11765
11380 11238.8
11640 11711
12/31/95 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
12/31/96 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
12/31/97 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
12/31/98 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
12/31/99 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
12/31/00 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
12/31/01 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
12/31/02 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
31462.9 20043.1
33168.1 20962.1
32549.3 20575.2
35643.3 22303
36193.4 23094.5
12/31/03 36454.6 23563
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 December
31, 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.
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RESULTS TO DECEMBER 31, 2003
4th quarter 1 year
WANGER U.S. SMALLER COMPANIES 12.00% 43.22%
Russell 2000 14.52 47.25
S&P MidCap 400 13.19 35.62
S&P 500 12.18 28.68
NAV AS OF 12/31/03: $26.51
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.
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TOP 5 INDUSTRIES
As a % of net assets, as of 12/31/03
Information 36.5%
Consumer Goods/Services 16.9
Health Care 13.1
Finance 10.5
Energy/Minerals 7.4
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TOP 10 HOLDINGS
As a % of net assets, as of 12/31/03
1. ITT Educational
Services 5.3%
Post Secondary Degree Programs
2. Kronos 3.2%
Labor Management Solutions
3. Lincare Holdings 3.2%
Home Health Care Services
4. Western Wireless 2.4%
Rural Cellular Phone Services
5. Micros Systems 2.3%
Information Systems for
Restaurants & Hotels
6. First Health Group 2.2%
PPO Network
7. AmeriCredit 2.2%
Auto Lending
8. JDA Software Group 2.1%
Applications/Software &
Services for Retailers
9. Commonwealth
Telephone 1.7%
Rural Phone Franchises & CLEC
10. Novell 1.7%
Directory, Identity Management &
Authorization Software
5
Wanger Advisors Trust 2003 Annual Report
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Logo: Squirrel
PERFORMANCE REVIEW WANGER INTERNATIONAL SMALL CAP
Wanger International Small Cap finished 2003 on a strong note. The Fund's annual
return of 48.86% fell short of the Citigroup EMI Global ex-US return of 55.02%
but beat the MSCI EAFE return of 38.59%. Stocks outside the Fund's core
strategy, mainly basic material stocks, soared during the year, dampening the
Fund's return. Even though we didn't beat the Citigroup EMI Global ex-US Index,
the absolute return for the year is the second best in Wanger International
Small Cap's history.
Wanger International Small Cap's best stocks for the year came from a variety of
industries. ASE Test, a semiconductor packaging and testing company in Taiwan,
rose 272% on a recovery in demand for semiconductors. Global Bio-Chem Technology
Group, a maker of corn starch and corn gluten headquartered in Hong Kong, was up
133%. United Services Group, a temporary staffing service in the Netherlands,
was up 114%, and Anglo Irish Bank, a niche middle-market bank in Ireland, was up
nearly 125% for the year in Wanger International Small Cap.
The Fund's three worst performers were all sold out of the portfolio before
year-end. Hagemeyer, an industrial supply company in the Netherlands, was down
37% when we exited the position. Ireland's Waterford Wedgewood, a maker of fine
crystal, tableware and cookware, fell 51% in the year. Lindex, a maker of
ladies' and children's wear in Sweden, was down 23% on weak sales.
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 12/31/03, the Fund's positions in the holdings mentioned were: ASE Test,
1.2%; Global Bio-Chem Technology Group, 1.2%; United Services Group, 1.2%; Anglo
Irish Bank, 1.9%; Hagemeyer, 0.0%; Waterford Wedgewood, 0.0%; Lindex, 0.0%.
Photo of: TODD M. NARTER
Photo of: CHRISTOPHER J. OLSON
TODD M. NARTER
Co-Portfolio Manager
CHRISTOPHER J. OLSON
Co-Portfolio Manager
6
Wanger Advisors Trust 2003 Annual Report
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VALUE OF A $10,000 INVESTMENT IN TOTAL RETURN FOR EACH PERIOD,
WANGER INTERNATIONAL SMALL CAP MAY 3, 1995 THROUGH DECEMBER 31, 2003
AVERAGE ANNUAL RETURN
- ------------------------------------
1 year 5 years Life of fund
48.86% 10.53% 15.00%
LINE CHART:
WANGER CITIGROUP EMI
INTERNATIONAL GLOBAL
SMALL CAP EX-US
5/3/95 10000 10000
5/31/95 10790 10000
6/30/95 10970 9889.52
11910 10443.6
12290 10196.5
12910 10265.1
12700 9958.24
12660 10044
12/31/95 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
12/31/96 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
12/31/97 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
12/31/98 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
12/31/99 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
12/31/00 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
12/31/01 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
12/31/02 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
26613.6 11598.7
27893.1 12153.3
29087.3 12709
31356.3 13633.4
32089.9 13881.6
12/31/03 33574.1 14738.7
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 December
31, 2003 with the Citigroup EMI Global ex-US. Dividends and capital gains are
reinvested. The performance data quoted is past performance and does not
guarantee future results. The investment return and principal value of an
investment will fluctuate so that investors' shares, when redeemed, may be worth
more or less than their original cost. DUE TO ONGOING MARKET VOLATILITY,
PERFORMANCE IS SUBJECT TO SUBSTANTIAL SHORT-TERM FLUCTUATIONS. Wanger
International Small Cap is a diversified fund that invests primarily in the
stocks of non-U.S. companies with capitalizations of less than $2 billion.
Smaller company stocks are often more volatile or less liquid than the stocks of
larger companies. Investments in foreign securities have special risks,
including political or economic instability, higher costs, different
regulations, accounting standards, trading practices and levels of information
and currency exchange rate fluctuations.
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE
DIFFERENT THAN THAT SHOWN.
- --------------------------------------------------------------------------------
RESULTS TO DECEMBER 31, 2003
4th quarter 1 year
WANGER INTERNATIONAL
SMALL CAP 15.43% 48.86%
Citigroup EMI Global ex-US 15.97 55.02
MSCI EAFE 17.08 38.59
Lipper International
Small Cap Funds Index 14.77 55.10
NAV AS OF 12/31/03: $19.68
The Citigroup EMI Global ex-US 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 12/31/03
United Kingdom 15.7%
France 8.1
Netherlands 7.2
Ireland 6.8
Germany 6.7
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
As a % of net assets, as of 12/31/03
1. Anglo Irish Bank 1.9%
Corporate Lending & Private
Banking - Ireland
2. Amplifon 1.8%
Hearing Aid Retailer - Italy
3. Grafton Group 1.4%
Builders, Wholesalers &
DIY Retailing - Ireland
4. Central European
Distribution 1.3%
Spirits & Wine
Distribution - Poland
5. International
Greetings 1.2%
Private Label Greeting
Products - United Kingdom
6. United Services
Group 1.2%
Temporary Staffing
Services - Netherlands
7. ASE Test 1.2%
Semiconductor Packaging
& Test Services - Taiwan
8. French Connection 1.2%
Clothing Wholesaler &
Retailer - United Kingdom
9. Global Bio-Chem
Technology Group 1.2%
Corn-based Food
Products - Hong Kong
10. Aalberts Industries 1.2%
Flow Control & Heat
Treatment - Netherlands
7
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
Logo: Squirrel
PERFORMANCE REVIEW WANGER TWENTY
Wanger Twenty returned 30.73% in 2003, trailing the S&P MidCap 400's 35.62%
return but beating the S&P 500's 28.68% gain. While we are pleased with the
Fund's absolute result, we are disappointed that Wanger Twenty underperformed
since it was leading its primary benchmark through the first three quarters of
the year.
Electronic Arts gained 96% in 2003, as sales and earnings consistently beat
expectations. Guidant, the Fund's largest position, returned 93% as investors
came to appreciate the company's fast growing defibrillator business as well as
its potential growth making drug-eluting stents. (A drug-eluting stent is a
little wire-mesh tube that keeps an artery open after an angioplasty procedure.)
On the downside, First Health Group, one of the Fund's biggest positions, fell
20% for the year as the company lowered its sales and earnings for 2004 due to
increased competition in the managed-care industry. We believe the long-term
outlook remains sound and we have added to the Fund's position in First Health.
Most other losses for the year were relatively small in position size or
percentages. In fact, all losses combined contributed to just a 3.43% drop for
the Fund. Perhaps the biggest detractor to performance was the conservative
nature of Wanger Twenty; only five of the Fund's stocks were up 70% or more.
While the market has rewarded the Fund's more conservative stance in the past,
highly speculative stocks had the most impressive gains in 2003 and Wanger
Twenty did not keep pace. Furthermore, as the market has bounced back, we have
seen few opportunities to buy such stocks at prices that fairly compensate us
for the risks incurred.
I am justifiably proud of the terrific efforts put forth by our investment team
in 2003. My thanks to Ralph Wanger, Chuck McQuaid, Rob Mohn, Ben Andrews, Susie
Hultquist, Harold Lichtenstein, Grant McKay, Rob Chalupnik, Todd Griesbach,
David Frank, and John Emerson for their invaluable contributions. I am also
grateful to Shelley Maish and Mike Olah for providing Herculean efforts in
trading throughout the year. Finally, thank you for your continued support as a
Wanger Twenty shareholder.
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 12/31/03, the Fund's positions in the holdings mentioned were: Electronic
Arts, 3.7%; Guidant, 8.5%; First Health Group, 6.5%.
Photo of: JOHN H. PARK
JOHN H. PARK
Portfolio Manager
8
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT IN TOTAL RETURN FOR EACH PERIOD,
WANGER TWENTY FEBRUARY 1, 1999 THROUGH DECEMBER 31, 2003
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------
1 year 3 years Life of fund
30.73% 9.63% 14.39%
LINE CHART:
WANGER S&P
TWENTY MIDCAP 400
2/1/99 10000 10000
2/28/99 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
12/31/99 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
12/31/00 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
12/31/01 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
12/31/02 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
17997.8 13873.3
18718.2 14502.6
18311 14280.6
19083.5 15360.4
18979.1 15895.6
12/31/03 19365.4 16163.8
This graph compares the results of $10,000 invested in Wanger Twenty on February
1, 1999 (the date the Fund began operations) through December 31, 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. 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.
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE
DIFFERENT THAN THAT SHOWN.
- --------------------------------------------------------------------------------
RESULTS TO DECEMBER 31, 2003
4th quarter 1 year
WANGER TWENTY 5.76% 30.73%
S&P MidCap 400 13.19 35.62
S&P 500 12.18 28.68
Lipper Mid-Cap Growth
Funds Index 10.98 35.42
NAV AS OF 12/31/03: $18.55
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 12/31/03
Information 29.2%
Consumer Goods/Services 27.6
Health Care 19.1
Finance 12.9
Industrial Goods/Services 3.8
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
As a % of net assets, as of 12/31/03
1. Guidant 8.5%
Stents, Defibrillators &
Other Cardiac Medical Devices
2. First Health Group 6.5%
PPO Network
3. Interpublic Group 5.7%
Advertising
4. Synopsys 4.8%
Software for Designing
Semiconductor Chips
5. International Game
Technology 4.4%
Slot Machines &
Progressive Jackpots
6. TCF Financial 4.3%
Great Lakes Bank
7. Expeditors International
of Washington 3.8%
International Freight Forwarder
8. PeopleSoft 3.7%
HR, ERP, CRM & Supply
Chain Software
9. Weight Watchers 3.7%
Weight Loss Program
10. Electronic Arts 3.7%
Entertainment Software
9
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
Logo: Squirrel
PERFORMANCE REVIEW WANGER FOREIGN FORTY
After three years of posting dreary results, the international markets rose
sharply in 2003. Wanger Foreign Forty finished the year up 41.24% vs. a 49.65%
gain for the benchmark Citigroup World ex-US Cap Range $2-10B Index and a 38.59%
return for the large-cap MSCI EAFE Index. In the fourth quarter, the Fund gained
16.85%, outperforming the benchmark return of 15.81% and nearing the MSCI EAFE
gain of 17.08%. Market interest in Japan and in more speculative stocks in
general cooled in the fourth quarter, benefiting the Fund's relative return. But
the Fund's more conservative stance toward Japan and higher-risk stocks dampened
annual performance. Still, we believe an annual return of over 40%, achieved
without speculative maneuvering, should delight most shareholders.
Three of the Fund's top performers during the year were banks offering niche
services. Anglo Irish Bank, the Fund's largest holding, finished up 125% in the
Fund for the year. The corporate lending environment in the United Kingdom
remained robust and Anglo Irish Bank continued to benefit. Ireland's Depfa Bank,
a provider of public-sector financing, finished the year up 158%. Another
banking winner in Wanger Foreign Forty was DNB Holding, a full-service
commercial bank in Norway. Shares finished up 51% for the year.
Problem stocks for the year included Kaba Holding, a maker of building security
systems in Switzerland, down 26%. We sold the position due to weakness in its
U.S. business. Oriental Land, a Disney theme park operator in Japan, was down
28% when we sold out of the position. Bad weather combined with less foot
traffic took its toll on park revenues and eventually the share price. Orix, a
leasing and financial services provider in Japan, was down 30%. We sold out of
the position before year-end.
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 12/31/03, the Fund's positions in the holdings mentioned were: Anglo Irish
Bank, 5.9%; Depfa Bank, 3.0%; DNB Holding, 3.5%; Kaba Holding, 0.0%; Oriental
Land, 0.0%; Orix, 0.0%.
Photo of: TODD M. NARTER
Photo of: CHRISTOPHER J. OLSON
TODD M. NARTER
Co-Portfolio Manager
CHRISTOPHER J. OLSON
Co-Portfolio Manager
10
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT IN TOTAL RETURN FOR EACH PERIOD,
WANGER FOREIGN FORTY FEBRUARY 1, 1999 THROUGH DECEMBER 31, 2003
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
1 year 3 years Life of fund
41.24% -4.24% 9.88%
LINE CHART:
WANGER CITIGROUP
FOREIGN WORLD
FORTY EX-US $2-10B
2/1/99 10000 10000
2/28/99 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
12/31/99 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
12/31/00 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
12/31/01 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
12/31/02 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
12603.7 10481.4
13142.2 11085.7
13600.5 11542.5
14528.6 12433.7
14860.9 12538.3
12/31/03 15892.1 13367.3
This graph compares the results of $10,000 invested in Wanger Foreign Forty on
February 1, 1999 (the date the Fund began operations) through December 31, 2003,
to the Citigroup World ex-US Cap Range $2-10B Index, with dividends and capital
gains reinvested. The performance data quoted is past performance and does not
guarantee future results. The investment return and principal value of an
investment will fluctuate so that investors' shares, when redeemed, may be worth
more or less than their original cost. DUE TO ONGOING MARKET VOLATILITY,
PERFORMANCE IS SUBJECT TO SUBSTANTIAL SHORT-TERM FLUCTUATIONS. Wanger Foreign
Forty is a 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. 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.
