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Wanger Advisors Trust 1999 Semiannual Report
Wanger 99
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New Funds!
Wanger Foreign Forty
Wanger Twenty
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Wanger Advisors Trust
1999 Semiannual Report
Contents
1 New Funds
2 J.P. Morgan
4 Funds at a Glance
6 Performance Review
Wanger U.S. Small Cap
8 Performance Review
Wanger International Small Cap
10 Performance Review
Wanger Twenty
12 Performance Review
Wanger Foreign Forty
14 Statement of Investments
Wanger U.S. Small Cap
18 Statement of Investments
Wanger International Small Cap
21 Portfolio Diversification
Wanger International Small Cap
22 Statement of Investments
Wanger Twenty
24 Statement of Investments
Wanger Foreign Forty
26 Portfolio Diversification
Wanger Foreign Forty
27 Statements of Assets
and Liabilities
28 Statements of Operations
29 Statements of Changes in
Net Assets
30 Financial Highlights
Wanger U.S. Small Cap
31 Financial Highlights
Wanger International Small Cap
32 Financial Highlights
Wanger Twenty
33 Financial Highlights
Wanger Foreign Forty
34 Notes to Financial Statements
Wanger Asset Management, L.P.
("WAM") is one of the leading
global small-cap equity managers
in the United States with 29 years of
small-cap investment experience.
WAM manages over $7 billion in
equities and is the investment
adviser to Wanger U.S. Small Cap,
Wanger International Small Cap,
Wanger Twenty, Wanger Foreign
Forty, and the Acorn Family of Funds.
WAM uses a unique style
of catching trends with small,
attractively priced niche
companies. For more complete
information about our funds
including the Acorn funds, fees
and expenses, call WAM
Brokerage Services, L.L.C.,
distributor, at 1-800-5-WANGER for
a prospectus. Read it carefully
before you invest or send money.
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New Funds to Complement Your
Variable Annuity Mix!
We are pleased to announce that Wanger Twenty and Wanger Foreign Forty, our
newest funds, are now available to you. They are focused mid-cap funds that are
an extension of Wanger's proven expertise in small-cap investing.
The funds invest in a select group of medium-to larger-size companies. Both
funds invest in companies with market capitalizations of $1 billion to $10
billion and take advantage of the advisor's proven research and stock-picking
capabilities. They follow an investment philosophy similar to the philosophy
that has distinguished Wanger's small-cap investing style. This philosophy is
based on the belief that less profiled companies may offer higher return
potential than the stocks of companies with capitalizations above $10 billion.
Wanger Twenty seeks long-term growth and invests primarily in the stocks
(generally between 20-25) of medium- to larger-size U.S. companies. Wanger
Foreign Forty also seeks long-term growth. It invests primarily in the stocks
(generally between 40-60) of medium- to larger-size foreign companies in
developed markets.
Wanger Twenty is co-managed by John Park and Mark Yost. Wanger Foreign
Forty is managed by Marcel Houtzager.
The funds are off to a great start. From their inception on February 1,
1999, through June 30, Wanger Twenty has returned 25.3% vs. 11.2% for the S&P
MidCap 400 and 7.9% for the S&P 500. Wanger Foreign Forty has returned 13.5% vs.
4.3% for the EAFE Index./1/ More information about the funds' performance is on
pages 5, 11 and 13 of this report.
For more information on these new funds, please call 800-492-6437 or visit
our web site at www.wanger.com. We plan to do everything we can to help your
investments work hard for you.
Peter Zaldivar joins Marcel Houtzager as Co-portfolio Manager of Wanger
International Small Cap
Peter has been a key member of the international analytical team since 1996
covering European equities. "International investing offers a very rich universe
of stocks to pick from. Our team of seven analysts concentrates on finding
under-followed companies, reasonably valued with strong growth potential," said
Mr. Zaldivar. "We travel the world talking to company managements, competitors
and suppliers, and leverage that knowledge to find and own what we believe are
the very best investments for our shareholders."
Before joining Wanger Asset Management, Mr. Zaldivar was a portfolio
manager with Lord Asset Management. A Chartered Financial Analyst, Mr.
Zaldivar's degrees include a B.A. from the University of Wisconsin/Madison and a
J.D. from Harvard Law School.
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/1/Past performance is no guarantee of future results. Share price and
investment return will vary, so you may have a gain or a loss when you sell
shares. Total return includes changes in share price and reinvestment of income
and capital gains distributions.
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Wanger Advisor Trust 1999 Semiannual Report
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J.P. Morgan
[LOGO APPEARS HERE]
In the history of American finance, there have been many interesting and
important figures from Alexander Hamilton to George Soros. None approaches the
mythic status of John Pierpont Morgan. He dominated the banking scene from the
end of the Civil War to the eve of World War I. Since his death in 1913, no
other person has achieved his level of power and reputation. Morgan was loved by
a few, respected by many, and hated by most. He was not hated for his deeds so
much as what he stood for--massive wealth and power. In the Gilded Age, he
personified the wealth of a Bill Gates and the influence of an Alan Greenspan.
Morgan: American Financier/1/, a new biography by Jean Strouse, is a splendid
study of the man and his period.
What a period it was! Some of the people who did business with Morgan were
Mellon, Rockefeller, Harriman, Frick, Carnegie, Baker, Widener and Edison, a
group of tycoons now turned into universities, museums, banks or libraries. One
could ponder on the transformation of a businessman into a building.
Morgan, as a person, was agreeably complex and contradictory. He was deeply
religious and a womanizer. He was a handsome youth, but an ugly adult (his nose
became deformed by rhinophyma). He was a leader, but not a good speaker or
writer. Despite achieving every worldly success, he suffered from fits of
depression, and often sat alone in his study, smoking a cigar and playing
solitaire. (Strouse does not say what game of solitaire he favored, but in that
primitive age he had to use real cards, not the Microsoft version.)
Mr. Morgan played solitaire in very nice surroundings. He had a Manhattan
mansion (a series of five, of increasing splendor), an art-filled house in
London, a great country house on the Hudson, and three vacation houses. He had a
fabulous yacht, the Corsair, built in three different versions. His art
collection included Gutenberg bibles and other rare books and manuscripts, old
master paintings, armor, Egyptian antiquities, all in great quantity, many now
in the Met or the Morgan Library. It was the best art collection ever assembled
by one private individual. His artistic taste was informed and refined, but
conventional. For instance, he missed the French Impressionist movement
altogether, although he could have bought a boxcar load of VanGoghs and Monets
for what he paid for one Gainsborough.
As mutual fund investors, you and I should be most interested in Morgan as
the supreme financial tycoon. His firm put together U.S. Steel, creating the
biggest industrial company in the country. Another deal created International
Harvester. Railroads were the leading industry of his time, and he put together
the Northern Pacific and the Southern Railway. His least successful trust was an
ocean shipping company, IMM, that not only lost money in the freight business,
but through the White Star Line, owned the ill-fated (but photogenic) Titanic.
These mergers were attacked by Progressive "trust-busters," but big companies
were needed as the United States became an industrial giant. Regardless of your
opinion on these mergers, Morgan did many things that clearly benefited the
country.
Bringing in Capital
The construction of the U.S. railway network was dependent on European capital.
By today's standards, 19th Century America would have been classified as an
Emerging Market. If you think of the United States in Morgan's era as the
equivalent to Argentina now, it's not surprising that many European investors
lost their money on American railroads that went bust. Morgan's firm (Drexel,
Morgan & Co. until 1895, now J.P. Morgan & Co.) was in the center of
international banking, with his father's bank in London funneling money to New
York./2/ The amount of European capital invested in the United States grew from
$222 million in 1853 to $3 billion in 1890. Morgan himself spent about half of
each year in Europe, mixing business, art collecting and spa treatments./3/
The key to keeping European investors happy was a sound dollar, backed by
gold. Therefore, Morgan and the other bankers fought to base the U.S. currency
on a gold standard. Whether your were pro or anti, the gold standard was one of
the key political divides of the 1890s. Farmers always hate bankers, and opposed
the gold standard. So did silver miners, who wanted silver to be counted in
monetary reserves together with gold. The Populist party, which represented the
anti-gold standard factions, wanted faster growth in the money supply and
inflation to enable debtors to pay off their obligations in cheaper dollars.
Morgan, the defender of sound money, was hated as the leader of the gold-
standard Eastern banking interests.
The One-Man Fed
In 1894, foreign investors became nervous that the Populists would prevail and
inflate the money supply, which would cause their dollar-denominated bonds to
lose value. European investors started selling bonds for gold and physically
shipping the gold to London. At the end of 1894, the U.S. gold reserve plunged
from $100
2
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Wanger Advisor Trust 1999 Semiannual Report
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million to $45 million. In early 1895, gold losses reached $2 million per day,
and the U.S. government faced a crisis not unlike the one that forced several
Asian countries to devalue their currencies two years ago. Morgan and several
other bankers met with President Cleveland in February 1895, the day gold
reserves dropped to only $9 million, with claims of $12 million against that
gold. A U.S. government default was only a day away. Morgan's group figured out
a way to sell $62 million in new gold-backed bonds without Congressional
approval (the silverites in Congress would not have approved the bond issue),
and saved the government. After the bond sale, Morgan ran a delicate foreign-
exchange support program that succeeded, and U.S. gold reserves rebounded back
over $100 million by June. Despite this triumph, Morgan and Rothschild, the two
syndicate managers, were vilified in the press and in Congress, where Bryan made
a nasty anti-gold, anti-Semitic speech.
In 1896, the Democrats nominated the Populist William Jennings Bryan for
president. His convention speech was perhaps the best political oration in
American history, ending with the famous phrase: "You shall not crucify mankind
upon a cross of gold." I always had thought that this was a great anti-
materialistic religious thunderbolt, but its context was merely part of Bryan's
violent hatred of the gold standard. Bryan lost the election anyway.
The Panic of 1907
In 1907, there was a terrible panic, one of the worst financial crises ever to
hit America. Many banks, trust companies, insurance companies, and stockbrokers
had too much debt. After a couple of banks failed, a panic started that
threatened to wipe out a large part of the American financial system and create
the kind of depression that showed up 22 years later in 1929. There was no
Federal Reserve System to regulate banks or act as lender of last resort.
Morgan and a small group of allies acted as a private Fed, deciding which
financial institutions were hopeless and should be allowed to go under, and
which were sound but illiquid and could be saved by extending new credit. Morgan
then browbeat his friends into extending the savable banks new credit despite
the fear and panic that enveloped Wall Street at that moment. It worked. The
Panic of 1907 was short-lived, and no depression followed.
A lot of the time Morgan and other nineteenth century bankers were don't-
rock-the-boat conservatives. Sometimes Morgan acted as a risk-taking venture
capitalist. His most successful undertaking was Edison and his new electric
light. In 1878, Edison was well-known, but had little money. Drexel, Morgan
supplied capital for the new Edison Electric Light Co., and continued to support
Edison during the start-up phase. Development was not smooth: the 1878 lamp used
a platinum filament that proved a dead-end. (Carbon filament worked better, and
finally the tungsten filament bulb, that we still use today, replaced carbon in
turn). The electric light was the "killer app" for the electrical industry. In
1892, Edison's company was combined with its major competition to form General
Electric, with Morgan as the investment banker.
