UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08748
Wanger Advisors Trust
(Exact name of registrant as specified in charter)
71 S Wacker Dr.
Suite 2500
Chicago, IL 60606, USA
(Address of principal executive offices) (Zip code)
Ryan C. Larrenaga
c/o Columbia Management
Investment Advisers, LLC
290 Congress Street
Boston, Massachusetts 02210
Daniel J. Beckman
c/o Columbia Management Investment Advisers, LLC
290 Congress Street
Boston, Massachusetts 02210
Mary C. Moynihan
Perkins Coie LLP
700 13th Street, NW
Suite 800
Washington, DC 20005
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 634-9200
Date of fiscal year end: December 31
Date of reporting period: June 30, 2021
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Wanger
International
Managed by Columbia
Wanger Asset Management, LLC
Please remember that you may not
buy (nor will you own) shares of the Fund directly. The Fund is available through variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies
as well as qualified pension and retirement plans. Please contact your financial advisor or insurance representative for more information.
Not Federally Insured • No
Financial Institution Guarantee • May Lose Value
Table of Contents
| 3 | |
| 5 | |
| 6 | |
| 10 | |
| 11 | |
| 12 | |
| 13 | |
| 14 | |
| 25 | |
| 25 |
Proxy voting policies and
procedures
The policy of the Board of Trustees
is to vote the proxies of the companies in which Wanger International (the Fund) holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of
the SAI without charge by calling 800.345.6611; contacting your financial intermediary or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted
proxies relating to portfolio securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting
columbiathreadneedleus.com/investor/, or searching the website of the SEC at sec.gov.
Quarterly schedule of
investments
The Fund files a complete schedule
of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The Fund’s Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s complete
schedule of portfolio holdings, as filed on Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
Fund investment manager
Columbia Wanger Asset Management, LLC (Investment
Manager)
71 S Wacker Drive, Suite 2500
Chicago, IL 60606
888.4.WANGER
(888.492.6437)
Fund distributor
Columbia Management Investment Distributors,
Inc.
290 Congress Street
Boston, MA 02210
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Wanger International | Semiannual
Report 2021
Fund at a Glance
(Unaudited)
(Unaudited)
Investment objective
The Fund
seeks long-term capital appreciation.
Portfolio management
Tae Han (Simon) Kim, CFA
Co-Portfolio Manager since 2017
Service with Fund since 2011
James Chapman, CFA
Co-Portfolio Manager since July 2020
Service with Fund since 2018
Zoe Tan, CFA
Co-Portfolio Manager since July 2020
Service with Fund since 2018
| Wanger International | Semiannual Report 2021 | 3 |
Fund at a Glance (continued)
(Unaudited)
(Unaudited)
| Equity sector breakdown (%) (at June 30, 2021) | |
| Communication Services | 5.1 |
| Consumer Discretionary | 12.8 |
| Consumer Staples | 2.5 |
| Financials | 8.5 |
| Health Care | 17.8 |
| Industrials | 20.8 |
| Information Technology | 21.1 |
| Materials | 6.8 |
| Real Estate | 4.6 |
| Total | 100.0 |
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
| Country breakdown (%) (at June 30, 2021) | |
| Australia | 5.1 |
| Austria | 1.0 |
| Brazil | 2.0 |
| Cambodia | 0.7 |
| Canada | 1.4 |
| China | 1.1 |
| Denmark | 3.4 |
| France | 1.0 |
| Germany | 9.6 |
| Greece | 0.6 |
| Hong Kong | 1.0 |
| Italy | 3.3 |
| Japan | 17.9 |
| Malta | 0.7 |
| Mexico | 1.2 |
| Netherlands | 4.1 |
| Russian Federation | 0.9 |
| Singapore | 2.2 |
| South Korea | 2.9 |
| Spain | 1.6 |
| Sweden | 10.2 |
| Switzerland | 3.7 |
| Taiwan | 5.8 |
| United Kingdom | 15.5 |
| United States(a) | 3.1 |
| Total | 100.0 |
| (a) | Includes investments in Money Market Funds. |
Country breakdown is based
primarily on issuer’s place of organization/incorporation. Percentages indicated are based upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject
to change.
| 4 | Wanger International | Semiannual Report 2021 |
Understanding Your Fund’s
Expenses
(Unaudited)
(Unaudited)
As a shareholder, you incur three
types of costs. There are shareholder transaction costs, which may include redemption fees. There are also ongoing fund costs, which generally include investment advisory fees and other expenses for Wanger
International (the Fund). Lastly, there may be additional fees or charges imposed by the insurance company that sponsors your variable annuity and/or variable life insurance product. The following information is
intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s
expenses
To illustrate these ongoing
costs, we have provided an example and calculated the expenses paid by investors in the Fund during the period. The actual and hypothetical information in the table below is based on an initial investment of $1,000 at
the beginning of the period indicated and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual”
column is calculated using the Fund’s actual operating expenses and total return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over
the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the results by the expenses paid during the period under the Actual column. The
amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the Fund’s actual return) and then applies the Fund’s actual expense ratio for the
period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the period.
See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are
required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the
hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are
meant to highlight the ongoing cost of investing in a fund only and do not reflect any transaction costs, such as redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.
| January 1, 2021 — June 30, 2021 | |||||||
| Account value at the beginning of the period ($) | Account value at the end of the period ($) | Expenses paid during the period ($) | Fund’s annualized expense ratio (%) | ||||
| Actual | Hypothetical | Actual | Hypothetical | Actual | Hypothetical | Actual | |
| Wanger International | 1,000.00 | 1,000.00 | 1,107.20 | 1,018.84 | 6.27 | 6.01 | 1.20 |
Expenses paid during the period
are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the Fund’s most recent fiscal half-year and divided by
365.
It is important to note that the
expense amounts shown in the table are meant to highlight only ongoing costs of investing in the Fund. Expenses paid during the period do not include any insurance charges imposed by your insurance company’s
separate account. The hypothetical example provided is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction
costs.
| Wanger International | Semiannual Report 2021 | 5 |
Portfolio of Investments
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
(Percentages represent value of
investments compared to net assets)
Investments in securities
The accompanying Notes to Financial
Statements are an integral part of this statement.
| 6 | Wanger International | Semiannual Report 2021 |
Portfolio of Investments (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
At June 30, 2021,
securities and/or cash totaling $459,351 were pledged as collateral.
Notes to Portfolio of
Investments
| (a) | Non-income producing investment. |
| (b) | All or a portion of this security was on loan at June 30, 2021. The total market value of securities on loan at June 30, 2021 was $4,228,177. |
| (c) | Represents privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified institutional buyers. At June 30, 2021, the total value of these securities amounted to $2,784,278, which represents 0.57% of total net assets. |
| (d) | The rate shown is the seven-day current annualized yield at June 30, 2021. |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| Wanger International | Semiannual Report 2021 | 7 |
Portfolio of Investments (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Notes to Portfolio of Investments (continued)
| (e) | Investment made with cash collateral received from securities lending activity. |
| (f) | As defined in the Investment Company Act of 1940, as amended, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. The value of the holdings and transactions in these affiliated companies during the period ended June 30, 2021 are as follows: |
| Affiliated issuers | Beginning of period($) | Purchases($) | Sales($) | Net change in unrealized appreciation (depreciation)($) | End of period($) | Realized gain (loss)($) | Dividends($) | End of period shares |
| Columbia Short-Term Cash Fund, 0.051% | ||||||||
| 9,879,253 | 52,859,886 | (58,785,933) | (113) | 3,953,093 | 113 | 2,422 | 3,953,489 | |
Abbreviation Legend
| ADR | American Depositary Receipt |
| GDR | Global Depositary Receipt |
Fair value measurements
Various inputs are used in
determining the value of the Fund’s investments, following the input prioritization hierarchy established by accounting principles generally accepted in the United States of America (GAAP). These inputs are
summarized in the three broad levels listed below:
| ■ | Level 1 – quoted prices in active markets for identical securities |
| ■ | Level 2 – prices determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others) |
| ■ | Level 3 – prices determined using significant unobservable inputs where quoted prices or observable inputs are unavailable or less reliable (including management’s own assumptions about the factors market participants would use in pricing an investment) |
The inputs or methodology used for
valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Examples of the types of securities
in which the Fund would typically invest and how they are classified within this hierarchy are as follows. Typical Level 1 securities include exchange traded domestic equities, mutual funds whose net asset values are
published each day and exchange traded foreign equities that are not typically statistically fair valued. Typical Level 2 securities include exchange traded foreign equities that are traded in the European region or
Asia Pacific region time zones which are typically statistically fair valued, forward foreign currency exchange contracts and short-term investments valued at amortized cost. Additionally, securities fair valued by
Columbia Wanger Asset Management’s Valuation Committee (the Committee) that rely on significant observable inputs are also included in Level 2. Typical Level 3 securities include any security fair valued by the
Committee that relies on significant unobservable inputs.
The Committee is responsible for
applying the Wanger Advisors Trust Portfolio Pricing Policy and the Columbia Wanger Asset Management pricing procedures (the Policies), which are approved by and subject to the oversight of the Board of Trustees.
The Committee meets as necessary,
and no less frequently than quarterly, to determine fair values for securities for which market quotations are not readily available or for which Columbia Wanger Asset Management believes that available market
quotations are unreliable. The Committee also reviews the continuing appropriateness of the Policies. In circumstances where a security has been fair valued, the Committee will also review the continuing
appropriateness of the current value of the security. The Policies address, among other things: circumstances under which market quotations will be deemed readily available; selection of third party pricing vendors;
appropriate pricing methodologies; events that require fair valuation and fair value techniques; circumstances under which securities will be deemed to pose a potential for stale pricing, including when securities are
illiquid, restricted, or in default; and certain delegations of authority to determine fair values to the Fund’s investment manager. The Committee may also meet to discuss additional valuation matters, which may
include review of back-testing results, review of time-sensitive information or approval of other valuation related actions, and to review the appropriateness of the Policies.
The following table is a summary of
the inputs used to value the Fund’s investments at June 30, 2021:
| Level 1 ($) | Level 2 ($) | Level 3 ($) | Total ($) | |
| Investments in Securities | ||||
| Common Stocks | ||||
| Australia | — | 24,800,452 | — | 24,800,452 |
| Austria | — | 4,683,369 | — | 4,683,369 |
| Brazil | 9,701,330 | — | — | 9,701,330 |
| Cambodia | — | 3,460,289 | — | 3,460,289 |
| Canada | 6,922,246 | — | — | 6,922,246 |
| China | — | 5,428,941 | — | 5,428,941 |
| Denmark | — | 16,683,562 | — | 16,683,562 |
| France | — | 5,053,572 | — | 5,053,572 |
| Germany | — | 47,090,555 | — | 47,090,555 |
| Greece | — | 2,973,182 | — | 2,973,182 |
| Hong Kong | — | 4,907,942 | — | 4,907,942 |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 8 | Wanger International | Semiannual Report 2021 |
Portfolio of Investments (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Fair value measurements (continued)
| Level 1 ($) | Level 2 ($) | Level 3 ($) | Total ($) | |
| Italy | — | 16,024,534 | — | 16,024,534 |
| Japan | — | 87,240,542 | — | 87,240,542 |
| Malta | — | 3,428,567 | — | 3,428,567 |
| Mexico | 5,761,825 | — | — | 5,761,825 |
| Netherlands | 5,164,254 | 14,670,318 | — | 19,834,572 |
| Russian Federation | — | 4,543,766 | — | 4,543,766 |
| Singapore | — | 10,613,269 | — | 10,613,269 |
| South Korea | — | 14,325,882 | — | 14,325,882 |
| Spain | — | 7,618,554 | — | 7,618,554 |
| Sweden | — | 50,018,338 | — | 50,018,338 |
| Switzerland | — | 17,988,175 | — | 17,988,175 |
| Taiwan | — | 28,291,838 | — | 28,291,838 |
| United Kingdom | — | 75,823,461 | — | 75,823,461 |
| United States | 6,908,688 | — | — | 6,908,688 |
| Total Common Stocks | 34,458,343 | 445,669,108 | — | 480,127,451 |
| Securities Lending Collateral | 4,272,000 | — | — | 4,272,000 |
| Money Market Funds | 3,953,093 | — | — | 3,953,093 |
| Total Investments in Securities | 42,683,436 | 445,669,108 | — | 488,352,544 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to
the Level 2 input category are generally valued using a market approach, in which a security’s value is determined through its correlation to prices and information from observable market transactions for
similar or identical assets. Foreign equities are generally valued at the last sale price on the foreign exchange or market on which they trade. The Fund may use a statistical fair valuation model, in accordance with
the policy adopted by the Board of Trustees, provided by an independent third party to value securities principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the
close of the foreign exchanges and the time for valuation. These models take into account available market data including intraday index, ADR, and ETF movements.
The accompanying Notes to Financial Statements are
an integral part of this statement.
| Wanger International | Semiannual Report 2021 | 9 |
Statement of Assets and Liabilities
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
| Assets | |
| Investments in securities, at value* | |
| Unaffiliated issuers (cost $327,788,967) | $484,399,451 |
| Affiliated issuers (cost $3,952,605) | 3,953,093 |
| Foreign currency (cost $39) | 39 |
| Margin deposits on: | |
| Futures contracts | 459,351 |
| Receivable for: | |
| Investments sold | 1,349,373 |
| Capital shares sold | 1,235 |
| Dividends | 473,834 |
| Securities lending income | 2,393 |
| Foreign tax reclaims | 556,654 |
| Prepaid expenses | 3,768 |
| Trustees’ deferred compensation plan | 345,799 |
| Total assets | 491,544,990 |
| Liabilities | |
| Due upon return of securities on loan | 4,272,000 |
| Payable for: | |
| Investments purchased | 8,305 |
| Capital shares purchased | 1,542,561 |
| Investment advisory fee | 12,816 |
| Service fees | 74,353 |
| Administration fees | 670 |
| Trustees’ fees | 1,040 |
| Compensation of chief compliance officer | 37 |
| Other expenses | 93,987 |
| Trustees’ deferred compensation plan | 345,799 |
| Total liabilities | 6,351,568 |
| Net assets applicable to outstanding capital stock | $485,193,422 |
| Represented by | |
| Paid in capital | 284,506,712 |
| Total distributable earnings (loss) | 200,686,710 |
| Total - representing net assets applicable to outstanding capital stock | $485,193,422 |
| Shares outstanding | 15,955,416 |
| Net asset value per share | 30.41 |
| * Includes the value of securities on loan | 4,228,177 |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 10 | Wanger International | Semiannual Report 2021 |
Statement of Operations
Six Months Ended June 30, 2021 (Unaudited)
Six Months Ended June 30, 2021 (Unaudited)
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $3,931,048 |
| Dividends — affiliated issuers | 2,422 |
| Income from securities lending — net | 12,295 |
| Foreign taxes withheld | (370,284) |
| Total income | 3,575,481 |
| Expenses: | |
| Investment advisory fee | 2,271,411 |
| Service fees | 261,693 |
| Administration fees | 118,613 |
| Trustees’ fees | 20,478 |
| Custodian fees | 53,393 |
| Printing and postage fees | 51,736 |
| Audit fees | 14,431 |
| Legal fees | 35,644 |
| Compensation of chief compliance officer | 809 |
| Other | 16,693 |
| Total expenses | 2,844,901 |
| Net investment income | 730,580 |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | 50,400,771 |
| Investments — affiliated issuers | 113 |
| Foreign currency translations | (99,559) |
| Futures contracts | 164,273 |
| Net realized gain | 50,465,598 |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | (2,376,231) |
| Investments — affiliated issuers | (113) |
| Foreign currency translations | (41,176) |
| Futures contracts | (103,180) |
| Net change in unrealized appreciation (depreciation) | (2,520,700) |
| Net realized and unrealized gain | 47,944,898 |
| Net increase in net assets resulting from operations | $48,675,478 |
The accompanying Notes to
Financial Statements are an integral part of this statement.