MUTUAL FUND PERFORMANCE CHANGES OVER TIME. CURRENT RETURNS FOR THE FUND MAY BE
DIFFERENT THAN THAT SHOWN.
- --------------------------------------------------------------------------------
RESULTS TO DECEMBER 31, 2003
4th quarter 1 year
WANGER FOREIGN FORTY 16.85% 41.24%
Citigroup World ex-US
Cap Range $2-10B 15.81 49.65
MSCI EAFE 17.08 38.59
Lipper International
Funds Index 15.45 36.00
NAV AS OF 12/31/03: $13.87
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. 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. 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 12/31/03
Ireland 18.9%
United Kingdom 17.1
Japan 9.2
Switzerland 9.0
France 8.8
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
As a % of net assets, as of 12/31/03
1. Anglo Irish Bank 5.9%
Corporate Lending & Private
Banking - Ireland
2. Kerry Group 4.2%
Specialty Food Ingredient
Company - Ireland
3. Rhoen-Klinikum 4.2%
Hospital Management - Germany
4. DNB Holding 3.5%
Bank - Norway
5. BG Group 3.4%
Oil & Gas Producer-
United Kingdom
6. Lion Nathan 3.4%
Beer Brewer/
Distributor- Australia
7. Depfa Bank 3.0%
International Public Sector
Finance - Ireland
8. Irish Life
& Permanent 3.0%
Savings Products - Ireland
9. Neopost 3.0%
Postage Meter Machines -
France
10. Grafton Group 2.8%
Builders, Wholesalers &
DIY Retailing - Ireland
11
Wanger Advisor Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
COMMON STOCKS-93.1%
INFORMATION-36.5%
- ----------------------------------------------------------------------
TELEVISION PROGRAMMING-0.9%
620,000 Mediacom Communications (b) $5,375,400
Cable Television Franchises
138,500 Gray Television 2,094,120
Mid Market Affiliated TV Stations
- ----------------------------------------------------------------------
7,469,520
- ----------------------------------------------------------------------
RADIO-2.4%
395,900 Salem Communications (b) 10,736,807
Radio Stations for Religious Programming
427,000 Spanish Broadcasting (b) 4,483,500
Spanish Language Radio Stations
130,900 Saga Communications (b) 2,425,577
Radio Stations in Small & Mid-sized Cities
110,000 Cumulus Media, Cl. A (b) 2,420,000
Radio Stations in Small Cities
- ----------------------------------------------------------------------
20,065,884
- ----------------------------------------------------------------------
TELECOMMUNICATIONS/WIRELINE COMMUNICATIONS-1.7%
368,300 Commonwealth Telephone (b) 13,903,325
Rural Phone Franchises & CLEC
- ----------------------------------------------------------------------
MOBILE COMMUNICATIONS-4.1%
1,057,000 Western Wireless (b) 19,406,520
Rural Cellular Phone Services
495,000 Crown Castle International (b) 5,459,850
Communication Towers in USA & UK
86,000 Telephone & Data Systems 5,379,300
Cellular & Telephone Services
351,750 COMARCO (b) 3,869,250
Wireless Network Testing
- ----------------------------------------------------------------------
34,114,920
- ----------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT-2.1%
837,800 Aspect Communications (b) 13,203,728
Call Center Equipment
340,000 Andrew (b) 3,913,400
Wireless Infrastructure Equipment
70,500 Symmetricom (b) 513,240
Network Timing & Synchronization Devices
- ----------------------------------------------------------------------
17,630,368
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
BUSINESS INFORMATION/MARKETING SERVICES/
MARKETING-2.3%
415,000 Navigant Consulting (b) $7,826,900
Consulting Firm
153,700 Getty Images (b) 7,704,981
Photographs for Publications & Electronic Media
92,900 Information Holdings (b) 2,053,090
Scientific & Medical Publications,
Patent Information
200,000 InfoUSA (b) 1,484,000
Business Data for Sales Leads
- ----------------------------------------------------------------------
19,068,971
- ----------------------------------------------------------------------
BUSINESS/CONSUMER SOFTWARE-12.9%
657,825 Kronos (b) 26,056,448
Labor Management Solutions
442,900 Micros Systems (b) 19,204,144
Information Systems for Restaurants & Hotels
1,030,000 JDA Software Group (b) 17,005,300
Applications/Software & Services for Retailers
1,320,000 Novell (b) 13,886,400
Directory, Identity Management & Authorization
Software
350,327 PeopleSoft (b) 7,987,456
HR, ERP, CRM & Supply Chain Software
515,000 Mapics (b) 6,741,350
Mid Market ERP Software
429,800 MRO Software (b) 5,785,108
Enterprise Management Software
628,200 E.Piphany (b) 4,529,322
CRM Software
121,800 Group 1 Software (b) 2,146,116
Address Verification Software
90,000 SPSS (b) 1,609,200
Statistical Analysis Software
34,000 Activision (b) 618,800
Entertainment Software
24,500 THQ (b) 414,295
Entertainment Software
- ----------------------------------------------------------------------
105,983,939
- ----------------------------------------------------------------------
INTERNET-0.6%
505,600 DoubleClick (b) 5,167,232
Internet Advertising & Direct Marketing
Statistical Data
See accompanying notes to financial statements.
12
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
TRANSACTION PROCESSORS-2.0%
273,440 Global Payments $12,884,493
Credit Card Processor
176,000 Euronet Worldwide (b) 3,168,000
ATM Processor
21,000 Pegasus Systems (b) 219,870
Transaction Processor for Hotel Industry
- ----------------------------------------------------------------------
16,272,363
- ----------------------------------------------------------------------
COMPUTER HARDWARE/RELATED SYSTEMS-1.7%
415,800 Seachange International (b) 6,403,320
Systems for Video on Demand & Ad Insertion
29,900 Zebra Technologies (b) 1,984,463
Bar Code Printing Hardware, Supplies & Software
50,000 Avocent (b) 1,826,000
Computer Control Switches
40,000 Rogers (b) 1,764,800
PCB Laminates & High Performance Foams
35,000 Applied Films (b) 1,155,700
Thin-Film Glass Coating Equipment
301,205 SensAble Technologies (b)(c) 560,241
Sensory Devices for Computer Based Sculpting
- ----------------------------------------------------------------------
13,694,524
- ----------------------------------------------------------------------
CONTRACT MANUFACTURING-0.5%
220,000 Plexus (b) 3,777,400
Electronic Manufacturing Services
- ----------------------------------------------------------------------
SEMICONDUCTORS/RELATED EQUIPMENT-1.8%
325,000 Integrated Circuit Systems (b) 9,259,250
Silicon Timing Devices
70,000 Littelfuse (b) 2,017,400
Little Fuses
68,600 Microsemi (b) 1,686,188
Analog/Mixed Signal Semiconductors
165,900 IXYS (b) 1,551,165
Power Semiconductors
- ----------------------------------------------------------------------
14,514,003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
INSTRUMENTATION-1.5%
288,000 Tektronix (b) $9,100,800
Analytical Instruments
60,000 Trimble Navigation (b) 2,234,400
GPS-Based Instruments
25,000 Mettler Toledo (b) 1,055,250
Laboratory Equipment
- ----------------------------------------------------------------------
12,390,450
- ----------------------------------------------------------------------
COMPUTER SERVICES-2.0%
753,000 RCM Technologies (b)(d) 5,549,610
Technology Staffing Services
705,500 AnswerThink Consulting (b) 3,915,525
IT Integrator for Fortune 2000
170,000 Pomeroy Computer Resources (b) 2,505,800
Network Integration Services
137,000 American Management Systems (b) 2,064,590
Software Development Services
149,700 Ciber (b) 1,296,402
Software Services & Staffing
256,600 Analysts International (b) 864,742
Technology Staffing Services
- ----------------------------------------------------------------------
16,196,669
- ----------------------------------------------------------------------
INFORMATION-TOTAL 300,249,568
HEALTH CARE-13.1%
- ----------------------------------------------------------------------
BIOTECHNOLOGY/DRUG DELIVERY-2.1%
540,000 Nektar Therapeutics (b) 7,349,400
Pulmonary Drug Delivery
325,000 Applera Celera Genomics (b) 4,520,750
Diagnostics & Drug Development
278,000 Enzon (b) 3,336,000
Polymer Delivery Technology for Improved Drugs
250,000 Locus Discovery, Series D. Pfd. (b)(c) 1,000,000
High Throughput Rational Drug Design
154,231 SYRRX, Series C (b)(c) 802,001
X-Ray Crystallography
42,000 Myriad Genetics (b) 540,120
Gene Discovery & Diagnostic Products
- ----------------------------------------------------------------------
17,548,271
See accompanying notes to financial statements.
13
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
MEDICAL EQUIPMENT-3.6%
412,000 Edwards Lifesciences (b) $12,392,960
Heart Valves
213,600 Visx (b) 4,944,840
Laser Eye Surgery
93,500 Orthofix International (b) 4,579,630
Bone Fixation & Stimulation Devices
98,500 ICU Medical (b) 3,376,580
Intravenous Therapy Products
338,000 Novoste (b) 1,619,020
Radiation Catheters for In-Stent Restenosis
31,300 Diagnostic Products 1,436,983
Immunodiagnostic Kits
35,000 CTI Molecular Imaging 591,850
Medical Diagnostic Devices
25,000 Viasys Healthcare (b) 515,000
Respiratory & Neurology Medical Equipment
- ----------------------------------------------------------------------
29,456,863
- ----------------------------------------------------------------------
MEDICAL SUPPLIES-0.5%
100,700 Techne (b) 3,804,446
Cytokines, Antibodies, Other Reagents For
Life Sciences
- ----------------------------------------------------------------------
SERVICES-6.9%
866,000 Lincare Holdings (b) 26,005,980
Home Health Care Services
933,000 First Health Group (b) 18,156,180
PPO Network
481,800 NDCHealth Group 12,343,716
Health Claims Processing & Drug Marketing
Services
44,000 Medquist (b) 706,640
Medical Transcription Services
- ----------------------------------------------------------------------
57,212,516
- ----------------------------------------------------------------------
HEALTH CARE-TOTAL 108,022,096
CONSUMER GOODS/SERVICES-16.9%
- ----------------------------------------------------------------------
RETAIL-5.7%
270,500 Aeropostale (b) 7,417,110
Mall Based Teen Retailer
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
RETAIL-5.7% (CONT)
289,150 Christopher & Banks (b) $5,647,100
Specialty Women's Retailer at Moderate
Price Levels
99,000 Zale Corp (b) 5,266,800
Specialty Retailer of Jewelry
145,000 Petco Animal Supplies (b) 4,415,250
Pet Supplies & Services
116,600 Urban Outfitters (b) 4,320,030
Eclectic Home & Apparel Retailer
425,000 Winn Dixie Stores 4,228,750
Supermarkets in the Southeast US
120,750 Hot Topic (b) 3,557,295
Music Inspired Retailer of Apparel,
Accessories & Gifts
163,000 Genesco (b) 2,466,190
Multi-Concept Branded Footware Retailer
50,000 Michaels Stores 2,210,000
Craft & Hobby Specialty Retailer
50,000 Ann Taylor (b) 1,950,000
Womens Apparel Retailer
65,000 Abercrombie & Fitch (b) 1,606,150
Teen Apparel Retailer
67,000 Borders (b) 1,468,640
Bookstores
655,000 Gadzooks (b)(d) 1,015,250
Teen Apparel Retailer
150,000 Gaiam (b) 892,500
Healthy Living Catalog & E-Commerce
20,000 Chico's Fas 739,000
Women's Specialty Retail
- ----------------------------------------------------------------------
47,200,065
- ----------------------------------------------------------------------
APPAREL-2.3%
485,400 Steven Madden (b) 9,902,160
Wholesaler/Retailer of Fashion Footware
192,000 Coach (b) 7,248,000
Designer & Retailer of Branded Leather Accessories
59,200 Oxford Industries 2,005,696
Branded & Private Label Apparel
- ----------------------------------------------------------------------
19,155,856
See accompanying notes to financial statements.
14
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
ENTERTAINMENT/LEISURE PRODUCTS-0.8%
51,300 International Speedway Motors $2,291,058
Largest Motorsport Racetrack Owner & Operator
90,000 Action Performance 1,764,000
Motorsport Collectibles & Merchandising
50,000 Leapfrog Enterprises (b) 1,326,500
Educational Toys
45,000 Speedway Motors 1,301,400
Motorsport Racetrack Owner & Operator
- ----------------------------------------------------------------------
6,682,958
- ----------------------------------------------------------------------
CASINOS-0.4%
75,000 Alliance Gaming (b) 1,848,750
Diversified Gaming Company
107,700 Monarch Casino & Resort (b) 1,187,931
Casino/Hotel in Reno
- ----------------------------------------------------------------------
3,036,681
- ----------------------------------------------------------------------
FURNITURE & TEXTILES-0.6%
110,000 Herman Miller 2,669,700
Office Furniture
33,000 Mohawk Industries (b) 2,327,820
Carpet & Flooring Manufacturer
- ----------------------------------------------------------------------
4,997,520
- ----------------------------------------------------------------------
DURABLE GOODS-0.3%
42,000 American Woodmark 2,312,100
Kitchen Cabinets
- ----------------------------------------------------------------------
NON-DURABLES-0.3%
47,000 Scotts Company (b) 2,780,520
Consumer Lawn & Garden Products
- ----------------------------------------------------------------------
TRAVEL-0.1%
150,000 LaQuinta (b) 961,500
Owner/Franchiser of Mid-Priced Hotels
- ----------------------------------------------------------------------
CONSUMER SERVICES-6.4%
927,000 ITT Educational Services (b) 43,541,190
Post Secondary Degree Programs
390,000 Coinstar (b) 7,043,400
Owner/Operator of Coin Counting Machines
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
CONSUMER SERVICES-6.4% (CONT)
101,500 Central Parking $1,515,395
Owner, Operator & Manager of Parking
Lots & Garages
- ----------------------------------------------------------------------
52,099,985
- ----------------------------------------------------------------------
CONSUMER GOODS/SERVICES - TOTAL 139,227,185
FINANCE-10.5%
- ----------------------------------------------------------------------
BANKS/SAVINGS & LOANS-2.6%
158,500 TCF Financial 8,138,975
Great Lakes Bank
90,000 Downey Financial 4,437,000
California Home Lender
105,500 Chittenden 3,549,020
Vermont & Western Massachusetts Bank
85,200 Anchor Bancorp Wisconsin 2,121,480
Wisconsin Thrift
53,350 Texas Regional Bancshares 1,973,950
TexMex Bank
34,800 Peoples Bank Bridgeport 1,134,480
Connecticut Savings & Loan
- ----------------------------------------------------------------------
21,354,905
- ----------------------------------------------------------------------
FINANCE COMPANIES-2.7%
1,135,400 AmeriCredit (b) 18,086,922
Auto Lending
217,100 World Acceptance (b) 4,322,461
Personal Loans
- ----------------------------------------------------------------------
22,409,383
- ----------------------------------------------------------------------
INSURANCE-4.0%
427,000 HCC Insurance Holdings 13,578,600
Aviation Insurance
39,000 Markel (b) 9,886,890
Specialty Insurance
92,000 Leucadia National 4,241,200
Insurance Holding Company
97,000 Harleysville Group 1,929,330
Commercial & Personal Lines Insurance
35,000 Philadelphia Consolidated Holding (b) 1,709,050
Specialty Insurance
See accompanying notes to financial statements.
