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The Wanger Investment Company PLC 2005 Annual Report

The Wanger Investment Company PLCAudited Financial Statements

For the year ended 30 June 2005

Contents

2 Organisation

3 Background to the Company

4 Investment Manager’s Report

8 Custodian’s Report

9 Directors’ Report

10 Auditors’ Report

12 Statement of Operations

12 Statement of Net Assets

13 Statement of Changes in Net Assets

14 Notes to the Financial Statements

Schedule of Investments18 Wanger US Smaller Companies Fund20 Wanger European Smaller Companies Fund

Schedule of Portfolio Changes22 Wanger US Smaller Companies Fund23 Wanger European Smaller Companies Fund

2


Organisation

Board of DirectorsRalph Wanger (U.S.)Bruce Lauer (U.S.)Daniel Morrissey (Irish) David Shubotham (Irish)

Registered OfficeFitzwilton HouseWilton PlaceDublin 2Ireland

Administrator and RegistrarState Street Fund Services

(Ireland) Limited Guild HouseGuild StreetInternational Financial Services CentreDublin 1 Ireland

Sponsoring BrokerJ&E DavyDavy House49 Dawson StreetDublin 2Ireland

Investment ManagerColumbia Wanger Asset Management, LP227 West Monroe StreetSuite 3000ChicagoIllinois 60606-5016U.S.A.

AuditorsErnst & YoungChartered AccountantsHarcourt CentreHarcourt StreetDublin 2Ireland

CustodianState Street Custodial Services(Ireland) LimitedGuild HouseGuild StreetInternational Financial Services CentreDublin 1Ireland

Legal Advisers William FrySolicitorsFitzwilton HouseWilton PlaceDublin 2Ireland

SecretaryWilton Secretarial LimitedFitzwilton HouseWilton PlaceDublin 2Ireland

The Wanger Investment Company PLC

3


The Company is structured as an open-endedinvestment umbrella fund with variable capital,incorporated under the laws of Ireland on 9 June1997 as a public limited company pursuant to theCompanies Acts, 1963 to 2005. The Company hasbeen authorised by the Irish Financial ServicesRegulatory Authority (the “Financial Regulator”)pursuant to the provisions of the EuropeanCommunities (Undertakings for CollectiveInvestment in Transferable Securities)Regulations, 2003 (as amended). The Companycommenced operations on 23 June 1997.

As an umbrella fund, the Company may createdifferent Funds from time to time. There arecurrently shares of two Funds in issue, theWanger US Smaller Companies Fund and theWanger European Smaller Companies Fund,which are denominated in US Dollars and Euro respectively.

Although each Fund will be treated as bearingits own liabilities, the Company as a whole willremain liable to third parties, the assets of anyFund potentially being exposed to the liabilities ofother Funds. The Directors are not aware of anysuch existing or contingent liabilities as at thedate of approval of the financial statements.

The shares of the Wanger US SmallerCompanies Fund and the Wanger EuropeanSmaller Companies Fund are listed on the IrishStock Exchange.

Investment ObjectiveThe Company has been established with theobjective of providing shareholders with long-term capital growth. Although income isconsidered in the selection of securities forinvestment by the Funds, neither of the Funds isdesigned for investors seeking primarily incomerather than capital appreciation.

The Company’s investments will beconcentrated on that segment of the marketwhere the competition for analytical informationis less intense, meaning companies with a totalcommon stock market capitalisation of less than US$2 billion (or the equivalent in another currency).

Wanger US Smaller Companies FundThe Fund will be invested principally in thesecurities of the types set out in the investmentobjective issued by companies established in theUnited States and which are quoted or traded onregulated markets.

Wanger European Smaller Companies FundThis Fund will be invested principally in thesecurities of the types set out in the investmentobjective issued by companies established in theEuropean Union, which are quoted or traded onregulated markets. It is expected that the Fund’sinvestments will be concentrated on issuers inthe member states such as the UK, France, Italy,Germany and the Netherlands as well as Norwayand Switzerland.