| Wanger International | Semiannual Report 2021 | 11 |
Statement of Changes in Net Assets
| Six Months Ended June 30, 2021 (Unaudited) | Year Ended December 31, 2020 | |
| Operations | ||
| Net investment income | $730,580 | $1,399,493 |
| Net realized gain | 50,465,598 | 11,236,210 |
| Net change in unrealized appreciation (depreciation) | (2,520,700) | 43,240,008 |
| Net increase in net assets resulting from operations | 48,675,478 | 55,875,711 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | (9,927,503) | (23,557,869) |
| Total distributions to shareholders | (9,927,503) | (23,557,869) |
| Decrease in net assets from capital stock activity | (21,365,914) | (40,068,079) |
| Total increase (decrease) in net assets | 17,382,061 | (7,750,237) |
| Net assets at beginning of period | 467,811,361 | 475,561,598 |
| Net assets at end of period | $485,193,422 | $467,811,361 |
| Six Months Ended | Year Ended | |||
| June 30, 2021 (Unaudited) | December 31, 2020 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Subscriptions | 114,942 | 3,353,568 | 442,771 | 9,071,329 |
| Distributions reinvested | 324,110 | 9,927,503 | 1,060,210 | 23,557,869 |
| Redemptions | (1,171,530) | (34,646,985) | (3,107,958) | (72,697,277) |
| Total net decrease | (732,478) | (21,365,914) | (1,604,977) | (40,068,079) |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 12 | Wanger International | Semiannual Report 2021 |
Financial Highlights
The following table is intended to
help you understand the Fund’s financial performance. Certain information reflects financial results for a single share held for the periods shown. Per share net investment income (loss) amounts are calculated
based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of the expenses that apply to the variable
accounts or contract charges, if any. Total return and portfolio turnover are not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales
transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the Fund’s portfolio turnover rate may be higher.
| Six Months Ended June 30, 2021 (Unaudited) | Year Ended December 31, | |||||
| 2020 | 2019 | 2018 | 2017 | 2016 | ||
| Per share data | ||||||
| Net asset value, beginning of period | $28.03 | $26.00 | $22.20 | $30.84 | $23.64 | $26.32 |
| Income from investment operations: | ||||||
| Net investment income | 0.05 | 0.07 | 0.24 | 0.29 | 0.25 | 0.31 |
| Net realized and unrealized gain (loss) | 2.96 | 3.31 | 6.08 | (4.93) | 7.49 | (0.56) |
| Total from investment operations | 3.01 | 3.38 | 6.32 | (4.64) | 7.74 | (0.25) |
| Less distributions to shareholders from: | ||||||
| Net investment income | (0.16) | (0.48) | (0.20) | (0.60) | (0.34) | (0.29) |
| Net realized gains | (0.47) | (0.87) | (2.32) | (3.40) | (0.20) | (2.14) |
| Total distributions to shareholders | (0.63) | (1.35) | (2.52) | (4.00) | (0.54) | (2.43) |
| Net asset value, end of period | $30.41 | $28.03 | $26.00 | $22.20 | $30.84 | $23.64 |
| Total return | 10.72% | 14.36% | 29.99%(a) | (17.70)%(a) | 32.91%(a) | (1.41)% |
| Ratios to average net assets | ||||||
| Total gross expenses(b) | 1.20%(c) | 1.25% | 1.23% | 1.19% | 1.16% | 1.08%(d) |
| Total net expenses(b) | 1.20%(c) | 1.25% | 1.20% | 1.13% | 1.12% | 1.08%(d) |
| Net investment income | 0.31%(c) | 0.34% | 1.01% | 1.03% | 0.92% | 1.23% |
| Supplemental data | ||||||
| Portfolio turnover | 25% | 60% | 42% | 47% | 55% | 56% |
| Net assets, end of period (in thousands) | $485,193 | $467,811 | $475,562 | $426,359 | $578,088 | $494,795 |
| Notes to Financial Highlights | |
| (a) | Had the Investment Manager and/or its affiliates not waived a portion of expenses, total return would have been reduced. |
| (b) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests, if any. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (c) | Annualized. |
| (d) | Expenses have been reduced due to a reimbursement of expenses overbilled by a third party. If the reimbursement had been excluded, the expense ratios would have been higher by 0.05%. All fee waivers and expense reimbursements by the Investment Manager and its affiliates were applied before giving effect to this third party reimbursement. |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| Wanger International | Semiannual Report 2021 | 13 |
Notes to Financial Statements
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Note 1. Organization
Wanger International (the Fund),
a series of Wanger Advisors Trust (the Trust), is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust. The investment objective of the Fund is to seek long-term capital appreciation. The Fund is available only for allocation to certain life insurance company separate accounts established for the purpose of
funding participating variable annuity contracts and variable life insurance policies and may also be offered directly to certain qualified pension and retirement plans.
Note 2. Summary of
significant accounting policies
Basis of preparation
The Fund is an investment company
that applies the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP), which requires
management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of
significant accounting policies followed by the Fund in the preparation of its financial statements.
Security valuation
Securities of the Fund are valued
at market value or, if a market quotation for a security is not readily available or is deemed not to be reliable because of events or circumstances that have occurred between the market quotation and the time as of
which the security is to be valued, the security is valued at its fair value determined in good faith under consistently applied procedures established by the Board of Trustees. Equity securities listed on an exchange
are valued at the closing price or last trade on their primary exchange at the close of business of the New York Stock Exchange. Securities with a closing price not readily available or not listed on any exchange are
valued at the mean between the closing bid and asked prices. Listed preferred stocks convertible into common stocks are valued using an evaluated price from a pricing service.
Foreign equity securities are
valued based on the closing price or last trade on their primary exchange at the close of business of the New York Stock Exchange. Foreign currency exchange rates are determined at the scheduled closing time of the
New York Stock Exchange. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange; therefore, the closing prices for securities in such markets or on such
exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. In situations where foreign markets are closed, where a significant event has occurred after the
foreign exchange closes but before the time at which the Fund’s share price is calculated, and in the event of significant movement in the trigger index for the statistical fair valuation process established by
the Board of Trustees, foreign securities will be fair valued pursuant to a policy adopted by the Board of Trustees. Under the policy, the Fund may use an independent statistical fair value pricing service that
employs a systematic methodology to assist in the fair valuation process for securities principally traded in a foreign market in order to adjust for possible changes in value that may occur between the close of the
foreign market and the time as of which the securities are to be valued. If a security is valued at a fair value, that value may be different from the last quoted market price for the security.
Investments in open-end investment
companies (other than exchange-traded funds (ETFs)), are valued at the latest net asset value reported by those companies as of the valuation time.
GAAP requires disclosure regarding
the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following
the Fund’s Portfolio of Investments.
| 14 | Wanger International | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
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 New York Stock 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.
Foreign currency transactions and
translations
Values of investments denominated
in foreign currencies are converted into U.S. dollars using the New York 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.
Derivative instruments
The Fund invests in certain
derivative instruments, as detailed below, in seeking to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more
securities, currencies, commodities, indices, or other assets or instruments. Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to
certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain
investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including the potential inability of the counterparty to fulfill its
obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the potential for market movements
which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer
a marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its
obligations under the contract. The Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by
the Fund and the amount of any variation margin held by the counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk
to the Fund since the clearinghouse or central counterparty (CCP) provides some protection in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract;
therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in exchange-traded or centrally cleared derivatives with respect to initial and variation margin
that is held in a broker’s customer account. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy
and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients and such shortfall is remedied by the CCP or otherwise, U.S. bankruptcy laws will typically
allocate that shortfall on a pro-rata basis across all the clearing broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its
contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement)
or similar agreement with its derivatives counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and foreign exchange forward contracts
and contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset
with the counterparty certain derivative instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically
permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or insolvency laws of a particular jurisdiction may
impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
| Wanger International | Semiannual Report 2021 | 15 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Collateral (margin) requirements
differ by type of derivative. Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain
circumstances. Collateral terms for most over-the-counter derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as
well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and
comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally, the amount of collateral due from or to a party has to exceed a minimum transfer amount
threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from
counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest expense paid by the Fund is shown on the Statement of Operations. The Fund attempts to
mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those
counterparties.
Certain ISDA Master Agreements
allow counterparties of over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified
time period or if the Fund fails to meet certain terms of the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination
rights if the counterparty fails to meet certain terms of the ISDA Master Agreement. In determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk,
whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes,
the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are
exchange-traded and represent commitments for the future purchase or sale of an asset at a specified price on a specified date. During the six months ended June 30, 2021, the Fund bought and sold futures contracts to
maintain appropriate equity market exposure while keeping sufficient cash to accommodate daily operations. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the
Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional risks include counterparty credit risk, the possibility of an illiquid market, and that a
change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures
contract, the Fund deposits cash or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be
maintained at an established level over the life of the contract. Cash deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are
designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are
recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund generally expects to earn interest income on its margin deposits. The Fund recognizes a realized gain or loss
when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Effects of derivative transactions in
the financial statements
The following tables are intended
to provide additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the
Statement of Assets and Liabilities; and the impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules
following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any.
At June 30, 2021, the Fund had no
outstanding derivatives.
| 16 | Wanger International | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
The following table indicates the
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the six months ended June 30, 2021:
| Amount of realized gain (loss) on derivatives recognized in income | |
| Risk exposure category | Futures contracts ($) |
| Equity risk | 164,273 |
| Change in unrealized appreciation (depreciation) on derivatives recognized in income | |
| Risk exposure category | Futures contracts ($) |
| Equity risk | (103,180) |
The following table is a summary
of the average outstanding volume by derivative instrument for the six months ended June 30, 2021:
| Derivative instrument | Average notional amounts ($)* |
| Futures contracts — long | 4,755,382 |
| * | Based on the ending quarterly outstanding amounts for the six months ended June 30, 2021. |
Securities lending
The Fund may lend securities up to
one-third of the value of its total assets to certain approved brokers, dealers, banks or other institutional borrowers of securities that the Fund’s securities lending agent has determined are credit worthy
under guidelines established by the Board of Trustees, to earn additional income. The Fund retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the
security. The Fund also receives a fee for the loan. The Fund has the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by
cash that exceeded the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Fund and any additional required collateral is delivered to the
Fund on the next business day. The Fund typically invests the cash collateral in the Dreyfus Government Cash Management Fund, a third-party institutional government money market fund in accordance with investment
guidelines contained in the securities lending agreement and approved by the Board of Trustees. The income earned from the securities lending program is paid to the Fund, net of any fees remitted to Goldman Sachs
Agency Lending, the Fund’s lending agent, and borrower rebates. The Fund’s investment manager, Columbia Wanger Asset Management, LLC (the Investment Manager or CWAM), does not retain any fees earned by the
lending program. Generally, in the event of borrower default, the Fund has the right to use the collateral to offset any losses incurred. In the event the Fund is delayed or prevented from exercising its right to
dispose of the collateral, there may be a potential loss to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of loss with respect to the investment of collateral. The net
lending income earned by the Fund as of June 30, 2021, is included in the Statement of Operations.
The following table indicates the
total amount of securities loaned by type, reconciled to gross liability payable upon return of the securities loaned by the Fund as of June 30, 2021:
| Overnight and continuous | Up to 30 days | 30-90 days | Greater than 90 days | Total | |
| Wanger International | |||||
| Securities lending transactions | |||||
| Equity securities | $4,228,177 | $— | $— | $— | $4,228,177 |
| Gross amount of recognized liabilities for securities lending (collateral received) | 4,272,000 | ||||
| Amounts due to counterparty in the event of default | $43,823 |
| Wanger International | Semiannual Report 2021 | 17 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Offsetting of assets and
liabilities
The following table presents the
Fund’s gross and net amount of assets and liabilities available for offset under netting agreements and under a securities lending agreement as well as the related collateral received by the Fund with securities
on loan as of June 30, 2021:
| Goldman Sachs ($) | |
| Liabilities | |
| Collateral on Securities Loaned | 4,272,000 |
| Total Liabilities | 4,272,000 |
| Total Financial and Derivative Net Assets | (4,272,000) |
| Financial Instruments | 4,228,177 |
| Net Amount (a) | (43,823) |
| (a) | Represents the net amount due from/(to) counterparties in the event of default. |
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 debt obligations when required for federal income tax purposes. Realized gains and losses from
security transactions are recorded on an identified cost basis.
Income recognition
Corporate actions and dividend
income are generally recorded net of any non-reclaimable tax withholdings, on the ex-dividend date or upon receipt of an ex-dividend notification in the case of certain foreign securities.
The Fund may receive distributions
from holdings in equity securities, exchange traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information as to the
tax character of their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. Return of capital is recorded as a
reduction of the cost basis of securities held. If the Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the extent actual information has not
yet been reported, estimates for return of capital may be made by the Fund’s management. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the
REITs, which could result in a proportionate change in return of capital to shareholders.
Awards, if any, from class action
litigation related to securities owned may be recorded as a reduction of cost of those securities. If the applicable securities are no longer owned, the proceeds are recorded as realized gains.
Expenses
General expenses of the Trust are
allocated to the Fund and the other series of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are
charged to the Fund.
Federal income tax status
The Fund intends to comply with the
provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, intends to distribute substantially all its taxable income, as well as any net realized gain on
sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required. The Fund meets
the exception under Internal Revenue Code Section 4982(f) and the Fund expects not to be subject to federal excise tax.
| 18 | Wanger International | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Foreign taxes
Gains in certain countries may be
subject to foreign taxes at the fund level. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction. The amount, if any, is disclosed as a liability on
the Statement of Assets and Liabilities.
Distributions to shareholders
Distributions to shareholders are
recorded on the ex-dividend date.
Guarantees and indemnification
In the normal course of business,
the Trust on behalf of the Fund enters into contracts that contain a variety of representations and warranties and that provide general indemnities. The Fund’s maximum exposure under these arrangements is
unknown, as this would involve future claims against the Fund. Also under the Trust’s organizational documents, the trustees and officers of the Trust are indemnified against certain liabilities that may arise
out of their duties to the Trust. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.
Note 3. Fees and other
transactions with affiliates
Management services fees
CWAM is a wholly owned subsidiary
of Columbia Management Investment Advisers, LLC (Columbia Management), which in turn is a wholly owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). CWAM furnishes continuing investment supervision
to the Fund and is responsible for the overall management of the Fund’s business affairs.