15
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
INSURANCE-4.0% (CONT)
57,400 United National Group $1,014,258
Specialty Insurance
- ----------------------------------------------------------------------
32,359,328
- ----------------------------------------------------------------------
MONEY MANAGEMENT-1.2%
321,000 SEI Investments 9,780,870
Mutual Fund Administration
- ----------------------------------------------------------------------
FINANCE - TOTAL 85,904,486
INDUSTRIAL GOODS/SERVICES-6.6%
- ----------------------------------------------------------------------
INDUSTRIAL GOODS-1.0%
98,000 Clarcor 4,321,800
Mobile & Industrial Filters
45,100 Mine Safety Appliances 3,585,901
Safety Equipment
10,300 Intermagnetics General (b) 228,248
Superconducting Wire
- ----------------------------------------------------------------------
8,135,949
- ----------------------------------------------------------------------
MACHINERY-2.0%
243,000 Esco Technologies (b) 10,606,950
Filtration & Test Equipment
90,000 Ametek 4,343,400
Aerospace/Industrial Instruments
26,300 Pentair 1,201,910
Pumps, Water Treatment & Tools
- ----------------------------------------------------------------------
16,152,260
- ----------------------------------------------------------------------
WATER-0.9%
133,000 Cuno (b) 5,988,990
Filtration & Fluids Clarification
70,000 Insituform Technologies (b) 1,155,000
Water/Sewer Pipe Repair
- ----------------------------------------------------------------------
7,143,990
- ----------------------------------------------------------------------
STEEL-0.2%
50,000 Gibraltar Steel 1,257,500
Steel Processing
- ----------------------------------------------------------------------
CONSTRUCTION-0.2%
30,000 Florida Rock Industries 1,645,500
Concrete & Aggregates
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
SPECIALTY CHEMICALS & INDUSTRIAL MATERIALS-0.5%
95,000 Spartech $2,340,800
Plastics Distribution & Compounding
70,000 Schulman 1,492,400
Plastics Distribution & Compounding
- ----------------------------------------------------------------------
3,833,200
- ----------------------------------------------------------------------
INDUSTRIAL DISTRIBUTION-0.3%
100,000 Nuco2 (b) 1,267,000
Bulk CO2 Gas Distribution to Restaurants
50,000 Airgas 1,074,000
Industrial Gas Distributor
- ----------------------------------------------------------------------
2,341,000
- ----------------------------------------------------------------------
LOGISTICS-0.6%
174,000 Hub Group (b) 3,747,960
Truck & Rail Freight Forwarder
59,600 Forward Air (b) 1,639,000
Freight Transportation Between Airports
- ----------------------------------------------------------------------
5,386,960
- ----------------------------------------------------------------------
OTHER INDUSTRIAL SERVICES-0.9%
412,100 Insurance Auto Auctions (b) 5,377,905
Auto Salvage Services
125,000 Clark/Bardes Consulting (b) 2,405,000
Executive Compensation & Benefits Consulting
- ----------------------------------------------------------------------
7,782,905
- ----------------------------------------------------------------------
INDUSTRIAL GOODS/SERVICES-TOTAL 53,679,264
ENERGY/MINERALS-7.4%
- ----------------------------------------------------------------------
OIL/GAS PRODUCERS-2.4%
148,000 Western Gas 6,993,000
Oil Producer & Coal Seam Gas Producer
265,000 Ultra Petroleum (b) 6,524,300
Natural Gas Producer
108,400 Southwestern Energy (b) 2,590,760
Oil & Gas Exploration/Production
75,000 Quicksilver (b) 2,422,500
Natural Gas & Coal Seam Gas Producer
40,000 Evergreen Resources (b) 1,300,400
Coal Seam Gas Producer
- ----------------------------------------------------------------------
19,830,960
16
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
OIL SERVICES-3.0%
490,700 FMC Technologies (b) $11,433,310
Deep Water Oil & Gas Well Head Manufacturer
1,195,600 Newpark Resources (b) 5,726,924
Oilfield Fluid Management & Equipment Rental
105,000 Carbo Ceramics 5,381,250
Natural Gas Well Stimulants
205,000 Key Energy Services (b) 2,113,550
Oil & Gas Well Workover Services
- ----------------------------------------------------------------------
24,655,034
- ----------------------------------------------------------------------
DISTRIBUTION/MARKETING/REFINING-2.0%
236,000 Equitable Resources 10,129,120
Natural Gas Utility & Producer
168,000 Atmos Energy 4,082,400
Natural Gas Utility
80,000 Oneok 1,766,400
Natural Gas Utility, Marketing & Processing
115,000 Aquila (b)(c) 809,600
Electric Utility Holding Company
- ----------------------------------------------------------------------
16,787,520
- ----------------------------------------------------------------------
ENERGY/MINERALS-TOTAL 61,273,514
OTHER INDUSTRIES-2.1%
- ----------------------------------------------------------------------
REAL ESTATE-1.5%
152,000 Chelsea Property Group 8,331,120
Outlet Malls
47,000 The Rouse Company 2,209,000
Regional Shopping Malls
100,000 Crescent Real Estate Equities 1,713,000
Class A Office Buildings
25,000 Highland Hospitality (b) 272,500
Hotel Real Estate Investment Trust
- ----------------------------------------------------------------------
12,525,620
- ----------------------------------------------------------------------
REGULATED UTILITIES-0.6%
250,000 Northeast Utilities 5,042,500
Regulated Electric Utility
- ----------------------------------------------------------------------
OTHER INDUSTRIES-TOTAL 17,568,120
TOTAL COMMON STOCKS (COST: $505,313,202)-93.1% 765,924,233
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Principal Value
Amount
SHORT-TERM OBLIGATIONS-7.0%
- -----------------------------------------------------------------------
$25,000,000 Sara Lee, 1.14% due 01/06/04 $24,996,042
32,479,000 Repurchase agreement with State
Street Bank & Trust Co, dated 12/31/03,
due 01/02/04 at 0.85%, collateralized by
Federal National Mortgage Association Notes,
maturing 08/15/04, market value $33,128,869
(repurchase proceeds $32,480,534) 32,479,000
- -----------------------------------------------------------------------
(AMORTIZED COST: $57,475,042) 57,475,042
TOTAL INVESTMENTS (COST: $562,788,244)-100.1% (a) 823,399,275
- -----------------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES-(0.1%) (740,780)
- -----------------------------------------------------------------------
TOTAL NET ASSETS-100% $822,658,495
======================================================================
NOTES TO STATEMENT OF INVESTMENTS:
(a) At December 31, 2003, cost for federal income tax purposes is $563,020,398.
The net unrealized appreciation was $260,378,877 consisting of gross
unrealized appreciation of $286,819,477 and gross unrealized depreciation
of $26,440,600.
(b) Non-income producing security.
(c) Denotes a restricted security, which is subject to restrictions on resale
under federal securities laws. These securities are valued in good faith by
the Board of Trustees. At December 31, 2003, these securities amounted to
$3,171,842 which represents 0.4% of net assets.
Additional information on these securities is as follows:
Acquisition
Security Date Shares Cost Value
- --------------------------------------------------------------------------------
Aquila 10/25-11/14/01 115,000 $2,433,066 $ 809,600
Locus Discovery,
Series D. Pfd. 09/05/01 250,000 1,000,000 1,000,000
SensAble
Technologies 04/04/00 301,205 1,000,000 560,241
SYRRX, Series C 01/04/01 154,231 1,002,502 802,001
---------- ----------
$5,435,568 $3,171,842
========== ==========
(d) At December 31, 2003, the Fund held the following percentages of the
outstanding voting shares of the companies listed below:
Gadzooks 7.15%
RCM Technologies 7.07%
The aggregate cost and value of these companies at December 31, 2003, was
$4,124,000 and $3,869,000, respectively. Investments in affiliated
companies represent 0.47% of total net assets at December 31, 2003. The
change in unrealized gain in these companies amounted to $2,276,000 during
the period ended December 31, 2003. There was no other investment activity
during the period.
See accompanying notes to financial statements.
17
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
COMMON STOCKS-94.8%
EUROPE-67.1%
- ----------------------------------------------------------------------
GERMANY/AUSTRIA-8.2%
75,000 Rhoen-Klinikum $3,874,345
Hospital Management
28,600 Mayr Melnhof (Austria) 3,434,096
Cartonboard & Packaging
100,000 GFK 2,875,207
Market Research Services
383,000 Takkt 2,847,110
Mail Order Retailer of Office & Warehouse
Durables
43,574 Beru 2,838,386
Auto Parts & Electronics
200,000 Deutsche Beteiligung 2,724,013
Private Equity
95,000 Wienerberger (Austria) 2,535,146
Bricks & Clay Roofing Tiles
118,000 Hugo Boss Designs 2,371,353
Fashion Apparel
95,000 DIS - Deutscher Industrie Services 2,215,560
Temporary Employment
90,000 Zapf Creation 2,169,257
Toy Manufacturer
36,850 Rational 2,089,777
Commercial Oven Manufacturer
50,000 Kali & Salz 1,370,826
Potash Products, Fertilizers, Salt & Waste
Management
- ----------------------------------------------------------------------
31,345,076
- ----------------------------------------------------------------------
DENMARK-0.5%
17,500 Kobenhavns Lufthavne 2,049,000
Copenhagen Airport Manager
- ----------------------------------------------------------------------
NORWAY-1.7%
190,000 Ekornes 3,505,851
Niche Furniture Manufacturer
460,000 Tomra Systems 2,767,177
Reverse Vending Machines
- ----------------------------------------------------------------------
6,273,028
- ----------------------------------------------------------------------
FINLAND-2.2%
412,200 Sponda 3,432,914
Office & Warehouse Property Company
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
FINLAND-2.2% (CONT)
73,000 Amer Group $3,159,389
Branded Sporting Goods
64,600 Jaakko Poyry 1,774,363
Engineering Consultants in Forestry & Energy
- ----------------------------------------------------------------------
8,366,666
- ----------------------------------------------------------------------
SWEDEN-3.2%
157,500 Hexagon 4,291,792
Diversified Engineering
271,000 Nobia 2,825,742
Kitchen Interiors Manufacturing & Distribution
366,000 Intrum Justitia (b) 1,933,600
Receivables Management & Debt Collection
70,000 Munters 1,693,360
Moisture & Humidity Control
52,000 Castellum 1,229,007
Office, Warehouse & Retail Property Company
66,500 Biotage (b) 108,171
Discovery Chemistry (Microwaves & Purification)
- ----------------------------------------------------------------------
12,081,672
- ----------------------------------------------------------------------
FRANCE/BELGIUM-8.6%
110,000 Rubis 4,222,976
Tank Storage & LPG Supplier
48,409 Camaieu 3,751,066
Women's Apparel Retailer
40,000 Algeco 3,434,625
Modular Construction
41,000 Bacou Dalloz (b) 3,202,794
Safety Equipment
15,000 Imerys 3,154,286
Industrial Minerals Producer
120,000 Fininfo 2,825,817
Data Feeds for French Banks & Brokers
50,000 Neopost 2,519,901
Postage Meter Machines
30,000 Vallourec 2,494,702
Seamless Tubes
50,000 Norbert Dentressangle 2,056,239
Transport
See accompanying notes to financial statements.
18
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
FRANCE/BELGIUM-8.6% (CONT)
60,100 Omega Pharma (Belgium) $1,908,220
OTC Products,Pharmacy & Dental Supplies
20,000 Bonduelle 1,825,668
Producer of Canned, Frozen & Fresh Vegetables
145,000 Cerep (b) 1,498,081
Health Care
- ----------------------------------------------------------------------
32,894,375
- ----------------------------------------------------------------------
GREECE-1.1%
218,000 Intralot 4,251,879
Lottery & Gaming Systems & Services
- ----------------------------------------------------------------------
UNITED KINGDOM/IRELAND-22.5%
450,000 Anglo Irish Bank (Ireland) 7,092,891
Corporate Lending & Private Banking
800,000 Grafton Group (Ireland) 5,513,543
Builders, Wholesalers & DIY Retailing
900,000 International Greetings 4,723,246
Private Label Greeting Products
750,000 French Connection 4,428,043
Clothing Wholesaler & Retailer
225,000 Kerry Group (Ireland) 4,223,984
Specialty Food Ingredient Company
450,000 Business Post Group 4,144,889
UK Parcel & Express Mail Service
790,000 Care UK 4,075,451
Nursing Home & Psychiatric Care Facilities
825,000 Expro International 3,976,202
Offshore Oil Field Services
750,000 Hit Entertainment 3,942,732
Children's Television Shows
1,450,000 RPS Group 3,811,308
Environmental Consulting
650,000 Kensington 3,799,928
Non-Conforming Mortgage Company
30,000 Depfa Bank (Ireland) 3,783,631
International Public Sector Finance
200,000 Irish Life & Permanent (Ireland) 3,225,473
Savings Products
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
UNITED KINGDOM/IRELAND-22.5% (CONT)
650,000 Charles Taylor Group $3,063,148
Insurance
640,000 Bloomsbury Publishing 2,976,037
Publishing
1,800,000 Tullow Oil (b) 2,755,227
Oil & Gas Producer
130,000 Cobham 2,708,101
Aerospace
314,000 Spectris 2,386,355
Electronic Instruments & Controls
700,000 Metal Bulletin 2,311,641
Publisher - Metals, Derivatives & Hedge
Fund Journals
180,000 Jurys Doyle Hotel (Ireland) 2,199,874
Hotel Group
561,500 Nestor Healthcare Group 2,064,751
Healthcare Staffing Company
200,000 Jardine Lloyd Thompson 1,883,229
Business Insurance Broker
210,000 Burberry 1,370,116
Apparel Retailer
400,000 TDG Group 1,353,069
Logistics & Storage Company
70,000 Intermediate Capital 1,319,510
European Provider of Mezzanine Capital
325,000 Ricardo 1,119,673
Auto Engine Design
100,000 McCarthy & Stone 922,872
Builder of Retirement Apartments
50,000 Topps Tiles 506,508
Retail Tile Company
- ----------------------------------------------------------------------
85,681,432
- ----------------------------------------------------------------------
SWITZERLAND-3.6%
6,500 Geberit International 3,194,052
Plumbing Supplies
8,000 BKW Energie 3,097,066
Electric Utility
8,000 Hiestand Holding 2,780,247
Bakery Goods
See accompanying notes to financial statements.