The Fund may also invest up to 30% of itsassets in regulated markets in other Europeanjurisdictions including the emerging markets ofthe former Soviet Union and other EasternEuropean countries, such as Poland andHungary, if considered that particular issuers,industries or regions in those countries provideinvestment opportunity in line with theinvestment objectives and policies of the Fund.

Calculation of Net Asset Value of SharesThe Net Asset Value of each Fund will bedetermined by the administrator in accordancewith the Articles of Association in the currency in which the Fund is denominated at the valuation point and will be equal to the value of all the assets of the relevant Fund less all of its liabilities.

Valuation Point refers to the close of businessin the relevant market on the business dayimmediately preceding the relevant dealing day.Dealing day is every business day on which retail banks and recognised exchanges in Dublin, London, Frankfurt and New York are open for business, or otherwise as the directorsmay decide.

Background to the Company

4


Wanger US Smaller Companies Fund gained12.05% over the past 12 months ending 30June 2005, nicely ahead of the Russell 2000small-cap benchmark’s 9.45% rise.

Industrial stocks stoked Fund performanceover the past year. Esco Technologies was thebiggest dollar winner for the Fund, rising 89% onnews that it landed a huge contract toinstall automated electric meter readers acrossCalifornia utility PG&E’s entire customerbase. Other winners were Genlyte (commerciallighting fixtures, up 55%), Ametek(aerospace instruments and nuclear detectiondevices, up 36%), and Florida RockIndustries (quarries, up 80%).

Many of the Fund’s holdings lured the buyinginterest of larger corporate acquirers. Overthe past year, eight companies held in theportfolio were bought out across a broad rangeof industries: Western Wireless (cellular serviceprovider), CTI Molecular (medical PETscanners), First Health Group (PPO network),Cuno (water filtration), Peoplesoft(corporate software), Mapics (corporatesoftware), Aspect Communications (call centerequipment), and Brookstone (specialty retailer).

Other winners for the year were ChicagoBridge & Iron (engineering and construction forthe energy industry, up 64%) and AmeriCredit(auto lender, up 31%).

Our worst-performing group was technology.Notable losers were e-learning companySkillSoft Publishing (down 56%) and telecomequipment company Andrew (down 36%).Both stocks fell due to disappointing revenueresults.

The US stock market has been stuck in a see-saw trading range for the past 18 months.Flat markets like this one may not make forexciting business news headlines, but can be just as rife with investment opportunities asthose good old Roaring Nineties bull markets.

Wanger US Smaller Companies Fund Investment Manager’s Report

Robert A. MohnLead Portfolio Manager

5


Wanger US Smaller Companies FundAt A Glance

Results to 30 June 2005

Last 3 Last 6 Last 12 Mos.* Mos.* Mos.*

Wanger US Smaller Companies Fund 5.20% 3.36% 12.05%Russell 2000 4.35 -1.25 9.45S&P 500 1.30 -0.81 6.32

*Time periods correspond to the last official dealing date of the month.

Performance is based upon the net asset value of the fund on30/06/2005. The net asset value of the fund on this day was USD 36.65.The last three months covers the period 01/04/2005 through 30/06/2005.The last six months covers the period 01/01/2005 through 30/06/2005.All total return percentages are in US dollars. The Russell 2000 isformed by taking the 3,000 largest US companies and eliminating thelargest 1,000, leaving a mainly small-company index. The S&P 500 is abroad US market-weighted average, blue chip-dominated index. Allindexes are unmanaged and include reinvested dividends. Theperformance data quoted represents past performance and does notguarantee future results.

