<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
WANGER ADVISORS TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
WANGER ADVISORS TRUST
227 WEST MONROE STREET, SUITE 3000
CHICAGO, ILLINOIS 60606-5016
November 21, 1997
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders of
Wanger U.S. Small Cap and Wanger International Small Cap (together, the
"Funds"), each of which is a series of Wanger Advisors Trust (the "Trust"),
which will be held on Tuesday, December 30, 1997 at 9:00 a.m. Central time, at
the office of the Trust, 227 West Monroe Street, Suite 3000, Chicago, Illinois
60606.
The primary purpose of the special meeting is to permit the shareholders of
the Funds to consider new Investment Advisory Agreements between the Trust, on
behalf of the Funds, and Wanger Asset Management, L.P. ("WAM"), that will be
required as a result of the corporate restructuring of WAM. The proposed new
Investment Advisory Agreements are identical to the current agreement, except
for the dates of execution, effectiveness and termination. The board urges you
to vote for approval of the new agreements.
Enclosed with this letter are the formal notice of the meeting and the proxy
statement, which gives detailed information about the new agreements and why
the board recommends that you vote to approve them.
Your vote is important. Please complete, sign and date the enclosed proxy
card and return it in the enclosed envelope. This will ensure that your vote
is counted, even if you can't attend the meeting in person.
Sincerely,
/s/ Ralph Wanger
Ralph Wanger
President and Trustee
<PAGE>
WANGER ADVISORS TRUST
227 WEST MONROE STREET, SUITE 3000
CHICAGO, ILLINOIS 60606-5016
1-800-4-WANGER
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 30, 1997
A special meeting of shareholders of Wanger U.S. Small Cap and Wanger
International Small Cap, each a series of Wanger Advisors Trust, will be held
at the office of the Trust, 227 West Monroe Street, Suite 3000, Chicago,
Illinois 60606, at 9:00 a.m., Central time, on December 30, 1997. At the
meeting, shareholders will be asked to consider and act upon the following
proposals:
1. To approve new Investment Advisory Agreements between Wanger Advisors
Trust and Wanger Asset Management, L.P. relating to Wanger U.S.
Small Cap and Wanger International Small Cap;
2. To ratify the selection of Ernst & Young LLP as the Funds'
independent public accountants for the fiscal year ending December
31, 1997; and
3. To transact any other business that properly comes before the
meeting.
Shareholders of record as of the close of business on November 10, 1997 are
entitled to vote at the meeting (or any adjournments of the meeting). This
proxy statement and proxy card are being mailed to shareholders on or about
November 21, 1997.
By Order of the Board of Trustees,
/s/ Ralph Wanger
Ralph Wanger
President and Trustee
November 21, 1997
Chicago, Illinois
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE
COMPLETE AND RETURN THE ENCLOSED PROXY CARD(S). YOU MAY STILL
VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE>
WANGER ADVISORS TRUST
227 WEST MONROE STREET, SUITE 3000
CHICAGO, ILLINOIS 60606-5016
1-800-4-WANGER
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 30, 1997
This proxy statement is being sent to you by the board of trustees of Wanger
Advisors Trust. The board is asking you to complete and return the enclosed
proxy card(s), permitting your shares of Wanger U.S. Small Cap and Wanger
International Small Cap to be voted at the meeting, even if you cannot attend
the meeting in person.
The meeting will be held at the office of the Trust, 227 West Monroe Street,
Suite 3000, Chicago, Illinois 60606, at 9:00 a.m. Central time, on December
30, 1997.
Shareholders of record at the close of business on November 10, 1997 (called
the "record date") are entitled to vote at the meeting.
You should also have received the Trust's annual report to shareholders for
the fiscal year ended December 31, 1996. IF YOU WOULD LIKE ANOTHER COPY OF THE
ANNUAL REPORT OR THE SEMIANNUAL REPORT FOR THE FIRST HALF OF 1997, PLEASE
WRITE TO THE TRUST AT THE ADDRESS SHOWN AT THE TOP OF THIS PAGE OR CALL 1-800-
4-WANGER. THE REPORTS WILL BE SENT TO YOU WITHOUT CHARGE.
For convenience, Wanger Advisors Trust is referred to in this proxy
statement as the "Trust." Wanger U.S. Small Cap and Wanger International Small
Cap are referred to individually as a "Fund" and together as the "Funds."
SUMMARY OF PROPOSALS
You are being asked to vote on two proposals--a new advisory agreement and
ratification of the board's selection of auditors for the Funds. The
shareholders of each of the Funds will vote separately on each proposal.
1
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PROPOSAL 1
NEW ADVISORY AGREEMENT
SUMMARY
You are being asked to consider new Investment Advisory Agreements between
the Trust, on behalf of the Funds, and Wanger Asset Management, L.P. ("WAM"),
the Funds' investment adviser, that will be identical to the current
Investment Advisory Agreements, except for the dates of execution,
effectiveness and termination. No changes will be made to the fees paid by the
Funds, or to the services provided by WAM.
If the proposed restructuring of WAM is consummated, the current Investment
Advisory Agreements would terminate, requiring the Funds' shareholders to
approve new agreements. The board of the Trust has unanimously approved new
Investment Advisory Agreements for the Funds which, if approved by
shareholders, will become effective as of time of consummation of WAM's
restructuring. That restructuring is described in more detail under the
heading, "The Proposed Restructuring."
THE BOARD OF TRUSTEES UNANIMOUSLY URGES YOU TO VOTE IN FAVOR OF THE NEW
AGREEMENT FOR EACH FUND. A complete copy of each new agreement is attached as
Exhibit A to the proxy statement.
INFORMATION ABOUT WAM
WAM serves as the investment adviser for the Funds and for other
institutional accounts. As of June 30, 1997, WAM had approximately $6.3
billion under management, including the Funds.
THE PROPOSED RESTRUCTURING
The following information relates to the ownership and management of WAM
itself, not the Funds or their portfolios. Portfolio management decisions for
the Funds are made by their portfolio managers, working with WAM's team of
analysts. There are no changes in the Funds' portfolio managers.
WAM is a limited partnership managed by its general partner, Wanger Asset
Management, Ltd. ("WAM Ltd."). Ralph Wanger, Charles P. McQuaid, Terence M.
Hogan, Leah J. Zell, Marcel P. Houtzager and Robert A. Mohn, all of whom are
officers of the Trust, are the current limited partners of WAM. Their
addresses and principal occupations are included under "More Information About
The Trust--Organization and Management of the Trust," below. WAM and WAM Ltd.
are located at 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606.
2
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WAM Ltd. has been controlled by Mr. Wanger, and WAM has been controlled by
Mr. Wanger with the consent of one or more of the other limited partners, but
each is evolving into an organization controlled by its partners or
shareholders collectively. To accommodate this evolution and to reflect more
closely WAM's team approach to management, WAM is committed to providing
partnership opportunities to its growing number of talented portfolio managers
and analysts. New mechanisms are being created to facilitate the admission of
new limited partners to WAM and to give new limited partners an equity interest
in WAM Ltd., which will continue to be WAM's general partner. Mr. Wanger's
interests in WAM Ltd. and in WAM are being reduced to less than a majority,
although Mr. Wanger will continue to have the largest interest in each. On
matters submitted to the shareholders of WAM Ltd., each such shareholder will
have one vote (or a lesser vote in the case of new shareholders). With certain
exceptions (including extraordinary transactions, for which Mr. Wanger's
consent will be required), decisions will be made by majority vote. Because
WAM's team approach causes it to operate largely by consensus, little change is
expected to result from implementation of this "majority rule" system.