19
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
SWITZERLAND-3.6% (CONT)
12,700 Kaba Holdings $2,566,071
Building Security Systems
5,000 Sika 2,157,925
Chemicals for Construction & Industrial
Application
- ----------------------------------------------------------------------
13,795,361
- ----------------------------------------------------------------------
ITALY-3.5%
242,000 Amplifon 6,875,676
Hearing Aid Retailer
320,000 Granitifiandre 2,777,939
Leading Innovator in the Stoneware Industry
50,000 Davide Campari 2,425,405
Beverages
300,000 De Longhi 1,254,911
Consumer Appliances for Heating,
Air Conditioners & Cooking
- ----------------------------------------------------------------------
13,333,931
- ----------------------------------------------------------------------
SPAIN-3.1%
110,000 Gamesa (b) 3,615,932
Wind Turbines
356,000 Cortefiel 3,274,359
Apparel Retailer
244,100 Abengoa 1,774,586
Engineering & Construction
79,200 Zardoya Otis (b) 1,646,503
Elevator Maintenance & Service Provider
100,000 Red Electrica 1,637,936
Spanish Power Grid
- ----------------------------------------------------------------------
11,949,316
- ----------------------------------------------------------------------
LUXEMBOURG-0.4%
145,300 SES Global 1,464,566
Satellite Broadcasting Services
- ----------------------------------------------------------------------
NETHERLANDS-7.2%
201,122 United Services Goup 4,599,278
Temporary Staffing Services
170,035 Aalberts Industries 4,398,258
Flow Control & Heat Treatment
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
NETHERLANDS-7.2% (CONT)
96,400 OPG Groep $4,378,605
Pharmaceutical Wholesaler & Retailer
69,276 Fugro 3,561,201
Survey & GPS Services
135,000 IM Tech 3,500,520
Technical Engineering
106,184 Sligro Food Group 3,271,082
Food Service & Wholesaling
69,135 Hunter Douglas 3,232,529
Decorative Window Coverings
40,952 Am NV 317,841
Property Developer
- ----------------------------------------------------------------------
27,259,314
- ----------------------------------------------------------------------
POLAND-1.3%
152,350 Central European Distribution (b) 4,814,260
Spirits & Wine Distribution
- ----------------------------------------------------------------------
EUROPE-TOTAL 255,559,876
ASIA-19.4%
- ----------------------------------------------------------------------
HONG KONG/CHINA-8.2%
7,128,000 Global Bio-Chem Technology Group 4,406,943
Corn-Based Food Products
8,450,000 Ngai Lik Industrial 3,482,853
China Based A/V Contract Manufacturer
1,000,000 Techtronic Industries 2,769,280
Power Tool Manufacturer
6,000,000 Sinotrans (China) (b) 2,704,878
Integrated Logistics in China
10,000,000 Vitasoy 2,485,912
Soy Food Brands
8,000,000 Convenience Retail 2,318,467
Exclusive Circle K Franchisee
3,600,000 Aeon Credit Service 2,306,875
Credit Card Issuer
3,000,000 Hainan Meilan Airport (China) (b) 2,086,621
Chinese Airport Operator
5,000,000 Linmark 2,044,759
Apparel/Hard Goods Sourcing Agent
See accompanying notes to financial statements.
20
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
HONG KONG/CHINA-8.2% (CONT)
10,000,000 Lerado Group $1,932,056
Baby Paraphernalia
4,000,000 Harbin Brewery (China) (b) 1,610,047
China Brewery
890,000 Ports Design (China) (b) 1,599,163
High-End Chinese Fashion Design & Retail
1,185,000 Lianhua Supermarket (China) (b) 1,251,586
Chinese Supermarket Chain
321,100 Clear Media (China) (b) 206,794
China's Largest Outdoor Advertiser
- ----------------------------------------------------------------------
31,206,234
- ----------------------------------------------------------------------
JAPAN-6.1%
46,000 Sugi Pharmacy 3,181,593
Drugstores
45,000 ARRK 2,910,813
Prototypes & Molds for New Product Development
625,000 OMC Card (b) 2,537,686
Credit Card Issuer
180,000 NIFCO 2,259,766
Molded Plastic Components
55,000 Eneserve 2,207,495
In-House Power Generators
197,800 Toyo Technica 2,187,828
Value Added Reseller of Imported Instrumentation
82,800 Park 24 1,897,363
Parking Lot Operator
60,000 Drake Beam Morin 1,545,713
Employment Outplacement Services
60,000 Taisei Lamick 1,310,496
Packaging Materials & Machinery
55,000 Nissin Healthcare Food Service 1,119,149
Meal Preparation
77,000 Daiseki 1,051,486
Waste Disposal & Recycling
4,000 Bellsystem 24 817,660
Call Centers
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
JAPAN-6.1% (CONT)
2,000 Kappa Create $168,946
Sushi Chain Restaurant Operator
- ----------------------------------------------------------------------
23,195,994
- ----------------------------------------------------------------------
TAIWAN-1.6%
303,000 ASE Test (b) 4,535,910
Semiconductor Packaging & Test Services
1,467,300 Phoenixtec Power 1,720,134
Uninterruptable Power Supplies
- ----------------------------------------------------------------------
6,256,044
- ----------------------------------------------------------------------
SOUTH KOREA-1.5%
55,130 Yuhan 3,137,066
Ethical Drug Producer
320,000 Samyoung Heat Exchange 2,562,149
Power Plant Related Machinery
- ----------------------------------------------------------------------
5,699,215
- ----------------------------------------------------------------------
INDONESIA-0.3%
7,000,000 PT Perusahaan Gas Negara (b) 1,288,216
Gas Pipeline Operator
- ----------------------------------------------------------------------
SINGAPORE-1.1%
1,700,000 Sembcorp Logistics 2,002,002
Logistic Services for Marine Transport
4,161,427 Comfort Group (b) 1,997,034
Taxi Service
- ----------------------------------------------------------------------
3,999,036
- ----------------------------------------------------------------------
THAILAND-0.6%
2,559,600 Thai Union Frozen Products 2,067,189
Canned Tuna Fish
- ----------------------------------------------------------------------
ASIA-TOTAL 73,711,928
See accompanying notes to financial statements.
21
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
LATIN AMERICA-1.7%
- ----------------------------------------------------------------------
MEXICO-1.4%
150,000 Grupo Aeroportuario $2,640,000
Mexican Airport Authority
1,000,000 Consorcio ARA (b) 2,482,869
Low/Medium Income House Builder
- ----------------------------------------------------------------------
5,122,869
- ----------------------------------------------------------------------
CHILE-0.3%
46,400 CorpBanca (b) 1,209,648
Chile's 3rd Largest Local Bank
- ----------------------------------------------------------------------
LATIN AMERICA-TOTAL 6,332,517
OTHER COUNTRIES-6.6%
- ----------------------------------------------------------------------
AUSTRALIA/NEW ZEALAND-2.3%
600,000 Billabong International 3,221,121
Surfwear Apparel Manufacturer
70,000 Perpetual Trustees 2,245,298
Investment Management
600,000 Sky City Entertainment 1,812,283
Casino/Entertainment Complex
500,000 The Warehouse Group (New Zealand) 1,677,311
Warehouse Club
- ----------------------------------------------------------------------
8,956,013
- ----------------------------------------------------------------------
CANADA-4.3%
343,400 Patheon (b) 3,092,952
Pharmaceuticals
135,000 Corus Entertainment (b) 2,872,674
CATV Programming & Radio Stations
600,000 Fairborne Energy 2,553,488
Oil & Gas Producer
1,000,000 Esprit Exploration (b) 2,151,120
Natural Gas Producer
261,000 VFC 1,985,244
Auto Finance Company
120,200 Enerflex Systems 1,878,779
Natural Gas Compressor
- ----------------------------------------------------------------------
Number of Shares or Value
Principal Amount
- ----------------------------------------------------------------------
CANADA-4.3% (CONT)
140,000 Shawcor $1,688,861
Oil & Gas Pipeline Products
- ----------------------------------------------------------------------
16,223,118
- ----------------------------------------------------------------------
OTHER-TOTAL 25,179,131
TOTAL COMMON STOCKS (COST: $273,704,897)-94.8% 360,783,452
- ----------------------------------------------------------------------
SHORT-TERM OBLIGATIONS-4.7%
- ----------------------------------------------------------------------
$18,149,000 Repurchase agreement with State
Street Bank & Trust Co., dated
12/31/03, due 01/02/04 at 0.85%,
collateralized by Federal National
Mortgage Association Notes,
maturing 08/15/05, market value
$18,514,895
(repurchase proceeds $18,149,857) 18,149,000
- ----------------------------------------------------------------------
(AMORTIZED COST: $18,149,000) 18,149,000
TOTAL INVESTMENTS (COST: $291,853,897)-99.5% (a)(c) 378,932,452
- ----------------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES-0.5% 1,793,270
- ----------------------------------------------------------------------
TOTAL NET ASSETS-100% $380,725,722
======================================================================
NOTES TO STATEMENT OF INVESTMENTS:
(a) At December 31, 2003, cost for federal income tax purposes is $293,290,437.
The net unrealized appreciation was $85,642,015 consisting of gross
unrealized appreciation of $96,393,965 and gross unrealized depreciation of
$10,751,950.
(b) Non-income producing security.
(c) On December 31, 2003, The Fund's total investments were denominated in
currencies as follows:
% of Net
Currency Value Assets
---------------------------------------------------------------
Euro $156,904,520 41.2%
British Pounds 59,642,035 15.7
U.S. Dollars 31,348,818 8.2
Hong Kong Dollars 31,206,234 8.2
Japanese Yen 23,195,996 6.1
Other currencies less than
5% of total net assets 76,634,849 20.1
------------ ----
$378,932,452 99.5%
See accompanying notes to financial statements.
22
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP PORTFOLIO DIVERSIFICATION DECEMBER 31, 2003
AT DECEMBER 31, 2003, THE FUND'S PORTFOLIO INVESTMENTS AS A PERCENT OF NET
ASSETS WAS DIVERSIFIED AS FOLLOWS:
Value Percent
- --------------------------------------------------
INFORMATION TECHNOLOGY
Business Information &
Marketing Services $10,329,991 2.7%
Television Programming 6,815,406 1.8
Publishing 5,287,679 1.4
Instrumentation 4,574,183 1.2
Semiconductors and
Related Equipment 4,535,910 1.2
Contract Manufacturing 3,482,853 0.9
Computer Hardware and
Related Equipment 1,720,134 0.4
Satellite Broadcasting
and Services 1,464,566 0.4
Advertising 206,794 0.1
- --------------------------------------------------
38,417,516 10.1
- --------------------------------------------------
HEALTHCARE
Services 13,546,175 3.6
Pharmaceuticals 7,728,099 2.0
Hospital Management 3,874,348 1.0
Medical Equipment 108,171 0.0
- --------------------------------------------------
25,256,793 6.6
- --------------------------------------------------
CONSUMER GOODS/SERVICES
Retail 28,128,217 7.4
Food 21,061,025 5.5
Furniture and Textiles 10,070,630 2.6
Apparels 9,236,396 2.4
Durable Goods 6,862,577 1.8
Non Durable Goods 6,033,742 1.6
Goods Distribution 4,814,260 1.3
Gaming 4,251,879 1.1
Beverage 4,035,452 1.1
Consumer Services 3,829,419 1.0
Leisure Products 3,159,389 0.8
Travel 2,199,874 0.6
Other Entertainment 2,169,257 0.6
Casinos 1,812,283 0.5
Restaurants 168,946 0.0
- --------------------------------------------------
107,833,346 28.3
Value Percent
- --------------------------------------------------
FINANCE
Banks $12,086,170 3.2%
Finance Companies 9,038,282 2.4
Insurance 8,171,850 2.1
Money Management 4,969,311 1.3
Credit Cards 2,537,686 0.7
Savings & Loans 2,306,875 0.6
- --------------------------------------------------
39,110,174 10.3
- --------------------------------------------------
INDUSTRIAL GOODS/SERVICES
Other Industrial Services 25,474,125 6.7
Industrial Materials 19,038,074 5.0
Outsourcing & Training
Services 11,778,901 3.1
Machinery 11,585,507 3.0
Conglomerates 10,464,636 2.7
Construction 8,506,958 2.2
Electrical Components 6,324,033 1.7
Industrial Distribution 5,513,543 1.4
Steel 2,494,702 0.7
Specialty Chemicals 2,157,925 0.6
- --------------------------------------------------
103,338,404 27.1
- --------------------------------------------------
ENERGY/MINERALS
Oil Services 11,105,043 2.9
Oil/Gas Producers 7,459,835 2.0
Oil Refining/Marketing/
Distribution 5,511,192 1.4
Independent Power 2,207,495 0.6
- --------------------------------------------------
26,283,565 6.9
- --------------------------------------------------
OTHER
Transportation 10,828,891 2.9
Real Estate 4,979,761 1.3
Regulated Utilities 4,735,002 1.3
- --------------------------------------------------
20,543,654 5.5
- --------------------------------------------------
TOTAL COMMON STOCKS 360,783,452 94.8
- --------------------------------------------------
SHORT-TERM OBLIGATIONS 18,149,000 4.7
- --------------------------------------------------
TOTAL INVESTMENTS 378,932,452 99.5
- --------------------------------------------------
CASH AND OTHER ASSETS
LESS LIABILITIES 1,793,270 0.5
- --------------------------------------------------
NET ASSETS $380,725,722 100.0%
==================================================
See accompanying notes to financial statements.