Net Asset Value Per Share 30/06/2005: USD 36.65

Top 5 Industriesas a % of net assets, as of 30/06/2005

Information Group 20.6%Industrial Goods 17.3Consumer Goods/Services 16.0Health Care 12.6Energy/Minerals 12.4

Inception

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

30/6/0530/6/0430/6/0330/6/0230/6/0130/6/0030/6/9930/6/9823/6/97

Value of a USD 10,000 Investment in Wanger US Smaller Companies Fundtotal return for each period

Wanger US Smaller Companies FundUSD 36,650

This graph compares the results of a USD 10,000 investment in Wanger US Smaller Companies Fund on 23 June 1997 (commencement of operations)though 30 June 2005, to the Russell 2000 with all dividends and capital gains reinvested. The performance data is past performance and does notguarantee future results. The investment return and principal value of an investment will fluctuate so that investors’ shares, when redeemed, may beworth more or less than the original cost.

AmeriCredit 3.0%Auto Lending

Esco Technologies 2.3%Automatic Electric Meter Readers

Ametek 2.1%Aerospace/Industrial Instruments

Genlyte Group 2.1%Commercial Lighting Fixtures

Pride International 1.8%Offshore Drilling Contractor

FMC Technologies 1.7%Oil & Gas Well HeadManufacturer

Oneok 1.7%Natural Gas Utility, Marketing &Processing

Unova 1.7%Barcode & Wireless LANSystems

Western Gas 1.7%Oil & Coal Seam Gas Producer

Oxford Industries 1.6%Branded & Private Label Apparel

Top 10 Holdingsas a % of net assets, as of 30/06/2005

Russell 2000USD 17,982

6


Wanger European Smaller Companies Fundgained 26.52% for the 12-months ended 30 June2005, outperforming the HSBC Smaller EuropeanCompanies Index return of 24.91%. The Fundreturned 16.63% for the first half of 2005,compared to 15.25% for the index. Fundperformance was very strong in the first quarterof 2005, rising 12.36% against the index’s 8.38%,but lagged the market significantly in the secondquarter adding a mere 3.80% against the index’s6.34%.

Our biggest performance contributors for the12 months included Vallourec, a French seamlesstube supplier that increased 205%, andKoninglijke Ten Cate, a Dutch maker of artificialfibres, up 70%. On the downside, the UK’s FrenchConnection was down 44% on bad operatingnews and Qualceram Shires an Irish tile retailer,fell 39%. We reported about the latter two in ourhalf-yearly report to December 2004.

Top performance for the six months to Junewas similar. Vallourec was up 119% in the periodand Koninglijke Ten Cate gained 41%. On thedownside, Pierre & Vacances, a French providerof holiday accommodations, fell 26% afterreducing its profit expectation for the year, andFininfo, the French financial information provider,fell 22% as it continued to report fallingsubscriber numbers.

In the second half of the Fund’s fiscal year, netoutflows were approximately EUR 48 million. Onelarge redemption accounted for the lion’s shareof this amount. This redemption activity gave usthe opportunity to weed out some smallerpositions while trimming others. In total weliquidated 12 names, including Abengoa, aSpanish engineering conglomerate and Camaïeu,the French women’s wear retailer. Portfolioconcentration rose slightly, with the top 10 namesamounting to 26% of the portfolio at the end ofJune, compared to 24% at the end of December.Where we didn’t sell positions, they remainedsubstantially the same.

Between June and December 2004, we addedEUR 6 million to eight new names, the larger onesbeing Paragon Group, a British specialist financeprovider, Smit Internationale, a Dutch provider ofharbor and offshore towage and marine services,and SAVE, the Venice airport authorities.

At the end of June, the portfolio traded at 23.5-times 2004 and 19.6-times 2005 earnings. Whilethis is well ahead of the multiples we reported atthe end of 2004, they are still lower than theindex’s, which according to consensus stood at25.1-times 2004 and 22.9-times 2005 earnings.