WAM's proposed restructuring recognizes the importance of the contributions
made to WAM by a broader, more diverse group of people than founded WAM in
1992. By expanding participation in ownership and management, WAM will retain
its independent structure while rewarding those who have been responsible for
WAM's success. No changes in the people at WAM responsible for portfolio
management for the Funds or for their business operations will result from
WAM's restructuring.
The proposed restructuring described above, however, is contingent upon the
shareholders of the Funds and of each series of Acorn Investment Trust
("Acorn") (described below under "Other Investment Companies Advised by WAM")
approving new investment advisory agreements with WAM. Until the shareholders
of the Trust and Acorn approve new investment advisory agreements, triggering
WAM's restructuring, Mr. Wanger, with the consent of one of the limited
partners of WAM, has the right to require voting in accordance with WAM's
current governing documents.
Consummation of WAM's proposed restructuring will constitute an "assignment,"
as defined by the Investment Company Act of 1940 (the "1940 Act"), of the
current Investment Advisory Agreements in effect between the Trust and WAM. As
required by the 1940 Act, the current agreements provide for their automatic
termination in the event of an assignment.
In anticipation of the restructuring of WAM, and in order for WAM to continue
to serve as investment adviser to the Trust, new Investment Advisory Agreements
on behalf of each Fund must be approved by (i) a majority of the
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<PAGE>
Trustees of the Trust who are not parties to the new Investment Advisory
Agreements or interested persons of any such party ("Outside Trustees") and
(ii) holders of a majority of the outstanding voting securities of each Fund.
DESCRIPTION OF THE CURRENT ADVISORY AGREEMENTS
As noted previously, except for the dates of execution, effectiveness and
termination, the proposed new Investment Advisory Agreements will be identical
to the current Investment Advisory Agreements. The current agreements were
approved by each of the Fund's initial shareholders before either began
offering their shares to the public. Each of the agreements were continued by
the board of trustees at a meeting held November 7, 1996.
The agreements provide that for its services to Wanger U.S. Small Cap, WAM
receives a fee at the annual rate of 1.00% of the net asset value of the Fund
up to $100 million, 0.95% of the net asset value in excess of $100 million and
up to $250 million and 0.90% of the net asset value in excess of $250 million.
For services to Wanger International Small Cap, WAM receives a fee at the
annual rate of 1.30% of the net asset value of the Fund up to $100 million,
1.20% of the net asset value of the Fund in excess of $100 million and up to
$250 million and 1.10% of the net asset value of the fund in excess of $250
million. The fees paid by the Funds may be reduced to cause the expenses of
Wanger U.S. Small Cap not to exceed 1.50% of its net asset value and the
expenses of Wanger International Small Cap not to exceed 1.90% of its net asset
value. During the last fiscal year, the advisory fees paid to WAM by Wanger
U.S. Small Cap were $704,115 and $631,977 by Wanger International Small Cap. No
other fees or payments were made by either Fund to WAM or any of its affiliates
during the fiscal year ended December 31, 1996.
Under the current agreements, subject to the overall supervision and control
of the board of trustees, WAM has supervisory responsibility for the general
management and investment of the Funds' assets. WAM is authorized to make the
decisions to buy and sell securities, options and futures contracts and other
assets for the Funds, to place the Funds' portfolio transactions with broker-
dealers and to negotiate the terms of such transactions, including brokerage
commissions, on behalf of the Funds. WAM is authorized to exercise discretion
within the Funds' policy concerning allocation of portfolio brokerage, as
permitted by law, including but not limited to Section 28(e) of the Securities
Exchange Act of 1934, and in so doing shall not be required to make any
reduction in its investment advisory fees. The current agreements also provide
that WAM shall furnish to the Trust at WAM's own expense, office space and all
necessary office facilities, equipment and personnel required to provide its
services; all expenses incurred in connection with managing the assets of the
Funds, including expenses in connection with the
4
<PAGE>
placement of securities orders, all expenses of printing and distributing the
Funds' prospectus and reports to prospective investors and all expenses in
determining daily price computations, portfolio accounting and related
bookkeeping.
Under the current agreements, each Fund is obligated to pay all of its
expenses other than those paid by WAM as set forth above, including taxes and
charges for auditing and legal services, custodian, depository and transfer
agent fees, all costs for borrowing money, registration, filing and other fees
in connection with the requirements of regulatory authorities, the printing and
mailing of reports to shareholders, expenses of shareholder and trustees
meetings, expenses of trustees, other than those affiliated with WAM, expenses
related to membership in any trade association and brokers' commissions and
other charges relative to the purchase or sale of portfolio securities.
The current agreements provide that WAM shall not be liable to the Funds or
their shareholders for any loss suffered by the Funds or their shareholders
from or as a consequence of any act or omission of WAM, or of any of the
partners, employees or agents of WAM, in connection with or pursuant to the
agreements, except for liability resulting from willful misfeasance, bad faith
or gross negligence on the part of WAM in the performance of its duties, or by
reason of reckless disregard by WAM of its obligations and duties.
THE NEW INVESTMENT ADVISORY AGREEMENTS
The form of the proposed new agreements are identical to the current
agreements, except for the dates of execution, effectiveness and termination.
The investment advisory fee as a percentage of net assets payable to WAM will
be the same under the new agreements.
The board of trustees of the Trust held a meeting on October 30, 1997, at
which the trustees, including the Outside Trustees, concluded that if the
restructuring of WAM is consummated, entry by the Trust into the new agreements
would be in the best interests of the Trust and the shareholders of the Funds.
The board of trustees, including the Outside Trustees, unanimously approved the
new agreements and recommend that the agreements be submitted for approval by
the shareholders of the Funds.
In evaluating the new agreements, the board took into account that the
current agreements and the new agreements, including the terms relating to the
services to be provided thereunder by WAM and the fees and expenses payable by
the Trust to WAM, are identical, except for the dates of execution,
effectiveness and termination. The board received and reviewed information
provided by Lipper Analytical Services, Inc. ("Lipper") on the fees and expense
5
<PAGE>
ratios of each Fund compared to a sample, selected by Lipper, of similar
mutual funds and the investment performance of each Fund compared to relevant
market indexes and other funds.
The board found that the rates of advisory fee paid by the Funds to WAM
under the advisory agreements and the total expense ratios of the Funds were
higher than the median advisory fee and total expense ratio paid by the Funds
in the comparison group selected by Lipper. However, the board noted that the
expense comparisons made by Lipper were for the year ended December 31, 1996
and that each Fund's expense ratio had since decreased because its assets had
grown.
In addition, the board considered the total return of each Fund in relation
to the Lipper-selected comparison groups. From inception on May 3, 1995,
Lipper concluded that each Fund's performance was the highest in its
comparison group. The board also reviewed information on performance achieved
by each Fund over shorter periods compared to various indexes and groups of
mutual funds. The board noted that, as compared to its Lipper-selected peer
group, Wanger International Small Cap's total return was below the median for
the year-to-date and one-year periods included in the study. However, the
trustees noted that the comparison group was dominated by large cap funds, and
that the Fund's total return as compared to all Lipper small cap funds,
including non-variable annuity small cap funds, was significantly above the
median. The board noted Lipper's conclusion that Wanger U.S. Small Cap's total
return ranked in the first quintile for that comparison group.