If Morgan did so many good things in his life, why did he receive such bad
press in his lifetime and to this day? One answer is that his critics on the
left--variously Anarchists, Communists, Fabian Socialists, Utopian Socialists,
other sects of Socialists, union organizers, Populists and Progressives--
detested his immense wealth and unparalleled power. They didn't believe any one
man should be allowed to obtain that kind of wealth and influence. The standard
anti-capitalist caricature is still J.P. Morgan in formal dress, whether in
political cartoon, movie, or the little banker guy in your Monopoly game. No one
since Morgan has equaled his immense power. Morgan's power died with him. Our
world today has grown too large for any one financier to dominate it.
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1 Strouse, Jean. Morgan: American Financier. Random House, NYC, 1999.
2 Papa's bank became Morgan, Grenfell & Co. in 1910. Other Morgan companies that
are in operation today include J.P. Morgan & Co., and Morgan Stanley Dean
Witter Discover.
3 Morgan and his wife Fanny both spent six months every year in Europe; just not
the same six months. When she was heading back to New York with her
companions, he would sail for London with his entourage, usually including one
of his lady friends.
[PHOTO OF RALPH WANGER APPEARS HERE]
Ralph Wanger
Chief Investment Officer
Wanger Asset Management, L.P.
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Wanger Advisor Trust 1999 Semiannual Report
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Funds at a Glance
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Wanger U.S. Small Cap
Results to June 30, 1999
<TABLE>
<CAPTION>
Year Last 12
2nd qtr. to date months
<S> <C> <C> <C>
Wanger U.S. Small Cap 17.8% 10.3% 4.0%
Russell 2000 15.6% 9.3% 1.5%
S & P MidCap 400 14.2% 6.9% 17.2%
S & P 500 7.1% 12.4% 22.8%
</TABLE>
Wanger U.S. Small Cap N.A.V. as of 6/30/99: $21.94
The Russell 2000 is formed by taking the 3,000 largest U.S. companies and then
eliminating the largest 1,000, leaving a good 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.
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Wanger U.S. Small Cap Top 5 Industries
As a % of net assets, as of 6/30/99
Information 37.3%
Energy/Minerals 16.4%
Finance 15.3%
Industrial Goods/Services 10.5%
Health Care 9.8%
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Wanger U.S. Small Cap Top 10 Holdings
MidAmerican Energy 7.5%
Growth Utility
Kronos 4.9%
Labor Management Solutions
RCN 4.6%
Metro Market: Voice,
Video & Internet Services
UICI 4.3%
Insurance/Specialty Finance
Lincare Holdings 4.0%
Home Health Care Services
Micros Systems 4.0%
Information Systems for
Restaurants & Hotels
National Data 3.8%
Credit Cards &
Health Claims Processor
Wackenhut 3.5%
Prison Management
Tesoro Petroleum 3.2%
Oil Refinery/Gas Reserves
Sykes Enterprises 2.8%
Call Center Services
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Wanger International Small Cap
Results to June 30, 1999
<TABLE>
<CAPTION>
Year Last 12
2nd qtr. to date months
<S> <C> <C> <C>
Wanger International Small Cap 17.8% 24.8% 18.7%
EMI (World ex-U.S.) 6.2% 7.7% 3.4%
EAFE 2.5% 4.0% 7.6%
Lipper Int'l Small Cap Funds Avg. 13.6% 17.8% 7.8%
Lipper Int'l Funds Avg. 5.6% 6.9% 4.0%
</TABLE>
The EMI is Salomon Brothers' index of the bottom 20% of institutionally
investable capital of countries, as selected by Salomon, excluding the U.S.EAFE
is Morgan Stanley's Europe, Australasia and Far East Index, an unmanaged index
of companies throughout the world in proportion to world stock market
capitalization, excluding the U.S. and Canada. The Lipper International Small
Cap Funds Avg. is calculated from the performance of a group of small-cap
international funds. For the 2nd qtr. 6- and 12-mos. periods above, the group
consisted of 70, 69 and 68 funds, respectively and included Wanger International
Small-Cap. The Lipper International Funds Avg. is an average of all
international funds tracked by Lipper, excluding the International Small Cap
Funds. This group consisted of 630, 620 and 570 funds for the 2nd qtr. 6- and
12-mos. periods above, respectively. All indexes are unmanaged and returns
include reinvested dividends.
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Wanger International Small Cap Top 5 Countries
As a % of net assets, as of 6/30/99
Singapore 16.4%
United Kingdom 14.4%
Sweden 9.2%
Japan 8.2%
Netherlands 8.1%
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Wanger International Small Cap Top 10 Holdings
Star Cruises 4.4%
Cruise Line-Singapore
Omni Industries 4.1%
Electronic Manufacturing
Services-Singapore
Venture Manufacturing 3.3%
Electronic Manufacturing
Services
Icon Medialab 3.0%
Web Site Development-
Sweden
Datacraft Asia 2.8%
Network Systems
Integration-Singapore
Athens Medical Center 2.7%
Hospitals-Greece
Talentum 2.6%
Trade Journals &
Internet Services-Finland
Class Editori 2.4%
Newspapers and Online
Financial Data-Italy
Li and Fung 2.4%
Sourcing of Consumer Goods-
Hong Kong
S1 Corporation 2.3%
Central Station Alarm
Business-South Korea
The funds' top 10 holdings and portfolio diversification vary with changes in
portfolio investments. See the Statements of Investments for complete lists of
the funds' holdings, including those described under Performance Review.
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Wanger Advisor Trust 1999 Semiannual Report
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Funds at a Glance
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Wanger Twenty
Results to June 30, 1999
<TABLE>
<CAPTION>
2nd qtr. Life of Fund
<S> <C> <C>
Wanger Twenty 19.0% 25.3%
Russell 2000 15.6% 7.9%
S & P MidCap 400 14.2% 11.2%
S & P 500 7.1% 7.9%
</TABLE>
Wanger Twenty N.A.V. as of 6/30/99: $12.53
Life of Fund performance for Wanger Twenty is from inception (2/1/99) through
6/30/99.The Russell 2000 is formed by taking the 3,000 largest U.S. companies
and then eliminating the largest 1,000, leaving a good 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.
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Wanger Twenty Top 5 Industries
As a % of net assets, as of 6/30/99
<TABLE>
<CAPTION>
<S> <C>
Information 42.5%
Finance 17.8%
Consumer Goods/Services 14.8%
Energy/Minerals 9.8%
Real Estate 6.1%
</TABLE>
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Wanger Twenty Top 10 Holdings
PRIMEDIA 7.3%
Specialty Magazines & Other
Publications
Americredit 6.1%
Auto Lending
The Rouse Company 6.1%
Regional Shopping Malls
AES Corporation 6.0%
Power Plants
National Data 5.6%
Credit Cards & Health Claims
Processor
UICI 5.0%
Insurance/Specialty Finance
ServiceMaster 4.9%
Facilities Management
H & R Block 4.9%
Tax Preparation
Telephone & 4.7%
Data Systems
Cellular & Telephone
Franchises
Sterling Commerce 4.7%
Electronic Commerce
Software & Services
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Wanger Foreign Forty
Results to June 30, 1999
<TABLE>
<CAPTION>
2nd qtr. Life of Fund*
<S> <C> <C>
Wanger Foreign Forty 11.4% 13.5%
EAFE 2.5% 4.3%
SSB Cap Range $2-10B 4.8% 6.2%
</TABLE>
Wanger Foreign Forty N.A.V. as of 6/30/99: $11.35
Life of Fund performance for Wanger Foreign Forty is from inception (2/1/99)
through 6/30/99. EAFE is Morgan Stanley's Europe, Australasia and Far East
Index, an unmanaged widely recognized international benchmark that comprises 20
major markets in Europe, Australia, and the Far East. The SSB Cap Range $2-10B
is Salomon Smith Barney's two to 10 billion U.S. dollar security market
capitalization subset of its Broad Market Index. It represents a mid-cap
developed market index, excluding the U.S. All indexes are unmanaged and returns
include reinvested dividends.
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Wanger Foreign Forty Top 5 Countries
As a % of net assets, as of 6/30/99
United Kingdom 19.1%
Japan 11.8%
Italy 9.7%
Germany 7.6%
Canada 7.4%
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Wanger Foreign Forty Top 10 Holdings
Logica 4.1%
Computer Services/
Consulting-United Kingdom
Editoriale L'Espresso 3.9%
Newspapers and
Magazines-Italy
Bodycote 3.5%
Materials Technology &
Metal Processing-United Kingdom
Softbank 3.4%
Internet Services/
Investment Holdings-Japan
Canadian Natural 3.3%
Resources
Oil & Gas Producer-Canada
Celestica 3.1%
Electronic Manufacturing
Services-Canada
Stinnes 3.0%
Freight Forwarder-
Germany
MobileCom 3.0%
Telecommunication
Services-Germany
SmarTone Telecom 3.0%
Mobile Telecommunications-
Hong Kong
MIH 2.9%
Pay TV-US
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Wanger Advisor Trust 1999 Semiannual Report
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Performance Review Wanger U.S. Small Cap
Small stocks started the year slowly, then rallied in the second quarter. Wanger
U.S. Small Cap gained 10.3% through June 30, a bit ahead of the small-cap
Russell 2000 Index return of 9.3% and a bit behind the S&P 500 return of 12.4%.
The two trends on Wall Street seem to be size and youth. S&P 500 stocks,
until this past quarter, dominated the market while Internet companies fared
well, too, especially those just hatched in some college dorm room. However,
after interest rates rose in April, price became important. Long-ignored stocks
soared (even the historically rate-sensitive utility stocks rallied), while
glamour stocks declined.
Our best stocks so far this year are companies benefiting from the
Internet. Some examples include RCN, TV Guide and Liberty Media. RCN is an
Internet service provider building an advanced fiber optic telecommunications
network in the Northeast and West Coast. TV Guide offers an interactive program
listing that one day may be your TV's portal to the World Wide Web. Liberty
Media is a holding company comprising cable channel and Internet site companies.
Wanger U.S. Small Cap's best stocks of the quarter were not so long ago its
worst. All are thriving small companies whose stock prices had plunged, then
rebounded 50% or more by June. Some examples include Magellan (managed care),
Aspect Telecom (call center software) and Equitable Resources (gas utility).
Small stocks were the market's winners this quarter. How long will this
small-cap rally last? Well, small-caps underperformed large-caps for five years.
Maybe the market will shift to favor small caps for the next five years. Wanger
U.S. Small Cap shareholders should do well if this normal rotation occurs.