Wanger European Smaller Companies Fund Investment Manager’s Report

Andreas Waldburg-WolfeggLead Portfolio Manager

Stephen KusmierczakCo-portfolio Manager

7


Wanger European Smaller Companies FundAt A Glance

Vallourec 3.2%Seamless TubesFrance

United Drug 3.2%Pharmaceutical Wholesaler & OutsourcerIreland

Rhoen-Klinikum 2.7%Hospital ManagementGermany

April Group 2.7 %Insurance Policy ConstructionFrance

Charles Taylor 2.6%Insurance ServicesUnited Kingdom

Kensington Group 2.6%Non-conforming Mortgage CompanyUnited Kingdom

Hexagon 2.5%Diversified EngineeringSweden

IAWS 2.4%Baked GoodsIreland

Aalberts Industries 2.2%Flow Control & Heat TreatmentNetherlands

Carbone Lorraine 2.2%Advanced Industrial MaterialsFrance

Top 5 Countriesas a % of net assets, as of 30/06/2005

United Kingdom 21.3%France 19.8Germany 14.9Netherlands 13.3Ireland 8.2

Results to 30 June 2005

Last 3 Last 6 Last 12 Mos.* Mos.* Mos.*

Wanger European Smaller Companies Fund 3.80% 16.63% 26.52%HSBC Smaller European Co. Index 6.34 15.25 24.91

Top 10 Holdingsas a % of net assets, as of 30/06/2005

*Time periods correspond to the last official dealing date of the month.

Performance is based upon the net asset value of the fund on 30/06/2005.The net asset value of the fund on this day was EUR 30.29. The last threemonths covers the period 01/04/2005 through 30/06/2005. The last sixmonths covers the period 01/01/2005 through 30/06/2005. All total returnpercentages are in euros. HSBC Smaller European Companies Index isan unmanaged index of smaller companies in Europe, including the UK.It consists of 18 markets, 24 industrial classifications and 1,585constituent companies. The performance data quoted represents pastperformance and does not guarantee future results.

Net Asset Value Per Share as of 30/06/2005: EUR 30.29

Value of a EUR 10,000 Investment in Wanger European Smaller Companies Fundtotal return for each period

Inception

EUR 10,000

EUR 15,000

EUR 20,000

EUR 25,000

EUR 30,000

EUR 35,000

EUR 40,000

EUR 45,000

6/30/056/30/046/30/036/30/026/30/016/30/006/30/996/30/9823/6/97

Wanger European Smaller Companies FundEUR 37,029

HSBC Smaller European Co. IndexEUR 16,036

This graph compares the results of EUR 10,000 invested in Wanger European Smaller Companies Fund on 23 June 1997 (commencement ofoperations) through 30 June 2005, to the HSBC Smaller European Companies Index. Past performance does not guarantee future results. Theinvestment return and principal value of an investment in the fund will fluctuate so that fund shares, when redeemed, may be worth more or lessthan their original cost.All figures represent performance in deutchemarks prior to 31 December 1998 chain-linked to performance in euros after 31 December 1998.

8


We have enquired into the conduct of TheWanger Investment Company Plc for the yearended 30 June 2005, in our capacity as Custodianto the Company.

In our opinion, the Company has beenmanaged in that period in all material respects:

(a) in accordance with the limitations imposedon the investment and borrowing powers of theCompany by the Memorandum and Articles ofAssociation and the European Communities(Undertakings for Collective Investments inTransferable Securities) Regulations, 2003; and(b) otherwise in accordance with theprovisions of the Memorandum & Articles ofAssociation and the European Communities(Undertakings for Collective Investments inTransferable Securities) Regulations, 2003.

State Street Custodial Services (Ireland) Limited13 September 2005

Custodian’s Report

9


The Directors present herewith the audited financialstatements for the year ended 30 June 2005.

Statement of Directors’ ResponsibilitiesThe Companies Acts, 1963 to 2005 (the “Acts”)require the Directors to prepare financial statementsfor each financial period which give a true and fairview of the state of affairs of the Company and of theprofit or loss of the Company for that period. Inpreparing those financial statements, the Directorsare required to;

• select suitable accounting policies and then applythem consistently;

• make judgements and estimates that arereasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping properaccounting records which disclose with reasonableaccuracy at any time the financial position of theCompany and which enable them to ensure that thefinancial statements comply with the Acts and theMemorandum and Articles of Association. To thisend, the Company has appointed State Street FundServices (Ireland) Limited to provide it with fundaccounting, administration and transfer agencyservices. They are also responsible for safeguardingthe assets of the Company and hence for takingreasonable steps for the prevention and detection offraud, error and non-compliance with laws orregulations. To this end, the Company has appointedState Street Custodial Services (Ireland) Limited astrustee and custodian of its assets.