The board also received and considered financial information about WAM,
including the profitability to WAM of its relationship to the Funds, and the
anticipated effect on the Funds of WAM's restructuring.
If approved by shareholders, the new agreements will be signed and become
effective on the date of consummation of WAM's restructuring, which is
expected to be January 1, 1998. They will continue in effect through December
31, 1999, and thereafter from year to year so long as their continuance as to
each Fund is approved at least annually (i) by the board of trustees or by the
holders of a "majority of that Fund's outstanding voting securities" as
defined in the 1940 Act; and (ii) by a majority of the members of the Trust's
board who are not otherwise affiliated with the Trust or WAM, cast in person
at a meeting called for that purpose. Any amendment to the new agreements must
be approved in the same manner. The new agreements may be terminated as to a
Fund without penalty by the vote of the board of trustees of the Trust or the
shareholders of that Fund (by a majority as defined in the Investment Company
Act) on sixty days' written notice to WAM or by WAM on sixty days' written
notice to the Fund, and will terminate automatically in the event of
assignment.
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<PAGE>
The fees payable by a Fund under the new agreements are the obligation only
of that Fund and impose no liability on the other Fund.
OTHER INVESTMENT COMPANIES ADVISED BY WAM
In addition to serving as investment adviser to the Trust, WAM is also
investment adviser to Acorn, an open-end management investment company with
three series--Acorn Fund, Acorn International and Acorn USA (the "Acorn Family
of Funds").
Recently, the board of trustees of Acorn proposed to its shareholders that
Acorn enter into a new advisory agreement with WAM. The proposed new agreement
contains two principal changes. First, the services provided by WAM to the
Acorn Family of Funds would be divided into investment advisory and
administrative services, and a separate fee would be paid for each. Second,
the breakpoints in Acorn Fund's fee schedule would be changed and the rate of
fees payable on larger amounts of assets would be increased. As a result, the
total amount of fees (advisory and administrative) paid by Acorn Fund to WAM
would be increased. The following table summarizes the annual advisory fee
rates currently payable to WAM by Acorn Fund and the annual advisory fee rates
that will be paid if the new agreement is approved by Acorn Fund's
shareholders:
<TABLE>
<CAPTION>
ANNUAL ADVISORY FEE RATES, AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS
----------------------------------------------------------------------
OLD AGREEMENT NEW AGREEMENT
------------- -------------
<S> <C>
0.75% of the first 0.75% of the first
$100 million $700 million
0.50% of net assets 0.70% of net assets
above $100 million above $700 million
to $1.5 billion to $2 billion
0.40% of net assets 0.65% of net assets
above $1.5 billion above $2 billion
</TABLE>
If the new agreement is approved, Acorn Fund will also enter into an
administrative services agreement with WAM at an annual rate of 0.05% of Acorn
Fund's average daily net assets.
The fees paid by Acorn International and Acorn USA would also be divided
between advisory and administrative services, but the total rate of fees paid
to WAM by these two funds as a percentage of their respective assets would not
be increased or decreased. A special meeting of Acorn's shareholders has been
called for December 9, 1997 to consider approval of the new agreement.
7
<PAGE>
The following table shows the total net assets of the Acorn Family of Funds
as of June 30, 1997, and the current rates of WAM's compensation:
<TABLE>
<CAPTION>
ASSETS AS OF RATE OF COMPENSATION PAID TO WAM
NAME OF FUND 6/30/97(000S) (AS A PERCENTAGE OF AVERAGE NET ASSETS)
------------ ------------- ---------------------------------------
<S> <C> <C>
Acorn Fund................ $3,220,749 0.75% of the first $100 million;
0.50% of the next $1.4 billion;
0.40% in excess of $1.5 billion
Acorn International....... $1,970,037 1.25% of the first $100 million;
1.00% of the next $400 million;
0.80% in excess of $500 million
Acorn USA................. $ 113,690 1.00% of the first $200 million;
0.95% in excess of $200 million
</TABLE>
VOTING
The shareholders of each Fund will vote separately on approval of the new
advisory agreements. Approval of the new advisory agreement for a Fund requires
the approval of the lesser of (a) 67 percent or more of the voting shares of
that Fund present at the meeting, if the holders of more than 50 percent of the
outstanding shares of that Fund are present or represented by proxy, or (b)
more than 50 percent of the outstanding shares of that Fund.
If a new agreement is not approved as to a Fund, that Fund will continue to
operate under the old agreement and the implementation of the proposed voting
procedures which would result from the restructuring of WAM would be deferred.
However, the board of trustees would consider whether any other action should
be taken, which might include submission of another proposed agreement for
approval by shareholders.
BOARD RECOMMENDATION
The board of trustees of the Trust, including all of the trustees who are not
affiliated with WAM, unanimously recommends that shareholders of the Funds vote
for the approval of the new advisory agreements between the Trust and WAM.
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
The board of trustees recommends that the shareholders ratify the board of
trustees' selection of Ernst & Young LLP as independent public accountants for
the Trust for the fiscal year ending December 31, 1997. Ernst & Young LLP has
served as the Trust's auditors since the Trust's organization.
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For the year ended December 31, 1996, Ernst & Young LLP examined the
financial statements of the Trust and provided consultation on financial
accounting, reporting and tax matters. Representatives of Ernst & Young LLP
will be present at the meeting and will have an opportunity to make a
statement if they desire to do so. They also will be available to respond to
appropriate questions presented at the meeting.
The shareholders of each Fund will vote separately on ratification of the
selection of auditors. Approval of the selection of auditors for a Fund
requires the affirmative vote of a majority of the shares of the Fund
represented at the meeting in person or by proxy, if a quorum is present.
The board of trustees of the Trust, including all of the trustees who are
not affiliated with the Trust, unanimously recommends that shareholders of the
Funds vote for ratification of the selection of auditors.
MORE INFORMATION ABOUT THE TRUST
ORGANIZATION AND MANAGEMENT OF THE TRUST
The Trust is a Massachusetts business trust organized on August 30, 1994.
The Trust is an open-end management investment company, currently with two
series: Wanger U.S. Small Cap and Wanger International Small Cap. Each of the
Funds began operations on May 3, 1995.
The Trust was established to offer its shares to certain life insurance
company ("Life Companies") separate accounts established for the purpose of
funding certain variable life insurance policies and qualified and non-
qualified variable annuity contracts ("Variable Contracts") and to certain
types of pension plans and retirement arrangements and accounts permitting the
accumulation of funds on a tax-deferred basis ("Retirement Plan").
The Trust is governed by a board of trustees, which is responsible for
protecting the interests of the shareholders of the Funds. The trustees are
experienced executives and professionals who meet at regular intervals to
oversee the activities of the Trust and the Funds. A majority of the trustees
are not otherwise affiliated with the Trust or WAM.