CWAM receives a monthly advisory
fee based on the Fund’s daily net assets at the following annual rates:
| Average daily net assets | Annual fee rate |
| Up to $100 million | 1.10% |
| $100 million to $250 million | 0.95% |
| $250 million to $500 million | 0.90% |
| $500 million to $1 billion | 0.80% |
| $1 billion and over | 0.72% |
For the six months ended June 30,
2021, the annualized effective investment advisory fee rate was 0.96% of the Fund’s average daily net assets.
Administration fees
CWAM provides administrative
services and receives an administration fee from the Fund at the following annual rates:
| Aggregate average daily net assets of the Trust | Annual fee rate |
| Up to $4 billion | 0.05% |
| $4 billion to $6 billion | 0.04% |
| $6 billion to $8 billion | 0.03% |
| $8 billion and over | 0.02% |
For the six months ended June 30,
2021, the annualized effective administration fee rate was 0.05% of the Fund’s average daily net assets. CWAM has delegated to Columbia Management responsibility to provide certain sub-administrative services to
the Fund.
| Wanger International | Semiannual Report 2021 | 19 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Compensation of board members
Certain officers and trustees of
the Trust are also officers of CWAM and/or Columbia Management. The Trust makes no direct payments to its officers and trustees who are affiliated with CWAM or Columbia Management. The Trust offers a Deferred
Compensation Plan (the Deferred Plan) for its independent trustees. Under the Deferred Plan, a trustee may elect to defer all or a portion of his or her compensation. Amounts deferred are retained by the Trust and may
represent an unfunded obligation of the Trust. The value of amounts deferred is determined by reference to the change in value of Institutional Class shares of one or more series of Columbia Acorn Trust or a money
market fund as specified by the trustee. Benefits under the Deferred Plan are payable in accordance with the Deferred Plan.
Compensation of Chief Compliance
Officer
The Board of Trustees has appointed
a Chief Compliance Officer for the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated
to the Fund, along with other allocations to affiliated registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Service fees
Pursuant to the Transfer, Dividend
Disbursing and Shareholder Servicing Agreement between the Fund and Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of
Ameriprise Financial, the Fund bears a service fee paid to the Transfer Agent to compensate it for amounts paid to Participating Insurance Companies and other financial intermediaries (together, Participating
Organizations) for various sub-transfer agency and other shareholder services each Participating Organization provides to its clients, customers and participants that are invested directly or indirectly in the Fund,
up to a cap approved by the Board of Trustees from time to time.
The Transfer Agent may retain as
compensation for its services revenues from fees for wire, telephone and redemption orders, account transcripts due to the Transfer Agent from Fund shareholders and interest (net of bank charges) earned with respect
to balances in accounts the Transfer Agent maintains in connection with its services to the Fund.
Distributor
Columbia Management Investment
Distributors, Inc., a wholly owned subsidiary of Ameriprise Financial, serves as the Fund’s distributor and principal underwriter.
Other expenses waived/reimbursed by
the Investment Manager and its affiliates
Effective May 1, 2021 through April
30, 2022, CWAM has contractually agreed to bear a portion of the Fund’s expenses so that its ordinary operating expenses (excluding transaction costs and certain other investment-related expenses, interest and
fees on borrowings and expenses associated with the Fund’s investment in other investment companies, if any), do not exceed the annual rate of 1.23% of the Fund’s average daily net assets. This agreement
may not be modified or terminated, without approval from the Fund’s Board of Trustees and CWAM. There is no guarantee that this agreement will continue after April 30, 2022.
Note 4. Federal tax
information
The timing and character of
income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At June 30, 2021, the approximate
cost of all investments for federal income tax purposes and the aggregate gross approximate unrealized appreciation and depreciation based on that cost was:
| Federal tax cost ($) | Gross unrealized appreciation ($) | Gross unrealized (depreciation) ($) | Net unrealized appreciation ($) |
| 331,742,000 | 161,387,000 | (4,776,000) | 156,611,000 |
| 20 | Wanger International | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
Management is required to determine
whether a tax position of the Fund is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the
technical merits of the position. The tax benefit to be recognized by the Fund is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.
Management is not aware of any tax positions in the Fund for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However,
management’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant
court decisions). The Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
Note 5. Portfolio
information
The aggregate cost of purchases
and proceeds from sales other than short-term obligations for the six months ended June 30, 2021, were $115,938,260 and $143,281,043, respectively. The amount of purchase and sales activity impacts the portfolio
turnover rate reported in the Financial Highlights.
Note 6. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for
other temporary or emergency purposes. Pursuant to a December 1, 2020 amendment, the credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an
affiliated investment manager, severally and not jointly, permits collective borrowings up to $950 million. Interest is currently charged to each participating fund based on its borrowings at a rate equal to the
higher of (i) the federal funds effective rate, (ii) the one-month London Interbank Offered Rate (LIBOR) rate and (iii) the overnight bank funding rate, plus in each case, 1.25%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. Most LIBOR settings will no longer be published after December 31, 2021, and a majority of U.S. dollar LIBOR settings will cease publication after
June 30, 2023. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other expenses in the
Statement of Operations. This agreement expires annually in December unless extended or renewed. Prior to the December 1, 2020 amendment, the Fund had access to a revolving credit facility with a syndicate of banks
led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. which permitted collective borrowings up to $1 billion. Interest was charged to each participating fund based on its borrowings at a rate equal
to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%.
The Fund had no borrowings during
the six months ended June 30, 2021.
Note 7. Significant
risks
Foreign securities and emerging
market countries risk
Investing in foreign securities may
involve certain risks not typically associated with investing in U.S. securities, such as increased currency volatility and risks associated with political, regulatory, economic, social, diplomatic and other
conditions or events occurring in the country or region, which may result in significant market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. Investing in emerging
markets may increase these risks and expose the Fund to elevated risks associated with increased inflation, deflation or currency devaluation. To the extent that the Fund concentrates its investment exposure to any
one or a few specific countries, the Fund will be particularly susceptible to the risks associated with the conditions, events or other factors impacting those countries or regions and may, therefore, have a greater
risk than that of a fund that is more geographically diversified.
| Wanger International | Semiannual Report 2021 | 21 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Asia Pacific Region. The Fund is particularly susceptible to economic, political, regulatory or other events or conditions affecting issuers and countries in the Asia Pacific region. Many of the countries in
the region are considered underdeveloped or developing, including from a political, economic and/or social perspective, and may have relatively unstable governments and economies based on limited business, industries
and/or natural resources or commodities. Events in any one country within the region may impact other countries in the region or the region as a whole. As a result, events in the region will generally have a greater
effect on the Fund than if the Fund were more geographically diversified. This could result in increased volatility in the value of the Fund’s investments and losses for the Fund. Also, securities of some
companies in the region can be less liquid than U.S. or other foreign securities, potentially making it difficult for the Fund to sell such securities at a desirable time and price.
Europe. The Fund is particularly susceptible to economic, political, regulatory or other events or conditions affecting issuers and countries in Europe. In addition, the private and public
sectors’ debt problems of a single European Union (EU) country can pose significant economic risks to the EU as a whole. As a result, the Fund’s NAV may be more volatile than the NAV of a more
geographically diversified fund. If securities of issuers in Europe fall out of favor, it may cause the Fund to underperform other funds that do not focus their investments in this region of the world. The UK’s
departure from the EU single market became effective January 1, 2021 with the end of the Brexit transition period and the post-Brexit trade deal between the UK and EU taking effect on December 31, 2020. The impact of
Brexit on the UK and European economies and the broader global economy could be significant, resulting in negative impacts on currency and financial markets generally, such as increased volatility and illiquidity, and
potentially lower economic growth in markets in Europe, which may adversely affect the value of your investment in the Fund.
Industrials sector risk
The Fund is more susceptible to the
particular risks that may affect companies in the industrials sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the industrials sector are subject to certain risks,
including changes in supply and demand for their specific product or service and for industrial sector products in general, including decline in demand for such products due to rapid technological developments and
frequent new product introduction. Performance of such companies may be affected by factors including government regulation, world events and economic conditions and risks for environmental damage and product
liability claims.
Information technology sector risk
The Fund is more susceptible to the
particular risks that may affect companies in the information technology sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the information technology sectors are
subject to certain risks, including the risk that new services, equipment or technologies will not be accepted by consumers and businesses or will become rapidly obsolete. Performance of such companies may be affected
by factors including obtaining and protecting patents (or the failure to do so) and significant competitive pressures, including aggressive pricing of their products or services, new market entrants, competition for
market share and short product cycles due to an accelerated rate of technological developments. Such competitive pressures may lead to limited earnings and/or falling profit margins. As a result, the value of their
securities may fall or fail to rise. In addition, many information technology sector companies have limited operating histories and prices of these companies’ securities historically have been more volatile than
other securities, especially over the short term. Some companies in the information technology sector are facing increased government and regulatory scrutiny and may be subject to adverse government or regulatory
action, which could negatively impact the value of their securities.
Market and environment risk
The Fund may incur losses due to
declines in the value of one or more securities in which it invests. These declines may be due to factors affecting a particular issuer, or the result of, among other things, political, regulatory, market, economic or
social developments affecting the relevant market(s) more generally. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers,
which could adversely affect the Fund, including causing difficulty in assigning prices to hard-to-value assets in thinly traded and closed markets, significant redemptions and operational challenges. Global economies
and financial markets are increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. These risks
may be magnified if certain events or developments adversely interrupt the global supply chain;
| 22 | Wanger International | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
in these and other circumstances, such risks might
affect companies worldwide. As a result, local, regional or global events such as terrorism, war, natural disasters, disease/virus outbreaks and epidemics or other public health issues, recessions, depressions or
other events – or the potential for such events – could have a significant negative impact on global economic and market conditions.
The Fund’s performance may
also be significantly negatively impacted by the economic impact of the coronavirus disease 2019 (COVID-19) pandemic. The COVID-19 pandemic has resulted in, and may continue to result in, significant global economic
and societal disruption and market volatility due to disruptions in market access, resource availability, facilities operations, imposition of tariffs, export controls and supply chain disruption, among others. Such
disruptions may be caused, or exacerbated by, quarantines and travel restrictions, workforce displacement and loss in human and other resources. The uncertainty surrounding the magnitude, duration, reach, costs and
effects of the global pandemic, as well as actions that have been or could be taken by governmental authorities or other third parties, present unknowns that are yet to unfold. The impacts, as well as the uncertainty
over impacts to come, of COVID-19 – and any other infectious illness outbreaks, epidemics and pandemics that may arise in the future – could negatively affect global economies and markets in ways that
cannot necessarily be foreseen. In addition, the impact of infectious illness outbreaks and epidemics in emerging market countries may be greater due to generally less established healthcare systems, governments and
financial markets. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The disruptions caused by COVID-19 could
prevent the Fund from executing advantageous investment decisions in a timely manner and negatively impact the Fund’s ability to achieve its investment objectives. Any such event(s) could have a significant
adverse impact on the value and risk profile of the Fund.
Shareholder concentration risk
At June 30, 2021, one unaffiliated
shareholder of record owned 19.3% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Affiliated shareholders of
record owned 58.3% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case
of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid
positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Small- and mid-cap company risk
Investments in small- and
mid-capitalization companies (small- and mid-cap companies) often involve greater risks than investments in larger, more established companies (larger companies) because small- and mid-cap companies tend to have less
predictable earnings and may lack the management experience, financial resources, product diversification and competitive strengths of larger companies. Securities of small- and mid-cap companies may be less liquid
and more volatile than the securities of larger companies.
Note 8. Subsequent
events
Management has evaluated the
events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 9. Information
regarding pending and settled legal proceedings
Ameriprise Financial and certain
of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in
connection with the conduct of their business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject
of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with
the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary, 8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to
Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
| Wanger International | Semiannual Report 2021 | 23 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
There can be no assurance that
these matters, or the adverse publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe
proceedings are not likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines,
penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial or one or more of its affiliates that provides services to
the Fund.
| 24 | Wanger International | Semiannual Report 2021 |
Liquidity Risk
Management Program
Pursuant to Rule 22e-4 under the
1940 Act, the Fund has adopted a liquidity risk management program (Program). The Program’s principal objectives include assessing, managing and periodically reviewing the Fund’s liquidity risk. Liquidity
risk is defined as the risk that the Fund could not meet redemption requests without significant dilution of remaining investors’ interests in the Fund.
The Board of Trustees has appointed
the Investment Manager as the program administrator for the Program. The Investment Manager has delegated oversight of the Program to its Liquidity Risk Management Committee (the Committee). At a Board meeting during
the fiscal period, the Committee provided the Board with a report addressing the operations of the Program and assessing its adequacy and effectiveness of implementation for the period January 1, 2020, through
December 31, 2020. Among other things, the report indicated that:
| • | the Fund had sufficient liquidity to both meet redemptions and operate effectively on behalf of shareholders; |
| • | there were no material changes to the Program during the period; |
| • | the Fund’s strategy continued to be effective for an open-end mutual fund; |
| • | the implementation of the Program was effective to manage the Fund’s liquidity risk; |
| • | the Fund did not require a highly liquid investment minimum; and |
| • | the Program operated adequately during the period. |
There can be no assurance that the
Program will achieve its objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an
investment in the Fund may be subject.
Board Consideration
and Approval of Advisory
Agreement
Wanger Advisors Trust (the
“Trust”) has an investment advisory agreement (the “Advisory Agreement”) with Columbia Wanger Asset Management, LLC (“CWAM”) under which CWAM manages the Fund. All of the voting
trustees of the Trust are persons who have no direct or indirect interest in the Advisory Agreement and are not “interested persons” (as defined in the Investment Company Act of 1940) of the Trust (the
“Independent Trustees”). The Independent Trustees oversee the management of the Fund and, as required by law, determine at least annually whether to continue the Advisory Agreement for the Fund.
The Contract Committee (the
“Contract Committee”) of the Board of Trustees of the Trust (the “Board”), which is comprised solely of Independent Trustees, makes recommendations to the Board regarding any proposed
continuation of the Advisory Agreement. After the Contract Committee has made its recommendations, the full Board determines whether to approve continuation of the Advisory Agreement.
The Board determines whether to
renew the Advisory Agreement each year by July 31. A discussion of the Board’s considerations in renewing the Advisory Agreement will be provided in the Fund’s annual report to shareholders for the period
ended December 31, 2021.
| Wanger International | Semiannual Report 2021 | 25 |
Please read and consider the
investment objectives, risks, charges and expenses for any fund carefully before investing. For variable fund and variable contract prospectuses, which contain this and other important information, including the fees
and expenses imposed under your contract, investors should contact their financial advisor or insurance representative. Read the prospectus for the Fund and your variable contract carefully before investing. Columbia Wanger Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA, and are managed by Columbia Wanger Asset Management, LLC.
Columbia Threadneedle Investments
(Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. All rights reserved. Columbia Management Investment Distributors, Inc., 290 Congress Street, Boston, MA 02210.
© 2021 Columbia Management Investment
Advisers, LLC.
C-1460 AR (8/21)
Wanger USA
Managed by Columbia
Wanger Asset Management, LLC
Please remember that you may not
buy (nor will you own) shares of the Fund directly. The Fund is available through variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies
as well as qualified pension and retirement plans. Please contact your financial advisor or insurance representative for more information.