The measures taken by the Directors to ensurecompliance with the Company’s obligation to keepproper books of account are the use of appropriatesystems and procedures and the appointment ofexperienced administrators and service providers,State Street Fund Services (Ireland) Limited. Thebooks of account are held at Guild House, GuildStreet, International Financial Services Centre,Dublin 1, Ireland.

Principal ActivitiesThe Company has been approved by the FinancialRegulator (formerly known as Irish Financial ServicesRegulatory Authority as an investment companypursuant to the European Communities (Undertakingsfor Collective Investment in Transferable Securities)Regulations, 2003 (as amended).

The investment objectives and policies are outlinedon page 3.

DividendThe Directors do not propose the payment of adividend in respect of the Shares of either Fund and,accordingly, all income and realised capital gainsderived from the Funds’ assets will be re-invested.

ResultsThe results for the year are set out in the Statementof Operations on page 12.

DirectorsThe Directors of the Company at 30 June 2005, all ofwhom have been Directors for the year ended onthat date, were:

Ralph Wanger Bruce Lauer Daniel MorrisseyDavid Shubotham

The independent Directors of the Company areDaniel Morrissey and David Shubotham. All Directorsare Non-Executive Directors of the Company.

Directors’ InterestsThe Board of Directors is not aware of anyshareholding in the share capital of the Company byany Director during the year ended 30 June 2005. Theinterests of the Directors in related parties aredisclosed in note 11 of the financial statements.

Transactions Involving DirectorsThe Board of Directors is not aware of any contractsor arrangements of any significance in relation to thebusiness of the Company in which the Directors orCompany Secretary had any interest as defined inthe Companies Act 1990 at any time during the yearended 30 June 2005 other than as disclosed in note11 of the financial statements.

EmployeesThere were no employees of the Companythroughout the year.

AuditorsThe auditors, Ernst & Young, Chartered Accountants,will continue in office in accordance with Section160(2) of the Companies Act, 1963.

ON BEHALF OF THE BOARD:

Daniel Morrissey

David Shubotham

13 September 2005

Directors’ Report

10


We have audited the financial statements for theyear ended 30 June 2005, which comprise thestatement of operations, statement of net assets,statement of changes in net assets, schedules ofinvestments and the related notes 1 to 14. Thesefinancial statements have been prepared on thebasis of the accounting policies set out therein.

This report is made solely to the company’smembers, as a body, in accordance with Section193 of the Companies Act, 1990. Our audit workhas been undertaken so that we might state tothe Company’s members those matters we arerequired to state to them in an auditors’ reportand for no other purpose. To the fullest extentpermitted by law, we do not accept or assumeresponsibility to anyone other than the Companyand the Company’s members as a body, for ouraudit work, for this report, or for the opinions wehave formed.

Respective responsibilities of the Directors andthe AuditorsThe Directors are responsible for preparing theAnnual Report and the financial statements inaccordance with applicable Irish law andaccounting standards as set out in the Statementof Directors’ Responsibilities.

Our responsibility is to audit the financialstatements in accordance with relevant legal andregulatory requirements and Auditing Standardsissued by the Auditing Practices Board for use inIreland and the United Kingdom.

We report to you our opinion as to whether thefinancial statements give a true and fair view andare properly prepared in accordance with theCompanies Acts and the European Communities(Undertakings for Collective Investment inTransferable Securities) Regulations, 2003, (asamended). We also report to you our opinion as towhether proper books of account have been keptby the Company and whether the informationgiven in the Directors’ Report is consistent withthe financial statements. In addition, we statewhether we have obtained all the information andexplanations necessary for the purposes of ouraudit and whether the financial statements are inagreement with the books of account.