The officers and trustees of the Trust are:
<TABLE>
<CAPTION>
BOARD
NAME, DATE OF BIRTH, ADDRESS AND MEMBER PRINCIPAL OCCUPATION
POSITION(S) WITH THE TRUST SINCE DURING LAST FIVE YEARS
- -------------------------------- ------ ----------------------
<S> <C> <C>
RALPH WANGER, 6/21/1934 1995 Trustee and president, Acorn
Trustee and President* Investment Trust; principal,
227 West Monroe Street Wanger Asset Management, L.P.
Suite 3000
Chicago, Illinois 60606
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
BOARD
NAME, DATE OF BIRTH, ADDRESS AND MEMBER PRINCIPAL OCCUPATION
POSITION(S) WITH THE TRUST SINCE DURING LAST FIVE YEARS
-------------------------------- ------ ----------------------
<S> <C> <C>
CHARLES P. MCQUAID, 1995 Trustee and senior vice
8/27/1953 president, Acorn Investment
Trustee and Senior Vice President* Trust; principal and director of
227 West Monroe Street, research, Wanger Asset
Suite 3000 Management, L.P.
Chicago, Illinois 60606
FRED D. HASSELBRING, 8/14/1941 1995 Owner, Fred D. Hasselbring and
Trustee Associates (retail industry and
819 Golf Lane computer systems consulting and
Wheaton, Illinois 60187 sales)
P. MICHAEL PHELPS, 9/19/1933 1995 Vice President and Corporate
Trustee Secretary, Morton International,
100 North Riverside Plaza Inc.
Chicago, Illinois 60606-1596
JAMES A. STAR, 1995 Vice President, Henry Crown and
2/27/1961 Company (private holding
Trustee company); prior thereto,
222 North LaSalle Street, portfolio manager and analyst,
Suite 2000 Harris Associates L.P.
Chicago, Illinois 60601
</TABLE>
OFFICERS
<TABLE>
<CAPTION>
NAME, DATE OF BIRTH, ADDRESS AND PRINCIPAL OCCUPATION
POSITION(S) WITH THE TRUST DURING LAST FIVE YEARS
- -------------------------------- ----------------------
<S> <C>
TERENCE M. HOGAN, Vice president, Acorn Investment
2/18/1962 Trust; principal, Wanger Asset
Vice President Management, L.P.
227 West Monroe Street,
Suite 3000
Chicago, Illinois 60606
LEAH J. ZELL, Vice president, Acorn Investment
5/23/1949 Trust; principal, analyst, and
Vice President portfolio manager, Wanger Asset
227 West Monroe Street, Management, L.P.
Suite 3000
Chicago, Illinois 60606
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NAME, DATE OF BIRTH, ADDRESS AND PRINCIPAL OCCUPATION
POSITION(S) WITH THE TRUST DURING LAST FIVE YEARS
-------------------------------- ----------------------
<S> <C>
MARCEL P. HOUTZAGER, Vice president, Acorn Investment
10/26/1960 Trust; Principal, analyst, and
Vice President portfolio manager, Wanger Asset
227 West Monroe Street, Management, L.P.
Suite 3000
Chicago, Illinois 60606
ROBERT A. MOHN, Vice president, Acorn Investment
9/13/1961 Trust; Principal, analyst and
Vice President portfolio manager, Wanger Asset
227 West Monroe Street, Management, L.P.
Suite 3000
Chicago, Illinois 60606
MERRILLYN J. KOSIER, Vice president and Secretary,
12/10/1959 Acorn Investment Trust; director
Vice President of marketing and shareholder
227 West Monroe Street, services, Wanger Asset
Suite 3000 Management, L.P., since September
Chicago, Illinois 60606 1993; prior thereto, vice
president of marketing, Kemper
Financial Services, Inc.
BRUCE H. LAUER, Vice president and Treasurer,
7/22/1957 Acorn Investment Trust; chief
Vice President and Treasurer administrative officer, Wanger
227 West Monroe Street, Asset Management, L.P. since
Suite 3000 April 1995; prior thereto, first
Chicago, Illinois 60606 vice president, investment
accounting, Kemper Financial
Services, Inc.
KENNETH A. KALINA, 8/4/1959 Assistant treasurer, Acorn
Assistant Treasurer Investment Trust; Fund
227 West Monroe Street, Suite 3000 controller, Wanger Asset
Chicago, Illinois 60606 Management, L.P., since September
1995; prior thereto, treasurer of
the Stein Roe Mutual Funds.
</TABLE>
- ---------
*Messrs. McQuaid and Wanger are trustees who are "interested persons" of the
Trust as defined in the 1940 Act, and of WAM. Messrs. McQuaid,
11
<PAGE>
Phelps and Wanger are members the executive committee of the Trust's board,
which has authority during intervals between meetings of the board of
trustees to exercise the powers of the board, with certain exceptions.
Messrs. Hasselbring, Phelps and Star are members of the Audit Committee. At
the record date, no officer or trustee of the Trust owned beneficially
greater than 1% of the outstanding shares of any Fund.
DISTRIBUTION OF SHARES OF THE FUNDS
Shares of the Funds are distributed by WAM Brokerage Services, L.L.C., 227
West Monroe Street, Suite 3000, Chicago, Illinois 60606 ("WAM BD"), the Trust's
distributor and principal underwriter. Shares of each Fund are offered for sale
through WAM BD without any sales commissions or charges to the Funds or Life
Companies or Retirement Plans purchasing Fund shares. However, each Variable
Contract imposes its own charges and fees on owners of Variable Contracts and
Retirement Plans may impose such charges on participants in a Retirement Plan.
In addition, no sales commission or "12b-1" payment is paid by the Funds. WAM
bears all sales and marketing expenses, including the cost of prospectuses and
other materials used for promotional purposes by WAM BD.
MORE INFORMATION ABOUT THE MEETING
DATE OF MAILING. This proxy statement and enclosed proxy are being mailed to
shareholders on or about November 21, 1997.
EXPENSES. All costs and expenses incurred in connection with the meeting
(including legal and proxy solicitation costs) will be paid by WAM.
SHAREHOLDERS. At the record date, the Funds had the following numbers of
shares outstanding:
Wanger U.S. Small Cap, 12,178,647 shares
Wanger International Small Cap, 7,130,916 shares, and
Of those shares, Phoenix Home Life Mutual Insurance Company (and its
affiliates) ("Phoenix") was the record holder of 11,900,947 shares
(approximately 97.72% of the outstanding shares) of Wanger U.S. Small Cap and
6,951,822 shares of (approximately 97.49% of the outstanding shares) of Wanger
International Small Cap, all of which are beneficially owned by Variable
Contact owners. No individual is known to the management to beneficially own 5%
or more of the outstanding shares of the Trust at the record date.
HOW PROXIES WILL BE VOTED. Those shares of the Funds that are held by Life
Companies, of which Phoenix is the primary holder, are owned by such
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<PAGE>
Life Companies. Pursuant to current interpretations of the 1940 Act, the Life
Companies will solicit voting instruction from owners of Variable Contracts on
the matters to be voted on at the meeting. All shares of the Funds will be
voted by the Life Companies in accordance with voting instructions received
from such Variable Contract owners. The Life Companies will vote all the
shares which they are entitled to vote, for, against or abstaining in the same
proportion as the voting instructions given by the Variable Contract owners on
the issues presented. The close of business on Friday, December 19, 1997, is
the last day on which instructions will be accepted.
All proxies solicited by the board of trustees that are properly executed
and received prior to the meeting, and which are not revoked, will be voted at
the meeting. Shares represented by those proxies will be voted in accordance
with the instructions marked on the proxy. If no instructions are specified,
shares will be voted for both proposals.
HOW PROXIES ARE BEING SOLICITED. Solicitation of proxies by personal
interview, mail, telephone and electronic mail may be made by officers and
trustees of the Trust and employees of WAM, none of whom will receive any
additional compensation for such service, and third-party solicitation agents.