Not Federally Insured • No
Financial Institution Guarantee • May Lose Value
Table of Contents
| 3 | |
| 5 | |
| 6 | |
| 10 | |
| 11 | |
| 12 | |
| 13 | |
| 14 | |
| 24 | |
| 24 |
Proxy voting policies and
procedures
The policy of the Board of Trustees
is to vote the proxies of the companies in which Wanger USA (the Fund) holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI
without charge by calling 800.345.6611; contacting your financial intermediary or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies
relating to portfolio securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting
columbiathreadneedleus.com/investor/, or searching the website of the SEC at sec.gov.
Quarterly schedule of
investments
The Fund files a complete schedule
of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The Fund’s Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s complete
schedule of portfolio holdings, as filed on Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
Fund investment manager
Columbia Wanger Asset Management, LLC (Investment
Manager)
71 S Wacker Drive, Suite 2500
Chicago, IL 60606
888.4.WANGER
(888.492.6437)
Fund distributor
Columbia Management Investment Distributors,
Inc.
290 Congress Street
Boston, MA 02210
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Wanger USA | Semiannual Report 2021
Fund at a Glance
(Unaudited)
(Unaudited)
Investment objective
The Fund
seeks long-term capital appreciation.
Portfolio management
Erika K. Maschmeyer, CFA
Co-Portfolio Manager since April 2021
Service with the Fund since 2016
John L. Emerson, CFA
Co-Portfolio Manager since April 2021
Service with the Fund since 2003
| Wanger USA | Semiannual Report 2021 | 3 |
Understanding Your Fund’s
Expenses
(Unaudited)
(Unaudited)
As a shareholder, you incur three
types of costs. There are shareholder transaction costs, which may include redemption fees. There are also ongoing fund costs, which generally include investment advisory fees and other expenses for Wanger USA (the
Fund). Lastly, there may be additional fees or charges imposed by the insurance company that sponsors your variable annuity and/or variable life insurance product. The following information is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s
expenses
To illustrate these ongoing
costs, we have provided an example and calculated the expenses paid by investors in the Fund during the period. The actual and hypothetical information in the table below is based on an initial investment of $1,000 at
the beginning of the period indicated and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual”
column is calculated using the Fund’s actual operating expenses and total return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over
the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the results by the expenses paid during the period under the Actual column. The
amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the Fund’s actual return) and then applies the Fund’s actual expense ratio for the
period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the period.
See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are
required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the
hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are
meant to highlight the ongoing cost of investing in a fund only and do not reflect any transaction costs, such as redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.
| January 1, 2021 — June 30, 2021 | |||||||
| Account value at the beginning of the period ($) | Account value at the end of the period ($) | Expenses paid during the period ($) | Fund’s annualized expense ratio (%) | ||||
| Actual | Hypothetical | Actual | Hypothetical | Actual | Hypothetical | Actual | |
| Wanger USA | 1,000.00 | 1,000.00 | 1,098.40 | 1,019.49 | 5.57 | 5.36 | 1.07 |
Expenses paid during the period
are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the Fund’s most recent fiscal half-year and divided by
365.
It is important to note that the
expense amounts shown in the table are meant to highlight only ongoing costs of investing in the Fund. Expenses paid during the period do not include any insurance charges imposed by your insurance company’s
separate account. The hypothetical example provided is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction
costs.
| Wanger USA | Semiannual Report 2021 | 5 |
Portfolio of Investments
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
(Percentages represent value of
investments compared to net assets)
Investments in securities
The accompanying Notes to Financial
Statements are an integral part of this statement.
| 6 | Wanger USA | Semiannual Report 2021 |
Portfolio of Investments (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
The accompanying Notes to Financial
Statements are an integral part of this statement.
| Wanger USA | Semiannual Report 2021 | 7 |
Portfolio of Investments (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Notes to Portfolio of
Investments
| (a) | Non-income producing investment. |
| (b) | All or a portion of this security was on loan at June 30, 2021. The total market value of securities on loan at June 30, 2021 was $18,509,099. |
| (c) | The rate shown is the seven-day current annualized yield at June 30, 2021. |
| (d) | Investment made with cash collateral received from securities lending activity. |
| (e) | As defined in the Investment Company Act of 1940, as amended, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. The value of the holdings and transactions in these affiliated companies during the period ended June 30, 2021 are as follows: |
| Affiliated issuers | Beginning of period($) | Purchases($) | Sales($) | Net change in unrealized appreciation (depreciation)($) | End of period($) | Realized gain (loss)($) | Dividends($) | End of period shares |
| Columbia Short-Term Cash Fund, 0.051% | ||||||||
| 3,273,726 | 168,060,554 | (166,165,386) | (646) | 5,168,248 | 646 | 6,758 | 5,168,765 | |
Abbreviation Legend
| ADR | American Depositary Receipt |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 8 | Wanger USA | Semiannual Report 2021 |
Portfolio of Investments (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Fair value measurements
Various inputs are used in
determining the value of the Fund’s investments, following the input prioritization hierarchy established by accounting principles generally accepted in the United States of America (GAAP). These inputs are
summarized in the three broad levels listed below:
| ■ | Level 1 – quoted prices in active markets for identical securities |
| ■ | Level 2 – prices determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others) |
| ■ | Level 3 – prices determined using significant unobservable inputs where quoted prices or observable inputs are unavailable or less reliable (including management’s own assumptions about the factors market participants would use in pricing an investment) |
The inputs or methodology used for
valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Examples of the types of securities
in which the Fund would typically invest and how they are classified within this hierarchy are as follows. Typical Level 1 securities include exchange traded domestic equities, mutual funds whose net asset values are
published each day and exchange traded foreign equities that are not typically statistically fair valued. Typical Level 2 securities include exchange traded foreign equities that are traded in the European region or
Asia Pacific region time zones which are typically statistically fair valued, forward foreign currency exchange contracts and short-term investments valued at amortized cost. Additionally, securities fair valued by
Columbia Wanger Asset Management’s Valuation Committee (the Committee) that rely on significant observable inputs are also included in Level 2. Typical Level 3 securities include any security fair valued by the
Committee that relies on significant unobservable inputs.
The Committee is responsible for
applying the Wanger Advisors Trust Portfolio Pricing Policy and the Columbia Wanger Asset Management pricing procedures (the Policies), which are approved by and subject to the oversight of the Board of Trustees.
The Committee meets as necessary,
and no less frequently than quarterly, to determine fair values for securities for which market quotations are not readily available or for which Columbia Wanger Asset Management believes that available market
quotations are unreliable. The Committee also reviews the continuing appropriateness of the Policies. In circumstances where a security has been fair valued, the Committee will also review the continuing
appropriateness of the current value of the security. The Policies address, among other things: circumstances under which market quotations will be deemed readily available; selection of third party pricing vendors;
appropriate pricing methodologies; events that require fair valuation and fair value techniques; circumstances under which securities will be deemed to pose a potential for stale pricing, including when securities are
illiquid, restricted, or in default; and certain delegations of authority to determine fair values to the Fund’s investment manager. The Committee may also meet to discuss additional valuation matters, which may
include review of back-testing results, review of time-sensitive information or approval of other valuation related actions, and to review the appropriateness of the Policies.
The following table is a summary of
the inputs used to value the Fund’s investments at June 30, 2021:
| Level 1 ($) | Level 2 ($) | Level 3 ($) | Total ($) | |
| Investments in Securities | ||||
| Common Stocks | ||||
| Consumer Discretionary | 142,439,508 | — | — | 142,439,508 |
| Consumer Staples | 15,725,997 | — | — | 15,725,997 |
| Financials | 43,359,608 | — | — | 43,359,608 |
| Health Care | 240,536,472 | — | — | 240,536,472 |
| Industrials | 89,815,825 | — | — | 89,815,825 |
| Information Technology | 151,601,182 | 7,680,106 | — | 159,281,288 |
| Materials | 9,347,626 | — | — | 9,347,626 |
| Real Estate | 14,016,098 | — | — | 14,016,098 |
| Total Common Stocks | 706,842,316 | 7,680,106 | — | 714,522,422 |
| Limited Partnerships | ||||
| Consumer Discretionary | 5,424,430 | — | — | 5,424,430 |
| Total Limited Partnerships | 5,424,430 | — | — | 5,424,430 |
| Securities Lending Collateral | 18,688,995 | — | — | 18,688,995 |
| Money Market Funds | 5,168,248 | — | — | 5,168,248 |
| Total Investments in Securities | 736,123,989 | 7,680,106 | — | 743,804,095 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to
the Level 2 input category are generally valued using a market approach, in which a security’s value is determined through its correlation to prices and information from observable market transactions for
similar or identical assets. Foreign equities are generally valued at the last sale price on the foreign exchange or market on which they trade. The Fund may use a statistical fair valuation model, in accordance with
the policy adopted by the Board of Trustees, provided by an independent third party to value securities principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the
close of the foreign exchanges and the time for valuation. These models take into account available market data including intraday index, ADR, and ETF movements.
The accompanying Notes to Financial Statements are
an integral part of this statement.
| Wanger USA | Semiannual Report 2021 | 9 |
Statement of Assets and Liabilities
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
| Assets | |
| Investments in securities, at value* | |
| Unaffiliated issuers (cost $530,136,144) | $738,635,847 |
| Affiliated issuers (cost $5,168,018) | 5,168,248 |
| Receivable for: | |
| Investments sold | 7,928,753 |
| Capital shares sold | 99,941 |
| Dividends | 155,309 |
| Securities lending income | 157,878 |
| Foreign tax reclaims | 953 |
| Prepaid expenses | 5,179 |
| Trustees’ deferred compensation plan | 360,739 |
| Total assets | 752,512,847 |
| Liabilities | |
| Due upon return of securities on loan | 18,688,995 |
| Payable for: | |
| Investments purchased | 5,132,427 |
| Capital shares purchased | 615,176 |
| Investment advisory fee | 17,305 |
| Service fees | 111,035 |
| Administration fees | 1,001 |
| Trustees’ fees | 1,191 |
| Other expenses | 51,354 |
| Trustees’ deferred compensation plan | 360,739 |
| Total liabilities | 24,979,223 |
| Net assets applicable to outstanding capital stock | $727,533,624 |
| Represented by | |
| Paid in capital | 417,572,230 |
| Total distributable earnings (loss) | 309,961,394 |
| Total - representing net assets applicable to outstanding capital stock | $727,533,624 |
| Shares outstanding | 27,798,635 |
| Net asset value per share | 26.17 |
| * Includes the value of securities on loan | 18,509,099 |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 10 | Wanger USA | Semiannual Report 2021 |
Statement of Operations
Six Months Ended June 30, 2021 (Unaudited)
Six Months Ended June 30, 2021 (Unaudited)
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $1,156,679 |
| Dividends — affiliated issuers | 6,758 |
| Income from securities lending — net | 425,011 |
| Foreign taxes withheld | (2,274) |
| Total income | 1,586,174 |
| Expenses: | |
| Investment advisory fee | 3,144,710 |
| Service fees | 398,723 |
| Administration fees | 182,020 |
| Trustees’ fees | 31,787 |
| Custodian fees | 6,403 |
| Printing and postage fees | 43,221 |
| Audit fees | 13,905 |
| Legal fees | 56,225 |
| Compensation of chief compliance officer | 1,322 |
| Other | 23,007 |
| Total expenses | 3,901,323 |
| Net investment loss | (2,315,149) |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | 109,936,958 |
| Investments — affiliated issuers | 646 |
| Futures contracts | (314,332) |
| Net realized gain | 109,623,272 |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | (38,686,883) |
| Investments — affiliated issuers | (646) |
| Net change in unrealized appreciation (depreciation) | (38,687,529) |
| Net realized and unrealized gain | 70,935,743 |
| Net increase in net assets resulting from operations | $68,620,594 |
The accompanying Notes to
Financial Statements are an integral part of this statement.
| Wanger USA | Semiannual Report 2021 | 11 |
Statement of Changes in Net Assets
| Six Months Ended June 30, 2021 (Unaudited) | Year Ended December 31, 2020 | |
| Operations | ||
| Net investment loss | $(2,315,149) | $(3,618,051) |
| Net realized gain | 109,623,272 | 24,307,201 |
| Net change in unrealized appreciation (depreciation) | (38,687,529) | 115,818,214 |
| Net increase in net assets resulting from operations | 68,620,594 | 136,507,364 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | (23,368,883) | (64,805,114) |
| Total distributions to shareholders | (23,368,883) | (64,805,114) |
| Decrease in net assets from capital stock activity | (26,060,743) | (30,313,016) |
| Total increase in net assets | 19,190,968 | 41,389,234 |
| Net assets at beginning of period | 708,342,656 | 666,953,422 |
| Net assets at end of period | $727,533,624 | $708,342,656 |
| Six Months Ended | Year Ended | |||
| June 30, 2021 (Unaudited) | December 31, 2020 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Subscriptions | 267,729 | 7,078,300 | 473,106 | 9,018,672 |
| Distributions reinvested | 914,634 | 23,368,883 | 3,474,805 | 64,805,114 |
| Redemptions | (2,147,252) | (56,507,926) | (5,141,351) | (104,136,802) |
| Total net decrease | (964,889) | (26,060,743) | (1,193,440) | (30,313,016) |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 12 | Wanger USA | Semiannual Report 2021 |
Financial Highlights
The following table is intended to
help you understand the Fund’s financial performance. Certain information reflects financial results for a single share held for the periods shown. Per share net investment income (loss) amounts are calculated
based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of the expenses that apply to the variable
accounts or contract charges, if any. Total return and portfolio turnover are not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales
transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the Fund’s portfolio turnover rate may be higher.
| Six Months Ended June 30, 2021 (Unaudited) | Year Ended December 31, | |||||
| 2020 | 2019 | 2018 | 2017 | 2016 | ||
| Per share data | ||||||
| Net asset value, beginning of period | $24.63 | $22.26 | $20.70 | $26.74 | $26.53 | $31.75 |
| Income from investment operations: | ||||||
| Net investment income (loss) | (0.08) | (0.12) | (0.02) | (0.02) | (0.02) | (0.04) |
| Net realized and unrealized gain | 2.48 | 4.78 | 5.93 | 0.75 | 4.81 | 3.56 |
| Total from investment operations | 2.40 | 4.66 | 5.91 | 0.73 | 4.79 | 3.52 |
| Less distributions to shareholders from: | ||||||
| Net investment income | — | — | (0.07) | (0.03) | — | — |
| Net realized gains | (0.86) | (2.29) | (4.28) | (6.74) | (4.58) | (8.74) |
| Total distributions to shareholders | (0.86) | (2.29) | (4.35) | (6.77) | (4.58) | (8.74) |
| Net asset value, end of period | $26.17 | $24.63 | $22.26 | $20.70 | $26.74 | $26.53 |
| Total return | 9.84% | 24.23% | 31.10%(a) | (1.46)%(a) | 19.58%(a) | 13.69% |
| Ratios to average net assets | ||||||
| Total gross expenses(b) | 1.07%(c) | 1.10% | 1.09% | 1.05% | 1.03% | 1.00% |
| Total net expenses(b) | 1.07%(c) | 1.10% | 1.06% | 1.00% | 0.99% | 1.00% |
| Net investment loss | (0.64)%(c) | (0.61)% | (0.08)% | (0.09)% | (0.08)% | (0.16)% |
| Supplemental data | ||||||
| Portfolio turnover | 41% | 92% | 90% | 81% | 96% | 118% |
| Net assets, end of period (in thousands) | $727,534 | $708,343 | $666,953 | $581,991 | $684,712 | $664,236 |
| Notes to Financial Highlights | |
| (a) | Had the Investment Manager and/or its affiliates not waived a portion of expenses, total return would have been reduced. |
| (b) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (c) | Annualized. |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| Wanger USA | Semiannual Report 2021 | 13 |
Notes to Financial Statements
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Note 1. Organization
Wanger USA (the Fund), a series
of Wanger Advisors Trust (the Trust), is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The
investment objective of the Fund is to seek long-term capital appreciation. The Fund is available only for allocation to certain life insurance company separate accounts established for the purpose of funding
participating variable annuity contracts and variable life insurance policies and may also be offered directly to certain qualified pension and retirement plans.