We also report to you if, in our opinion, anyinformation specified by law regarding Directors’remuneration and transactions with the Companyis not given and, where practicable, include suchinformation in our report.

We read the other information contained inthe Annual Report and consider whether it isconsistent with the audited financial statements.The other information comprises the Directors’Report and Investment Manager’s Report. Weconsider the implications for our report if webecome aware of any apparent misstatements ormaterial inconsistencies with the financialstatements. Our responsibilities do not extend toany other information.

Basis of Audit OpinionWe conducted our audit in accordance withAuditing Standards issued by the AuditingPractices Board. An audit includes examination,on a test basis, of evidence relevant to theamounts and disclosures in the financialstatements. It also includes an assessment of thesignificant estimates and judgements made bythe Directors in the preparation of the financialstatements, and of whether the accountingpolicies are appropriate to the Company’scircumstances, consistently applied andadequately disclosed.

We planned and performed our audit so as toobtain all the information and explanations whichwe considered necessary in order to provide uswith sufficient evidence to give reasonableassurance that the financial statements are free from material misstatement, whether causedby fraud or other irregularity or error. In formingour opinion we also evaluated the overalladequacy of the presentation of information inthe financial statements.

Auditors’ Report To The Shareholders of TheWanger Investment Company Plc

11


OpinionIn our opinion the financial statements give a trueand fair view of the state of the Company’s affairsat 30 June 2005 and of its results for the yearthen ended, and have been properly prepared inaccordance with the Companies Acts, 1963 to2005 and the European Communities(Undertakings for Collective Investment inTransferable Securities) Regulations, 2003, (as amended).

We have obtained all the information andexplanations we consider necessary for thepurposes of our audit. In our opinion, properbooks of account have been kept by theCompany. The financial statements are inagreement with the books of account.

In our opinion, the information given in theDirectors’ Report is consistent with the financialstatements.

Ernst & YoungRegistered AuditorsDublin13 September 2005

Auditors’ Report To The Shareholders of TheWanger Investment Company Plc (Continued)

12


Company Company Wanger US Smaller Wanger EuropeanTotal Total Companies Fund Smaller Companies Fund2005 2004 2005 2004 2005 2004

Notes USD USD USD USD EUR EUR

Operating Income 2 5,184,337 4,468,190 1,894,398 1,195,812 2,717,610 2,711,391

Less :Withholding Tax (829,596) (767,536) (426,627) (251,247) (332,870) (427,781)

Operating Expenses 3 (7,434,887) (5,578,083) (4,627,440) (2,932,753) (2,319,053) (2,191,839)

Net Operating (Expense)/Income (3,080,146) (1,877,429) (3,159,669) (1,988,188) 65,687 91,771

Realised Profit on Sale of Investments 57,599,232 35,035,156 28,558,506 18,051,415 23,988,705 14,072,202

Foreign Currency Loss (328,862) (533,964) — — (271,652) (442,426)

Change in Unrealised Appreciationof Investments 11,222,756 66,920,547 5,826,946 42,539,702 4,457,137 20,201,214

Increase in Net Assets resulting from Operations 65,412,980 99,544,310 31,225,783 58,602,929 28,239,877 33,922,761

There are no recognised gains or losses arising in either year other than the increase in Net Assets attributable to shareholders of the Company. In arrivingat the results for the financial year, all amounts above relate to continuing operations.

ON BEHALF OF THE BOARD

Daniel Morrissey

David Shubotham

13 September 2005

Wanger Investment Company PLCStatement of Operations


Wanger Investment Company PLCStatement of Net Assets

As at 30 June 2005



Current Assets

Investments in Transferable Securities 4 402,113,100 354,196,070 290,603,993 237,721,236 92,110,612 96,507,444

Debtors 5 5,249,560 12,900,846 1,294,339 10,863,629 3,267,158 1,687,975

Cash at Bank 36,234,676 27,665,769 29,690,394 20,820,160 5,405,817 5,672,060

443,597,336 394,762,685 321,588,726 269,405,025 100,783,587 103,867,479

Creditors (amounts falling due within one year) 6 (10,348,908) (10,060,341) (5,347,751) (8,722,736) (4,131,139) (1,108,299)