REVOKING A PROXY. At any time before it has been voted, you may revoke your
proxy by: (1) sending a letter saying that you are revoking your proxy to the
Vice President and Secretary of Wanger Advisors Trust at the Trust's offices
located at 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606; (2)
properly executing a later-dated proxy; or (3) attending the meeting,
requesting return of any previously delivered proxy and voting in person.
QUORUM, VOTING AT THE MEETING AND ADJOURNMENT. Shareholders of each Fund
will vote separately on Proposals 1 and 2.
Approval of Proposal 1 for a Fund will require the affirmative vote of the
lesser of (a) 67 percent or more of the voting shares of that Fund present at
the meeting, if the holders of more than 50 percent of the outstanding voting
shares of that Fund are present or represented by proxy, or (b) more than 50
percent of the outstanding voting shares of that Fund. Abstentions and broker
non-votes will have the practical effect of a "No" vote if adoption of
Proposal 1 is to be determined pursuant to item (a) and will have no effect on
the outcome of the vote if adoption of Proposal 1 is to be determined pursuant
to item (b).
Approval of Proposal 2 for a Fund will require the affirmative vote of a
majority of the shares of that Fund represented at the meeting in person or by
proxy, if a quorum is present. Abstentions and broker non-votes will have the
practical effect of a "No" vote on Proposal 2.
Thirty percent of the shares entitled to vote present in person or
represented by proxy constitutes a quorum for the transaction of business at
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<PAGE>
the meeting. On proposals for which shareholders of a Fund vote separately,
thirty percent of the shares of the Fund entitled to vote at the meeting
present in person or represented by proxy constitutes a quorum of that Fund.
For purposes of determining the presence or absence of a quorum and for
determining whether sufficient votes have been received for approval of any
matter to be acted upon at the meeting, abstentions and broker non-votes will
be treated as shares that are present at the meeting but have not been voted.
If a quorum is not present in person or by proxy at the meeting, or if a
quorum is present at the meeting but not enough votes to approve a proposal
are received, the persons named as proxies may propose one or more
adjournments of the meeting to permit further solicitation of proxies. Any
proposal for adjournment for a Fund will require the vote of a majority of the
shares of that Fund represented at the meeting in person or by proxy. A vote
may be taken on one of the proposals in this proxy statement before
adjournment if a quorum is present and sufficient votes have been received for
approval.
OTHER MATTERS
The board of trustees of the Trust knows of no other matters that are
intended to be brought before the meeting. If other matters are presented for
action, the proxies named in the enclosed form of proxy will vote on those
matters in their sole discretion.
SHAREHOLDER PROPOSALS
The Trust is not required, and does not intend, to hold annual meetings of
shareholders. Therefore, no date can be given by which a proposal by a
shareholder for consideration at such a meeting must be submitted. Any such
proposal should be submitted in writing to the Secretary of the Trust at its
principal offices at 227 West Monroe Street, Suite 3000, Chicago, Illinois
60606-5016. Upon submitting a proposal, the shareholder shall provide the
Trust with a written notice which includes the shareholder's name and address,
the number of shares of each fund that such shareholder holds of record or
beneficially, the dates upon which such shares were acquired, and documentary
support for a claim of beneficial ownership.
By order of the Board of Trustees,
/s/ Ralph Wanger
Ralph Wanger
President and Trustee
November 21, 1997
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EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
BETWEEN
WANGER ADVISORS TRUST
AND
WANGER ASSET MANAGEMENT, L.P.
FOR
WANGER U.S. SMALL-CAP ADVISOR
WANGER ADVISORS TRUST, a Massachusetts business trust registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management investment company (the "Trust"), and WANGER ASSET MANAGEMENT,
L.P., a Delaware limited partnership registered under the Investment Advisers
Act of 1940 as an investment adviser ("WAM"), agree that:
1. ENGAGEMENT OF WAM. WAM shall manage the investment and reinvestment of
the assets of Wanger U.S. Small Cap Advisor, a series of the Trust (the
"Fund"), subject to the supervision of the Board of Trustees of the Trust, for
the period and on the terms set forth in this agreement. WAM shall give due
consideration to the investment policies and restrictions and the other
statements concerning the Fund in the Trust's agreement and declaration of
trust, bylaws, and registration statement under the 1940 Act and the
Securities Act of 1933 (the "1933 Act"), and to the provisions of the Internal
Revenue Code of 1986, as amended, applicable to the Fund as a regulated
investment company. WAM shall be deemed for all purposes to be an independent
contractor and not an agent of the Trust or the Fund, and unless otherwise
expressly provided or authorized, shall have no authority to act or represent
the Trust or the Fund in any way.
WAM is authorized to make the decisions to buy and sell securities, options,
futures contracts and any other investments in which the Fund may invest
pursuant to its investment objectives, policies and restrictions, to place the
Fund's portfolio transactions with broker-dealers, and to negotiate the terms
of such transactions, including brokerage commissions on brokerage
transactions, on behalf of the Fund. WAM is authorized to exercise discretion
with the Fund's policy concerning allocation of its portfolio brokerage,
consistent with the Trust's registration statement and under the supervision
of the Trust's Board of Trustees, and as permitted by law, including but not
limited to Section 28(e) of the Securities Exchange Act of 1934, and in so
doing shall not be required to make any reduction in its investment advisory
fees.
2. EXPENSES TO BE PAID BY WAM. WAM shall furnish to the Trust, at WAM's
expense, office space and all necessary office facilities, equipment and
A-1
<PAGE>
personnel for managing that portion of the Trust's business relating to the
Fund. WAM shall also assume and pay all other expenses incurred by it in
connection with managing the assets of the Fund, including expenses in
connection with placement of securities orders, all expenses of printing and
distributing the Fund's prospectus and reports to prospective investors (except
to the extent such expenses are allocated to a party other than the Trust in
any participation or operating agreement to which the Trust is a party), and
all expenses in determination of daily price computations, portfolio accounting
and related bookkeeping. WAM may, at WAM's expense, contract with any other
person or persons to provide services in connection with daily price
computations, portfolio accounting and related bookkeeping under such terms as
it deems reasonable and it shall have the authority to direct the activities of
such other person or persons in the manner it deems appropriate.
3. EXPENSES TO BE PAID BY THE TRUST. The Trust shall pay all charges of
depositories, custodians and other agencies for the safekeeping and servicing
of its cash, securities and other property and of its transfer agents and
registrars and its dividend disbursing and redemption agents, if any; all
charges of legal counsel and of independent auditors; all expenses of
qualifying and maintaining the registration of shares of the Fund under the
federal and applicable state securities laws of such United States
jurisdictions as the Trust may from time to time reasonably designate; all
compensation of trustees other than those affiliated with WAM and all expenses
incurred in connection with their services to the Trust; all costs of borrowing
money; all expenses of publication of notices and reports to the Fund's
shareholders and to governmental bodies or regulatory agencies; all expenses of
proxy solicitations of the Fund or of the Board of Trustees of the Trust; all
expenses of shareholder meetings; all expenses of typesetting of the Fund's
prospectus and of printing and mailing copies of the prospectus furnished to
each then-existing shareholder or beneficial owner (except as may be otherwise
provided in any participation or operating agreement to which the Trust is a
party); all taxes and fees payable to federal, state or other governmental
agencies, domestic or foreign, all stamp or other taxes; all expenses of
printing and mailing certificates for shares of the Fund; all expenses of bond
and insurance coverage required by law or deemed advisable by the Trust's Board
of Trustees; all expenses of maintaining the registration of the Trust under
the 1940 Act and all fees, dues and other expenses related to membership of the
Trust in any trade association or other investment company organization.