Note 2. Summary of
significant accounting policies
Basis of preparation
The Fund is an investment company
that applies the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP), which requires
management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of
significant accounting policies followed by the Fund in the preparation of its financial statements.
Security valuation
Securities of the Fund are valued
at market value or, if a market quotation for a security is not readily available or is deemed not to be reliable because of events or circumstances that have occurred between the market quotation and the time as of
which the security is to be valued, the security is valued at its fair value determined in good faith under consistently applied procedures established by the Board of Trustees. Equity securities listed on an exchange
are valued at the closing price or last trade on their primary exchange at the close of business of the New York Stock Exchange. Securities with a closing price not readily available or not listed on any exchange are
valued at the mean between the closing bid and asked prices. Listed preferred stocks convertible into common stocks are valued using an evaluated price from a pricing service.
Foreign equity securities are
valued based on the closing price or last trade on their primary exchange at the close of business of the New York Stock Exchange. Foreign currency exchange rates are determined at the scheduled closing time of the
New York Stock Exchange. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange; therefore, the closing prices for securities in such markets or on such
exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. In situations where foreign markets are closed, where a significant event has occurred after the
foreign exchange closes but before the time at which the Fund’s share price is calculated, and in the event of significant movement in the trigger index for the statistical fair valuation process established by
the Board of Trustees, foreign securities will be fair valued pursuant to a policy adopted by the Board of Trustees. Under the policy, the Fund may use an independent statistical fair value pricing service that
employs a systematic methodology to assist in the fair valuation process for securities principally traded in a foreign market in order to adjust for possible changes in value that may occur between the close of the
foreign market and the time as of which the securities are to be valued. If a security is valued at a fair value, that value may be different from the last quoted market price for the security.
Investments in open-end investment
companies (other than exchange-traded funds (ETFs)), are valued at the latest net asset value reported by those companies as of the valuation time.
Short-term investments maturing in
60 days or less are primarily valued at amortized cost, which approximates market value.
GAAP requires disclosure regarding
the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following
the Fund’s Portfolio of Investments.
| 14 | Wanger USA | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
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 New York Stock 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.
Derivative instruments
The Fund invests in certain
derivative instruments, as detailed below, in seeking to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more
securities, currencies, commodities, indices, or other assets or instruments. Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to
certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain
investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including the potential inability of the counterparty to fulfill its
obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the potential for market movements
which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer
a marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its
obligations under the contract. The Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by
the Fund and the amount of any variation margin held by the counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk
to the Fund since the clearinghouse or central counterparty (CCP) provides some protection in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract;
therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in exchange-traded or centrally cleared derivatives with respect to initial and variation margin
that is held in a broker’s customer account. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy
and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients and such shortfall is remedied by the CCP or otherwise, U.S. bankruptcy laws will typically
allocate that shortfall on a pro-rata basis across all the clearing broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its
contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement)
or similar agreement with its derivatives counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and foreign exchange forward contracts
and contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset
with the counterparty certain derivative instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically
permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or insolvency laws of a particular jurisdiction may
impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Collateral (margin) requirements
differ by type of derivative. Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain
circumstances. Collateral terms for most over-the-counter derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as
well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and
comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally, the amount of collateral due from or to a party has to exceed a minimum transfer amount
threshold (e.g., $250,000) before a transfer has to be made. To the extent
| Wanger USA | Semiannual Report 2021 | 15 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
amounts due to the Fund from its counterparties
are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any
interest expense paid by the Fund is shown on the Statement of Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial
resources to honor their obligations and by monitoring the financial stability of those counterparties.
Certain ISDA Master Agreements
allow counterparties of over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified
time period or if the Fund fails to meet certain terms of the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination
rights if the counterparty fails to meet certain terms of the ISDA Master Agreement. In determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk,
whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes,
the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are
exchange-traded and represent commitments for the future purchase or sale of an asset at a specified price on a specified date. During the six months ended June 30, 2021, the Fund bought and sold futures contracts to
maintain appropriate equity market exposure while keeping sufficient cash to accommodate daily operations. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the
Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional risks include counterparty credit risk, the possibility of an illiquid market, and that a
change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures
contract, the Fund deposits cash or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be
maintained at an established level over the life of the contract. Cash deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are
designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are
recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund generally expects to earn interest income on its margin deposits. The Fund recognizes a realized gain or loss
when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Effects of derivative transactions in
the financial statements
The following tables are intended
to provide additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the
Statement of Assets and Liabilities; and the impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules
following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any.
At June 30, 2021, the Fund had no
outstanding derivatives.
The following table indicates the
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the six months ended June 30, 2021:
| Amount of realized gain (loss) on derivatives recognized in income | |
| Risk exposure category | Futures contracts ($) |
| Equity risk | (314,332) |
| 16 | Wanger USA | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
The following table is a summary
of the average outstanding volume by derivative instrument for the six months ended June 30, 2021:
| Derivative instrument | Average notional amounts ($)* |
| Futures contracts — long | 5,834,063 |
| * | Based on the ending quarterly outstanding amounts for the six months ended June 30, 2021. |
Securities lending
The Fund may lend securities up to
one-third of the value of its total assets to certain approved brokers, dealers, banks or other institutional borrowers of securities that the Fund’s securities lending agent has determined are credit worthy
under guidelines established by the Board of Trustees, to earn additional income. The Fund retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the
security. The Fund also receives a fee for the loan. The Fund has the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by
cash that exceeded the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Fund and any additional required collateral is delivered to the
Fund on the next business day. The Fund typically invests the cash collateral in the Dreyfus Government Cash Management Fund, a third-party institutional government money market fund in accordance with investment
guidelines contained in the securities lending agreement and approved by the Board of Trustees. The income earned from the securities lending program is paid to the Fund, net of any fees remitted to Goldman Sachs
Agency Lending, the Fund’s lending agent, and borrower rebates. The Fund’s investment manager, Columbia Wanger Asset Management, LLC (the Investment Manager or CWAM), does not retain any fees earned by the
lending program. Generally, in the event of borrower default, the Fund has the right to use the collateral to offset any losses incurred. In the event the Fund is delayed or prevented from exercising its right to
dispose of the collateral, there may be a potential loss to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of loss with respect to the investment of collateral. The net
lending income earned by the Fund as of June 30, 2021, is included in the Statement of Operations.
The following table indicates the
total amount of securities loaned by type, reconciled to gross liability payable upon return of the securities loaned by the Fund as of June 30, 2021:
| Overnight and continuous | Up to 30 days | 30-90 days | Greater than 90 days | Total | |
| Wanger USA | |||||
| Securities lending transactions | |||||
| Equity securities | $18,509,099 | $— | $— | $— | $18,509,099 |
| Gross amount of recognized liabilities for securities lending (collateral received) | 18,688,995 | ||||
| Amounts due to counterparty in the event of default | $179,896 |
Offsetting of assets and
liabilities
The following table presents the
Fund’s gross and net amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of June 30, 2021:
| Goldman Sachs ($) | |
| Liabilities | |
| Collateral on Securities Loaned | 18,688,995 |
| Total Liabilities | 18,688,995 |
| Total Financial and Derivative Net Assets | (18,688,995) |
| Financial Instruments | 18,509,099 |
| Net Amount (a) | (179,896) |
| (a) | Represents the net amount due from/(to) counterparties in the event of default. |
| Wanger USA | Semiannual Report 2021 | 17 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
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 debt obligations when required for federal income tax purposes. Realized gains and losses from
security transactions are recorded on an identified cost basis.
Income recognition
Corporate actions and dividend
income are generally recorded net of any non-reclaimable tax withholdings, on the ex-dividend date or upon receipt of an ex-dividend notification in the case of certain foreign securities.
The Fund may receive distributions
from holdings in equity securities, exchange traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information as to the
tax character of their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. Return of capital is recorded as a
reduction of the cost basis of securities held. If the Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the extent actual information has not
yet been reported, estimates for return of capital may be made by the Fund’s management. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the
REITs, which could result in a proportionate change in return of capital to shareholders.
Awards, if any, from class action
litigation related to securities owned may be recorded as a reduction of cost of those securities. If the applicable securities are no longer owned, the proceeds are recorded as realized gains.
Expenses
General expenses of the Trust are
allocated to the Fund and the other series of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are
charged to the Fund.
Federal income tax status
The Fund intends to comply with the
provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, intends to distribute substantially all its taxable income, as well as any net realized gain on
sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required. The Fund meets
the exception under Internal Revenue Code Section 4982(f) and the Fund expects not to be subject to federal excise tax.
Foreign taxes
Gains in certain countries may be
subject to foreign taxes at the fund level. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction. The amount, if any, is disclosed as a liability on
the Statement of Assets and Liabilities.
Distributions to shareholders
Distributions to shareholders are
recorded on the ex-dividend date.
Guarantees and indemnification
In the normal course of business,
the Trust on behalf of the Fund enters into contracts that contain a variety of representations and warranties and that provide general indemnities. The Fund’s maximum exposure under these arrangements is
unknown, as this would involve future claims against the Fund. Also under the Trust’s organizational documents, the trustees and officers of the Trust are indemnified against certain liabilities that may arise
out of their duties to the Trust. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.
| 18 | Wanger USA | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Note 3. Fees and other
transactions with affiliates
Management services fees
CWAM is a wholly owned subsidiary
of Columbia Management Investment Advisers, LLC (Columbia Management), which in turn is a wholly owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). CWAM furnishes continuing investment supervision
to the Fund and is responsible for the overall management of the Fund’s business affairs.
CWAM receives a monthly advisory
fee based on the Fund’s daily net assets at the following annual rates:
| Average daily net assets | Annual fee rate |
| Up to $100 million | 0.94% |
| $100 million to $250 million | 0.89% |
| $250 million to $2 billion | 0.84% |
| $2 billion and over | 0.80% |
For the six months ended June 30,
2021, the annualized effective investment advisory fee rate was 0.86% of the Fund’s average daily net assets.
Administration fees
CWAM provides administrative
services and receives an administration fee from the Fund at the following annual rates:
| Aggregate average daily net assets of the Trust | Annual fee rate |
| Up to $4 billion | 0.05% |
| $4 billion to $6 billion | 0.04% |
| $6 billion to $8 billion | 0.03% |
| $8 billion and over | 0.02% |
For the six months ended June 30,
2021, the annualized effective administration fee rate was 0.05% of the Fund’s average daily net assets. CWAM has delegated to Columbia Management responsibility to provide certain sub-administrative services to
the Fund.
Compensation of board members
Certain officers and trustees of
the Trust are also officers of CWAM and/or Columbia Management. The Trust makes no direct payments to its officers and trustees who are affiliated with CWAM or Columbia Management. The Trust offers a Deferred
Compensation Plan (the Deferred Plan) for its independent trustees. Under the Deferred Plan, a trustee may elect to defer all or a portion of his or her compensation. Amounts deferred are retained by the Trust and may
represent an unfunded obligation of the Trust. The value of amounts deferred is determined by reference to the change in value of Institutional Class shares of one or more series of Columbia Acorn Trust or a money
market fund as specified by the trustee. Benefits under the Deferred Plan are payable in accordance with the Deferred Plan.
Compensation of Chief Compliance
Officer
The Board of Trustees has appointed
a Chief Compliance Officer for the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated
to the Fund, along with other allocations to affiliated registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Service fees
Pursuant to the Transfer, Dividend
Disbursing and Shareholder Servicing Agreement between the Fund and Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of
Ameriprise Financial, the Fund bears a service fee paid to the Transfer Agent to compensate it for amounts paid
| Wanger USA | Semiannual Report 2021 | 19 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
to Participating Insurance Companies and other
financial intermediaries (together, Participating Organizations) for various sub-transfer agency and other shareholder services each Participating Organization provides to its clients, customers and participants that
are invested directly or indirectly in the Fund, up to a cap approved by the Board of Trustees from time to time.
The Transfer Agent may retain as
compensation for its services revenues from fees for wire, telephone and redemption orders, account transcripts due to the Transfer Agent from Fund shareholders and interest (net of bank charges) earned with respect
to balances in accounts the Transfer Agent maintains in connection with its services to the Fund.
Distributor
Columbia Management Investment
Distributors, Inc., a wholly owned subsidiary of Ameriprise Financial, serves as the Fund’s distributor and principal underwriter.
Other expenses waived/reimbursed by
the Investment Manager and its affiliates
Effective May 1, 2021 through April
30, 2022, CWAM has contractually agreed to bear a portion of the Fund’s expenses so that its ordinary operating expenses (excluding transaction costs and certain other investment-related expenses, interest and
fees on borrowings and expenses associated with the Fund’s investment in other investment companies, if any), do not exceed the annual rate of 1.09% of the Fund’s average daily net assets. This agreement
may not be modified or terminated, without approval from the Fund’s Board of Trustees and CWAM. There is no guarantee that this agreement will continue after April 30, 2022.
Note 4. Federal tax
information
The timing and character of
income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At June 30, 2021, the approximate
cost of all investments for federal income tax purposes and the aggregate gross approximate unrealized appreciation and depreciation based on that cost was:
| Federal tax cost ($) | Gross unrealized appreciation ($) | Gross unrealized (depreciation) ($) | Net unrealized appreciation ($) |
| 535,304,000 | 226,914,000 | (18,414,000) | 208,500,000 |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
Management is required to determine
whether a tax position of the Fund is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the
technical merits of the position. The tax benefit to be recognized by the Fund is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.
Management is not aware of any tax positions in the Fund for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However,
management’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant
court decisions). The Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
Note 5. Portfolio
information
The aggregate cost of purchases
and proceeds from sales other than short-term obligations for the six months ended June 30, 2021, were $294,114,664 and $350,575,569, respectively. The amount of purchase and sales activity impacts the portfolio
turnover rate reported in the Financial Highlights.
| 20 | Wanger USA | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Note 6. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for
other temporary or emergency purposes. Pursuant to a December 1, 2020 amendment, the credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an
affiliated investment manager, severally and not jointly, permits collective borrowings up to $950 million. Interest is currently charged to each participating fund based on its borrowings at a rate equal to the
higher of (i) the federal funds effective rate, (ii) the one-month London Interbank Offered Rate (LIBOR) rate and (iii) the overnight bank funding rate, plus in each case, 1.25%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. Most LIBOR settings will no longer be published after December 31, 2021, and a majority of U.S. dollar LIBOR settings will cease publication after
June 30, 2023. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other expenses in the
Statement of Operations. This agreement expires annually in December unless extended or renewed. Prior to the December 1, 2020 amendment, the Fund had access to a revolving credit facility with a syndicate of banks
led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. which permitted collective borrowings up to $1 billion. Interest was charged to each participating fund based on its borrowings at a rate equal
to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%.