[PHOTO OF ROBERT A. MOHN APPEARS HERE]
Robert A. Mohn
Portfolio Manager
Wanger U.S. Small Cap
6
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Wanger Advisor Trust 1999 Semiannual Report
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[LOGO APPEARS HERE]
Wanger U.S. Small Cap Results to June 30, 1999
The Value of a $10,000 Investment in
Wanger U.S. Small Cap
Total Return for the Period
May 3, 1995 through June 30, 1999
[CHART APPEARS HERE]
Wanger U.S. Small Cap Mountain Chart Plot Points
Wanger U.S. Small Cap Russell 2000
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5/3/95 $10,000 $10,000
12/31/95 $11,600 $11,808
12/31/96 $17,004 $13,756
12/31/97 $22,005 $16,830
12/30/98 $23,916 $16,404
3/31/99 $22,388 $15,792
6/30/99 $26,375 $18,248
Average Annual
Total Return
1 year: 4.0%
3 Years: 19.8%
Life: 26.3%
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This graph compares the results of $10,000 invested in Wanger U.S. Small Cap on
May 3,1995 through June 30, 1999 , with the Russell 2000 with dividends
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.
7
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Wanger Advisor Trust 1999 Semiannual Report
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Performance Review Wanger International Small Cap
Your Fund delivered strong performance in the first half of 1999. Our year-to-
date gain of 24.8% significantly outpaced both the competition and the Fund's
benchmarks.
The best-performing countries were Singapore and Japan. European service
companies, Asian contract manufacturers and companies with Internet businesses
also did particularly well.
Since we started this Fund in May of 1995, it has risen an average of 25%
per year vs. an annual 4% increase in the EMI and 9% gain in the EAFE indexes.
(The Lipper International Small Cap Index had not been invented yet when we
started the Fund). Our bottom-up research approach, and our emphasis on a
limited number of key investment themes drove these excellent short- and long-
term results.
By identifying themes, we are able to assemble a portfolio that is widely
diversified by country and industry where good ideas make a big difference. This
might sound contradictory, yet a good investment theme can apply to many
different companies in different countries and different industries.
For example, the Internet, the European Economic Union, and the European
common currency are causing the cold winds of competition to blow across Europe
at hurricane strength. Large companies are responding with cost cuts. A variety
of tasks that used to be performed in-house are now being outsourced to service
companies. These service companies can do the work cheaper and more efficiently.
Luckily for us, many of the service companies riding this outsourcing boom are
small caps. They range from temporary employment agencies to computer service
bureaus to cleaning companies to contract manufacturers, and they make up almost
20% of your Fund.
Teamwork has always been necessary to our labor intensive research effort.
Peter Zaldivar has been a key member of our research team (you can find his bio
on page 1 or on our web site at www.wanger.com). In recognition of his
contributions, we are pleased to add him as a co-portfolio manager of Wanger
International Small Cap. In the Wanger tradition, Peter is also an investor in
the Fund.
[PHOTO OF MARCEL P. HOUTZAGER APPEARS HERE]
Marcel P. Houtzager
Lead Portfolio Manager
[PHOTO OF PETER ZALDIVAR APPEARS HERE]
Peter Zaldivar
Co-Portfolio Manager
8
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Wanger Advisor Trust 1999 Semiannual Report
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[LOGO APPEARS HERE]
Wanger International Small Cap Results to June 30, 1999
The Value of a $10,000 Investment in
Wanger International Small Cap
Total Return for the Period
May 3, 1995 through June 30, 1999
[CHART APPEARS HERE]
Wanger Int'l Small Cap Mountain Chart Plot Points
Wanger Int'l Small Cap EMI (World ex U.S.)
---------------------- -------------------
5/3/95 $10,000 $10,000
12/31/95 $13,450 $10,123
12/31/96 $17,755 $10,855
12/31/97 $17,496 $ 9,835
12/31/98 $20,352 $11,030
6/30/99 $25,404 $11,875
Average Annual
Total Return
1 year: 18.7%
3 Years: 13.9%
Life: 25.1%
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This graph compares the results of $10,000 invested in Wanger International
Small Cap on May 3, 1995 through June 30, 1999, with all dividends and capital
gains reinvested, with the EMI (World ex-U.S.) In preceding years, the
performance of Wanger International Small Cap was compared to Morgan Stanley's
Europe, Australasia Far East Index (EAFE), an unmanaged international benchmark
that comprises 20 major markets in Europe, Australia and the Far East. The EMI
(World ex- U.S.) more closely approximates the composition of Wanger
International Small Cap's portfolio. For the 6-months ended 6/30/99, the EMI
showed an increase of 7.7% and EAFE showed an increase of 4.0%, compared to
Wanger International Small Cap's total return of 24.8% for the same period. Past
performance does not guarantee future results. The investment return and
principal value of an investment in the Fund will fluctuate so that Fund shares,
when redeemed, may be worth more or less than their original cost.
9
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Performance Review Wanger Twenty
New Fund!
This quarter paid off for small- and mid-cap investors. Wanger Twenty gained
19.0%, beating the S&P MidCap 400 Index return of 14.2% and the S&P 500 Index
return of 7.1%. Since inception (2/1/99), Wanger Twenty returned 25.3%, beating
the S&P 400 gain of 11.2% and the S&P 500 gain of 7.9%.
Investors rediscovered the meaning of value during the second quarter. They
finally noticed the wide valuation gap between small- and mid-cap stocks versus
their large-cap brethren. The small cap Russell 2000 and the S&P MidCap 400
indexes outperformed the S&P 500 by 8.5% and 7.1%, respectively during the
quarter. This supports our belief that relative value exists among small to
midsized companies. Many of Wanger Twenty's stocks trade at lower price-earnings
multiples than S&P 500 companies, yet have higher expected growth rates.
Twelve stocks posted double-digit gains in your Fund. Some standouts
include AES, an energy company, up 56% over the past three months. Liberty Media
produced a 40% gain after it invested in News Corp. Several other stocks were up
20% or more, including three stocks highlighted in our March 30 report--
Telephone & Data Systems, RCN and Jones Apparel.
We had one disappointment this quarter--McKesson HBOC, a hospital computer
services company. The stock declined 42% during the quarter when an accounting
scandal was uncovered in April. While we are disappointed, it is important to
remember that our concentrated strategy is to have our winners outweigh the
losers, resulting in superior, long-term return potential.
As a new institutional offering, we want to welcome fellow shareholders. We
hope you are as happy with the Fund's strong start as we are. We continue to be
excited about the Fund's future prospects and we appreciate your investment in
Wanger Twenty.
[PHOTO OF MARK H. YOST APPEARS HERE]
Mark H. Yost
Co-Portfolio Manager
[PHOTO OF JOHN H. PARK APPEARS HERE]
John H. Park
Co-Portfolio Manager
10
<PAGE>
Wanger 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
[LOGO APPEARS HERE]
Wanger Twenty Results to June 30, 1999
- --------------------------------------------------------------------------------
The Value of a $10,000 Investment in
Wanger Twenty
Total Return for the Period
February 1 through June 30, 1999
[CHART APPEARS HERE]
Wanger Twenty Mountain Chart Plot Points
Wanger Twenty S&P MidCap 400
------------- --------------
2/1/99 $10,000 $10,000
3/31/99 $10,530 $9,741
4/30/99 $12,150 $10,509
5/31/99 $12,220 $10,555
6/30/99 $12,530 $11,120
- --------------------------------------------------------------------------------
This graph compares the results of $10,000 invested in Wanger Twenty on
February 1, 1999 through June 30, 1999, with the S & P MidCap 400 Index, with
dividends 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.
Total Return
2nd qtr: 19.0% Life: 25.3%
11
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Performance Review Wanger Foreign Forty
New Fund!
Wanger Foreign Forty returned a satisfying 11.4% in the second quarter, well
ahead of the 2.5% EAFE Index return. Since inception (2/1/99), the Fund is up
13.5% vs. the EAFE gain of 4.3%.
Three of your Fund's stocks gained more than 50% during the quarter. We
thank Michael King, our Japanese analyst, for unearthing Softbank at a time when
it was very underfollowed. Michael also scored with Nintendo, up 64%, a name
that is on the tip of every child's tongue, but not yet in every parent's
portfolio. Our International Research Director, Roger Edgley, contributed
contract manufacturer Natsteel Electronics in Singapore, up 56%.
Not all of our stocks went up. We experienced modest declines in two of our
European life insurance companies, Mapfre Vida in Spain, and ASR in the
Netherlands. We visited these companies and have confirmed that their core life
insurance businesses are still doing extremely well. Danish cleaning contractor
ISS and Olivetti, an Italian typewriter maker-turned telecom operator, also had
poor stock returns this quarter, although nothing bad happened to their
businesses.
As this Fund is a new offering, we would like to welcome our fellow
shareholders. We hope that you are as happy with the Fund's impressive start as
we are. We continue to see many excellent opportunities in the international
mid-to large-cap stock universe. We believe Wanger Foreign Forty provides both a
good way to diversify and to own what we think will be tomorrow's blue chips.
[PHOTO OF MARCEL P. HOUTZAGER GOES HERE]
Marcel P. Houtzager
Portfolio Manager
12
<PAGE>
Wanger 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
[LOGO APPEARS HERE]
Wanger Foreign Forty Results to June 30, 1999
- --------------------------------------------------------------------------------
The Value of a $10,000 Investment in
Wanger Foreign Forty
Total Return for the Period
February 1 through June 30, 1999
[CHART APPEARS HERE]
Wanger Foreign Forty Mountain Chart Plot Points
Wanger Foreign Forty EAFE
-------------------- -------
2/1/99 $10,000 $10,000
3/31/99 $10,190 $10,169
4/30/99 $10,620 $10,581
5/31/99 $10,480 $10,036
6/30/99 $11,350 $10,428
- --------------------------------------------------------------------------------
This graph compares the results of $10,000 invested in Wanger Foreign Forty on
February 1, 1999 through June 30, 1999, with the EAFE Index, with dividends
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.