In addition to the payment of expenses, the Fund shall also pay all brokers'
commissions and other charges relative to the purchase and sale of portfolio
securities for the Fund. Any expenses borne by the Trust that are attributable
solely to the organization, operation or business of the Fund shall be paid
solely out of the Fund assets.
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<PAGE>
The Trust's organizational expenses which were advanced to the Trust by WAM
shall be amortized over a period of 60 months beginning with the month
following the commencement of the Trust's operations, and the Trust shall
reimburse WAM during the period such amortization by paying to WAM on the last
business day of each month an amount equal to the organizational expenses
amortized during that month.
Any expense borne by the Trust that is not solely attributable to the Fund,
nor solely to any other series of shares of the Trust, shall be apportioned in
such manner as WAM determines is fair and appropriate, or as otherwise
specified by the Board of Trustees of the Trust.
4. COMPENSATION OF WAM. For the services to be rendered and the charges and
expenses to be assumed and to be paid by WAM hereunder, the Fund shall pay to
WAM a fee accrued daily and paid monthly at the annual rate of 1.00% of the
average daily net asset value of the Fund up to $100 million, 0.95% of the
average daily net asset value of the Fund in excess of $100 million and up to
$250 million, and 0.90% of the average daily net asset value of the Fund in
excess of $250 million.
5. LIMITATION OF EXPENSES OF THE FUND. The total expenses of the Fund,
exclusive of taxes, of interest and of extraordinary litigation expenses, but
including fees paid to WAM, shall not in any fiscal year of the Fund exceed the
most restrictive limits prescribed by any state in which the Fund's shares are
then qualified for sale, and WAM agrees to reimburse the Fund for any sums
expended for such expenses in excess of that amount. If the states in which the
Fund's shares are qualified for sale impose no limits on total expenses, then
WAM agrees to reimburse the Fund in the event the fee and expenses payable by
the Fund in any fiscal year exceed 2.0%. For purposes of calculating the
expenses subject to this limitation, (i) brokers' commissions and other charges
relating to the purchase and sale of portfolio securities and (ii) the excess
custodian costs attributable to investments in foreign securities compared to
the custodian costs which would have been incurred had the investments been in
domestic securities, shall not be regarded as expenses. Reimbursement, if any,
shall be made by reduction of the fees otherwise payable to WAM under this
agreement, no less frequently than quarterly.
6. SERVICES OF WAM NOT EXCLUSIVE. The services of WAM to the Fund hereunder
are not to be deemed exclusive, and WAM shall be free to render similar
services to others so long as its services under this agreement are not
impaired by such other activities.
7. SERVICES OTHER THAN AS MANAGER. WAM (or an affiliate of WAM) may act as
broker for the Fund in connection with the purchase or sale of securities by or
to the Fund if and to the extent permitted by procedures adopted from time to
time by the Board of Trustees of the Trust. Such
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<PAGE>
brokerage services are not within the scope of the duties of WAM under this
agreement, and, within the limits permitted by law and the Board of Trustees of
the Trust, WAM (or an affiliate of WAM) may receive brokerage commissions, fees
or other remuneration from the Fund for such services in addition to its fee
for services as WAM. Within the limits permitted by law, WAM may receive
compensation from the Fund for other services performed by it for the Fund
which are not within the scope of the duties of WAM under this agreement.
8. LIMITATION OF LIABILITY OF WAM. WAM shall not be liable to the Trust or
its shareholders for any loss suffered by the Trust or its shareholders from or
as a consequence of any act or omission of WAM, or of any of the partners,
employees or agents of WAM, in connection with or pursuant to this agreement,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of WAM in the performance of its duties or by reason of reckless disregard
by WAM of its obligations and duties under this agreement.
9. USE OF WAM'S NAME. The Trust may use the name "Wanger Advisors Trust" or
any other name using the name "Wanger" only for so long as this agreement or
any extension, renewal or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of WAM as investment adviser. At such time as this agreement or any
extension, renewal or amendment hereof, or such similar agreement, shall no
longer be in effect, the Trust will (by amendment of its Agreement and
Declaration of Trust, if necessary) cease to use any name using the name
"Wanger," any name similar thereto or any other name indicating that it is
advised by or otherwise connected with WAM or with any organization which shall
have succeeded to WAM's business as investment adviser. WAM's consent to the
use of the name "Wanger" by the Trust shall not prevent WAM's permitting any
other enterprise, including other investment companies, to use that name.
10. DURATION AND RENEWAL. This agreement shall be effective January 1, 1998,
or if later, the date approved by both (a) the vote of a "majority of the
outstanding voting shares of the Fund" (which term as used throughout this
agreement shall be construed in accordance with the definition of "vote of a
majority of the outstanding voting securities of a company" in section 2(a)(42)
of the 1940 Act), and (b) the vote of a majority of trustees who are not
parties to this agreement or interested persons of any party to this agreement,
cast in person at a meeting called for the purpose of voting on approval of
this agreement. Unless terminated as provided in Section 11, this agreement
shall continue in effect until December 31, 1999, and thereafter from year to
year only so long as such continuance is specifically approved at least
annually (a) by a majority of those trustees who are not interested
A-4
<PAGE>
persons of the Trust or of WAM, voting in person at a meeting called for the
purpose of voting on such approval, and (b) by either the Board of Trustees of
the Trust or vote of the holders of a majority of the outstanding shares of the
Fund.
11. TERMINATION. This agreement may be terminated at any time, without
payment of any penalty, by the Board of Trustees of the Trust, or by a vote of
the holders of a majority of the outstanding shares of the Fund, upon 60 days'
written notice to WAM. This agreement may be terminated by WAM at any time upon
60 days' written notice to the Trust. This agreement shall terminate
automatically in the event of its assignment (as defined in Section 2(a)(4) of
the 1940 Act).
12. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any obligation of the Trust
hereunder shall be binding only upon the assets of the Trust (or applicable
series thereof) and shall not be binding upon any trustee, officer, employee,
agent or shareholder of the Trust. Neither the authorization of any action by
the trustees or shareholders of the Trust nor the execution of this agreement
on behalf of the Trust shall impose any liability upon any trustee, officer or
shareholder of the Trust.
13. AMENDMENT. This agreement may not be amended without the affirmative vote
(a) of a majority of those trustees who are not "interested persons" (as
defined in section 2(a)(19) of the 1940 Act) of the Trust or of WAM, voting in
person at a meeting called for the purpose of voting on such approval, and (b)
of the holders of a majority of the outstanding shares of the Fund, where
required by the 1940 Act or other applicable law, or otherwise deemed
appropriate by the Board of Trustees of the Trust.
Dated: January 1, 1998
Wanger Advisors Trust
By _____________________________________
Wanger Asset Management, L.P.,
by Wanger Asset Management, Ltd.,
its General Partner
By _____________________________________
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<PAGE>
INVESTMENT ADVISORY AGREEMENT
BETWEEN
WANGER ADVISORS TRUST
AND
WANGER ASSET MANAGEMENT, L.P.