23
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER TWENTY STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
COMMON STOCKS-92.6%
INFORMATION-29.2%
- ----------------------------------------------------------------------
BUSINESS INFORMATION/ADVERTISING-9.3%
190,000 Interpublic Group (b) $2,964,000
Advertising
31,000 Moody's (b) 1,877,050
Ratings Service for Credit Obligations
- ----------------------------------------------------------------------
4,841,050
- ----------------------------------------------------------------------
BUSINESS/CONSUMER SOFTWARE-12.2%
74,000 Synopsys (b) 2,498,240
Software for Designing Semiconductor Chips
85,000 PeopleSoft (b) 1,938,000
HR, ERP, CRM & Supply Chain Software
40,000 Electronic Arts (b) 1,911,200
Entertainment Software
- ----------------------------------------------------------------------
6,347,440
- ----------------------------------------------------------------------
GAMING EQUIPMENT-4.4%
64,000 International Game Technology (b) 2,284,800
Slot Machines & Progressive Jackpots
- ----------------------------------------------------------------------
INSTRUMENTATION-3.3%
55,000 Tektronix (b) 1,738,000
Analytical Instruments
- ----------------------------------------------------------------------
INFORMATION-TOTAL 15,211,290
CONSUMER GOODS/SERVICES-27.6%
- ----------------------------------------------------------------------
ENTERTAINMENT-2.1%
24,000 International Speedway Motors 1,071,840
Largest Motorsport Racetrack Owner & Operator
- ----------------------------------------------------------------------
RETAIL-8.3%
45,000 Costco (b) 1,673,100
Warehouse Superstores
71,000 Safeway (b) 1,555,610
Retail Food & Drug Stores
45,000 Abercrombie & Fitch (b) 1,111,950
Teen Apparel Retailer
- ----------------------------------------------------------------------
4,340,660
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
CONSUMER SERVICES-3.7%
50,000 Weight Watchers (b) $1,918,500
Weight Loss Program
- ----------------------------------------------------------------------
APPAREL-3.3%
46,000 Coach (b) 1,736,500
Designer & Retailer of Branded Leather
Accessories
- ----------------------------------------------------------------------
FURNITURE/TEXTILES-6.7%
78,000 Herman Miller 1,893,060
Office Furniture
23,000 Mohawk Industries (b) 1,622,420
Carpet & Flooring
- ----------------------------------------------------------------------
3,515,480
- ----------------------------------------------------------------------
LEISURE VEHICLES-3.5%
38,000 Harley Davidson 1,806,140
Motorcycles & Related Merchandise
- ----------------------------------------------------------------------
CONSUMER GOODS/SERVICES-TOTAL 14,389,120
HEALTH CARE-19.1%
- ----------------------------------------------------------------------
HOSPITAL/LABORATORY SUPPLIES-2.1%
29,000 Techne (b) 1,095,620
Cytokines, Antibodies, Other Reagents For
Life Sciences
- ----------------------------------------------------------------------
MEDICAL EQUIPMENT-8.5%
74,000 Guidant (b) 4,454,800
Stents, Defibrillators & Other Cardiac
Medical Devices
- ----------------------------------------------------------------------
SERVICES-8.5%
175,000 First Health Group (b) 3,405,500
PPO Network
34,000 Lincare Holdings (b) 1,021,020
Home Health Care Services
- ----------------------------------------------------------------------
4,426,520
- ----------------------------------------------------------------------
HEALTH CARE-TOTAL 9,976,940
See accompanying notes to financial statements.
24
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER TWENTY STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
FINANCE-12.9%
- ----------------------------------------------------------------------
MONEY MANAGEMENT-2.0%
34,000 SEI Investments $1,035,980
Mutual Fund Administration
- ----------------------------------------------------------------------
INSURANCE-3.5%
7,100 Markel (b) 1,799,921
Specialty Insurance
- ----------------------------------------------------------------------
BANKS-7.4%
44,000 TCF Financial 2,259,400
Great Lakes Bank
38,000 Associated Banc-Corp 1,620,700
Midwest Bank
- ----------------------------------------------------------------------
3,880,100
- ----------------------------------------------------------------------
FINANCE-TOTAL 6,716,001
INDUSTRIAL GOODS/SERVICES-3.8%
- ----------------------------------------------------------------------
LOGISTICS-3.8%
52,000 Expeditors International of Washington 1,958,320
International Freight Forwarder
- ----------------------------------------------------------------------
TOTAL COMMON STOCKS (COST: $36,679,841)-92.6% 48,251,671
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Principal Value
Amount
SHORT-TERM OBLIGATIONS-7.1%
- ----------------------------------------------------------------------
$3,700,000 Repurchase agreement with State Street
Bank & Trust Co., dated 12/31/03 due
01/02/04 at 0.85%, collateralized by
Federal National Mortgage Association
Notes, maturing 08/15/04, market value
$3,774,575
(repurchase proceeds $3,700,175) $3,700,000
- ----------------------------------------------------------------------
(AMORTIZED COST: $3,700,000) 3,700,000
TOTAL INVESTMENTS (COST: $40,379,841)-99.7% (a) 51,951,671
- ----------------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES-0.3% 160,274
- ----------------------------------------------------------------------
TOTAL NET ASSETS-100% $52,111,945
======================================================================
NOTES TO STATEMENT OF INVESTMENTS:
(a) At December 31, 2003, cost for federal income tax purposes is $40,379,843.
The net unrealized appreciation was $11,571,828 consisting of gross
unrealized appreciation of $12,580,149 and gross unrealized depreciation of
$1,008,321.
(b) Non-income producing security.
See accompanying notes to financial statements.
25
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER FOREIGN FORTY STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
COMMON STOCKS-96.4%
EUROPE-72.9%
- ----------------------------------------------------------------------
GERMANY-5.7%
20,000 Rhoen-Klinikum $1,121,354
Hospital Management
7,400 Deutsche Boerse 404,180
Trading, Clearing & Settlement Services
for Financial Markets
- ----------------------------------------------------------------------
1,525,534
- ----------------------------------------------------------------------
NORWAY-5.7%
142,300 DNB Holding 947,813
Bank
26,000 Orkla 581,158
Beverages, Packaged Foods and Newspapers
- ----------------------------------------------------------------------
1,528,971
- ----------------------------------------------------------------------
SWEDEN-1.0%
32,000 Gambro 264,709
Products & Services for Renal Care
- ----------------------------------------------------------------------
FRANCE-8.8%
16,000 Neopost 806,368
Postage Meter Machines
14,100 Essilor International 728,377
Eyeglass Lenses
23,000 Euronext 581,606
Trading, Clearing & Settlement Services
for Financial Markets
1,200 Imerys 252,343
Industrial Minerals Producer
- ----------------------------------------------------------------------
2,368,694
- ----------------------------------------------------------------------
UNITED KINGDOM/IRELAND-36.0%
100,000 Anglo Irish Bank (Ireland) 1,576,198
Corporate Lending & Private Banking
60,000 Kerry Group (Ireland) 1,126,396
Specialty Food Ingredient Company
181,000 BG Group 926,473
Oil & Gas Producer
6,500 Depfa Bank (Ireland) 819,787
International Public Sector Finance
50,000 Irish Life & Permanent (Ireland) 806,368
Savings Products
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
UNITED KINGDOM/IRELAND-36.0% (CONT)
110,000 Grafton Group (Ireland) $758,112
Builders, Wholesalers & DIY Retailing
110,000 Compass Group 746,151
International Concession & Contract Caterer
25,000 Cobham 520,789
Aerospace
67,000 Bunzl 510,386
Supplier of Business to Business Consumables
40,000 British Sky Broadcasting (b) 501,956
Digital Satelite Broadcasting
50,000 Smith & Nephew 418,818
Medical Equipment & Supplies
25,000 Exel 329,565
Global Freight Forwarding
50,000 Hit Entertainment 262,849
Children's Television Shows
25,000 Jardine Lloyd Thompson 235,404
Business Insurance Broker
24,000 Burberry 156,585
Apparel Retailer
- ----------------------------------------------------------------------
9,695,837
- ----------------------------------------------------------------------
SWITZERLAND-9.0%
5,600 Swatch Group (b) 672,109
Watch & Electronics Manufacturer
2,500 Schindler (b) 610,200
Elevator Manufacturer & Maintenance
610 Synthes-Startec 603,443
Products for Orthopedic Surgery
1,050 Givaudan 544,815
Industrial Fragrances & Flavors
- ----------------------------------------------------------------------
2,430,567
- ----------------------------------------------------------------------
ITALY-2.2%
41,600 Autogrill (b) 594,374
Restaurants & Catering for Travelers
- ----------------------------------------------------------------------
SPAIN-2.3%
37,000 Red Electrica 606,036
Spanish Power Grid
See accompanying notes to financial statements.
26
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER FOREIGN FORTY STATEMENT OF INVESTMENTS DECEMBER 31, 2003
- ----------------------------------------------------------------------
Number of Value
Shares
- ----------------------------------------------------------------------
LUXEMBOURG-2.2%
18,000 Tenaris (b) $599,760
Steel Pipe for Oil Wells & Pipelines
- ----------------------------------------------------------------------
EUROPE-TOTAL 19,614,482
ASIA-13.6%
- ----------------------------------------------------------------------
HONG KONG-1.8%
100,000 Esprit Holdings 332,314
Global Apparel Brand Manager
30,000 TVB 151,473
Television Programming & Broadcasting
- ----------------------------------------------------------------------
483,787
- ----------------------------------------------------------------------
JAPAN-9.2%
6,200 Hoyo 569,450
Opto-Electrical Components & Eyeglass Lenses
5,300 Nidec 506,081
Hard Disk Drive Spindle Motor Manufacturer
24,100 Shimano 499,389
Bicycle Components & Fishing Tackle
5,000 USS 353,759
Used Car Auctioneer
9,900 Daito Trust Construction 293,854
Apartment Builder
16,000 Ushio 265,683
Industrial Light Sources
- ----------------------------------------------------------------------
2,488,216
- ----------------------------------------------------------------------
SINGAPORE-2.6%
59,400 Venture 699,523
Electronic Contract Manufacturer
- ----------------------------------------------------------------------
ASIA-TOTAL 3,671,526
OTHER COUNTRIES-9.9%
- ----------------------------------------------------------------------
AUSTRALIA-3.4%
200,000 Lion Nathan 909,564
Beer Brewer/Distributor
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Number of Shares Value
or Principal Amount
- ----------------------------------------------------------------------
CANADA-6.5%
13,300 Talisman Energy $756,619
Oil & Gas Producer
25,000 Corus Entertainment (b) 531,977
CATV Programming & Radio Stations
12,500 Power Financial 479,069
Life Insurance & Mutual Funds
- ----------------------------------------------------------------------
1,767,665
- ----------------------------------------------------------------------
OTHER-TOTAL 2,677,229
TOTAL COMMON STOCKS (COST: $19,294,992)-96.4% 25,963,237
- ----------------------------------------------------------------------
SHORT-TERM OBLIGATIONS-4.2%
- ----------------------------------------------------------------------
$1,126,000 Repurchase agreement with State Street
Bank & Trust Co., dated 12/31/03 due
01/02/04 at 0.85% collateralized by
Federal National Mortgage Association
Notes, maturing 08/15/04, market value
$1,152,904
(repurchase proceeds $1,126,053) 1,126,000
- ----------------------------------------------------------------------
(AMORTIZED COST: $1,126,000) 1,126,000
TOTAL INVESTMENTS (COST: $20,420,992)-100.6% (a)(c) 27,089,237
- ----------------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES-(0.6%) (161,648)
- ----------------------------------------------------------------------
TOTAL NET ASSETS-100% $26,927,589
======================================================================
NOTES TO STATEMENT OF INVESTMENTS:
(a) At December 31, 2003, cost for federal income tax purposes is $20,454,420.
The net unrealized appreciation was $6,634,817 consisting of gross
unrealized appreciation of $6,649,461 and gross unrealized depreciation of
$14,644.
(b) Non-income producing security.
(c) On December 31, 2003, The Fund's total investments were denominated in
currencies as follows:
% of Net
Currency Value Assets
---------------------------------------------------------
Euros $10,181,501 37.8%
British Pounds 4,608,976 17.1
Japanese Yen 2,488,216 9.2
Swiss Francs 2,430,567 9.0
Canadian Dollars 1,767,664 6.6
U.S. Dollars 1,725,760 6.4
Norwegian Krones 1,528,971 5.7
Other currencies less than 5%
of total net assets 2,357,582 8.8
----------- -----
$27,089,237 100.6%
See accompanying notes to financial statements.