Net Assets 433,248,428 384,702,344 316,240,975 260,682,289 96,652,448 102,759,180

Shareholders’ Funds (all non-equity interests) 433,073,740 384,702,344 316,240,975 260,682,289 96,652,448 102,759,180

Number of Shares In Issue 8,627,807 7,970,376 3,190,486 4,292,863

Net Asset Value Per Share 36.65 32.71 30.29 23.94

ON BEHALF OF THE BOARD

Daniel Morrissey

David Shubotham

13 September 2005

13




Net Assets at beginning of year 384,702,344 216,393,147 260,682,289 110,837,804 102,759,180 92,284,790

Increase in Net Assetsresulting from Operations (page 12) 65,412,980 99,544,310 31,225,783 58,602,929 28,239,877 33,922,761

Subscriptions 265,465,381 251,705,346 195,404,580 173,429,954 57,872,791 64,856,568

Redemptions (282,712,483) (188,763,629) (171,071,677) (82,188,398) (92,219,400) (88,304,939)

Increase/(Decrease) in Net Assets resulting from Capital Share Transactions (17,247,102) 62,941,717 24,332,903 91,241,556 (34,346,609) (23,448,371)

Foreign Currency Translation Adjustment 1(d) 205,518 5,823,170 — — — —

Increase in Net Assets 48,371,396 168,309,197 55,558,686 149,844,485 (6,106,732) 10,474,390

Net Assets at end of year 433,073,740 384,702,344 316,240,975 260,682,289 96,652,448 102,759,180

Wanger Investment Company PLCStatement of Changes in Net Assets


14


Notes to the Financial Statements as at 30 June 2005

1. Basis of PresentationThe financial statements have been prepared under the historical costconvention as modified to include investments at valuation.

The Company has availed of certain exemptions contained in theFRS 1 (Revised) ‘Cash Flow Statements’ and has presented a statementof changes in net assets in place of a cash flow statement. In theopinion of the Directors, this information also satisfies the requirementof FRS 3 ‘Reporting Financial Performance’ in relation to a reconciliationof movements in Shareholders’ funds.

The Financial Statements are for the year ended 30 June 2005 withcomparative figures for the year ended 30 June 2004.

Significant accounting policies adopted by the Company aredetailed below:

a) Investments

i) Valuation of InvestmentsInvestments in securities which are traded on a RecognisedExchange are valued at the latest trade price on the date on whichthe net assets are being valued or if this is not available, at thelatest bid price.

The value of any investment which is not traded on a RecognisedExchange shall be the probable realisation value of the investmentdetermined by the Directors.

There were no investments held at Directors’ valuation during theyear ended 30 June 2005.

ii) Accounting for InvestmentsPurchases and sales of investments are accounted for on the daythe transaction takes place i.e. the trade date.

iii) Realised Gains and Losses on Sale of InvestmentsThe computation of realised gains and losses on sale ofinvestments is made on the basis of average cost.

b) Income from Investments

i) Dividend IncomeDividend income arising on the underlying equity investments ofthe Company is recognised as income of the Company on the ex-dividend date.

ii) Interest IncomeDeposit Interest is recognised as income of the Company on anaccruals basis.

iii) Withholding taxIn accordance with FRS 16 dividend income is to be reportedgross of withholding tax.

c) Foreign CurrencyThe financial statements of Wanger US Smaller Companies Fundand of Wanger European Smaller Companies Fund are expressedin US Dollars (USD) and Euro (EUR) respectively. Transactions inother currencies have been translated at the rate of exchangeprevailing at the time of transaction. Assets and liabilities havebeen translated at the rate of exchange prevailing at the year end.The resulting profits or losses are dealt with in the Statement ofOperations.