FOR
WANGER INTERNATIONAL SMALL-CAP ADVISOR
WANGER ADVISORS TRUST, a Massachusetts business trust registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management investment company (the "Trust"), and WANGER ASSET MANAGEMENT,
L.P., a Delaware limited partnership registered under the Investment Advisers
Act of 1940 as an investment adviser ("WAM"), agree that:
1. ENGAGEMENT OF WAM. WAM shall manage the investment and reinvestment of
the assets of Wanger International Small Cap Advisor, a series of the Trust
(the "Fund"), subject to the supervision of the Board of Trustees of the
Trust, for the period and on the terms set forth in this agreement. WAM shall
give due consideration to the investment policies and restrictions and the
other statements concerning The Fund in the Trust's agreement and declaration
of trust, bylaws, and registration statement under the 1940 Act and the
Securities Act of 1933 (the "1933 Act"), and to the provisions of the Internal
Revenue Code of 1986, as amended, applicable to the Fund as a regulated
investment company. WAM shall be deemed for all purposes to be an independent
contractor and not an agent of the Trust or the Fund, and unless otherwise
expressly provided or authorized, shall have no authority to act or represent
the Trust or the Fund in any way.
WAM is authorized to make the decisions to buy and sell securities, options,
futures contracts and any other investments in which the Fund may invest
pursuant to its investment objectives, policies and restrictions, to place the
Fund's portfolio transactions with broker-dealers, and to negotiate the terms
of such transactions, including brokerage commissions on brokerage
transactions, on behalf of the Fund. WAM is authorized to exercise discretion
with the Fund's policy concerning allocation of its portfolio brokerage,
consistent with the Trust's registration statement and under the supervision
of the Trust's Board of Trustees, and as permitted by law, including but not
limited to Section 28(e) of the Securities Exchange Act of 1934, and in so
doing shall not be required to make any reduction in its investment advisory
fees.
2. EXPENSES TO BE PAID BY WAM. WAM shall furnish to the Trust, at WAM's
expense, office space and all necessary office facilities, equipment and
personnel for managing that portion of the Trust's business relating to the
A-6
<PAGE>
Fund. WAM shall also assume and pay all other expenses incurred by it in
connection with managing the assets of the Fund, including expenses in
connection with placement of securities orders, all expenses of printing and
distributing the Fund's prospectus and reports to prospective investors (except
to the extent such expenses are allocated to a party other than the Trust in
any participation or operating agreement to which the Trust is a party), and
all expenses in determination of daily price computations, portfolio
accounting, and related bookkeeping. WAM may, at WAM's expense, contract with
any other person or persons to provide services in connection with daily price
computations, portfolio accounting and related bookkeeping under such terms as
it deems reasonable and it shall have the authority to direct the activities of
such other person or persons in the manner it deems appropriate.
3. EXPENSES TO BE PAID BY THE TRUST. The Trust shall pay all charges of
depositories, custodians and other agencies for the safekeeping and servicing
of its cash, securities and other property and of its transfer agents and
registrars and its dividend disbursing and redemption agents, if any; all
charges of legal counsel and of independent auditors; all expenses of
qualifying and maintaining the registration of shares of the Fund under the
federal and applicable state securities laws of such United States
jurisdictions as the Trust may from time to time reasonably designate; all
compensation of trustees other than those affiliated with WAM and all expenses
incurred in connection with their services to the Trust; all costs of borrowing
money; all expenses of publication of notices and reports to the Fund's
shareholders and to governmental bodies or regulatory agencies; all expenses of
proxy solicitations of the Fund or of the Board of Trustees of the Trust; all
expenses of shareholder meetings; all expenses of typesetting of the Fund's
prospectus and of printing and mailing copies of the prospectus furnished to
each then-existing shareholder or beneficial owner (except as may be otherwise
provided in any participation or operating agreement to which the Trust is a
party); all taxes and fees payable to federal, state or other governmental
agencies, domestic or foreign, all stamp or other taxes; all expenses of
printing and mailing certificates for shares of the Fund; all expenses of bond
and insurance coverage required by law or deemed advisable by the Trust's Board
of Trustees; all expenses of maintaining the registration of the Trust under
the 1940 Act and all fees, dues and other expenses related to membership of the
Trust in any trade association or other investment company organization.
In addition to the payment of expenses, the Fund shall also pay all brokers'
commissions and other charges relative to the purchase and sale of portfolio
securities for the Fund. Any expenses borne by the Trust that are attributable
solely to the organization, operation or business of the Fund shall be paid
solely out of the Fund assets.
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<PAGE>
The Trust's organizational expenses which were advanced to the Trust by WAM
shall be amortized over a period of 60 months beginning with the month
following the commencement of the Trust's operations, and the Trust shall
reimburse WAM during the period such amortization by paying to WAM on the last
business day of each month an amount equal to the organizational expenses
amortized during that month.
Any expense borne by the Trust that is not solely attributable to the Fund,
nor solely to any other series of shares of the Trust, shall be apportioned in
such manner as WAM determines is fair and appropriate, or as otherwise
specified by the Board of Trustees of the Trust.
4. COMPENSATION OF WAM. For the services to be rendered and the charges and
expenses to be assumed and to be paid by WAM hereunder, the Fund shall pay to
WAM a fee accrued daily and paid monthly at the annual rate of 1.30% of the
average daily net asset value of the Fund up to $100 million, 1.20% of the
average daily net asset value of the Fund in excess of $100 million and up to
$250 million, and 1.10% of the average daily net asset value of the Fund in
excess of $250 million.
5. LIMITATION OF EXPENSES OF THE FUND. The total expenses of the Fund,
exclusive of taxes, of interest and of extraordinary litigation expenses, but
including fees paid to WAM, shall not in any fiscal year of the Fund exceed the
most restrictive limits prescribed by any state in which the Fund's shares are
then qualified for sale, and WAM agrees to reimburse the Fund for any sums
expended for such expenses in excess of that amount. If the states in which the
Fund's shares are qualified for sale impose no limits on total expenses, then
WAM agrees to reimburse the Fund in the event the fee and expenses payable by
the Fund in any fiscal year exceed 2.0%. For purposes of calculating the
expenses subject to this limitation, (i) brokers' commissions and other charges
relating to the purchase and sale of portfolio securities and (ii) the excess
custodian costs attributable to investments in foreign securities compared to
the custodian costs which would have been incurred had the investments been in
domestic securities, shall not be regarded as expenses. Reimbursement, if any,
shall be made by reduction of the fees otherwise payable to WAM under this
agreement, no less frequently than quarterly.
6. SERVICES OF WAM NOT EXCLUSIVE. The services of WAM to the Fund hereunder
are not to be deemed exclusive, and WAM shall be free to render similar
services to others so long as its services under this agreement are not
impaired by such other activities.
7. SERVICES OTHER THAN AS MANAGER. WAM (or an affiliate of WAM) may act as
broker for the Fund in connection with the purchase or sale of securities by or
to the Fund if and to the extent permitted by procedures
A-8
<PAGE>
adopted from time to time by the Board of Trustees of the Trust. Such brokerage
services are not within the scope of the duties of WAM under this agreement,
and, within the limits permitted by law and the Board of Trustees of the Trust,
WAM (or an affiliate of WAM) may receive brokerage commissions, fees or other
remuneration from the Fund for such services in addition to its fee for
services as WAM. Within the limits permitted by law, WAM may receive
compensation from the Fund for other services performed by it for the Fund
which are not within the scope of the duties of WAM under this agreement.