27
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER FOREIGN FORTY PORTFOLIO DIVERSIFICATION DECEMBER 31, 2003
AT DECEMBER 31, 2003, THE FUND'S PORTFOLIO INVESTMENTS AS A PERCENT OF NET
ASSETS WAS DIVERSIFIED AS FOLLOWS:
Value Percent
- --------------------------------------------------
INFORMATION TECHNOLOGY
Computer Related Hardware
Contract Manufacturing $699,523 2.6%
Semiconductors &
Related Equipment 569,450 2.1
Computer Hardware 506,081 1.9
- --------------------------------------------------
1,775,054 6.6
Media
TV Programming 794,826 3.0
TV Broadcasting 653,429 2.4
- --------------------------------------------------
1,448,255 5.4
Software and Services
Financial Processors 985,786 3.6
- --------------------------------------------------
985,786 3.6
- --------------------------------------------------
4,209,095 15.6
- --------------------------------------------------
HEALTHCARE
Medical Equipment 1,750,638 6.5
Hospital Management 1,121,356 4.1
Services 264,709 1.0
- --------------------------------------------------
3,136,703 11.6
- --------------------------------------------------
CONSUMER GOODS/SERVICES
Food 1,707,554 6.3
Restaurants 1,340,525 5.0
Durable Goods 1,171,498 4.3
Beverage 909,564 3.4
Retail 488,899 1.8
Consumer Goods Distribution 353,759 1.3
- --------------------------------------------------
5,971,799 22.1
Value Percent
- --------------------------------------------------
FINANCE
Banks $3,343,798 12.4%
Insurance 1,041,772 3.9
Money Management 479,069 1.8
- --------------------------------------------------
4,864,639 18.1
- --------------------------------------------------
INDUSTRIAL GOODS/SERVICES
Industrial Services 939,763 3.6
Machinery 806,368 3.0
Electrical Components 786,472 2.9
Industrial Distribution 758,112 2.8
Steel 599,760 2.2
Speciality Chemicals 544,815 2.0
Outsourcing & Training
Services 510,386 1.9
Industrial Materials 252,343 0.9
- --------------------------------------------------
5,198,019 19.3
- --------------------------------------------------
ENERGY/MINERALS
Oil/Gas Producers 1,683,092 6.3
- --------------------------------------------------
1,683,092 6.3
- --------------------------------------------------
OTHER
Regulated Utilities 606,036 2.3
Real Estate 293,854 1.1
- --------------------------------------------------
899,890 3.4
- --------------------------------------------------
TOTAL COMMON STOCKS 25,963,237 96.4
- --------------------------------------------------
SHORT-TERM OBLIGATIONS 1,126,000 4.2
- --------------------------------------------------
TOTAL INVESTMENTS 27,089,237 100.6
- --------------------------------------------------
CASH AND OTHER ASSETS
LESS LIABILITIES (161,648) (0.6)
- --------------------------------------------------
NET ASSETS $26,927,589 100.0%
==================================================
See accompanying notes to financial statements.
28
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER ADVISORS FUNDS
> STATEMENTS OF ASSETS AND LIABILITIES
> STATEMENTS OF OPERATIONS
> STATEMENTS OF CHANGES IN NET ASSETS
> FINANCIAL HIGHLIGHTS
> NOTES TO FINANCIAL STATEMENTS
29
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
WANGER WANGER WANGER WANGER
U.S. SMALLER INTERNATIONAL TWENTY FOREIGN
COMPANIES SMALL CAP FORTY
============================================================================================================
ASSETS
Investments, at cost $562,788,244 $291,853,897 $40,379,841 $20,420,992
- ------------------------------------------------------------------------------------------------------------
Investments, at value $823,399,275 $378,932,452 $51,951,671 $27,089,237
Cash 138 908 135 816
Foreign currency (cost: Wanger International
Small Cap $3,459,646; Wanger Foreign
Forty $4,180) -- 3,487,153 -- 4,219
Receivable for:
Investments sold 408,364 -- -- --
Fund shares sold 536,992 202,158 186,627 --
Dividends and interest 88,370 460,597 2,915 61,833
Other assets 12,243 4,612 755 7,274
- ------------------------------------------------------------------------------------------------------------
Total Assets 824,445,382 383,087,880 52,142,103 27,163,379
LIABILITIES
Payable for:
Investments purchased 161,998 1,477,866 -- 20,532
Fund shares repurchased 1,539,845 814,423 5,284 194,592
Transfer agent fee 1,926 1,750 1,559 1,553
Custody fee 816 13,481 639 859
Reports to shareholders 31,276 22,606 4,178 3,715
Legal and audit fee 41,543 27,524 13,744 13,095
Other liabilities 9,483 4,508 4,754 1,444
- ------------------------------------------------------------------------------------------------------------
Total Liabilities 1,786,887 2,362,158 30,158 235,790
- ------------------------------------------------------------------------------------------------------------
Net Assets $822,658,495 $380,725,722 $52,111,945 $26,927,589
============================================================================================================
COMPOSITION OF NET ASSETS
Paid in capital $597,667,491 $386,980,882 $40,491,855 $27,995,297
Undistributed net investment income 163,258 2,935,123 -- 82,012
Accumulated net realized gain (loss) (35,783,285) (95,693,607) 48,260 (7,821,946)
Net unrealized appreciation on:
Investments (net of unrealized PFIC gains
of $614,129 for Wanger International
Small Cap) 260,611,031 86,464,427 11,571,830 6,668,245
Foreign currency transactions -- 38,897 -- 3,981
- ------------------------------------------------------------------------------------------------------------
Net Assets $822,658,495 $380,725,722 $52,111,945 $26,927,589
============================================================================================================
Fund shares outstanding 31,035,965 19,348,798 2,808,670 1,941,981
============================================================================================================
Net asset value, offering price and redemption
price per share $26.51 $19.68 $18.55 $13.87
============================================================================================================
See accompanying notes to financial statements.
30
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
WANGER WANGER WANGER WANGER
U.S. SMALLER INTERNATIONAL TWENTY FOREIGN
COMPANIES SMALL CAP FORTY
============================================================================================================
INVESTMENT INCOME:
Dividend income (net of foreign taxes of $2,521,250 $5,935,367 $162,055 $305,500
$618,933 for Wanger International Small
Cap and $27,563 for Wanger Foreign Forty)
Interest income 543,276 117,282 22,363 11,658
- ------------------------------------------------------------------------------------------------------------
Total investment income 3,064,526 6,052,649 184,418 317,158
EXPENSES:
Investment advisory fees 5,627,621 3,279,805 355,065 172,540
Custody fees 24,018 276,825 4,836 34,713
Legal and audit fees 178,732 95,299 30,422 25,556
Transfer agent fees 22,271 21,697 18,955 18,917
Trustees' fees 83,937 40,996 4,803 1,743
Other expenses 44,956 56,468 14,942 12,818
- ------------------------------------------------------------------------------------------------------------
Total Expenses 5,981,535 3,771,090 429,023 266,287
Less custody fees paid indirectly (310) (97) (1) (1)
Less expenses reimbursed by Advisor -- -- -- (16,227)
- ------------------------------------------------------------------------------------------------------------
Net Expenses 5,981,225 3,770,993 429,022 250,059
- ------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (2,916,699) 2,281,656 (244,604) 67,099
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
PORTFOLIO POSITIONS:
Net realized gain (loss) on:
Investments 16,030,419 (3,558,065) 562,443 (490,216)
Foreign currency transactions -- 43,058 -- 15,233
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 16,030,419 (3,515,007) 562,443 (474,983)
============================================================================================================
Net change in unrealized appreciation
(depreciation) on:
Investments 208,755,524 115,859,238 9,417,172 7,045,112
Foreign currency transactions -- 8,112 -- 1,302
- ------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) 208,755,524 115,867,350 9,417,172 7,046,414
- ------------------------------------------------------------------------------------------------------------
Net Gain 224,785,943 112,352,343 9,979,615 6,571,431
- ------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $221,869,244 $114,633,999 $9,735,011 $6,638,530
============================================================================================================
See accompanying notes to financial statements.
31
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
WANGER U.S. SMALLER COMPANIES WANGER INTERNATIONAL SMALL CAP
Year ended Year ended Year ended Year ended
INCREASE (DECREASE) IN NET ASSETS December 31, 2003 December 31, 2002 December 31, 2003 December 31, 2002
==================================================================================================================================
FROM OPERATIONS:
Net investment income (loss) $(2,916,699) $(2,320,011) $2,281,656 $1,068,839
Net realized gain (loss) on investments
and foreign currency transactions 16,030,419 (17,795,068) (3,515,007) (29,381,289)
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions 208,755,524 (74,506,422) 115,867,350 (3,856,903)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 221,869,244 (94,621,501) 114,633,999 (32,169,353)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- (778,511) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders -- -- (778,511) --
SHARE TRANSACTIONS:
Subscriptions 218,524,438 140,977,765 152,933,800 334,085,769
Distributions reinvested -- -- 778,511 --
Redemptions (89,461,181) (72,816,413) (102,925,641) (316,459,265)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase from Share Transactions 129,063,257 68,161,352 50,786,670 17,626,504
- ----------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 350,932,501 (26,460,149) 164,642,158 (14,542,849)
NET ASSETS:
Beginning of period 471,725,994 498,186,143 216,083,564 230,626,413
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $822,658,495 $471,725,994 $380,725,722 $216,083,564
- ----------------------------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME $163,258 $13,289 $2,935,123 $774,792
==================================================================================================================================
See accompanying notes to financial statements.
32
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
WANGER TWENTY WANGER FOREIGN FORTY
Year ended Year ended Year ended Year ended
INCREASE (DECREASE) IN NET ASSETS December 31, 2003 December 31, 2002 December 31, 2003 December 31, 2002
===================================================================================================================================
FROM OPERATIONS:
Net investment income (loss) $(244,604) $(148,168) $67,099 $51,954
Net realized gain (loss) on investments
and foreign currency transactions 562,443 726,558 (474,983) (2,982,769)
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions 9,417,172 (2,604,955) 7,046,414 635,281
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 9,735,011 (2,026,565) 6,638,530 (2,295,534)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- (50,019) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders -- -- (50,019) --
SHARE TRANSACTIONS:
Subscriptions 20,698,376 12,257,973 14,037,658 32,503,614
Distributions reinvested -- -- 50,019 --
Redemptions (4,445,362) (5,536,933) (7,831,407) (31,556,395)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase from Share Transactions 16,253,014 6,721,040 6,256,270 947,219
- -----------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 25,988,025 4,694,475 12,844,781 (1,348,315)
NET ASSETS:
Beginning of period 26,123,920 21,429,445 14,082,808 15,431,123
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $52,111,945 $26,123,920 $26,927,589 $14,082,808
- -----------------------------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME -- -- $82,012 $49,697
===================================================================================================================================
33
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER U.S. SMALLER COMPANIES FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING Year Ended December 31,
THROUGHOUT EACH PERIOD 2003 2002 2001 2000 1999
======================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $18.51 $22.25 $19.99 $24.88 $22.18
- ----------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) (0.11) (0.10) (0.04) 0.02 0.03
Net realized and unrealized gain (loss) on investments 8.11 (3.64) 2.31 (1.82) 4.79
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 8.00 (3.74) 2.27 (1.80) 4.82
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- -- (0.01) (0.03) --
From net realized capital gains -- -- -- (3.06) (2.12)
- ----------------------------------------------------------------------------------------------------------------------
Total Distributions Declared to Shareholders -- -- (0.01) (3.09) (2.12)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $26.51 $18.51 $22.25 $19.99 $24.88
======================================================================================================================
Total Return (b) 43.22% (16.81)% 11.39% (8.16)% 25.06%
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.99%(c) 1.05%(c) 0.99% 1.00%(c) 1.02%(c)
Net investment income (loss) (0.48)%(c) (0.47)%(c) (0.20)% 0.07%(c) 0.14%(c)
Portfolio turnover rate 10% 16% 18% 36% 35%
Net assets, end of period (000's) $822,658 $471,726 $498,186 $403,306 $390,709
- --------------------------------------------------------------------------------
(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) The benefits derived from custody fees paid indirectly had no impact.
See accompanying notes to financial statements.
34
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER INTERNATIONAL SMALL CAP FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING Year Ended December 31,
THROUGHOUT EACH PERIOD 2003 2002 2001 2000 1999
======================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $13.27 $15.40 $28.53 $43.67 $19.62
- ----------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) 0.13 0.07 0.02 (0.26) (0.13)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 6.33 (2.20) (5.12) (9.75) 24.52
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 6.46 (2.13) (5.10) (10.01) 24.39
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.05) -- -- -- (0.34)
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)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $19.68 $13.27 $15.40 $28.53 $43.67
======================================================================================================================
Total Return (b) 48.86% (13.83)% (21.27)% (27.84)% 126.37%
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (c) 1.41% 1.47% 1.43% 1.41% 1.49%
Net investment income (loss) (c) 0.85% 0.46% 0.10% (0.68)% (0.49)%
Portfolio turnover rate 45% 54% 56% 67% 75%
Net assets, end of period (000's) $380,726 $216,084 $230,626 $271,675 $311,331
- --------------------------------------------------------------------------------
(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) The benefits derived from custody fees paid indirectly had no impact.
See accompanying notes to financial statements.
35
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER TWENTY FINANCIAL HIGHLIGHTS
February 1,
1999
through
SELECTED DATA FOR A SHARE OUTSTANDING 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) (0.11) (0.09) (0.05) (0.03) (0.08)
Net realized and unrealized gain (loss) on investments 4.47 (1.08) 1.33 1.23 3.51
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 4.36 (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 $18.55 $14.19 $15.36 $14.08 $13.43
=============================================================================================================================
Total Return (b) 30.73% (7.62)% 9.09% 9.45%(c) 34.30%(c)(d)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.15%(e) 1.18%(e) 1.33%(e) 1.39%(f) 1.41%(f)(g)
Net investment loss (0.65)%(e) (0.62)%(e) (0.34)%(e) (0.24)%(f) (0.77)%(f)(g)
Reimbursement -- -- -- 0.21% 0.71%(g)
Portfolio turnover rate 21% 45% 76% 86% 113%(g)
Net assets, end of period (000's) $52,112 $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) Had the Advisor not reimbursed a portion of its expenses, total return
would have been reduced.
(d) Not annualized.
(e) The benefits derived from custody fees paid indirectly had no impact.
(f) In accordance with a requirement of the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custody fees
for cash balances it maintains with the custodian ("custody fees paid
indirectly"). The ratios of expenses to average daily net assets and net
investment income to average daily net assets net of custody fees paid
indirectly would have been 1.35% 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.
(g) Annualized.
See accompanying notes to financial statements.
36
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
WANGER FOREIGN FORTY FINANCIAL HIGHLIGHTS
February 1,
1999
through
SELECTED DATA FOR A SHARE OUTSTANDING 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) 0.04 0.04 (0.03) (0.04) (0.01)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 4.01 (1.82) (4.46) (0.10) 8.40
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 4.05 (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 $13.87 $9.86 $11.64 $17.29 $18.39
=============================================================================================================================
Total Return (b) 41.24%(c) (15.29)%(c) (26.61)% (1.58)%(c) 83.90%(c)(d)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.45%(e) 1.45%(e) 1.45%(e) 1.45%(e) 1.59%(f)(g)
Net investment income (loss) 0.39%(e) 0.35%(e) (0.20)%(e) (0.20)%(e) (0.10)%(f)(g)
Reimbursement 0.09% 0.10% -- 0.23% 1.86%(g)
Portfolio turnover rate 59% 113% 72% 96% 91%(g)
Net assets, end of period (000's) $26,928 $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) Had the Advisor not reimbursed a portion of expenses, total return would be
reduced.
(d) Not annualized.