Total Return
2nd qtr: 11.4% Life: 13.5%
13
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger U.S. Small Cap Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number of Value
Shares
<S> <C> <C>
Common Stocks--93.1%
Information--37.3%
- --------------------------------------------------------------------------------
Broadcasting--2.1%
250,600 Data Transmission Network (b) $ 7,048,125
Data Services for Farmers
- --------------------------------------------------------------------------------
Television Programming--2.5%
217,200 TV Guide (b) 7,954,950
TV Program Guides & Programming
20,200 Liberty Media Group, AT&T (b) 742,350
Cable Programming
- --------------------------------------------------------------------------------
8,697,300
- --------------------------------------------------------------------------------
Telephone Services--6.2%
380,600 RCN (b) 15,842,475
Metro Market: Voice, Video & Internet Services
127,300 Commonwealth Telephone (b) 5,147,693
Rural Market: Local, Lon Distance &
Internet Access
- --------------------------------------------------------------------------------
20,990,168
- --------------------------------------------------------------------------------
Mobile Communications--3.9%
102,000 Telephone & Data Systems 7,452,375
Cellular & Telephone Franchises
234,500 COMARCO (b) (c) 4,646,031
Wireless Network Testing
50,000 Pinnacle Holdings (b) 1,225,000
Towers for Cellular, PCS, & Paging
- --------------------------------------------------------------------------------
13,323,406
- --------------------------------------------------------------------------------
Telecommunications Equipment--1.2%
425,900 Aspect Telecommunications (b) 4,152,525
Call Center Equipment
- --------------------------------------------------------------------------------
Business Software--1.3%
314,000 JDA Software Group (b) 2,924,125
Applications/Software & Services for Retailers
97,600 Systems & Computer Technology (b) 1,421,300
Enterprise Software & Services
- --------------------------------------------------------------------------------
4,345,425
- --------------------------------------------------------------------------------
Business Information/Marketing Services--3.0%
194,300 CACI International (b) $ 4,371,750
Technology Services for Government
429,400 IntelliQuest Information (b) (c) 3,220,500
Technology/Market Research
151,000 PRIMEDIA (b) 2,557,563
Specialty Magazines & Other Publications
- --------------------------------------------------------------------------------
10,149,813
- --------------------------------------------------------------------------------
Transaction Processors--3.8%
305,300 National Data 13,051,575
Credit Card & Health Claims Processor
- --------------------------------------------------------------------------------
Computer Hardware/Related Systems--8.9%
368,900 Kronos (b) 16,784,950
Labor Management Solutions
396,100 Micros Systems (b) 13,467,400
Information Systems for Restaurants & Hotels
- --------------------------------------------------------------------------------
30,252,350
- --------------------------------------------------------------------------------
Gaming Equipment--0.6%
113,000 International Game Technology 2,090,500
Slot Machines and Progressive Jackpots
- --------------------------------------------------------------------------------
Computer Services--3.8%
283,900 Sykes Enterprises (b) 9,475,162
Call Center Services
119,000 Computer Task Group 2,023,000
Application Development & Staffing Services
50,000 IMR Global (b) 962,500
Application Development & Maintenance Services
357,000 Aztec Technology Partners (b) 669,375
Technology Staffing Service
- --------------------------------------------------------------------------------
13,130,037
- --------------------------------------------------------------------------------
Information--Total 127,231,224
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
[WANGER 99]
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger U.S. Small Cap Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number of Value
Shares
<S> <C> <C>
Health Care--8.0%
- --------------------------------------------------------------------------------
Biotechnology/Drug Delivery--0.2%
117,000 Synaptic Pharmaceuticals (b) $555,750
Receptor Targeted Drug Design
- --------------------------------------------------------------------------------
Services--7.8%
544,800 Lincare Holdings (b) 13,620,000
Home Health Care Services
348,000 First Health (b) 7,503,750
PPO Network
547,700 Magellan Health Services (b) 5,477,000
Mental Health Services
- --------------------------------------------------------------------------------
26,600,750
- --------------------------------------------------------------------------------
Health Care--Total 27,156,500
Consumer Goods/Services--3.6%
- --------------------------------------------------------------------------------
Nondurables--0.5%
92,000 NuSkin Enterprises (b) 1,834,250
Personal Care/Herbal Products
- --------------------------------------------------------------------------------
Retail--2.9%
809,000 Host Marriott Services (b) 6,573,125
Fast Food Kiosks in Airports
66,000 Whole Foods Market (b) 3,172,125
Natural Food Supermarkets
- --------------------------------------------------------------------------------
9,745,250
- --------------------------------------------------------------------------------
Casinos--0.2%
115,200 Monarch Casino & Resort (b) 734,400
Casino/Hotel in Reno
- --------------------------------------------------------------------------------
Consumer Goods/Services--Total 12,313,900
Finance--15.3%
- --------------------------------------------------------------------------------
Banks/Savings & Loans--1.8%
82,000 Texas Regional Bancshares 2,229,375
TexMex Bank
67,500 Peoples Bank Bridgeport 2,054,531
Connecticut Savings & Loan
49,500 Chittenden $1,548,875
Vermont & West Massachusetts Bank
157,500 Coast Contingency Rights (b) 167,343
Litigation Claim Against US Government
- --------------------------------------------------------------------------------
5,998,124
- --------------------------------------------------------------------------------
Finance Companies--2.3%
419,400 Americredit (b) 6,710,400
Auto Lending
232,000 World Acceptance (b) 1,167,250
Personal Loans
- --------------------------------------------------------------------------------
7,877,650
- --------------------------------------------------------------------------------
Insurance--8.8%
529,600 UICI (b) 14,630,200
Insurance/Specialty Finance
403,900 Acceptance Insurance (b) 6,083,744
Crop Insurance
21,000 Markel (b) 3,927,000
Specialty Insurance
92,000 Leucadia National 2,334,500
Insurance Holding Company
57,000 Protective Life 1,881,000
Life/Dental Insurance
44,000 AmerUs Life Holdings 1,188,000
Annuities/Life Insurance
- --------------------------------------------------------------------------------
30,044,444
- --------------------------------------------------------------------------------
Money Management--2.4%
57,000 SEI 5,030,250
Mutual Fund Administration
167,700 Baker Fentress 3,186,300
Closed-End Investment Company
- --------------------------------------------------------------------------------
8,216,550
- --------------------------------------------------------------------------------
Finance--Total 52,136,768
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger U.S. Small Cap Statement of Investments (unaudited) June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Value
Shares
<S> <C> <C>
Industrial Goods/Services-9.8%
- --------------------------------------------------------------------------------
Machinery-0.9%
99,000 Vallen (b) $ 1,584,000
Safety Products Distribution
135,700 Farr (b) 1,492,700
Filters
- --------------------------------------------------------------------------------
3,076,700
- --------------------------------------------------------------------------------
Steel-1.1%
232,400 Atchison Casting (b) 2,418,413
Steel Foundries
56,400 Schnitzer Steel 1,265,475
Scrap Steel Processor
- --------------------------------------------------------------------------------
3,683,888
- --------------------------------------------------------------------------------
Specialty Chemicals-1.0%
189,600 Lilly Industries, Cl. A 3,519,450
Industrial Coatings
- --------------------------------------------------------------------------------
Other Industrial Services-6.8%
496,400 Wackenhut, Cl. B 11,913,600
Prison Management
412,100 Insurance Auto Auctions (b) 6,645,113
Auto Salvage Services
123,000 Labor Ready (b) 3,997,500
Temporary Manual Labor
92,300 Compass International Services (b) 646,100
Collection Agencies
- --------------------------------------------------------------------------------
23,202,313
- --------------------------------------------------------------------------------
Industrial Goods/Services-Total 33,482,351
Energy/Minerals-16.4%
- --------------------------------------------------------------------------------
Independent Power-8.1%
737,600 MidAmerican Energy 25,539,400
Growth Utility
38,000 AES Corporation (b) 2,208,750
Power Plants
- --------------------------------------------------------------------------------
27,748,150
- --------------------------------------------------------------------------------
Oil/Gas Producers-3.3%
688,900 Tesoro Petroleum (b) $10,979,344
Oil Refinery/Gas Reserves
78,000 Tipperary (b) 97,500
Oil & Gas Producer
- --------------------------------------------------------------------------------
11,076,844
- --------------------------------------------------------------------------------
Distribution/Marketing/Refining-5.0%
258,000 Atmos Energy 6,450,000
Natural Gas Utility
259,100 Dynegy 5,279,163
Natural Gas & Electric Processing,
Production & Marketing
137,000 Equitable Resources 5,171,750
Natural Gas Utility & Producer
- --------------------------------------------------------------------------------
16,900,913
- --------------------------------------------------------------------------------
Energy/Minerals-Total 55,725,907
Other Industries-2.7%
- --------------------------------------------------------------------------------
Real Estate-1.5%
67,600 Forest City Enterprises Cl. A 1,892,800
Shopping Malls
53,900 Gaylord Entertainment 1,617,000
Opryland Hotel & Other Assets
47,000 The Rouse Company 1,192,625
Regional Shopping Malls
25,000 Cornerstone Properties 396,875
Downtown Office Buildings
- --------------------------------------------------------------------------------
5,099,300
- --------------------------------------------------------------------------------
Transportation-1.2%
174,000 Hub Group (b) 3,904,125
Truck & Rail Freight Forwarder
- --------------------------------------------------------------------------------
Other Industries-Total 9,003,425
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
Wanger 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger U.S. Small Cap Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
Principal Amount Value
<S> <C>
Total Common Stocks-93.1% $317,050,075
- --------------------------------------------------------------------------------
(Cost: $268,555,292)
Short-Term Obligations-6.5%
- --------------------------------------------------------------------------------
$13,123,000 Commercial Credit 5.10%
Maturing 07/02/99 13,121,141
$9,123,000 Ford Motor Credit 5.21%
Maturing 07/01/99 9,123,000
- --------------------------------------------------------------------------------
(Amoritized Cost: $22,244,141) 22,244,141
Total Investments-99.6% 339,294,216
- --------------------------------------------------------------------------------
(Cost: $290,799,433)
Cash and Other Assets less Liabilities-0.4% 1,429,841
- --------------------------------------------------------------------------------
Total Net Assets--100% $340,724,057
- --------------------------------------------------------------------------------
</TABLE>
Notes to Statement of Investments:
(a) At June 30, 1999, for federal income tax purposes cost of investments was
$291,203,919 and net unrealized appreciation was $48,090,297 consisting of
gross unrealized appreciation of $75,176,038 and gross unrealized
depreciation of $27,085,741.
(b) Non-income producing security.
(c) At June 30, 1999, the Fund held the following percentages of the
outstanding voting shares of the affiliated companies (ownership of
at least 5%) listed below:
IntelliQuest Information 5.46%
COMARCO 5.28%
The aggregate cost and value of investments in these companies at June 30,
1999, was $8,676,591 and $7,866,531, respectively. The market value of
these securities represents 2.31% of the total net assets at June 30, 1999.
During the six months ended June 30, 1999, cost of purchases in affiliated
companies was $921,500. There were no proceeds from sales or dividends
received from these companies during the six months ended June 30, 1999.
See accompanying notes to financial statements.