The Fund had no borrowings during
the six months ended June 30, 2021.
Note 7. Significant
risks
Health care sector risk
The Fund is more susceptible to the
particular risks that may affect companies in the health care sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the health care sector are subject to certain risks,
including restrictions on government reimbursement for medical expenses, government approval of medical products and services, competitive pricing pressures, and the rising cost of medical products and services
(especially for companies dependent upon a relatively limited number of products or services). Performance of such companies may be affected by factors including government regulation, obtaining and protecting patents
(or the failure to do so), product liability and other similar litigation as well as product obsolescence.
Information technology sector risk
The Fund is more susceptible to the
particular risks that may affect companies in the information technology sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the information technology sectors are
subject to certain risks, including the risk that new services, equipment or technologies will not be accepted by consumers and businesses or will become rapidly obsolete. Performance of such companies may be affected
by factors including obtaining and protecting patents (or the failure to do so) and significant competitive pressures, including aggressive pricing of their products or services, new market entrants, competition for
market share and short product cycles due to an accelerated rate of technological developments. Such competitive pressures may lead to limited earnings and/or falling profit margins. As a result, the value of their
securities may fall or fail to rise. In addition, many information technology sector companies have limited operating histories and prices of these companies’ securities historically have been more volatile than
other securities, especially over the short term. Some companies in the information technology sector are facing increased government and regulatory scrutiny and may be subject to adverse government or regulatory
action, which could negatively impact the value of their securities.
Market and environment risk
The Fund may incur losses due to
declines in the value of one or more securities in which it invests. These declines may be due to factors affecting a particular issuer, or the result of, among other things, political, regulatory, market, economic or
social developments affecting the relevant market(s) more generally. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers,
which could adversely affect the Fund, including causing difficulty in assigning prices to hard-to-value assets in thinly traded and closed markets, significant redemptions and operational challenges. Global economies
and financial markets are increasingly interconnected, and
| Wanger USA | Semiannual Report 2021 | 21 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
conditions and events in one country, region or
financial market may adversely impact issuers in a different country, region or financial market. These risks may be magnified if certain events or developments adversely interrupt the global supply chain; in these
and other circumstances, such risks might affect companies worldwide. As a result, local, regional or global events such as terrorism, war, natural disasters, disease/virus outbreaks and epidemics or other public
health issues, recessions, depressions or other events – or the potential for such events – could have a significant negative impact on global economic and market conditions.
The Fund’s performance may
also be significantly negatively impacted by the economic impact of the coronavirus disease 2019 (COVID-19) pandemic. The COVID-19 pandemic has resulted in, and may continue to result in, significant global economic
and societal disruption and market volatility due to disruptions in market access, resource availability, facilities operations, imposition of tariffs, export controls and supply chain disruption, among others. Such
disruptions may be caused, or exacerbated by, quarantines and travel restrictions, workforce displacement and loss in human and other resources. The uncertainty surrounding the magnitude, duration, reach, costs and
effects of the global pandemic, as well as actions that have been or could be taken by governmental authorities or other third parties, present unknowns that are yet to unfold. The impacts, as well as the uncertainty
over impacts to come, of COVID-19 – and any other infectious illness outbreaks, epidemics and pandemics that may arise in the future – could negatively affect global economies and markets in ways that
cannot necessarily be foreseen. In addition, the impact of infectious illness outbreaks and epidemics in emerging market countries may be greater due to generally less established healthcare systems, governments and
financial markets. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The disruptions caused by COVID-19 could
prevent the Fund from executing advantageous investment decisions in a timely manner and negatively impact the Fund’s ability to achieve its investment objectives. Any such event(s) could have a significant
adverse impact on the value and risk profile of the Fund.
Shareholder concentration risk
At June 30, 2021, two unaffiliated
shareholders of record owned 34.4% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Affiliated shareholders of
record owned 59.0% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case
of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid
positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Small- and mid-cap company risk
Investments in small- and
mid-capitalization companies (small- and mid-cap companies) often involve greater risks than investments in larger, more established companies (larger companies) because small- and mid-cap companies tend to have less
predictable earnings and may lack the management experience, financial resources, product diversification and competitive strengths of larger companies. Securities of small- and mid-cap companies may be less liquid
and more volatile than the securities of larger companies.
Note 8. Subsequent
events
Management has evaluated the
events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 9. Information
regarding pending and settled legal proceedings
Ameriprise Financial and certain
of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in
connection with the conduct of their business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject
of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with
the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary, 8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to
Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
| 22 | Wanger USA | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
There can be no assurance that
these matters, or the adverse publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe
proceedings are not likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines,
penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial or one or more of its affiliates that provides services to
the Fund.
| Wanger USA | Semiannual Report 2021 | 23 |
Liquidity Risk
Management Program
Pursuant to Rule 22e-4 under the
1940 Act, the Fund has adopted a liquidity risk management program (Program). The Program’s principal objectives include assessing, managing and periodically reviewing the Fund’s liquidity risk. Liquidity
risk is defined as the risk that the Fund could not meet redemption requests without significant dilution of remaining investors’ interests in the Fund.
The Board of Trustees has appointed
the Investment Manager as the program administrator for the Program. The Investment Manager has delegated oversight of the Program to its Liquidity Risk Management Committee (the Committee). At a Board meeting during
the fiscal period, the Committee provided the Board with a report addressing the operations of the Program and assessing its adequacy and effectiveness of implementation for the period January 1, 2020, through
December 31, 2020. Among other things, the report indicated that:
| • | the Fund had sufficient liquidity to both meet redemptions and operate effectively on behalf of shareholders; |
| • | there were no material changes to the Program during the period; |
| • | the Fund’s strategy continued to be effective for an open-end mutual fund; |
| • | the implementation of the Program was effective to manage the Fund’s liquidity risk; |
| • | the Fund did not require a highly liquid investment minimum; and |
| • | the Program operated adequately during the period. |
There can be no assurance that the
Program will achieve its objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an
investment in the Fund may be subject.
Board Consideration
and Approval of Advisory
Agreement
Wanger Advisors Trust (the
“Trust”) has an investment advisory agreement (the “Advisory Agreement”) with Columbia Wanger Asset Management, LLC (“CWAM”) under which CWAM manages the Fund. All of the voting
trustees of the Trust are persons who have no direct or indirect interest in the Advisory Agreement and are not “interested persons” (as defined in the Investment Company Act of 1940) of the Trust (the
“Independent Trustees”). The Independent Trustees oversee the management of the Fund and, as required by law, determine at least annually whether to continue the Advisory Agreement for the Fund.
The Contract Committee (the
“Contract Committee”) of the Board of Trustees of the Trust (the “Board”), which is comprised solely of Independent Trustees, makes recommendations to the Board regarding any proposed
continuation of the Advisory Agreement. After the Contract Committee has made its recommendations, the full Board determines whether to approve continuation of the Advisory Agreement.
The Board determines whether to
renew the Advisory Agreement each year by July 31. A discussion of the Board’s considerations in renewing the Advisory Agreement will be provided in the Fund’s annual report to shareholders for the period
ended December 31, 2021.
| 24 | Wanger USA | Semiannual Report 2021 |
Please read and consider the
investment objectives, risks, charges and expenses for any fund carefully before investing. For variable fund and variable contract prospectuses, which contain this and other important information, including the fees
and expenses imposed under your contract, investors should contact their financial advisor or insurance representative. Read the prospectus for the Fund and your variable contract carefully before investing. Columbia Wanger Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA, and are managed by Columbia Wanger Asset Management, LLC.
Columbia Threadneedle Investments
(Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. All rights reserved. Columbia Management Investment Distributors, Inc., 290 Congress Street, Boston, MA 02210.
© 2021 Columbia Management Investment
Advisers, LLC.
C-1470 AR (8/21)
Wanger Select
Managed by Columbia
Wanger Asset Management, LLC
Please remember that you may not
buy (nor will you own) shares of the Fund directly. The Fund is available through variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies
as well as qualified pension and retirement plans. Please contact your financial advisor or insurance representative for more information.
Not Federally Insured • No
Financial Institution Guarantee • May Lose Value
Table of Contents
| 3 | |
| 5 | |
| 6 | |
| 9 | |
| 10 | |
| 11 | |
| 12 | |
| 13 | |
| 21 | |
| 21 |
Proxy voting policies and
procedures
The policy of the Board of Trustees
is to vote the proxies of the companies in which Wanger Select (the Fund) holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI
without charge by calling 800.345.6611; contacting your financial intermediary or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies
relating to portfolio securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting
columbiathreadneedleus.com/investor/, or searching the website of the SEC at sec.gov.
Quarterly schedule of
investments
The Fund files a complete schedule
of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The Fund’s Form N-PORT is available on the SEC’s website at sec.gov. The Fund’s complete
schedule of portfolio holdings, as filed on Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
Fund investment manager
Columbia Wanger Asset Management, LLC (Investment
Manager)
71 S Wacker Drive, Suite 2500
Chicago, IL 60606
888.4.WANGER
(888.492.6437)
Fund distributor
Columbia Management Investment Distributors,
Inc.
290 Congress Street
Boston, MA 02210
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Wanger Select | Semiannual Report
2021
Fund at a Glance
(Unaudited)
(Unaudited)
Investment objective
The Fund
seeks long-term capital appreciation.
Portfolio management
Daniel Cole, CFA
Co-Portfolio Manager since April 2021
Service with Fund since 2021
Erika K. Maschmeyer, CFA
Co-Portfolio Manager since April 2021
Service with Fund since 2016
John L. Emerson, CFA
Co-Portfolio Manager since 2019
Service with Fund since 2003
| Wanger Select | Semiannual Report 2021 | 3 |
Understanding Your Fund’s
Expenses
(Unaudited)
(Unaudited)
As a shareholder, you incur three
types of costs. There are shareholder transaction costs, which may include redemption fees. There are also ongoing fund costs, which generally include investment advisory fees and other expenses for Wanger Select (the
Fund). Lastly, there may be additional fees or charges imposed by the insurance company that sponsors your variable annuity and/or variable life insurance product. The following information is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s
expenses
To illustrate these ongoing
costs, we have provided an example and calculated the expenses paid by investors in the Fund during the period. The actual and hypothetical information in the table below is based on an initial investment of $1,000 at
the beginning of the period indicated and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual”
column is calculated using the Fund’s actual operating expenses and total return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over
the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the results by the expenses paid during the period under the Actual column. The
amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the Fund’s actual return) and then applies the Fund’s actual expense ratio for the
period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the period.
See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are
required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the
hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are
meant to highlight the ongoing cost of investing in a fund only and do not reflect any transaction costs, such as redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.
| January 1, 2021 — June 30, 2021 | |||||||
| Account value at the beginning of the period ($) | Account value at the end of the period ($) | Expenses paid during the period ($) | Fund’s annualized expense ratio (%) | ||||
| Actual | Hypothetical | Actual | Hypothetical | Actual | Hypothetical | Actual | |
| Wanger Select | 1,000.00 | 1,000.00 | 1,096.20 | 1,020.38 | 4.63 | 4.46 | 0.89 |
Expenses paid during the period
are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the Fund’s most recent fiscal half-year and divided by
365.
Had the investment manager and/or
certain of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced. See Note 3 to the Financial Statements.
It is important to note that the
expense amounts shown in the table are meant to highlight only ongoing costs of investing in the Fund. Expenses paid during the period do not include any insurance charges imposed by your insurance company’s
separate account. The hypothetical example provided is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds whose shareholders may incur transaction
costs.
| Wanger Select | Semiannual Report 2021 | 5 |
Portfolio of Investments
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
(Percentages represent value of
investments compared to net assets)
Investments in securities
The accompanying Notes to Financial
Statements are an integral part of this statement.
| 6 | Wanger Select | Semiannual Report 2021 |
Portfolio of Investments (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
| Securities Lending Collateral 0.9% | ||
| Issuer | Shares | Value ($) |
| Dreyfus Government Cash Management Fund, Institutional Shares, 0.030%(c),(d) | 1,038,825 | 1,038,825 |
| Total Securities Lending Collateral (Cost $1,038,825) | 1,038,825 | |
| Money Market Funds 4.2% | ||
| Shares | Value ($) | |
| Columbia Short-Term Cash Fund, 0.051%(c),(e) | 5,301,142 | 5,300,612 |
| Total Money Market Funds (Cost $5,300,612) | 5,300,612 | |
| Total Investments in Securities (Cost: $103,840,386) | 125,579,878 | |
| Obligation to Return Collateral for Securities Loaned | (1,038,825) | |
| Other Assets & Liabilities, Net | 1,078,600 | |
| Net Assets | 125,619,653 | |
Notes to Portfolio of
Investments
| (a) | Non-income producing investment. |
| (b) | All or a portion of this security was on loan at June 30, 2021. The total market value of securities on loan at June 30, 2021 was $1,017,198. |
| (c) | The rate shown is the seven-day current annualized yield at June 30, 2021. |
| (d) | Investment made with cash collateral received from securities lending activity. |
| (e) | As defined in the Investment Company Act of 1940, as amended, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. The value of the holdings and transactions in these affiliated companies during the period ended June 30, 2021 are as follows: |
| Affiliated issuers | Beginning of period($) | Purchases($) | Sales($) | Net change in unrealized appreciation (depreciation)($) | End of period($) | Realized gain (loss)($) | Dividends($) | End of period shares |
| Columbia Short-Term Cash Fund, 0.051% | ||||||||
| 736,282 | 36,931,584 | (32,367,254) | — | 5,300,612 | — | 848 | 5,301,142 | |
Fair value measurements
Various inputs are used in
determining the value of the Fund’s investments, following the input prioritization hierarchy established by accounting principles generally accepted in the United States of America (GAAP). These inputs are
summarized in the three broad levels listed below:
| ■ | Level 1 – quoted prices in active markets for identical securities |
| ■ | Level 2 – prices determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others) |
| ■ | Level 3 – prices determined using significant unobservable inputs where quoted prices or observable inputs are unavailable or less reliable (including management’s own assumptions about the factors market participants would use in pricing an investment) |
The inputs or methodology used for
valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Examples of the types of securities
in which the Fund would typically invest and how they are classified within this hierarchy are as follows. Typical Level 1 securities include exchange traded domestic equities, mutual funds whose net asset values are
published each day and exchange traded foreign equities that are not typically statistically fair valued. Typical Level 2 securities include exchange traded foreign equities that are traded in the European region or
Asia Pacific region time zones which are typically statistically fair valued, forward foreign currency exchange contracts and short-term investments valued at amortized cost. Additionally, securities fair valued by
Columbia Wanger Asset Management’s Valuation Committee (the Committee) that rely on significant observable inputs are also included in Level 2. Typical Level 3 securities include any security fair valued by the
Committee that relies on significant unobservable inputs.
The Committee is responsible for
applying the Wanger Advisors Trust Portfolio Pricing Policy and the Columbia Wanger Asset Management pricing procedures (the Policies), which are approved by and subject to the oversight of the Board of Trustees.