(e) The benefits derived from custody fees paid indirectly had no impact.
(f) In accordance with a requirement of the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custody fees
for cash balances it maintains with the custodian ("custody fees paid
indirectly"). The ratios of expenses to average daily net assets and net
investment income to average daily net assets net of custody fees paid
indirectly would have been 1.45% and 0.04%, respectively, for the period
ended December 31, 1999.
(g) Annualized.
See accompanying notes to financial statements.
37
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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, which approximates fair value. 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
its custodians, receive delivery of underlying securities collateralizing each
repurchase agreement. 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.
Money market instruments having a maturity of 60 days or less from the valuation
date are valued on an amortized cost basis, which approximates fair value.
Realized gains and losses from security transactions are reported on an
identified cost basis.
The Funds estimate components of distributions from Real Estate Investment
Trusts ("REITS"). Distributions received in excess of income are recorded as a
reduction of the cost of the related investments. Results of operations for the
year reflect a change in estimate of these components using more current tax
reporting received from REIT investments. The change in estimate had no impact
on each of the Fund's net assets.
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.
38
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
3. FEDERAL TAX INFORMATION
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from generally accepted accounting principles.
Reclassifications are made to the Fund's capital accounts for permanent tax
differences to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
For the year ended December 31, 2003, permanent differences resulting
primarily from differing treatments for net operating losses, foreign currency
transactions, treatment of passive foreign investment company ("PFIC") gains,
REIT adjustments and utilized capital loss carryforwards were identified and
reclassified among the components of the Funds' net assets as follows:
UNDISTRIBUTED/
(OVERDISTRIBUTED)
OR (ACCUMULATED) ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN UNREALIZED
INCOME (LOSS) GAIN/LOSS CAPITAL APPRECIATION
----------------- -------------- ------------ --------------
Wanger U.S.
Smaller
Companies $3,066,668 $23,261 $(3,089,929) $ --
Wanger
International
Small Cap 657,186 (43,057) -- (614,129)
Wanger Twenty 244,604 (1,964) (242,640) --
Wanger Foreign
Forty 15,235 (15,235) -- --
Net investment income and net realized gains (losses), as disclosed on the
Statement of Operations, and net assets were not affected by these
reclassifications.
The tax character of distributions paid during 2003 and 2002 was as follows:
YEARS ENDED DECEMBER 31,
2003 2002
----------------------------------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM
INCOME* CAPITAL GAIN INCOME* CAPITAL GAIN
------------------------ ------------------------
Wanger U.S.
Smaller
Companies $ -- $-- $-- $--
Wanger
International
Small Cap 778,511 -- -- --
Wanger Twenty -- -- -- --
Wanger Foreign
Forty 50,019 -- -- --
* For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
As of December 31, 2003, the components of distributable earnings on a tax
basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED
ORDINARY LONG-TERM NET UNREALIZED
INCOME CAPITAL GAINS APPRECIATION
--------------- --------------- ----------------
Wanger U.S.
Smaller
Companies $ -- $ -- $260,378,877
Wanger
International
Small Cap 2,936,025 -- 86,680,011
Wanger Twenty -- 48,262 11,571,828
Wanger Foreign
Forty 81,951 -- 6,638,860
The differences between book-basis and tax-basis net unrealized
appreciation/depreciation are primarily due to REITadjustments and deferral of
losses from wash sales.
The following capital loss carryforwards, determined as of December 31, 2003,
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
----------- -----------
2009 $23,353,860 $55,963,354
2010 12,034,012 36,103,588
2011 -- 2,734,494
----------- -----------
Total $35,387,872 $94,801,436
WANGER
WANGER FOREIGN
YEAR OF EXPIRATION TWENTY FORTY
----------- ----------
2009 $-- $3,168,366
2010 -- 3,638,146
2011 -- 982,004
----------- ----------
Total $-- $7,788,516
Capital loss carryforwards of $7,876,522 and $512,219 were utilized during
the year ended December 31, 2003 for Wanger U.S. Small Companies and Wanger
Twenty, respectively.
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, 2003 for federal income tax purposes,
post-October losses were deferred to January 1, 2004 were follows:
Wanger U.S. Smaller Companies $ --
Wanger International Small Cap 69,759
Wanger Twenty --
Wanger Foreign Forty --
39
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Wanger International Small Cap has elected to mark-to-market its investments
in PFIC's for federal income tax purposes. Gains and losses relating to PFIC's
are treated as ordinary income for federal income tax purposes. A summary of
transactions relating to PFIC's is as follows:
WANGER
INTERNATIONAL
SMALL CAP
-------------
Cumulative unrealized appreciation on
PFIC's recognized in prior years at
December 31, 2002 $ --
Unrealized appreciation on PFIC's
recognized for federal income tax
purposes during 2003 614,129
Unrealized appreciation recognized in
prior years on PFIC's sold during 2003 --
--------
Cumulative unrealized appreciation on
PFIC's carried forward at
December 31, 2003 $614,129
========
4. TRANSACTIONS WITH AFFILIATES
Effective October 13, 2003, the Funds' investment advisor changed its name from
Liberty Wanger Asset Management, L.P. to Columbia Wanger Asset Management, L.P.,
("Columbia 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 Columbia 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 Columbia 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.
Year Ended
December 31, 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 Columbia WAM.
The Trust makes no direct payments to its officers and trustees who are
affiliated with Columbia WAM. The Fund paid the following trustees' fees and
expenses to trustees not affiliated with Columbia WAM:
Year Ended
December 31, 2003
Wanger U.S. Smaller Companies $83,937
Wanger International Small Cap 40,996
Wanger Twenty 4,803
Wanger Foreign Forty 1,743
Effective October 13, 2003, Liberty Funds Distributor, Inc. changed its
name to Columbia Funds Distributor, Inc. ("CFD"), a subsidiary of Columbia,
serves as the principal underwriter of the Trust and receives no compensation
for its services.
Effective October 13, 2003, Liberty Funds Services, Inc., changed its name to
Columbia Funds Services, Inc. The Transfer Agent is an affiliate of the
investment advisor and provides shareholder services to the Fund and receives
reimbursement for out-of-pocket expenses.
During the year ended December 31, 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 $2,838,000 $ --
Wanger International
Small Cap 6,278,157 598,691
Wanger Twenty -- 39,564
Wanger Foreign Forty -- 67,545
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 year ended December 31, 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 Year ended Year ended
COMPANIES December 31, 2003 December 31, 2002
Shares sold 9,675,283 6,859,016
- -------------------------------------------------------------------
Less shares redeemed 4,118,462 3,775,228
- -------------------------------------------------------------------
Net increase in shares outstanding 5,556,821 3,083,788
40
Wanger Advisors Trust 2003 Annual Report
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
WANGER INTERNATIONAL Year ended Year ended
SMALL CAP December 31, 2003 December 31, 2002
Shares sold 10,174,171 22,143,427
Shares issued in reinvestment
of dividend distributions 61,737 --
- -------------------------------------------------------------------
10,235,908 22,143,427
Less shares redeemed 7,169,275 20,832,143
- -------------------------------------------------------------------
Net increase in shares outstanding 3,066,633 1,311,284
WANGER TWENTY Year ended Year ended
December 31, 2003 December 31, 2002
Shares sold 1,249,090 842,336
- -------------------------------------------------------------------
Less shares redeemed 281,941 395,508
- -------------------------------------------------------------------
Net increase in shares outstanding 967,149 446,828
WANGER FOREIGN FORTY Year ended Year ended
December 31, 2003 December 31, 2002
Shares sold 1,237,004 3,006,672
Shares issued in reinvestment
of dividend distributions 5,607 --
- -------------------------------------------------------------------
1,242,611 3,006,672
Less shares redeemed 728,804 2,904,415
- -------------------------------------------------------------------
Net increase in shares outstanding 513,807 102,257
7. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales other than short-term
obligations for the year ended December 31, 2003 were:
----------------------------------------------------------
WANGER WANGER WANGER WANGER
U.S. SMALLER INTERNATIONAL TWENTY FOREIGN FORTY
COMPANIES SMALL CAP
PURCHASES $163,890,258 $157,193,818 $20,706,950 $16,400,250
SALES 54,800,521 114,468,289 7,289,445 9,581,550
8. LEGAL PROCEEDINGS
The Securities and Exchange Commission (the "SEC"), the New York Attorney
General and various other regulatory authorities are investigating late trading
and market timing in mutual fund shares, and have sent information requests and
subpoenas to certain affiliates of Columbia Management Group, Inc. ("CMG")
(collectively, "Columbia"). These affiliates include Columbia Funds Distributor,
Inc. ("CFD"), the distributor of the Funds' shares, Columbia Management
Advisors, Inc. ("CMA"), and Columbia Wanger Asset Management, L.P. ("Columbia
WAM"). CMA is the adviser to the Columbia Family of Funds but is not the adviser
to the Wanger Advisors Trust Family of Funds. Columbia has not uncovered any
instances where Columbia entities were knowingly involved in late trading of
mutual fund shares. Columbia has identified a limited number of investors who
had informal arrangements for trading of various funds managed by subsidiaries
of CMG between 1998 and 2003. A majority of the transactions in connection with
these arrangements occurred in one international fund and two domestic funds in
the Columbia Family of Funds. The majority of the trading under these
arrangements was made by three entities. A substantial majority of the trading
had ended by October 2002. None of these arrangements exists today. Information
relating to those trading arrangements has been supplied to various regulatory
authorities.
The SEC staff has issued notices to the effect that it has made a preliminary
determination to recommend that the SEC bring civil enforcement actions,
including injunctive proceedings, against CFD and CMA, alleging that they have
violated certain provisions of the federal securities laws. Columbia believes
that those allegations are based principally on the trading arrangements
referred to above. Columbia WAM has not been named in these notices. CFD and CMA
are engaged in discussions with the SEC staff in an effort to reach a
satisfactory resolution of these matters. However, there can be no assurance
that such a resolution will be reached. Any potential resolution of these
matters may include, but not be limited to, sanctions, financial penalties,
damages or injunctions regarding CFD or CMA, and structural changes in the
conduct of their business.
Although Columbia does not believe that these regulatory developments, or
their resolution, will have a material adverse effect on the Funds, or on the
ability of CFD or Columbia WAM to provide services to the Funds, there can be no
assurance that these matters or any publicity relating to these matters or other
developments resulting from them will not adversely effect sales or redemptions
of Fund shares or otherwise effect the Funds.
Columbia WAM and Columbia Acorn Trust (the "CAT Trust"), another mutual fund
family advised by Columbia WAM, are defendants in a lawsuit that seeks
certification of a plaintiff class consisting of all persons in the United
States who held shares in the series of the CAT Trust designated Columbia Acorn
International Fund ("International Fund") for a period of more than 14 days
during the five years prior to the filing of the lawsuit. The suit seeks
compensatory and punitive damages, as well as interest, costs and attorney's
fees. The lawsuit alleges, in summary, that the CAT Trust and Columbia WAM
exposed International Fund shareholders to trading by market timers by allegedly
(a) failing to properly evaluate daily whether a significant event affecting the
value of International Fund's securities had occurred after foreign markets had
closed but before the calculation of the Fund's net asset value ("NAV"); (b)
failing to implement International Fund's portfolio valuation and share pricing
policies and procedures; (c) allowing portfolio valuation and share policies and
procedures that benefited market timers at the expense of long-term
shareholders; and (d) failing to know and implement applicable rules and
regulations concerning the calculation of NAV.
Columbia WAM and the CAT Trust also are defendants in a lawsuit that seeks
certification of a plaintiff class consisting of all persons in the United
States who held shares in International Fund for a period of more than 14 days,
without any stated limitation on the duration of the class period. The suit
seeks compensatory and punitive damages, as well as interest, costs and
attorney's fees. This suit contains allegations and counts similar to those
described above, and also includes an additional count under Section 36(a) of
the Investment Company Act of 1940.
Columbia WAM and the CAT Trust, on behalf of International Fund, intend to
defend both suits vigorously. Columbia WAM does not believe that the pending
actions will have a material adverse affect on its ability to perform under its
contracts with the Funds.
41
Wanger Advisors Trust 2003 Annual Report
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REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
Wanger Advisors Trust
We have audited the accompanying statements of assets and liabilities, including
the statements of invest ments of Wanger U.S. Smaller Companies, Wanger
International Small Cap, Wanger Twenty and the Wanger Foreign Forty portfolios,
comprising the Wanger Advisors Trust, as of December 31, 2003, the related
statements of operations, changes in net assets, and the financial highlights
for the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Funds' management. Our respon sibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of investments owned as of December 31, 2003, by cor respon dence
with the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presen tation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respec tive Funds of the Wanger Advisors Trust as of December 31, 2003,
the results of their operations and changes in their net assets and financial
highlights for the periods indicated therein, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Chicago, Illinois
February 6, 2004
42
Wanger Advisors Trust 2003 Annual Report
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FEDERAL INCOME TAX INFORMATION (Unaudited)
For the fiscal year ended December 31, 2003, the Wanger Twenty Fund designates
long-term capital gains of $48,262.
43
Wanger Advisors Trust 2003 Annual Report
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BOARD OF TRUSTEES AND MANAGEMENT OF WANGER ADVISORS TRUST
The board of trustees serve indefinite terms of unlimited duration provided that
a majority of trustees always has been elected by shareholders. The trustees
appoint their own successors, provided that at least two-thirds of the trustees,
after such appointment, have been elected by shareholders. Shareholders may
remove a trustee, with or without cause, upon the vote of two-thirds of the
Trust's outstanding shares at any meeting called for that purpose. A trustee may
be removed, with or without cause, upon the vote of a majority of the trustees.
The names of the trustees and officers of the Trust, the date each was first
elected or appointed to office, their principal business occupations and other
directorships they have held during at least the last five years, are shown
below. Each trustee serves in such capacity for each of the four series of the
Trust. Mr. Wanger also serves as a trustee for each of the six series of
Columbia Acorn Trust.
NAME, POSITION(S) WITH YEAR FIRST
WANGER ADVISORS TRUST ELECTED OR
AND AGE AT APPOINTED TO PRINCIPAL OCCUPATION(S) DURING OTHER
JANUARY 1, 2004 OFFICE PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------------
TRUSTEES WHO ARE NOT INTERESTED PERSONS OF WANGER ADVISORS TRUST:
Jerome L. Duffy, 67, 2003 Retired since December 31, 1997; prior there to, senior vice None.