17
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger International Small Cap
Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number of Value
Shares
<S> <C> <C>
Common Stocks--99.1%
Europe--56.5%
- --------------------------------------------------------------------------------
Germany--2.2%
34,000 Rhoen Klinikum $3,383,695
Hospital Management
7,800 Kamps 317,744
Bakery Chain
- --------------------------------------------------------------------------------
3,701,439
- --------------------------------------------------------------------------------
Denmark--0.9%
25,000 Vest Wood 1,515,573
Furniture
- --------------------------------------------------------------------------------
Netherlands--8.1%
94,243 Hunter Douglas 3,236,520
Decorative Window Coverings
51,666 Kempen 2,584,232
Stock Brokerage/Investment Management
101,785 Unique International 2,482,561
Human Resources
121,818 Computer Service Solutions (b) 1,746,269
Computer Services
160,000 Scala Business Solutions (b) 1,361,316
Enterprise Software for Small-to-Medium
Sized Companies
60,000 Detron Group (b) 841,541
Telephone Services
26,000 Frans Maas Group 777,600
Transportation/Freight Forwarding
30,000 UCC Holding 417,676
Computer Services
- --------------------------------------------------------------------------------
13,447,715
- --------------------------------------------------------------------------------
Finland--3.2%
288,800 Talentum 4,408,024
Trade Journals & Internet Services
112,000 Teleste Corporation (b) 1,016,449
Cable Television Equipment
- --------------------------------------------------------------------------------
5,424,473
- --------------------------------------------------------------------------------
Norway--1.8%
500,000 Visma $1,937,123
Business Software
67,700 Enitel (b) 1,074,944
Telephone Services
- --------------------------------------------------------------------------------
3,012,067
- --------------------------------------------------------------------------------
Sweden--9.2%
140,000 Icon Medialab (b) 5,071,748
Web Site Development
175,000 Modern Times 3,797,636
TV, Newspapers & Internet
250,000 Semcon 2,234,768
Technical Consultant
247,000 Mandator 1,641,437
Computer Services/Consulting
300,000 Micronic Laser Systems (b) 1,340,861
Electronics Production Equipment
55,000 IBS (b) 1,238,826
Supply Chain Management Software
3,300 Entra Data 65,208
Banking Software
- --------------------------------------------------------------------------------
15,390,484
- --------------------------------------------------------------------------------
France--2.9%
15,000 Fininfo 2,567,937
Data Feeds for French Banks & Brokers
50,000 CPR Finance 2,230,702
Stock Brokerage
- --------------------------------------------------------------------------------
4,798,639
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
[WANGER 99]
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger International Small Cap
Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number of Value
Shares
<S> <C> <C>
- --------------------------------------------------------------------------------
United Kingdom/Ireland--15.1%
600,000 Informa Group $3,494,657
Business Information Provider
345,000 Parity 3,426,088
Computer Software, IT Staffing & Services
1,300,000 Workplace Technologies 3,278,704
Network Integration
2,000,000 Electronics Boutique 2,908,274
Video/Computer Games Retailer
1,000,000 Taylor Nelson 2,490,554
Market Research Services
500,000 Hogg Robinson 1,785,160
Corporate Travel Management
150,000 SSL International 1,730,777
Medical & Footcare Products
400,000 Oriflame International 1,513,248
Cosmetics Sold Door-to-Door
60,000 Icon (Ireland) (b) 1,177,500
Contract Research Organization
245,868 Morse Holdings (b) 903,019
Computer Hardware & Equipment
250,000 Photobition Group (b) 853,172
Production of Graphics for Exhibits
129,000 Edinburgh Fund Managers 850,989
Investment Management
150,000 Expro International Group 800,366
Oil Field Services
- -------------------------------------------------------------------------------
25,212,508
- -------------------------------------------------------------------------------
Spain/Portugal--3.9%
100,000 Mapfre Vida 2,856,701
Life Insurance/Mutual Funds
200,000 Prosegur 2,248,234
Security Guards
100,000 Filmes Lusomundo (Portugal) 1,390,192
Newspapers, Radio, Video, Film Distribution
- -------------------------------------------------------------------------------
6,495,127
- -------------------------------------------------------------------------------
Switzerland--2.0%
4,000 Phoenix Mecano $1,883,443
Electrical Components Manufacturer
3,000 Affichage 1,418,371
Billboard Advertising
- -------------------------------------------------------------------------------
3,301,814
- -------------------------------------------------------------------------------
Italy/Greece--7.2%
180,000 Athens Medical Center (Greece) (b) 4,486,854
Hospitals
500,000 Class Editori 3,996,287
Newspapers & Online Financial Data
150,000 Banca Pop Commercia e Industria 3,511,576
150,000 Banca Pop Commercia e Industria Rights (b) 92,972
Regional Bank
- -------------------------------------------------------------------------------
12,087,689
- -------------------------------------------------------------------------------
Europe--Total 94,387,528
Asia--29.6%
- -------------------------------------------------------------------------------
Hong Kong--2.4%
1,640,000 Li and Fung 3,931,485
Sourcing of Consumer Goods
- -------------------------------------------------------------------------------
Japan--8.2%
175,000 NuSkin Enterprises (b) 3,489,063
Personal Care/Herbal Products
31,000 Nichii Gakkan 3,380,701
Health Care Services
10,000 Ryohin Keikaku 2,515,697
Designer & Retailer of Muji Brand
Specialty Consumer Goods
31,100 Trans Cosmos 2,261,071
Information Technology Services & Investments
28,000 Moshi Moshi Hotline 2,058,824
Telemarketing
- -------------------------------------------------------------------------------
13,705,356
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger International Small Cap
Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number of Value
Shares
<S> <C> <C>
Asia--29.6% (cont)
- --------------------------------------------------------------------------------
Malaysia--0.3%
388,000 Computer System Advisor $551,659
Systems Integration & Software Services
- -------------------------------------------------------------------------------
Singapore--16.4%
1,630,400 Star Cruises 7,271,584
Cruise Line
7,200,000 Omni Industries 6,851,101
Electronic Manufacturing Services
720,000 Venture Manufacturing 5,540,088
Electronic Manufacturing Services
1,080,000 Datacraft Asia 4,708,800
Network Systems Integration
4,509,000 Datapulse Technology (b) 2,939,789
CD-ROM Replication
- -------------------------------------------------------------------------------
27,311,362
- -------------------------------------------------------------------------------
South Korea--2.3%
20,000 S1 Corporation 3,853,132
918 S1 Corporation Rights (b) 41,716
Central Station Alarm Business
- -------------------------------------------------------------------------------
3,894,848
- -------------------------------------------------------------------------------
Asia-Total 49,394,710
Latin America--4.1%
- -------------------------------------------------------------------------------
Mexico--3.3%
1,600,000 Grupo Continental 2,502,964
Beverages
641,000 Corp Interamericana 2,079,451
de Entretenimiento (b)
Special Events and Live Entertainment
1,240,000 Nadro, Series L 984,335
Pharmaceutical Distributor
- -------------------------------------------------------------------------------
5,566,750
- -------------------------------------------------------------------------------
Brazil--0.8%
46,900 Tele Celular $ 1,017,144
Mobile Communications
10,000 Tele Nordeste 270,000
Cellular Operator
- -------------------------------------------------------------------------------
1,287,144
- -------------------------------------------------------------------------------
Latin America--Total 6,853,894
Other Countries--8.9%
- -------------------------------------------------------------------------------
Australia--2.9%
750,000 AAPT (b) 2,333,198
Telecommunications Services
1,100,000 Powertel (b) 1,317,843
Telecommunications Services
500,000 Keycorp (b) 1,234,444
Smart Card Technology
- -------------------------------------------------------------------------------
4,885,485
- -------------------------------------------------------------------------------
Canada--3.8%
200,000 Penn West Petroleum (b) 3,648,402
Oil & Gas Producer
140,000 MDSI Mobil Data Solutions (b) 2,266,250
Wireless Software
175,000 Canadian 88 Energy (b) 487,129
Oil & Gas Producer
- -------------------------------------------------------------------------------
6,401,781
- -------------------------------------------------------------------------------
Israel--2.2%
80,000 Galileo Technology (b) 3,625,000
Communications Semiconductors
- -------------------------------------------------------------------------------
Other-Total 14,912,266
Total Common Stocks--99.1% 165,548,398
- -------------------------------------------------------------------------------
(Cost: $118,965,633)
Cash and Other Assets less Liabilities--0.9% 1,431,364
- -------------------------------------------------------------------------------
Total Net Assets--100% $166,979,762
- -------------------------------------------------------------------------------
</TABLE>
Notes to Statement of Investments:
(a) At June 30, 1999, for federal income tax purposes cost of investments was
$118,980,042 and net unrealized appreciation was $46,568,356 consisting of
gross unrealized appreciation of $53,171,832 and gross unrealized
depreciation of $6,603,476.
(b) Non-income producing security.
See accompanying notes to financial statements.
20
<PAGE>
Wanger 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger International Small Cap Portfolio Diversification June 30, 1999
At June 30, 1999, the Fund's portfolio of investments as a percentage of net
assets was diversified as follows:
<TABLE>
<CAPTION>
Value Percent
<S> <C> <C>
- -----------------------------------------------------------
Information
Computer Services $17,022,781 10.2%
Contract Manufacturing 15,330,978 9.2
Publishing 13,592,139 8.1
Telephone Services 11,174,564 6.7
Business Software 10,284,392 6.2
Business Information &
Marketing Services 5,911,663 3.5
Semiconductors & Related
Equipment 4,965,861 3.0
Domestic Consumer Software 2,266,250 1.3
Advertising 1,418,371 0.9
Computer Hardware &
Related Equipment 1,238,826 0.8
Transaction Processors 1,234,444 0.7
Telecommunications Equipment 1,016,449 0.6
- -----------------------------------------------------------
85,456,718 51.2
- -----------------------------------------------------------
Health Care
Hospital Management 7,870,549 4.7
Healthcare Services 3,380,701 2.0
Pharmaceuticals 1,730,777 1.0
- -----------------------------------------------------------
12,982,027 7.7
- -----------------------------------------------------------
Consumer Goods/Services
Travel 9,056,744 5.4
Other Consumer Services 5,974,299 3.6
Retail 5,423,971 3.3
Nondurables 5,002,311 3.0
Other Entertainment 4,708,800 2.8
Other Durable Goods 3,236,520 1.9
Beverages 2,502,964 1.5
Furniture/Textile 1,515,573 0.9
Consumer Goods Distribution 984,335 0.6
Food 317,744 0.2
- -----------------------------------------------------------
38,723,261 23.2
- -----------------------------------------------------------
Finance
Brokerage $4,814,934 2.9
Banks 3,604,548 2.2
Insurance 2,856,701 1.7
Money Management 850,989 0.5
- -----------------------------------------------------------
12,127,172 7.3
- -----------------------------------------------------------
Industrial Goods/Services
Outsourcing and Training Services 8,662,280 5.2
Electrical Components 1,883,443 1.1
- -----------------------------------------------------------
10,545,723 6.3
- -----------------------------------------------------------
Energy/Minerals
Oil/Gas Producers 4,135,531 2.5
Oil Services 800,366 0.5
- -----------------------------------------------------------
4,935,897 3.0
- -----------------------------------------------------------
Other
Transportation 777,600 0.4
- -----------------------------------------------------------
- -----------------------------------------------------------
Total Common Stocks 165,548,398 99.1
- -----------------------------------------------------------
Cash and Other Assets
less Liabilities 1,431,364 0.9
- -----------------------------------------------------------
Net Assets $166,979,762 100.0%
- -----------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
Wagner 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger Twenty Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------------------------------------------
Number of Value
Shares
Common Stocks-92.7%
Information-42.5%
- ---------------------------------------------------------------------------
Television Programming-3.5%
4,400 Liberty Media Group, AT&T (b) $ 161,700
Cable Programming
- ---------------------------------------------------------------------------
Telephone Services-4.3%
4,700 RCN (b) 195,637
Metro Market: Voice, Video & Internet Services
- ---------------------------------------------------------------------------
Mobile Communications-4.7%
3,000 Telephone & Data Systems 219,188
Cellular & Telephone Franchises
- ---------------------------------------------------------------------------
Business Software-4.7%
6,000 Sterling Commerce (b) 219,000
Electronic Commerce Software & Services
- ---------------------------------------------------------------------------
Business Information/Marketing Services-16.2%
20,000 PRIMEDIA (b) 338,750
Specialty Magazines & Other Publications
4,500 H & R Block 225,000
Tax Preparation
7,500 Acxiom (b) 187,031
Database Marketing Services
- ---------------------------------------------------------------------------
750,781
- ---------------------------------------------------------------------------
Transaction Processors-5.6%
6,000 National Data 256,500
Credit Card & Health Claims Processor
- ---------------------------------------------------------------------------
Computer Services-3.5%
7,200 Keane (b) 162,900
Application Development & Maintenance Services
- ---------------------------------------------------------------------------
Information-Total 1,965,706
Health Care-1.7%
- ---------------------------------------------------------------------------
Services-1.7%
3,200 Lincare Holdings (b) $ 80,000
Home Health Care Services
- ---------------------------------------------------------------------------
Health Care-Total 80,000
Consumer Goods/Services-14.8%
- ---------------------------------------------------------------------------
Furniture/Manufacturers-6.5%
6,000 Jones Apparel (b) 205,875
Women's Apparel
4,400 Herman Miller 92,400
Office Furniture
- ---------------------------------------------------------------------------
298,275
- ---------------------------------------------------------------------------
Cruise Lines-3.4%
3,600 Royal Caribbean Cruises 157,500
Cruises to Caribbean & Alaska
- ---------------------------------------------------------------------------
Other Consumer Services-4.9%
12,200 ServiceMaster 228,750
Facilities Management
- ---------------------------------------------------------------------------
Consumer Goods/Services-Total 684,525
Finance-17.8%
- ---------------------------------------------------------------------------
Finance Companies-6.1%
17,800 Americredit (b) 284,800
Auto Lending
- ---------------------------------------------------------------------------
Insurance-8.2%
8,400 UICI (b) 232,050
Insurance/Specialty Finance
1,000 Progressive 145,000
Auto Insurance
- ---------------------------------------------------------------------------
377,050
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
Wanger 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger Twenty Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Number of Value
Shares
<S> <C> <C>
- ---------------------------------------------------------------------------
Money Management-3.5%
1,850 SEI Investments $163,263
Mutual Fund Administration
- ---------------------------------------------------------------------------
Finance-Total 825,113
Energy/Minerals-9.8%
- ---------------------------------------------------------------------------
Independent Power-9.8%
4,800 AES Corporation (b) 279,000
Power Plants
5,000 MidAmerican Energy 173,125
Growth Utility
- ---------------------------------------------------------------------------
Energy/Minerals-Total 452,125
- ---------------------------------------------------------------------------
Real Estate-6.1%
11,000 The Rouse Company 279,125
Regional Shopping Malls
- ---------------------------------------------------------------------------
Real Estate-Total 279,125
Total Common Stocks-92.7% 4,286,594
- ---------------------------------------------------------------------------
(Cost: $3,810,312)
Cash and Other Assets less Liabilities-7.3% 339,201
- ---------------------------------------------------------------------------
Total Net Assets-100% $4,625,795
- ---------------------------------------------------------------------------
</TABLE>
Notes to Statement of Investments:
(a) At June 30, 1999, for federal income tax purposes cost of investments was
$3,823,621 and net unrealized appreciation was $462,973 consisting of gross
unrealized appreciation of $529,341 and gross unrealized depreciation of
$66,368.