8. LIMITATION OF LIABILITY OF WAM. WAM shall not be liable to the Trust or
its shareholders for any loss suffered by the Trust or its shareholders from or
as a consequence of any act or omission of WAM, or of any of the partners,
employees or agents of WAM, in connection with or pursuant to this agreement,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of WAM in the performance of its duties or by reason of reckless disregard
by WAM of its obligations and duties under this agreement.
9. USE OF WAM'S NAME. The Trust may use the name "Wanger Advisors Trust" or
any other name using the name "Wanger" only for so long as this agreement or
any extension, renewal or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of WAM as investment adviser. At such time as this agreement or any
extension, renewal or amendment hereof, or such similar agreement, shall no
longer be in effect, the Trust will (by amendment of its Agreement and
Declaration of Trust, if necessary) cease to use any name using the name
"Wanger," any name similar thereto or any other name indicating that it is
advised by or otherwise connected with WAM or with any organization which shall
have succeeded to WAM's business as investment adviser. WAM's consent to the
use of the name "Wanger" by the Trust shall not prevent WAM's permitting any
other enterprise, including other investment companies, to use that name.
10. DURATION AND RENEWAL. This agreement shall be effective January 1, 1998,
or if later, the date approved by both (a) the vote of a "majority of the
outstanding voting shares of the Fund" (which term as used throughout this
agreement shall be construed in accordance with the definition of "vote of a
majority of the outstanding voting securities of a company" in section 2(a)(42)
of the 1940 Act), and (b) the vote of a majority of trustees who are not
parties to this agreement or interested persons of any party to this agreement,
cast in person at a meeting called for the purpose of voting on approval of
this agreement. Unless terminated as provided in Section 11, this agreement
shall continue in effect until December 31, 1999, and thereafter from year to
year only so long as such continuance is specifically approved at
A-9
<PAGE>
least annually (a) by a majority of those trustees who are not interested
persons of the Trust or of WAM, voting in person at a meeting called for the
purpose of voting on such approval, and (b) by either the Board of Trustees of
the Trust or vote of the holders of a majority of the outstanding shares of
the Fund.
11. TERMINATION. This agreement may be terminated at any time, without
payment of any penalty, by the Board of Trustees of the Trust, or by a vote of
the holders of a majority of the outstanding shares of the Fund, upon 60 days'
written notice to WAM. This agreement may be terminated by WAM at any time
upon 60 days' written notice to the Trust. This agreement shall terminate
automatically in the event of its assignment (as defined in Section 2(a)(4) of
the 1940 Act).
12. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any obligation of the Trust
hereunder shall be binding only upon the assets of the Trust (or applicable
series thereof) and shall not be binding upon any trustee, officer, employee,
agent or shareholder of the Trust. Neither the authorization of any action by
the trustees or shareholders of the Trust nor the execution of this agreement
on behalf of the Trust shall impose any liability upon any trustee, officer or
shareholder of the Trust.
13. AMENDMENT. This agreement may not be amended without the affirmative
vote (a) of a majority of those trustees who are not "interested persons" (as
defined in section 2(a)(19) of the 1940 Act) of the Trust or of WAM, voting in
person at a meeting called for the purpose of voting on such approval, and (b)
of the holders of a majority of the outstanding shares of the Fund, where
required by the 1940 Act or other applicable law, or otherwise deemed
appropriate by the Board of Trustees of the Trust.
Dated: January 1, 1998
Wanger Advisors Trust
By ___________________________________________
Wanger Asset Management, L.P.
by Wanger Asset Management, Ltd.,
Its General Partner
By ___________________________________________
A-10
<PAGE>
PROXY WANGER U.S. SMALL CAP
- --------------------------------------------------------------------------------
Special Meeting of Shareholders - December 30, 1997
This Proxy is Solicited on Behalf of the Board of Trustees
The undersigned hereby appoints RALPH WANGER, BRUCE H. LAUER AND MERRILLYN J.
KOSIER and each or any of them, as proxies, with full power of substitution, to
vote all shares of WANGER U.S. SMALL CAP represented by this proxy which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held on December 30, 1997, and at any adjournments thereof, with all powers the
undersigned would possess if personally present at such meeting.
The board of trustees recommends a Vote FOR Proposals 1 and 2.
1. Approval of a proposed new Investment Advisory Agreement between Wanger
Advisors Trust and Wanger Asset Management, L.P. relating to each of Wanger
U.S. Small Cap and Wanger International Small Cap.
FOR _______ AGAINST _______ ABSTAIN _______
2. Ratification of selection of Ernst & Young LLP as the Funds' independent
public accountants for the fiscal year ending December 31, 1997.
FOR _______ AGAINST _______ ABSTAIN _______
3. In their sole discretion on any other matters properly coming before the
meeting or any adjournment or adjournments thereof.
(Please DATE AND SIGN on the reverse side
and return this proxy promptly in the enclosed envelope.)
<PAGE>
(continued from reverse side)
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR Proposal 1, FOR Proposal 2, and in the sole discretion of the Proxies upon
such other business as may properly come before the meeting or any adjournment
or adjournments thereof.
Dated____________________________________, 1997
------------------------------------------------
Signature
------------------------------------------------
Signature if held jointly
IMPORTANT: Please date and sign exactly as your name appears hereon. When
signing as executor, administrator, trustee, agent, attorney, guardian, or
corporate officer, please set forth your full title. Joint owners must each
sign.
<PAGE>
PROXY WANGER INTERNATIONAL SMALL CAP
- --------------------------------------------------------------------------------
Special Meeting of Shareholders - December 30, 1997
This Proxy is Solicited on Behalf of the Board of Trustees
The undersigned hereby appoints RALPH WANGER, BRUCE H. LAUER AND MERRILLYN J.
KOSIER and each or any of them, as proxies, with full power of substitution, to
vote all shares of Wanger International Small Cap represented by this proxy
which the undersigned is entitled to vote at the Special Meeting of Shareholders
to be held on December 30, 1997, and at any adjournments thereof, with all
powers the undersigned would possess if personally present at such meeting.
The board of trustees recommends a Vote FOR Proposals 1 and 2.
1. Approval of a proposed new Investment Advisory Agreement between Wanger
Advisors Trust and Wanger Asset Management, L.P. relating to each of Wanger
U.S. Small Cap and Wanger International Small Cap.
FOR _______ AGAINST _______ ABSTAIN _______
2. Ratification of selection of Ernst & Young LLP as the Funds' independent
public accountants for the fiscal year ending December 31, 1997.
FOR _______ AGAINST _______ ABSTAIN _______
3. In their sole discretion on any other matters properly coming before the
meeting or any adjournment or adjournments thereof.
(Please DATE AND SIGN on the reverse side
and return this proxy promptly in the enclosed envelope.)
<PAGE>
(continued from reverse side)
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR Proposal 1, FOR Proposal 2, and in the sole discretion of the Proxies upon
such other business as may properly come before the meeting or any adjournment
or adjournments thereof.
Dated____________________________________, 1997
------------------------------------------------
Signature
------------------------------------------------
Signature if held jointly
IMPORTANT: Please date and sign exactly as your name appears hereon. When
signing as executor, administrator, trustee, agent, attorney, guardian, or
corporate officer, please set forth your full title. Joint owners must each
sign.