Trustee president, Kemper Financial Services and treasurer,
Kemper Funds.
Fred D. Hasselbring, 62, Retail industry, general project development and business None.
Trustee 1994 computer systems consultant; voice over specialist for
Lead Independent Trustee 2003 industrial and institutional applications.
Dr. Kathryn A. Krueger, M.D., 46, 2003 Medical Advisor, Cardiovascular Therapeutic Area, Lilly None
Trustee Research Nominee Laboratories (January 2003 to present);
Medical Director, Cardiovascular Therapeutic Area,
Lilly Research Laboratories (October 2002 to December 2002);
Medical Director, Neptune Product Team, Lilly Research
Laboratories (October 2001 to October 2002); Acting Director
and Senior Clinical Research Physician, Lilly Research
Laboratories (April 2001 to September 2001); Senior Clinical
Research Physician, Lilly Research Laboratories (January
2000 to March 2001); Clinical Research Physician, Lilly
Research Laboratories (June 1996 to December 1999).
Patricia H. Werhane, 68, 1998 Ruffin Professor of Business Ethics, Darden Graduate School None.
Trustee of Business Administration, University of Virginia, since 1993;
Co-Director of the Olsson Center for Applied Ethics, Darden
Graduate School of Business Administration, University of
Virginia, since September 2001; and Wicklander Chair of
Business Ethics and Director of the Institute for Business
and Professional Ethics, DePaul University (since September
2003).
TRUSTEES WHO ARE AN INTERESTED PERSON OF WANGER ADVISORS TRUST:
Ralph Wanger, 69, 1994 Former president, chief investment officer and portfolio Columbia
Trustee manager, Columbia WAM from July 1992 until September 29, Acorn
2003; president, Columbia Acorn Trust (April 1992 through Trust.
Sept. 30, 2003); president, Wanger Advisors Trust (1994 through
Sept. 30, 2003); principal, WAM from July 1992 until
September 29, 2000; president, WAM Ltd. from July 1992 to
September 29, 2000; president and director, WAM Acquisition
GP, Inc. since September 29, 2000; director, Wanger
Investment Company plc.
OFFICERS OF WANGER ADVISORS TRUST:
J. Kevin Connaughton, 39, 2001 Treasurer of the Columbia Funds and of the Columbia All-Star None.
Assistant Treasurer Funds since December 2000; vice president of Columbia WAM since
April 2003 (formerly controller of the Columbia Funds and of
the Columbia All-Star Funds from February 1998 to October
2000); treasurer of the Galaxy Funds since September 2002;
treasurer, Columbia Management Multi-Strategy Hedge Fund,
LLC since December, 2002 (formerly vice president of
Colonial Management Associates from February 1998 to October
2000 and senior tax manager, Coopers & Lybrand, LLP from
April 1996 to January 1998).
44
Wanger Advisors Trust 2003 Annual Report
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NAME, POSITION(S) WITH YEAR FIRST
WANGER ADVISORS TRUST ELECTED OR
AND AGE AT APPOINTED TO PRINCIPAL OCCUPATION(S) DURING OTHER
JANUARY 1, 2004 OFFICE PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF WANGER ADVISORS TRUST (CONTINUED):
Kenneth A. Kalina, 44, 1995 Chief financial officer, Columbia WAM since April 2000; None.
Assistant Treasurer assistant treasurer, Columbia Acorn Trust; fund controller,
Columbia WAM since September 1995; director, New Americas
Small Cap Fund.
Bruce H. Lauer, 46, 1995 Chief operating officer, Columbia WAM since April 1995; None.
Vice President, Secretary principal, WAM from January 2000 to September 29, 2000;
and Treasurer vice president, treasurer and secretary, Columbia Acorn Trust;
director, Wanger Investment Company plc and New
Americas Small Cap Fund.
Charles P. McQuaid, 50, 1994 Chief investment officer of Columbia WAM since September 30, Columbia
President 2003; senior vice president of the Trust from 1994 through Acorn
September 2003; director of research, Columbia WAM from Trust.
July 1992 through December 2003; principal, WAM from July
1995 to September 29, 2000; trustee and president,
Columbia Acorn Trust.
Robert A. Mohn, 42, 1997 Analyst and portfolio manager, Columbia WAM since August None.
Vice President 1992; principal, WAM from 1995 to September 29, 2000; vice
president, Columbia Acorn Trust.
Todd Narter, 39, 2001 Analyst and portfolio manager, Columbia WAM since June 1997; None.
Vice President vice president, Columbia Acorn Trust.
Christopher Olson, 39, 2001 Analyst and portfolio manager, Columbia WAM since January None.
Vice President 2001; vice president, Columbia Acorn Trust; prior thereto,
director and portfolio strategy analyst with UBS Asset
Management/Brinson Partners.
John H. Park, 36, 1998 Director of domestic research since December 2003; analyst None.
Vice President and portfolio manager, Columbia WAM since July 1993; principal,
WAM from 1998 to September 29, 2000; vice president, Columbia
Acorn Trust.
Vincent P. Pietropaolo, 38, 2001 Vice president and counsel, Columbia Funds Group since None.
Assistant Secretary December 1999; Associate, Morgan Lewis & Bockius,
October 1998 to December 1999.
David A. Rozenson, 49, 2003 Secretary of the Columbia Funds and of the Columbia All-Star None.
Chief Legal Officer Funds since December 2003; senior counsel, Fleet Boston
Financial Corporation since January 1996; associate general
counsel, Columbia Management Group since November 2002.
The address for the trustees and officers of the Trust is Columbia Wanger
Asset Management, L.P., 227 West Monroe Street, Suite 3000, Chicago, Illinois
60606.
Wanger's Statement of Additional Information includes additional
information about Wanger's trustees and officers. You may obtain a free copy of
the Statement of Additional Information, or request any other information and
discuss your questions about us, by writing or calling toll-free:
Columbia Wanger Asset Management, L.P.
Shareholder Services Group
227 West Monroe, Suite 3000
Chicago, IL 60606
(800) 4-WANGER (800-492-6437)
www.wanger.com
45
Wanger Advisors Trust 2003 Annual Report
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SPECIAL NOTICE
At a special meeting on November 24, 2003, shareholders of each of the Funds
voted to elect trustees to the Wanger Advisors Trust board of trustees. The
record date share position of each Fund and the total share position voted of
each Fund were respectively: Wanger U.S. Smaller Companies 28,764,581.221 and
28,763,925.742; Wanger International Small Cap 17,734,379.641 and
17,733,328.959; Wanger Twenty 2,516,933.843 and 2,516,933.842; and Wanger
Foreign Forty 1,578,321.547 and 1,578,321.547.
The outcome of the votes were as follows:
The shareholders of the Funds elected the following individuals to serve on the
Board of Trustees:
TRUSTEE FOR WITHHELD PERCENTAGE FOR
- --------------------------------------------------------------------------------
Jerome L. Duffy 49,143,047.327 1,449,462.763 97.135
- --------------------------------------------------------------------------------
Fred D. Hasselbring 49,140,228.492 1,452,281.598 97.129
- --------------------------------------------------------------------------------
Dr. Kathryn A. Krueger 49,149,175.293 1,443,334.797 97.147
- --------------------------------------------------------------------------------
Ralph Wanger 49,113,156.030 1,479,354.060 97.076
- --------------------------------------------------------------------------------
Patricia H. Werhane 49,162,145.966 1,430,364.124 97.173
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46
Wanger Advisors Trust 2003 Annual Report
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47
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Logo: Squirrel
WANGER ADVISORS TRUST
TRANSFER AGENT,
DIVIDEND DISBURSING AGENT
Columbia Funds Services, Inc.
P.O. Box 8081
Boston, Massachusetts
02266-8081
DISTRIBUTOR
Columbia Funds Distributor, Inc.
One Financial Center
Boston, Massachusetts
02111-2621
INVESTMENT ADVISOR
Columbia 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
INDEPENDENT AUDITORS
Ernst & Young LLP
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.
48
WANGER ADVISORS TRUST
ANN-02/7309-1203 04/0222
ITEM 2. CODE OF ETHICS.
(a) The registrant has, as of the end of the period covered by this
report, adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(b) During the period covered by this report, there were not any
amendments to a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any waivers
or implicit waivers to a provision of the code of ethics adopted in
2(a) above.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Trustees has determined that Jerome L. Duffy, who is a
member of the registrant's Board of Trustees and Audit Committee, qualifies as
an audit committee financial expert. Mr. Duffy is an independent trustee, as
defined in paragraph (a)(2) of this item's instructions.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
4(a) Aggregate Audit Fees billed to the registrant by the principal accountant
for professional services rendered during the fiscal years ended December 31,
2003 and December 31, 2002 are as follows:
2003 2002
$78,800 $75,300
Audit Fees include amounts related to the audit of the registrant's annual
financial statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Aggregate Audit-Related Fees billed to the registrant by the principal
accountant for professional services rendered during the fiscal years ended
December 31, 2003 and December 31, 2002 are as follows:
2003 2002
$16,000 $8,000
Audit-Related Fees include amounts for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported in Audit Fees
above. In fiscal year 2003, Audit-Related Fees relate to certain agreed-upon
procedures performed for semi-annual shareholder reports. Audit-Related Fees in
fiscal year 2002 relate to certain agreed-upon procedures conducted during the
conversion of the registrant's accounting system.
The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X became effective on May 6, 2003. The percentage of Audit-Related
services to the registrant that were approved under the "de minimis" exception
during the fiscal years ended December 31, 2003 and December 31, 2002 are as
follows:
2003 2002
0% N/A
The pre-approval requirements for services to the investment adviser (not
including any sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser) and any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the registrant under paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X became effective on May 6, 2003. During the fiscal year
ended December 31, 2003, there were no Audit-Related Fees that were approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The percentage of Audit-Related fees required to be approved under paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de
minimis" exception during the fiscal years ended December 31, 2003 and December
31, 2002 are as follows:
2003 2002
0% N/A
(c) Aggregate Tax Fees billed to the registrant by the principal accountant for
professional services rendered during the fiscal years ended December 31, 2003
and December 31, 2002 are as follows:
2003 2002
$12,100 $10,500
Tax Fees include amounts for professional services by the principal accountant
for tax compliance, tax advice and tax planning. Tax Fees in both fiscal years
2003 and 2002 relate to the review of annual tax returns.
The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X became effective on May 6, 2003. The percentage of Tax Fees
billed to the registrant that were approved under the "de minimis" exception
during the fiscal years ended December 31, 2003 and December 31, 2002 are as
follows:
2003 2002
0% N/A
The pre-approval requirements for services to the investment adviser (not
including any sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser) and any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the registrant under paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X became effective on May 6, 2003. During the fiscal year
ended December 31, 2003, there were no Tax Fees that were approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The percentage of Tax Fees required to be approved under paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception
during the fiscal years ended December 31, 2003 and December 31, 2002 are as
follows:
2003 2002
0% N/A
(d) Aggregate All Other Fees billed to the registrant by the principal
accountant for professional services rendered during the fiscal years ended
December 31, 2003 and December 31, 2002 are as follows:
2003 2002
$0 $0
All Other Fees include amounts for products and services provided by the
principal accountant, other than the services reported in (a)-(c) above.
The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X became effective on May 6, 2003. The percentage of All Other Fees
billed to the registrant that were approved under the "de minimis" exception
during the fiscal years ended December 31, 2003 and December 31, 2002 are as
follows:
2003 2002
0% N/A
The pre-approval requirements for services to the investment adviser (not
including any sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser) and any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the registrant under paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X became effective on May 6, 2003. During the fiscal year
ended December 31, 2003, there were no All Other Fees that were approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The percentage of All Other Fees required to be approved under paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de
minimis" exception during the fiscal years ended December 31, 2003 and December
31, 2002 are as follows:
2003 2002
0% N/A
(e)(1) Audit Committee Pre-Approval Policies and Procedures
The policy of the registrant's Audit Committee is to specifically pre-approve
(i) all audit and non-audit (including audit related, tax and all other)
services provided by the registrant's independent auditor to the registrant and
individual funds (collectively "Fund Services") and (ii) all non-audit services
provided by the registrant's independent auditor to the funds' adviser or a
control affiliate of the adviser, that relate directly to the funds' operations
and financial reporting (collectively "Fund-related Adviser Services"). A
"control affiliate" is an entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the funds, and the
term "adviser" is deemed to exclude any unaffiliated sub-adviser whose role is
primarily portfolio management and is sub-contracted or overseen by another
investment adviser.
If such Fund Services or Fund-related Adviser Services are required during the
period between the Audit Committee's regularly scheduled meetings, the Chairman
of the Audit Committee has the authority to pre-approve the service, with
reporting to the full Audit Committee at the next regularly scheduled meeting.
The Audit Committee will waive pre-approval of Fund Services or Fund-related
Adviser Services provided that the requirements under paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X are met.
(f) Not applicable.
(g) All non-audit fees billed by the registrant's accountant for services
rendered to the registrant for the fiscal years ended December 31, 2003 and
December 31, 2002 are disclosed in 4(b)-(d) above.
All non-audit fees billed by the registrant's accountant for services rendered
to the registrant's investment adviser (not including any sub-adviser whose role
is primarily portfolio management and is subcontracted with or overseen by
another investment adviser) and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the registrant
for the fiscal years ended December 31, 2003 and December 31, 2002 are also
disclosed in 4(b)-(d) above. There were no such fees during the last two fiscal
years.
(h) The registrant's Audit Committee of the Board of Directors has considered
whether the provision of non-audit services that were rendered to the
registrant's adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X, is compatible with maintaining the principal accountant's
independence. The Audit Committee determined that the provision of such services
is compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. RESERVED.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable at this time.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer, based on their evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing of
this report, have concluded that such controls and procedures are
adequately designed to ensure that information required to be
disclosed by the registrant in Form N-CSR is accumulated and
communicated to the registrant's management, including the principal
executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR
attached hereto as Exhibit 99.CODE ETH
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Wanger Advisors Trust
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By (Signature and Title) /s/ Charles P. McQuaid
-------------------------------------------------------
Charles P. McQuaid, President
Date March 4, 2004
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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/ Charles P. McQuaid
-------------------------------------------------------
Charles P. McQuaid, President
Date March 4, 2004
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By (Signature and Title) /s/ Bruce H. Lauer
-------------------------------------------------------
Bruce H. Lauer, Treasurer
Date March 4, 2004
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