The accompanying Notes to Financial Statements are
an integral part of this statement.
| Wanger Select | Semiannual Report 2021 | 7 |
Portfolio of Investments (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Fair value measurements (continued)
The Committee meets as necessary, and no less frequently than quarterly, to determine fair values for securities for which market quotations are not readily available or for which Columbia Wanger Asset Management believes that available market quotations are unreliable. The Committee also reviews the continuing appropriateness of the Policies. In circumstances where a security has been fair valued, the Committee will also review the continuing appropriateness of the current value of the security. The Policies address, among other things: circumstances under which market quotations will be deemed readily available; selection of third party pricing vendors; appropriate pricing methodologies; events that require fair valuation and fair value techniques; circumstances under which securities will be deemed to pose a potential for stale pricing, including when securities are illiquid, restricted, or in default; and certain delegations of authority to determine fair values to the Fund’s investment manager. The Committee may also meet to discuss additional valuation matters, which may include review of back-testing results, review of time-sensitive information or approval of other valuation related actions, and to review the appropriateness of the Policies.
The Committee meets as necessary, and no less frequently than quarterly, to determine fair values for securities for which market quotations are not readily available or for which Columbia Wanger Asset Management believes that available market quotations are unreliable. The Committee also reviews the continuing appropriateness of the Policies. In circumstances where a security has been fair valued, the Committee will also review the continuing appropriateness of the current value of the security. The Policies address, among other things: circumstances under which market quotations will be deemed readily available; selection of third party pricing vendors; appropriate pricing methodologies; events that require fair valuation and fair value techniques; circumstances under which securities will be deemed to pose a potential for stale pricing, including when securities are illiquid, restricted, or in default; and certain delegations of authority to determine fair values to the Fund’s investment manager. The Committee may also meet to discuss additional valuation matters, which may include review of back-testing results, review of time-sensitive information or approval of other valuation related actions, and to review the appropriateness of the Policies.
The following table is a summary of
the inputs used to value the Fund’s investments at June 30, 2021:
| Level 1 ($) | Level 2 ($) | Level 3 ($) | Total ($) | |
| Investments in Securities | ||||
| Common Stocks | ||||
| Communication Services | 7,763,944 | — | — | 7,763,944 |
| Consumer Discretionary | 23,102,324 | — | — | 23,102,324 |
| Consumer Staples | 3,649,386 | — | — | 3,649,386 |
| Health Care | 33,344,666 | — | — | 33,344,666 |
| Industrials | 12,773,466 | — | — | 12,773,466 |
| Information Technology | 38,606,655 | — | — | 38,606,655 |
| Total Common Stocks | 119,240,441 | — | — | 119,240,441 |
| Securities Lending Collateral | 1,038,825 | — | — | 1,038,825 |
| Money Market Funds | 5,300,612 | — | — | 5,300,612 |
| Total Investments in Securities | 125,579,878 | — | — | 125,579,878 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 8 | Wanger Select | Semiannual Report 2021 |
Statement of Assets and Liabilities
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
| Assets | |
| Investments in securities, at value* | |
| Unaffiliated issuers (cost $98,539,774) | $120,279,266 |
| Affiliated issuers (cost $5,300,612) | 5,300,612 |
| Receivable for: | |
| Investments sold | 1,286,978 |
| Capital shares sold | 384 |
| Dividends | 9,533 |
| Securities lending income | 96 |
| Expense reimbursement due from Investment Manager | 116 |
| Prepaid expenses | 969 |
| Total assets | 126,877,954 |
| Liabilities | |
| Due upon return of securities on loan | 1,038,825 |
| Payable for: | |
| Capital shares purchased | 52,610 |
| Investment advisory fee | 2,083 |
| Service fees | 46,597 |
| Administration fees | 173 |
| Trustees’ fees | 83,541 |
| Compensation of chief compliance officer | 2 |
| Other expenses | 34,470 |
| Total liabilities | 1,258,301 |
| Net assets applicable to outstanding capital stock | $125,619,653 |
| Represented by | |
| Paid in capital | 81,752,528 |
| Total distributable earnings (loss) | 43,867,125 |
| Total - representing net assets applicable to outstanding capital stock | $125,619,653 |
| Shares outstanding | 6,283,127 |
| Net asset value per share | 19.99 |
| * Includes the value of securities on loan | 1,017,198 |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| Wanger Select | Semiannual Report 2021 | 9 |
Statement of Operations
Six Months Ended June 30, 2021 (Unaudited)
Six Months Ended June 30, 2021 (Unaudited)
| Net investment income | |
| Income: | |
| Dividends — unaffiliated issuers | $120,865 |
| Dividends — affiliated issuers | 848 |
| Income from securities lending — net | 2,045 |
| Total income | 123,758 |
| Expenses: | |
| Investment advisory fee | 488,180 |
| Service fees | 109,957 |
| Administration fees | 30,511 |
| Trustees’ fees | 17,823 |
| Custodian fees | 2,017 |
| Printing and postage fees | 21,580 |
| Audit fees | 13,905 |
| Legal fees | 9,323 |
| Compensation of chief compliance officer | 217 |
| Other | 7,728 |
| Total expenses | 701,241 |
| Fees waived or expenses reimbursed by Investment Manager and its affiliates | (36,096) |
| Advisory fee waiver | (122,045) |
| Total net expenses | 543,100 |
| Net investment loss | (419,342) |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | 22,644,338 |
| Net realized gain | 22,644,338 |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | (10,801,646) |
| Net change in unrealized appreciation (depreciation) | (10,801,646) |
| Net realized and unrealized gain | 11,842,692 |
| Net increase in net assets resulting from operations | $11,423,350 |
The accompanying Notes to
Financial Statements are an integral part of this statement.
| 10 | Wanger Select | Semiannual Report 2021 |
Statement of Changes in Net Assets
| Six Months Ended June 30, 2021 (Unaudited) | Year Ended December 31, 2020 | |
| Operations | ||
| Net investment loss | $(419,342) | $(579,291) |
| Net realized gain | 22,644,338 | 14,062,066 |
| Net change in unrealized appreciation (depreciation) | (10,801,646) | 11,670,224 |
| Net increase in net assets resulting from operations | 11,423,350 | 25,152,999 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | (13,070,321) | (13,024,104) |
| Total distributions to shareholders | (13,070,321) | (13,024,104) |
| Increase (decrease) in net assets from capital stock activity | 5,615,263 | (7,156,817) |
| Total increase in net assets | 3,968,292 | 4,972,078 |
| Net assets at beginning of period | 121,651,361 | 116,679,283 |
| Net assets at end of period | $125,619,653 | $121,651,361 |
| Six Months Ended | Year Ended | |||
| June 30, 2021 (Unaudited) | December 31, 2020 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Subscriptions | 56,624 | 1,186,630 | 200,527 | 3,552,084 |
| Distributions reinvested | 679,684 | 13,070,321 | 788,384 | 13,024,104 |
| Redemptions | (412,056) | (8,641,688) | (1,408,832) | (23,733,005) |
| Total net increase (decrease) | 324,252 | 5,615,263 | (419,921) | (7,156,817) |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| Wanger Select | Semiannual Report 2021 | 11 |
Financial Highlights
The following table is intended to
help you understand the Fund’s financial performance. Certain information reflects financial results for a single share held for the periods shown. Per share net investment income (loss) amounts are calculated
based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of the expenses that apply to the variable
accounts or contract charges, if any. Total return and portfolio turnover are not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales
transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the Fund’s portfolio turnover rate may be higher.
| Six Months Ended June 30, 2021 (Unaudited) | Year Ended December 31, | |||||
| 2020 | 2019 | 2018 | 2017 | 2016 | ||
| Per share data | ||||||
| Net asset value, beginning of period | $20.42 | $18.29 | $16.32 | $20.84 | $19.10 | $24.18 |
| Income from investment operations: | ||||||
| Net investment income (loss) | (0.07) | (0.09) | (0.02) | 0.07 | 0.04 | 0.03 |
| Net realized and unrealized gain (loss) | 1.94 | 4.44 | 4.48 | (2.15) | 4.62 | 2.48 |
| Total from investment operations | 1.87 | 4.35 | 4.46 | (2.08) | 4.66 | 2.51 |
| Less distributions to shareholders from: | ||||||
| Net investment income | — | (0.14) | (0.02) | (0.04) | (0.03) | (0.03) |
| Net realized gains | (2.30) | (2.08) | (2.47) | (2.40) | (2.89) | (7.56) |
| Total distributions to shareholders | (2.30) | (2.22) | (2.49) | (2.44) | (2.92) | (7.59) |
| Net asset value, end of period | $19.99 | $20.42 | $18.29 | $16.32 | $20.84 | $19.10 |
| Total return(a) | 9.62% | 26.65% | 29.30% | (12.41)% | 26.67% | 13.31% |
| Ratios to average net assets | ||||||
| Total gross expenses(b) | 1.15%(c) | 1.16%(d) | 1.15% | 1.10% | 1.05% | 0.93%(e) |
| Total net expenses(b) | 0.89%(c) | 0.89%(d) | 0.88% | 0.78% | 0.77% | 0.73%(e) |
| Net investment income (loss) | (0.69)%(c) | (0.54)% | (0.14)% | 0.34% | 0.19% | 0.17% |
| Supplemental data | ||||||
| Portfolio turnover | 51% | 109% | 152% | 66% | 52% | 93% |
| Net assets, end of period (in thousands) | $125,620 | $121,651 | $116,679 | $106,469 | $141,213 | $125,500 |
| Notes to Financial Highlights | |
| (a) | Had the Investment Manager and/or its affiliates not waived a portion of expenses, total return would have been reduced. |
| (b) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests, if any. Such indirect expenses are not included in the Fund’s reported expense ratios. |
| (c) | Annualized. |
| (d) | Ratios include line of credit interest expense which is less than 0.01%. |
| (e) | Expenses have been reduced due to a reimbursement of expenses overbilled by a third party. If the reimbursement had been excluded, the expense ratios would have been higher by 0.03%. All fee waivers and expense reimbursements by the Investment Manager and its affiliates were applied before giving effect to this third party reimbursement. |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 12 | Wanger Select | Semiannual Report 2021 |
Notes to Financial Statements
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
Note 1. Organization
Wanger Select (the Fund), a
series of Wanger Advisors Trust (the Trust), is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
The investment objective of the Fund is to seek long-term capital appreciation. The Fund is available only for allocation to certain life insurance company separate accounts established for the purpose of funding
participating variable annuity contracts and variable life insurance policies and may also be offered directly to certain qualified pension and retirement plans.
Note 2. Summary of
significant accounting policies
Basis of preparation
The Fund is an investment company
that applies the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP), which requires
management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of
significant accounting policies followed by the Fund in the preparation of its financial statements.
Security valuation
Securities of the Fund are valued
at market value or, if a market quotation for a security is not readily available or is deemed not to be reliable because of events or circumstances that have occurred between the market quotation and the time as of
which the security is to be valued, the security is valued at its fair value determined in good faith under consistently applied procedures established by the Board of Trustees. Equity securities listed on an exchange
are valued at the closing price or last trade on their primary exchange at the close of business of the New York Stock Exchange. Securities with a closing price not readily available or not listed on any exchange are
valued at the mean between the closing bid and asked prices. Listed preferred stocks convertible into common stocks are valued using an evaluated price from a pricing service.
Foreign equity securities are
valued based on the closing price or last trade on their primary exchange at the close of business of the New York Stock Exchange. Foreign currency exchange rates are determined at the scheduled closing time of the
New York Stock Exchange. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange; therefore, the closing prices for securities in such markets or on such
exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. In situations where foreign markets are closed, where a significant event has occurred after the
foreign exchange closes but before the time at which the Fund’s share price is calculated, and in the event of significant movement in the trigger index for the statistical fair valuation process established by
the Board of Trustees, foreign securities will be fair valued pursuant to a policy adopted by the Board of Trustees. Under the policy, the Fund may use an independent statistical fair value pricing service that
employs a systematic methodology to assist in the fair valuation process for securities principally traded in a foreign market in order to adjust for possible changes in value that may occur between the close of the
foreign market and the time as of which the securities are to be valued. If a security is valued at a fair value, that value may be different from the last quoted market price for the security.
Investments in open-end investment
companies (other than exchange-traded funds (ETFs)), are valued at the latest net asset value reported by those companies as of the valuation time.
GAAP requires disclosure regarding
the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following
the Fund’s Portfolio of Investments.
| Wanger Select | Semiannual Report 2021 | 13 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
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 New York Stock 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.
Securities lending
The Fund may lend securities up to
one-third of the value of its total assets to certain approved brokers, dealers, banks or other institutional borrowers of securities that the Fund’s securities lending agent has determined are credit worthy
under guidelines established by the Board of Trustees, to earn additional income. The Fund retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the
security. The Fund also receives a fee for the loan. The Fund has the ability to recall the loans at any time and could do so in order to vote proxies or to sell the loaned securities. Each loan is collateralized by
cash that exceeded the value of the securities on loan. The market value of the loaned securities is determined daily at the close of business of the Fund and any additional required collateral is delivered to the
Fund on the next business day. The Fund typically invests the cash collateral in the Dreyfus Government Cash Management Fund, a third-party institutional government money market fund in accordance with investment
guidelines contained in the securities lending agreement and approved by the Board of Trustees. The income earned from the securities lending program is paid to the Fund, net of any fees remitted to Goldman Sachs
Agency Lending, the Fund’s lending agent, and borrower rebates. The Fund’s investment manager, Columbia Wanger Asset Management, LLC (the Investment Manager or CWAM), does not retain any fees earned by the
lending program. Generally, in the event of borrower default, the Fund has the right to use the collateral to offset any losses incurred. In the event the Fund is delayed or prevented from exercising its right to
dispose of the collateral, there may be a potential loss to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of loss with respect to the investment of collateral. The net
lending income earned by the Fund as of June 30, 2021, is included in the Statement of Operations.
The following table indicates the
total amount of securities loaned by type, reconciled to gross liability payable upon return of the securities loaned by the Fund as of June 30, 2021:
| Overnight and continuous | Up to 30 days | 30-90 days | Greater than 90 days | Total | |
| Wanger Select | |||||
| Securities lending transactions | |||||
| Equity securities | $1,017,198 | $— | $— | $— | $1,017,198 |
| Gross amount of recognized liabilities for securities lending (collateral received) | 1,038,825 | ||||
| Amounts due to counterparty in the event of default | $21,627 |
Offsetting of assets and
liabilities
The following table presents the
Fund’s gross and net amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of June 30, 2021:
| Goldman Sachs ($) | |
| Liabilities | |
| Collateral on Securities Loaned | 1,038,825 |
| Total Liabilities | 1,038,825 |
| Total Financial and Derivative Net Assets | (1,038,825) |
| Financial Instruments | 1,017,198 |
| Net Amount | (21,627) |
| 14 | Wanger Select | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
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 debt obligations when required for federal income tax purposes. Realized gains and losses from
security transactions are recorded on an identified cost basis.
Income recognition
Corporate actions and dividend
income are generally recorded net of any non-reclaimable tax withholdings, on the ex-dividend date or upon receipt of an ex-dividend notification in the case of certain foreign securities.