(b) Non-income producing security.
See accompanying notes to financial statements.
23
<PAGE>
Wanger 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger Foreign Forty Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Number of Value
Shares
<S> <C> <C>
Common Stocks-94.5%
Europe-61.7%
- ---------------------------------------------------------------------------
Germany-7.6%
3,500 Stinnes (b) $ 54,504
Freight Forwarder
600 MobilCom 53,710
Telecommunication Services
300 Rhoen Klinikum 29,856
Hospital Management
- ---------------------------------------------------------------------------
138,070
- ---------------------------------------------------------------------------
Denmark-1.5%
500 ISS International Service (b) 26,766
Cleaning Services
- ---------------------------------------------------------------------------
Netherlands-5.9%
1,229 Hunter Douglas 42,207
Decorative Window Coverings
1,006 Getronics 38,698
Computer Services
406 ASR Verzekeringsgrp 26,776
Insurance
- ---------------------------------------------------------------------------
107,681
- ---------------------------------------------------------------------------
Finland-2.3%
1,000 Tieto Corporation 41,665
Computer Services/Consulting
- ---------------------------------------------------------------------------
Sweden-1.9%
1,000 Netcom 33,639
Telecommunication Services
- ---------------------------------------------------------------------------
France-3.3%
150 SITA 33,940
Waste Hauling & Landfills
260 Atos (b) 26,546
Computer Services/Transaction Processing
- ---------------------------------------------------------------------------
60,486
- ---------------------------------------------------------------------------
United Kingdom-19.1%
7,000 Logica $ 73,377
Computer Software & Services
10,000 Bodycote 62,500
Materials Technology & Metal Processing
600 NTL (b) 51,713
Voice, Video & Data Services
5,000 Airtours 39,880
Packaged Tour Vacations
1,500 Serco Group 33,812
Facilities Management
10,000 Smith & Nephew 30,423
Medical Equipment & Supplies
3,000 Sema 28,941
Computer Software & Services
1,000 Energis (b) 23,849
Telecommunication Services
- ---------------------------------------------------------------------------
344,495
- ---------------------------------------------------------------------------
Spain/Portugal-7.1%
800 Aguas de Barcelona 41,664
Water Utility
3,000 Prosegur 33,724
Security Guards
1,000 Mapire Vida 28,567
Life Insurance & Mutual Funds
2,300 Indra Sistamas 24,787
Computer Services
- ---------------------------------------------------------------------------
128,742
- ---------------------------------------------------------------------------
Switzerland-3.3%
20 Pargesa 30,362
Industrial & Media Conglomerate
15 Cie Fin Richemont 28,850
Luxury Goods, Tobacco & Pay TV
- ---------------------------------------------------------------------------
59,212
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
Wanger 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger Foreign Forty Statement of Investments (unaudited) June 30, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Number of Value
Shares
<S> <C> <C>
- ---------------------------------------------------------------------------
Italy-9.7%
4,400 Editoriale L'Espresso $71,242
Newspapers & Magazines
10,000 Saipem 39,911
Offshore Construction
25,000 SEAT Pagine Gialle 34,161
Yellow Pages Publisher
3,000 Autogrill Finanziari 30,908
Tollway Restaurants
- ---------------------------------------------------------------------------
176,222
- ---------------------------------------------------------------------------
Europe-Total 1,116,978
Asia-17.2%
- ---------------------------------------------------------------------------
Hong Kong-3.0%
15,000 SmarTone Telecom 53,358
Mobile Telecommunications
- ---------------------------------------------------------------------------
Japan-11.8%
300 Softbank 60,749
Internet Services/Investment Holdings
2,500 NuSkin Enterprises (b) 49,844
Personal Care/Herbal Products
300 Nintendo 42,160
Video Games
300 Takefuji 31,006
Unsecured Consumer Loans
2,000 Olympus Optical 29,560
Photographic & Medical Equipment
- ---------------------------------------------------------------------------
213,319
- ---------------------------------------------------------------------------
Singapore-2.4%
10,000 Natsteel Electronics 43,759
Electronic Manufacturing Services
- ---------------------------------------------------------------------------
Asia-Total 310,436
Other Countries-15.6%
- ---------------------------------------------------------------------------
Canada-7.4%
3,000 Canadian Natural Resources (b) $58,780
Oil & Gas Producer
1,300 Celestica (b) 55,949
Electronic Manufacturing Services
1,000 Power Financial 18,918
Financial Services Holding Company
- ---------------------------------------------------------------------------
133,647
- ---------------------------------------------------------------------------
Israel-1.3%
1,000 Amdocs (b) 22,750
Telecommunications Billing & Customer
Care Software
- ---------------------------------------------------------------------------
United States-6.9%
2,000 MIH (b) 53,000
Pay TV
600 Global TeleSystems (b) 48,600
Telecommunication Services
1,200 Azurix (b) 24,000
Owner & Operator of Water Utilities
- ---------------------------------------------------------------------------
125,600
- ---------------------------------------------------------------------------
Other-Total 281,997
Total Common Stocks-94.5% 1,709,411
- ---------------------------------------------------------------------------
(Cost: $1,568,486)
Cash and Other Assets less Liabilities-5.5% 98,822
- ---------------------------------------------------------------------------
Total Net Assets-100% $1,808,233
- ---------------------------------------------------------------------------
</TABLE>
Notes to Statement of Investments:
(a) At June 30, 1999, for federal income tax purposes cost of investments was
$1,568,486 and net unrealized appreciation was $140,925 consisting of gross
unrealized appreciation of $212,483 and gross unrealized depreciation of
$71,558.
(b) Non-income producing security.
See accompanying notes to financial statements.
