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WANGER U.S. SMALL CAP
WANGER INTERNATIONAL SMALL CAP
Supplement dated October 31, 1997
to Prospectus dated April 30, 1997 of Wanger Advisors Trust
On October 30, 1997, the board of trustees of Wanger Advisors Trust
(the "Trust") approved new Investment Advisory Agreements (the "New Agreements")
between the Trust and Wanger Asset Management, L.P. ("WAM") relating to Wanger
U.S. Small Cap and Wanger International Small Cap (the "WAT Funds"). The New
Agreements will take effect on January 1, 1998 if approved by shareholders of
record of each WAT Fund at a meeting scheduled to be held on December 30, 1997.
If the New Agreements are not approved by shareholders, this supplement will be
revised.
At the same time each New Agreement becomes effective, the structure of WAM
and WAM's general partner, Wanger Asset Management, Ltd. ("WAM Ltd."), will
change to reflect more closely WAM's team approach to investment management. WAM
is also the investment adviser to Acorn Fund, Acorn International and Acorn USA
(the "Acorn Funds"), the series of Acorn Investment Trust. For the restructuring
of WAM to become effective, the New Agreement must be approved by shareholders
of the WAT Funds, and a corresponding new investment advisory agreement for the
Acorn Funds must be approved by shareholders of the Acorn Funds.
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 restructuring recognizes the importance of the contributions made to
WAM, and the Funds, 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 the success of WAM and the WAT Funds. WAM commenced operations in 1992.
Ralph Wanger, Charles P. McQuaid, Terence M. Hogan, Leah J. Zell, Marcel P.
Houtzager and Robert A. Mohn, who are officers of the Trust, are the current
limited partners of WAM.