The Fund may receive distributions
from holdings in equity securities, exchange traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information as to the
tax character of their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. Return of capital is recorded as a
reduction of the cost basis of securities held. If the Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the extent actual information has not
yet been reported, estimates for return of capital may be made by the Fund’s management. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the
REITs, which could result in a proportionate change in return of capital to shareholders.
Awards, if any, from class action
litigation related to securities owned may be recorded as a reduction of cost of those securities. If the applicable securities are no longer owned, the proceeds are recorded as realized gains.
Expenses
General expenses of the Trust are
allocated to the Fund and the other series of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are
charged to the Fund.
Federal income tax status
The Fund intends to comply with the
provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, intends to distribute substantially all its taxable income, as well as any net realized gain on
sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required. The Fund meets
the exception under Internal Revenue Code Section 4982(f) and the Fund expects not to be subject to federal excise tax.
Distributions to shareholders
Distributions to shareholders are
recorded on the ex-dividend date.
Guarantees and indemnification
In the normal course of business,
the Trust on behalf of the Fund enters into contracts that contain a variety of representations and warranties and that provide general indemnities. The Fund’s maximum exposure under these arrangements is
unknown, as this would involve future claims against the Fund. Also under the Trust’s organizational documents, the trustees and officers of the Trust are indemnified against certain liabilities that may arise
out of their duties to the Trust. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.
Note 3. Fees and other
transactions with affiliates
Management services fees
CWAM is a wholly owned subsidiary
of Columbia Management Investment Advisers, LLC (Columbia Management), which in turn is a wholly owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). CWAM furnishes continuing investment supervision
to the Fund and is responsible for the overall management of the Fund’s business affairs.
| Wanger Select | Semiannual Report 2021 | 15 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
CWAM receives a monthly advisory
fee based on the Fund’s daily net assets at the following annual rates:
| Average daily net assets | Annual fee rate |
| Up to $500 million | 0.80% |
| $500 million and over | 0.78% |
Through April 30, 2022, CWAM has
contractually agreed to waive 0.20% of the advisory fee otherwise payable to it by the Fund. When determining whether the Fund’s total expenses exceed the contractual expense cap described below, under Other
expenses waived/reimbursed by the Investment Manager and its affiliates. The Fund’s net advisory fee, reflecting application of the 0.20% waiver, will be used to calculate the Fund’s total expenses. This
arrangement may only be modified or amended with approval from the Board of Trustees and CWAM.
For the six months ended June 30,
2021, the annualized effective investment advisory fee rate, net of fee waivers, was 0.60% of the Fund’s average daily net assets.
Administration fees
CWAM provides administrative
services and receives an administration fee from the Fund at the following annual rates:
| Aggregate average daily net assets of the Trust | Annual fee rate |
| Up to $4 billion | 0.05% |
| $4 billion to $6 billion | 0.04% |
| $6 billion to $8 billion | 0.03% |
| $8 billion and over | 0.02% |
For the six months ended June 30,
2021, the annualized effective administration fee rate was 0.05% of the Fund’s average daily net assets. CWAM has delegated to Columbia Management responsibility to provide certain sub-administrative services to
the Fund.
Compensation of board members
Certain officers and trustees of
the Trust are also officers of CWAM and/or Columbia Management. The Trust makes no direct payments to its officers and trustees who are affiliated with CWAM or Columbia Management. The Trust offers a Deferred
Compensation Plan (the Deferred Plan) for its independent trustees. Under the Deferred Plan, a trustee may elect to defer all or a portion of his or her compensation. Amounts deferred are retained by the Trust and may
represent an unfunded obligation of the Trust. The value of amounts deferred is determined by reference to the change in value of Institutional Class shares of one or more series of Columbia Acorn Trust or a money
market fund as specified by the trustee. Benefits under the Deferred Plan are payable in accordance with the Deferred Plan.
Compensation of Chief Compliance
Officer
The Board of Trustees has appointed
a Chief Compliance Officer for the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated
to the Fund, along with other allocations to affiliated registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Service fees
Pursuant to the Transfer, Dividend
Disbursing and Shareholder Servicing Agreement between the Fund and Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of
Ameriprise Financial, the Fund bears a service fee paid to the Transfer Agent to compensate it for amounts paid to Participating Insurance Companies and other financial intermediaries (together, Participating
Organizations) for various sub-transfer agency and other shareholder services each Participating Organization provides to its clients, customers and participants that are invested directly or indirectly in the Fund,
up to a cap approved by the Board of Trustees from time to time.
| 16 | Wanger Select | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
The Transfer Agent may retain as
compensation for its services revenues from fees for wire, telephone and redemption orders, account transcripts due to the Transfer Agent from Fund shareholders and interest (net of bank charges) earned with respect
to balances in accounts the Transfer Agent maintains in connection with its services to the Fund.
Distributor
Columbia Management Investment
Distributors, Inc., a wholly owned subsidiary of Ameriprise Financial, serves as the Fund’s distributor and principal underwriter.
Other expenses waived/reimbursed by
the Investment Manager and its affiliates
Through April 30, 2022, CWAM has
contractually agreed to bear a portion of the Fund’s expenses so that its ordinary operating expenses (excluding transaction costs and certain other investment-related expenses, interest and fees on borrowings
and expenses associated with the Fund’s investment in other investment companies, if any), inclusive of net advisory fees do not exceed the annual rate of 0.89% of the Fund’s average daily net assets. This
agreement may not be modified or terminated, without approval from the Fund’s Board of Trustees and CWAM. There is no guarantee that this agreement will continue after April 30, 2022.
Note 4. Federal tax
information
The timing and character of
income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At June 30, 2021, the approximate
cost of all investments for federal income tax purposes and the aggregate gross approximate unrealized appreciation and depreciation based on that cost was:
| Federal tax cost ($) | Gross unrealized appreciation ($) | Gross unrealized (depreciation) ($) | Net unrealized appreciation ($) |
| 103,840,000 | 23,981,000 | (2,241,000) | 21,740,000 |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
Management is required to determine
whether a tax position of the Fund is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the
technical merits of the position. The tax benefit to be recognized by the Fund is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.
Management is not aware of any tax positions in the Fund for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However,
management’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant
court decisions). The Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
Note 5. Portfolio
information
The aggregate cost of purchases
and proceeds from sales other than short-term obligations for the six months ended June 30, 2021, were $61,042,184 and $75,012,416, respectively. The amount of purchase and sales activity impacts the portfolio
turnover rate reported in the Financial Highlights.
Note 6. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for
other temporary or emergency purposes. Pursuant to a December 1, 2020 amendment, the credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an
affiliated investment manager, severally and not jointly, permits collective borrowings up to $950 million. Interest is currently charged to each participating fund based on its borrowings at a rate equal to the
higher of (i) the federal funds effective rate, (ii) the one-month
| Wanger Select | Semiannual Report 2021 | 17 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
London Interbank Offered Rate (LIBOR) rate and
(iii) the overnight bank funding rate, plus in each case, 1.25%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. Most LIBOR settings will no longer be published
after December 31, 2021, and a majority of U.S. dollar LIBOR settings will cease publication after June 30, 2023. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit
facility at a rate of 0.15% per annum. The commitment fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed. Prior to the December 1,
2020 amendment, the Fund had access to a revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. which permitted collective borrowings up to $1
billion. Interest was charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank
funding rate, plus in each case, 1.00%.
The Fund had no borrowings during
the six months ended June 30, 2021.
Note 7. Significant
risks
Health care sector risk
The Fund is more susceptible to the
particular risks that may affect companies in the health care sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the health care sector are subject to certain risks,
including restrictions on government reimbursement for medical expenses, government approval of medical products and services, competitive pricing pressures, and the rising cost of medical products and services
(especially for companies dependent upon a relatively limited number of products or services). Performance of such companies may be affected by factors including government regulation, obtaining and protecting patents
(or the failure to do so), product liability and other similar litigation as well as product obsolescence.
Information technology sector risk
The Fund is more susceptible to the
particular risks that may affect companies in the information technology sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the information technology sectors are
subject to certain risks, including the risk that new services, equipment or technologies will not be accepted by consumers and businesses or will become rapidly obsolete. Performance of such companies may be affected
by factors including obtaining and protecting patents (or the failure to do so) and significant competitive pressures, including aggressive pricing of their products or services, new market entrants, competition for
market share and short product cycles due to an accelerated rate of technological developments. Such competitive pressures may lead to limited earnings and/or falling profit margins. As a result, the value of their
securities may fall or fail to rise. In addition, many information technology sector companies have limited operating histories and prices of these companies’ securities historically have been more volatile than
other securities, especially over the short term. Some companies in the information technology sector are facing increased government and regulatory scrutiny and may be subject to adverse government or regulatory
action, which could negatively impact the value of their securities.
Market and environment risk
The Fund may incur losses due to
declines in the value of one or more securities in which it invests. These declines may be due to factors affecting a particular issuer, or the result of, among other things, political, regulatory, market, economic or
social developments affecting the relevant market(s) more generally. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers,
which could adversely affect the Fund, including causing difficulty in assigning prices to hard-to-value assets in thinly traded and closed markets, significant redemptions and operational challenges. Global economies
and financial markets are increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. These risks
may be magnified if certain events or developments adversely interrupt the global supply chain; in these and other circumstances, such risks might affect companies worldwide. As a result, local, regional or global
events such as terrorism, war, natural disasters, disease/virus outbreaks and epidemics or other public health issues, recessions, depressions or other events – or the potential for such events – could
have a significant negative impact on global economic and market conditions.
| 18 | Wanger Select | Semiannual Report 2021 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
The Fund’s performance may
also be significantly negatively impacted by the economic impact of the coronavirus disease 2019 (COVID-19) pandemic. The COVID-19 pandemic has resulted in, and may continue to result in, significant global economic
and societal disruption and market volatility due to disruptions in market access, resource availability, facilities operations, imposition of tariffs, export controls and supply chain disruption, among others. Such
disruptions may be caused, or exacerbated by, quarantines and travel restrictions, workforce displacement and loss in human and other resources. The uncertainty surrounding the magnitude, duration, reach, costs and
effects of the global pandemic, as well as actions that have been or could be taken by governmental authorities or other third parties, present unknowns that are yet to unfold. The impacts, as well as the uncertainty
over impacts to come, of COVID-19 – and any other infectious illness outbreaks, epidemics and pandemics that may arise in the future – could negatively affect global economies and markets in ways that
cannot necessarily be foreseen. In addition, the impact of infectious illness outbreaks and epidemics in emerging market countries may be greater due to generally less established healthcare systems, governments and
financial markets. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The disruptions caused by COVID-19 could
prevent the Fund from executing advantageous investment decisions in a timely manner and negatively impact the Fund’s ability to achieve its investment objectives. Any such event(s) could have a significant
adverse impact on the value and risk profile of the Fund.
Shareholder concentration risk
At June 30, 2021, two unaffiliated
shareholders of record owned 88.6% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Subscription and redemption
activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times, including its liquid
positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for
non-redeeming Fund shareholders.
Small- and mid-cap company risk
Investments in small- and
mid-capitalization companies (small- and mid-cap companies) often involve greater risks than investments in larger, more established companies (larger companies) because small- and mid-cap companies tend to have less
predictable earnings and may lack the management experience, financial resources, product diversification and competitive strengths of larger companies. Securities of small- and mid-cap companies may be less liquid
and more volatile than the securities of larger companies.
Note 8. Subsequent
events
Management has evaluated the
events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 9. Information
regarding pending and settled legal proceedings
Ameriprise Financial and certain
of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in
connection with the conduct of their business activities. Ameriprise Financial believes that the Fund is not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject
of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with
the Fund. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary, 8-K filings with the Securities and Exchange Commission (SEC) on legal and regulatory matters that relate to
Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that
these matters, or the adverse publicity associated with them, will not result in increased Fund redemptions, reduced sale of Fund shares or other adverse consequences to the Fund. Further, although we believe
proceedings are not likely to have a material adverse effect on the Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could
| Wanger Select | Semiannual Report 2021 | 19 |
Notes to Financial Statements (continued)
June 30, 2021 (Unaudited)
June 30, 2021 (Unaudited)
result in adverse judgments, settlements, fines,
penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial or one or more of its affiliates that provides services to
the Fund.
| 20 | Wanger Select | Semiannual Report 2021 |
Liquidity Risk
Management Program
Pursuant to Rule 22e-4 under the
1940 Act, the Fund has adopted a liquidity risk management program (Program). The Program’s principal objectives include assessing, managing and periodically reviewing the Fund’s liquidity risk. Liquidity
risk is defined as the risk that the Fund could not meet redemption requests without significant dilution of remaining investors’ interests in the Fund.
The Board of Trustees has appointed
the Investment Manager as the program administrator for the Program. The Investment Manager has delegated oversight of the Program to its Liquidity Risk Management Committee (the Committee). At a Board meeting during
the fiscal period, the Committee provided the Board with a report addressing the operations of the Program and assessing its adequacy and effectiveness of implementation for the period January 1, 2020, through
December 31, 2020. Among other things, the report indicated that:
| • | the Fund had sufficient liquidity to both meet redemptions and operate effectively on behalf of shareholders; |
| • | there were no material changes to the Program during the period; |
| • | the Fund’s strategy continued to be effective for an open-end mutual fund; |
| • | the implementation of the Program was effective to manage the Fund’s liquidity risk; |
| • | the Fund did not require a highly liquid investment minimum; and |
| • | the Program operated adequately during the period. |
There can be no assurance that the
Program will achieve its objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an
investment in the Fund may be subject.
Board Consideration
and Approval of Advisory
Agreement
Wanger Advisors Trust (the
“Trust”) has an investment advisory agreement (the “Advisory Agreement”) with Columbia Wanger Asset Management, LLC (“CWAM”) under which CWAM manages the Fund. All of the voting
trustees of the Trust are persons who have no direct or indirect interest in the Advisory Agreement and are not “interested persons” (as defined in the Investment Company Act of 1940) of the Trust (the
“Independent Trustees”). The Independent Trustees oversee the management of the Fund and, as required by law, determine at least annually whether to continue the Advisory Agreement for the Fund.
The Contract Committee (the
“Contract Committee”) of the Board of Trustees of the Trust (the “Board”), which is comprised solely of Independent Trustees, makes recommendations to the Board regarding any proposed
continuation of the Advisory Agreement. After the Contract Committee has made its recommendations, the full Board determines whether to approve continuation of the Advisory Agreement.
The Board determines whether to
renew the Advisory Agreement each year by July 31. A discussion of the Board’s considerations in renewing the Advisory Agreement will be provided in the Fund’s annual report to shareholders for the period
ended December 31, 2021.
| Wanger Select | Semiannual Report 2021 | 21 |
Please read and consider the
investment objectives, risks, charges and expenses for any fund carefully before investing. For variable fund and variable contract prospectuses, which contain this and other important information, including the fees
and expenses imposed under your contract, investors should contact their financial advisor or insurance representative. Read the prospectus for the Fund and your variable contract carefully before investing. Columbia Wanger Funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA, and are managed by Columbia Wanger Asset Management, LLC.
Columbia Threadneedle Investments
(Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. All rights reserved. Columbia Management Investment Distributors, Inc., 290 Congress Street, Boston, MA 02210.
© 2021 Columbia Management Investment
Advisers, LLC.
C-1465 AR (8/21)