25
<PAGE>
Wanger 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger Foreign Forty Portfolio Diversification June 30, 1999
At June 30, 1999 the Fund's portfolio of investments as a percentage of net
assets was diversified as follows:
<TABLE>
<CAPTION>
Value Percent
<S> <C> <C>
- ------------------------------------------------------------------
Information
Telephone Services $300,319 16.6%
Computer Services 209,226 11.5
Publishing 131,991 7.3
CATV 51,713 2.9
Contract Manufacturing 43,759 2.4
Business Information & Marketing Services 24,787 1.4
Business Software 22,750 1.2
- ------------------------------------------------------------------
784,545 43.3
- ------------------------------------------------------------------
Health Care
Hospital/Laboratory Supplies 30,423 1.7
Hospital Management 29,856 1.7
Medical Equipment 29,560 1.6
- ------------------------------------------------------------------
89,839 5.0
- ------------------------------------------------------------------
Consumer Goods/Services
Nondurables 49,844 2.8
Other Durable Goods 42,207 2.3
International Consumer Software 42,160 2.3
Travel 39,880 2.2
Restaurants 30,908 1.7
Other Entertainment 28,850 1.6
- ------------------------------------------------------------------
233,849 12.9
- ------------------------------------------------------------------
Finance
Insurance 74,261 4.1
Finance Companies 31,006 1.7
Closed-End Funds 30,362 1.7
- ------------------------------------------------------------------
135,629 7.5
- ------------------------------------------------------------------
Industrial Goods/Services
Outsourcing & Training Services 94,301 5.2
Industrial Materials 62,500 3.5
Electrical Components 55,949 3.1
- ------------------------------------------------------------------
212,750 11.8
- ------------------------------------------------------------------
Energy/Minerals
Oil/Gas Producers 58,780 3.3
Oil Services 39,910 2.2
- ------------------------------------------------------------------
98,690 5.5
- ------------------------------------------------------------------
Other
Regulated Utilities 65,665 3.6
Transportation 54,504 3.0
Waste Management 33,940 1.9
- ------------------------------------------------------------------
154,109 8.5
- ------------------------------------------------------------------
Total Common Stocks 1,709,411 94.5
- ------------------------------------------------------------------
Cash and Other Assets less Liabilities 98,822 5.5
- ------------------------------------------------------------------
Net Assets $1,808,233 100.0%
- ------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
Wanger99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) June 30, 1999
<TABLE>
<CAPTION>
---------------------------------------------------------------
Wanger Wanger Wanger Wanger
U.S. Small Cap International Twenty Foreign
Small Cap Forty
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Assets
Investments, at value (cost: Wanger U.S. Small Cap $290,799,433; $339,294,216 $165,548,398 $ 4,286,594 $ 1,709,411
Wanger International Small Cap $118,965,633;
Wanger Twenty $3,810,312; Wanger Foreign Forty $1,568,486)
Cash 912 1,750,994 451,819 4,384
Organization costs 16,782 16,782 -- --
Receivable for:
Securities sold 994,578 3,052,143 -- 72,053
Fund shares sold 477,161 144,406 10,104 16,968
Dividends and interest 25,418 240,362 950 3,422
Amount due from advisor -- -- 5,495 13,931
Other assets 1,135 3,371 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets 340,810,202 170,756,456 4,754,962 1,820,169
Liabilities and Net Assets
Payable for:
Securities purchased -- 3,521,955 117,872 --
Fund shares redeemed 42,265 171,757 -- 21
Amount owed to advisor 17,170 16,680 -- --
Other 26,710 66,302 11,295 11,915
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 86,145 3,776,694 129,167 11,936
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Fund shares outstanding $340,724,057 $166,979,762 $ 4,625,795 $ 1,808,233
- -----------------------------------------------------------------------------------------------------------------------------------
Fund shares outstanding 15,531,414 6,933,671 369,296 159,352
- -----------------------------------------------------------------------------------------------------------------------------------
Pricing of Shares
Net asset value, offering price and redemption price per share $21.94 $24.08 $12.53 $11.35
- -----------------------------------------------------------------------------------------------------------------------------------
Analysis of Net Assets
Paid-in capital $260,423,742 $114,179,466 $ 4,046,893 $ 1,598,626
Undistributed net realized gain on sales of investments and
foreign currency transactions 31,189,978 6,162,015 109,670 60,151
Net unrealized appreciation of investments and foreign
currency transactions 48,494,783 46,576,943 476,282 140,885
Undistributed net investment income (loss) 615,554 61,338 (7,050) 8,571
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Fund shares outstanding $340,724,057 $166,979,762 $ 4,625,795 $ 1,808,233
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
Wanger99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Statements of Operations (unaudited)
<TABLE>
<CAPTION>
---------------- ---------------- ------------- -------------
Wanger Wanger Wanger Wanger
U.S. Small Cap International Twenty Foreign Forty
Inception Inception
February 1 February 1
Six months ended Six months ended through through
June 30, 1999 June 30, 1999 June 30, 1999 June 30, 1999
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Income:
Dividends (net of foreign taxes of $128,740 for Wanger $ 1,699,825 $ 1,193,034 $ 7,227 $ 16,910
International Small Cap and $1,456 for Wanger Foreign Forty)
Interest 524,396 10,115 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total investment income 2,224,221 1,203,149 7,227 16,910
Expenses:
Investment advisory 1,502,772 935,848 10,047 5,751
Custodian 19,401 130,267 2,200 3,853
Legal and audit 29,517 28,112 6,871 6,871
Reports to shareholders 14,015 14,015 3,318 3,318
Amortization of organization costs 9,906 9,906 -- --
Transfer agent 10,860 10,860 8,636 8,636
Trustees' 15,117 8,537 417 417
Insurance 2,232 1,017 -- --
Other 7,240 3,801 167 167
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,611,060 1,142,363 31,656 29,013
Less custodian fees paid indirectly (2,393) (667) (1,836) (992)
Less reimbursement of expenses by advisor -- -- (15,543) (19,682)
- ---------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,608,667 1,141,696 14,277 8,339
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 615,554 61,453 (7,050) 8,571
Net realized and unrealized gain (loss) on investments:
Net realized gain on sales of investments 31,594,733 13,523,454 109,670 60,151
Net change in unrealized appreciation (1,610,075) 20,023,079 476,282 140,885
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 29,984,658 33,546,533 585,952 201,036
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $30,600,212 $33,607,986 $578,902 $209,607
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
Wanger99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
------------------------- ------------------------- ------------- -------------
Wanger U.S. Small Cap Wanger International Wanger Twenty Wanger
Small Cap Foreign
Forty
Inception Inception
Six months Year ended Six months Year ended February 1 February 1
ended June December ended June December through June through June
30, 1999 31, 1998 30, 1999 31, 1999 30, 1999 30, 1999
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
From operations:
Net investment income (loss) $615,554 $(783,423) $61,453 $220,138 $(7,050) $8,571
Net realized gain (loss) on sales of
investments 31,594,733 31,406,965 13,523,454 (2,995,916) 109,670 60,151
Net change in unrealized appreciation (1,610,075) (6,414,368) 20,023,079 21,548,547 476,282 140,885
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 30,600,212 24,209,174 33,607,986 18,772,769 578,902 209,607
Distributions to shareholders from:
Net investment income -- -- (2,396,217) (1,532,876) -- --
Net realized gain (31,015,042) (15,422,770) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (31,015,042) (15,422,770) (2,396,217) (1,532,876) -- --
From Fund share transactions:
Reinvestment of dividends and capital gain
distributions 30,987,684 15,407,847 2,391,782 1,530,069 -- --
Proceeds from other shares sold 16,882,083 94,608,919 7,859,552 26,836,486 4,367,302 1,765,984
- ------------------------------------------------------------------------------------------------------------------------------------
47,869,767 110,016,766 10,251,334 28,366,555 4,367,302 1,765,984
Payments for shares redeemed (45,849,761) (50,550,116) (15,736,650) (25,013,297) (320,409) (167,358)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Fund share transactions 2,020,006 59,466,650 (5,485,316) 3,353,258 4,046,893 1,598,626
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,605,176 68,253,054 25,726,453 20,593,151 4,625,795 1,808,233
Net assets:
Beginning of period 339,118,881 270,865,827 141,253,309 120,660,158 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
End of period $340,724,057 $339,118,881 $166,979,762 $141,253,309 $ 4,625,795 $ 1,808,233
- ------------------------------------------------------------------------------------------------------------------------------------
Undistributed Net Investment Income (Loss) $615,554 $0 $61,337 $2,396,211 $(7,050) $8,571
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
Wanger99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger U.S. Small Cap Financial Highlights
<TABLE>
<CAPTION>
Six months ended Year ended Year ended Year ended May 3, 1995 through
June 30. 1999 December 31, 1998 December 31, 1997 December 31, 1996 December 31, 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, beginning of
period $22.18 $21.46 $16.97 $11.60 $10.00
Income From Investment Operations
Net investment income (loss) (c) .04 (.05) (.02) (.06) (.05)
Net realized and unrealized gain
on investments 1.84 1.93 4.90 5.46 1.65
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.88 1.88 4.88 5.40 1.60
Less Distributions
Dividends from net investment income -- -- -- -- --
Distributions from net realized gain (2.12) (1.16) (.39) (.03) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.12) (1.16) (.39) (.03) --
Net Asset Value, end of period $21.94 $22.18 $21.46 $16.97 $11.60
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 10.3% 8.68% 29.41% 46.59% 16.00%
Ratios/Supplemental Data
Ratio of expenses to average net
assets (a) (b) 1.02%* 1.02% 1.06% 1.21% 2.08%*
Ratio of net investment income (loss)
to average net assets (b) .39%* (.25%) (.10%) (.41%) (1.44%)
Portfolio turnover rate 37%* 34% 34% 46% 59%
Net assets at end of period 340,724,057 339,118,881 270,865,827 128,957,911 21,903,536
</TABLE>
- --------------------------------------------------------------------------------
*Annualized
(a) In accordance with a requirement of the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custodian fees
for cash balances it maintains with the custodian (custodian fees paid
indirectly). This ratio net of custodian fees paid indirectly would have
been 1.04% for the year ended December 31, 1997, 1.19% for the year ended
December 31, 1996 and 2.00% for the period ended December 31, 1995.
(b) The Fund was reimbursed by the Advisor for certain expenses from May 3,
1995 through December 31, 1995. Without the reimbursement, the ratio of
expenses (prior to custodian fees paid indirectly) to average net assets
and the ratio of net investment income to average net assets for the period
ended December 31, 1995, would have been 2.35% and (1.71%), respectively.
(c) Net investment income (loss) per share for the six months ended June 30,
1999, and the years ended December 31, 1998, 1997 and 1996 was based upon
the average shares outstanding during the period.
See accompanying notes to financial statements.
30
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger International Small Cap Financial Highlights
<TABLE>
<CAPTION>
Six months ended Year ended Year ended Year ended May 3, 1995 through
June 30, 1999 December 31, 1998 December 31, 1997 December 31, 1996 December 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning
of period $19.62 $17.05 $17.71 $13.45 $10.00
Income From Investment
Operations
Net investment income
(loss) (c) -- .03 .02 (.09) (.03)
Net realized and
unrealized gain (loss)
on investments 4.80 2.76 (.26) 4.38 3.48
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 4.80 2.79 (.24) 4.29 3.45
Less Distributions
Dividends from net
investment income (.34) (.22) -- -- --
Distributions from net realized
gain and unrealized gain
reportable for federal
income taxes -- -- (.42) (.03) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (.34) (.22) (.42) (.03) --
Net Asset Value, end of
period $24.08 $19.62 $17.05 $17.71 $13.45
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return 24.82% 16.33% (1.46%) 32.01% 34.50%
Ratios/Supplemental Data
Ratio of expenses to average net
assets (a) (b) 1.55%* 1.55% 1.60% 1.79% 2.32%
Ratio of net investment
income (loss) to average
net assets (b) .08%* .16% .12% (.56%) (.81%)*
Portfolio turnover rate 73%* 56% 60% 50% 14%*
Net assets at end of period 166,979,762 141,253,309 120,660,158 84,855,082 11,368,924
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Annualized
(a) In accordance with a requirement of the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custodian fees
for cash balances it maintains with the custodian (custodian fees paid
indirectly). This ratio net of custodian fees paid indirectly would have
been 1.54% for the six months ended June 30, 1999, 1.59% for the year ended
December 31, 1997, 1.75% for the year ended December 31, 1996 and 2.00% for
the period ended December 31, 1995.
(b) The Fund was reimbursed by the Advisor for certain expenses from May 3,
1995 through December 31, 1995. Without the reimbursement, the ratio of
expenses (prior to custodian fees paid indirectly) to average net assets
and the ratio of net investment income to average net assets for the period
ended December 31, 1995, would have been 4.20% and (2.69%), respectively.
(c) Net investment income (loss) per share for the six months ended June 30,
1999, and the years ended December 31, 1998, 1997 and 1996 was based upon
the average shares outstanding during the period.
See accompanying notes to financial statements.
31
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger Twenty Financial Highlights
<TABLE>
<CAPTION>
February 1,1999 through
June 30,1999
- --------------------------------------------------------------------------------
<S> <C>
Net Asset Value, beginning of period $10.00
Income From Investment Operations
Net investment loss (c) (.03)
Net realized and unrealized gain on investments 2.56
- --------------------------------------------------------------------------------
Total from investment operations 2.53
- --------------------------------------------------------------------------------
Net Asset Value, end of period $12.53
- --------------------------------------------------------------------------------
Total Return 25.30%
Ratios/Supplemental Data
Ratio of expenses to average net assets (a) (b) 1.52% *
Ratio of net investment loss to average net assets (b) (.67%)*
Portfolio turnover rate 119% *
Net assets at end of period 4,625,795
</TABLE>
*Annualized
(a) In accordance with a requirement of the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custodian fees
for cash balances it maintains with the custodian (custodian fees paid
indirectly). This ratio net of custodian fees paid indirectly would have
been 1.35% for the period ended June 30, 1999.
(b) The Fund was reimbursed by the Advisor for certain expenses from February
1, 1999 through June 30, 1999. Without the reimbursement, the ratio of
expenses (prior to custodian fees paid indirectly) to average net assets
and the ratio of net investment income to average net assets for the period
ended June 30, 1999 would have been 2.82% and (2.14%), respectively.
(c) Net investment loss per share for the period ended June 30, 1999 was based
upon the average shares outstanding during the period.
See accompanying notes to financial statements.
32
<PAGE>
Wanger 99
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Wanger Foreign Forty Financial Highlights
<TABLE>
<CAPTION>
February 1, 1999 through
June 30, 1999
- --------------------------------------------------------------------------------
<S> <C>
Net Asset Value, beginning of period $10.00
Income From Investment Operations
Net investment income (c) .06
Net realized and unrealized gain on investments 1.29
- --------------------------------------------------------------------------------
Total from investment operations 1.35
- --------------------------------------------------------------------------------
Net Asset Value, end of period $11.35
- --------------------------------------------------------------------------------
Total Return 13.50%
Ratios/Supplemental Data
Ratio of expenses to average net assets (a) (b) 1.62%*
Ratio of net investment income to average net assets (b) 1.49%*
Portfolio turnover rate 101%*
Net assets at end of period 1,808,233
</TABLE>
- --------------------------------------------------------------------------------
*Annualized
(a) In accordance with a requirement of the Securities and Exchange Commission,
this ratio reflects total expenses prior to the reduction of custodian fees
for cash balances it maintains with the custodian (custodian fees paid
indirectly). This ratio net of custodian fees paid indirectly would have
been 1.45% for the period ended June 30, 1999.
(b) The Fund was reimbursed by the Advisor for certain expenses from February
1, 1999 through June 30, 1999. Without the reimbursement, the ratio of
expenses (prior to custodian fees paid indirectly) to average net assets
and the ratio of net investment income to average net assets for the period
ended June 30, 1999 would have been 4.87% and (1.93%), respectively.
(c) Net investment income per share for the period ended June 30, 1999, was
based upon the average shares outstanding during the period.
See accompanying notes to financial statements.
33
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Notes to Financial Statements
1. Nature of Operations
Wanger U.S. Small Cap, 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 insurance
company separate accounts established for the purpose of funding variable
insurance 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 current 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. Securities
for which there are no reported sales on the valuation date are valued at the
mean of the latest bid and ask quotation or, if there is no ask quotation, at
the most recent bid quotation. Money market instruments having a maturity of 60
days or less from the valuation date are valued on an amortized cost basis.
Securities for which quotations are not readily available and any other assets
are valued as determined in good faith by the Board of Trustees.
Foreign currency translations
Values of investments denominated in foreign currencies are converted into U.S.
dollars using the spot market rate of exchange at the time of valuation.
Purchases and sales of investments and dividend and interest income are
translated into U.S. dollars using the spot market rate of exchange prevailing
on the respective dates of such transactions. The gain or loss resulting from
changes in foreign exchange rates is included with net realized and unrealized
gain or loss from investments, as appropriate.
Security transactions and investment income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as soon as
the information is available to the Fund. Interest income is recorded on the
accrual basis and includes amortization of discounts on money market instruments
and on long-term debt instruments when required for federal income tax purposes.
Realized gains and losses from security transactions are reported on an
identified cost basis.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
Custodian fees
Custodian fees are reduced based on each Fund's cash balances maintained with
the custodian. This presentation does not affect the determination of Fund
shares outstanding.
Federal income taxes, dividends and distributions to shareholders
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 of their taxable income, as well as any net realized gain on
sales of investments and foreign currency transactions reportable for federal
income tax purposes.
Wanger International Small Cap has elected to mark-to-market its investments
in Passive Foreign Investment Companies ("PFICS") for income tax purposes. In
accordance with this election, the Fund had no unrealized appreciation from
investments in PFICs at June 30, 1999. Cumulative net unrealized appreciation
recognized in prior years on PFICs sold in 1999 amounted to $83,762.
Wanger International Small Cap intends to utilize provisions of the federal
income tax law that allow it to carry a realized capital loss forward for eight
years following the year of the loss and offset such losses against future
realized gains. At December 31, 1998, the Fund had a capital loss carryforward
of $7,263,202 of which $382,694 will expire December 31, 2005 and $6,880,508
will expire December 31, 2006.
Dividends and distributions payable to each Fund's shareholders are recorded
by the Fund on the ex-dividend date.
Reclassifications have been made in 1998 for Wanger U.S. Small Cap in the
accompanying analysis of net assets from undistributed net investment income to
net realized gain on the sale of investments of $783,423 to reflect differences
between financial reporting and income tax basis and had no impact on net asset
value. Reclassifications have also been made in 1998 for Wanger International
Small Cap from accumulated net realized gain on sale of investments to
undistributed net investment income of $2,092,223 to reflect differences between
financial reporting and income tax basis.
3. Transactions with Affiliates
The Funds' investment advisor, Wanger Asset Management, L.P., ("WAM") furnishes
continuing investment supervision to the Funds and is responsible for overall
management of the Funds' business affairs. Each Fund pays WAM a monthly advisory
fee based upon average daily net assets at the following rates:
34
<PAGE>
Wanger Advisor Trust 1999 Semiannual Report
- --------------------------------------------------------------------------------
Notes to Financial Statements
Wanger U.S. Small Cap
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%
WAM has undertaken to reimburse the Funds to the extent that ordinary operating
expenses (computed based on net custodian fees) exceed a percentage of average
net assets. This amount is 1.50% for Wanger U.S. Small Cap, 1.90% for Wanger
International Small Cap, 1.35% for Wanger Twenty and 1.45% for Wanger Foreign
Forty. WAM was not required to reimburse Wanger U.S. Small Cap or Wanger
International Small Cap under these undertakings for the six months ended June
30, 1999. Wanger Twenty and Wanger Foreign Forty were reimbursed $15,543 and
$19,682, respectively, for the period ended June 30, 1999.
Certain officers and trustees of the Trust are also principals of WAM. The
Trust makes no direct payments to its officers and trustees who are affiliated
with WAM. The Funds paid the following trustees' fees and expenses to trustees
not affiliated with WAM:
<TABLE>
<CAPTION>
Period ended June 30, 1999
<S> <C>
Wanger U.S. Small Cap $15,117
Wanger International Small Cap 8,537
Wanger Twenty 417
Wanger Foreign Forty 417
</TABLE>
WAM advanced $100,000 in connection with the organization and initial
registration of Wanger U.S. Small Cap and Wanger International Small Cap. These
costs are being amortized and reimbursed to WAM over the period May, 1995
through April, 2000. WAM paid all organization costs associated with the
organization of Wanger Twenty and Wanger Foreign Forty. These costs amounted to
$20,816. WAM will not be reimbursed for these costs by the Funds.
WAM Brokerage Services, L.L.C., a wholly-owned subsidiary of WAM, is the
distributor of each Fund's shares and receives no compensation for its services.
4. Borrowing Arrangements
The trust participates in a $250,000,000 credit facility which was entered into
to facilitate portfolio liquidity. No amounts have been borrowed under this
facility.
5. Fund Shares Transactions
Proceeds and payments on Fund shares as shown in the statements of changes in
net assets are in respect of the following numbers of shares:
<TABLE>
<CAPTION>
Wanger U.S. Small Cap Period ended Year ended
June 30, 1999 December 31, 1998
<S> <C> <C>
Shares sold 834,884 4,370,518
Shares issued in reinvestment of
dividend and capital gain
distributions 1,675,771 686,318
- --------------------------------------------------------------------------------
2,510,655 5,056,836
Less shares redeemed 2,270,064 2,389,858
- --------------------------------------------------------------------------------
Net increase in shares outstanding 240,591 2,666,978
</TABLE>
<TABLE>
<CAPTION>
Wanger International Small Cap Period ended Year ended
June 30, 1999 December 31, 1998
<S> <C> <C>
Shares sold 370,799 1,389,310
Shares issued in reinvestment
of dividend and capital gain
distributions 119,889 76,657
- --------------------------------------------------------------------------------
490,688 1,485,987
Less shares redeemed 754,971 1,346,776
- --------------------------------------------------------------------------------
Net decrease in shares outstanding (264,283) 119,191
</TABLE>
<TABLE>
<CAPTION>
Wanger Twenty Period ended
June 30, 1999
<S> <C>
Shares sold 396,035
Less shares redeemed 26,739
- --------------------------------------------------------------------------------
Net increase in shares outstanding 369,296
</TABLE>
<TABLE>
<CAPTION>
Wanger Foreign Forty Period ended
June 30, 1999
<S> <C>
Shares sold 175,081
Less shares redeemed 15,729
- --------------------------------------------------------------------------------
Net increase in shares outstanding 159,352
</TABLE>
6. Investment Transactions
The aggregate costs of purchases and proceeds from sales other than short-term
obligations for the period ended June 30, 1999 were:
<TABLE>
<CAPTION>
------------------------------------------------------------
Wanger U.S. Wanger Wanger Wanger
Small Cap International Twenty Foreign Forty
Small Cap
<S> <C> <C> <C> <C>
Purchases $54,856,973 $53,569,418 $4,935,376 $2,055,610
Sales 83,195,198 58,000,528 1,234,734 547,275
</TABLE>
35
<PAGE>
- --------------------------------------------------------------------------------
Wanger Advisors Trust
Trustees
Fred D. Hasselbring
Charles P. McQuaid
P. Michael Phelps
Ralph Wanger
Patricia H. Werhane
Officers
Marcel P. Houtzager
Vice President
Kenneth A. Kalina
Assistant Treasurer
Bruce H. Lauer
Vice President and Treasurer
Charles P. McQuaid
Senior Vice President
Robert A. Mohn
Vice President
John H. Park
Vice President
Steven A. Radis
Vice President and Secretary
Ralph Wanger
President
Mark H. Yost
Vice President
Peter Zaldivar
Vice President
Leah J. Zell
Vice President
Transfer Agent,
Dividend Disbursing Agent
and Custodian
State Street Bank
and Trust Company
Attention:
Wanger Advisors Trust
P.O. Box 8502
Boston, Massachusetts
02266-8502
Distributor
WAM Brokerage
Services, L.L.C.
227 West Monroe Street
Suite 3000
Chicago, Illinois 60606
1-800-5-WANGER
(1-800-592-6437)
Investment Advisor
Wanger Asset
Management, L.P.
227 West Monroe Street
Suite 3000
Chicago, Illinois 60606
1-800-5-WANGER
(1-800-592-6437)
Legal Counsel
Bell, Boyd & Lloyd
Chicago, Illinois
This report, including the unaudited 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.
36
<PAGE>
OBC1
<PAGE>
Wanger Advisors Trust
OL2568S
8/99