The rates of exchange ruling at the year end were:

EUR1 = CHF 1.5510 GBP 0.6754 NOK 7.9150 SEK 9.4539 USD 1.2106

d) Translation to Reporting Currency

For the purpose of combining the financial statements of the Fundsto arrive at Company figures (required under Irish Company Law),the amounts in the financial statements have been translated toUSD at the exchange rate ruling at 30 June 2005. The method oftranslation has no effect on the Net Asset Value per shareattributable to the individual funds.

The opening value of the Wanger European Smaller CompaniesFund has been restated at the exchange rate ruling at 30 June2005. The resulting profit of USD205,518 is due to the movement inexchange rates between 30 June 2004 and 30 June 2005 and isincluded as a foreign currency translation adjustment in theStatement of Changes in Net Assets. This is a notional profit whichhas no impact on the Net Asset Value of the Fund.

15


Notes to the Financial Statements (continued)

as at 30 June 2005

Company Company Wanger US Smaller Wanger EuropeanTotal Total Companies Fund Smaller Companies Fund2005 2004 2005 2004 2005 2004USD USD USD USD EUR EUR

2. Operating IncomeDividend Income 4,648,172 4,318,438 1,426,120 1,099,222 2,661,533 2,667,343 Interest Income 536,165 149,752 468,278 96,590 56,077 44,048________ ________ ________ ________ ________ ________

5,184,337 4,468,190 1,894,398 1,195,812 2,717,610 2,711,391 _____ _____ _____ _____ _____ _____3. Operating Expenses

Investment Management Fees 6,394,700 4,839,901 4,138,776 2,674,677 1,863,476 1,794,038 Administration Fees 254,030 196,065 157,959 100,038 79,358 79,565 Custodian Fees 447,580 279,409 154,795 34,740 241,851 202,725 Audit Fees 50,118 29,134 26,335 13,943 19,646 12,587 Directors’ Fees 58,364 58,428 27,313 27,388 25,649 25,719 Legal Fees 167,626 109,061 94,716 54,537 60,226 45,177 Printing & Marketing Fees 24,168 24,150 10,377 10,353 11,392 11,432 Listing & Publication Fees 25,971 25,905 11,384 11,323 12,049 12,082 Other Expenses 12,330 16,030 5,785 5,754 5,406 8,514________ ________ ________ ________ ________ ________

7,434,887 5,578,083 4,627,440 2,932,753 2,319,053 2,191,839 _____ _____ _____ _____ _____ _____4. Investments

Cost at beginning of year 280,693,203 188,284,695 182,452,879 88,000,643 81,398,893 87,676,213 Additions 194,158,119 238,990,027 105,667,246 125,019,598 73,096,707 94,432,371 Disposals (157,820,926) (152,113,888) (58,611,436) (30,567,362) (81,950,677) (100,709,691)Foreign Currency Translation

Adjustment (Note 1(d)) 162,798 5,532,369 — — — — _________ _________ _________ _________ _________ _________Cost at end of year 317,193,194 280,693,203 229,508,689 182,452,879 72,544,923 81,398,893______ ______ ______ ______ ______ ______Market Value at end of year 402,113,100 354,196,070 290,603,993 237,721,236 92,110,612 96,507,444______ ______ ______ ______ ______ ______

5. DebtorsSales of Securities Awaiting Settlement 3,237,098 34,143 67,307 — 2,618,364 28,290 Subscription of Shares Awaiting Settlement 1,742,140 12,591,638 1,147,975 10,832,249 490,802 1,457,775 Dividend Income Receivable 204,949 266,347 76,583 30,628 106,035 195,310 Other Income Receivable 65,373 8,718 2,474 752 51,957 6,600 _________ _________ _________ _________ _________ _________

5,249,560 12,900,846 1,294,339 10,863,629 3,267,158 1,687,975 ______ ______ ______ ______ ______ ______6. Creditors (amounts falling due within one year)

Purchases of Securities Awaiting Settlement 2,012,785 7,907,330 760,793 7,661,839 1,034,191 203,406 Redemption of Shares Awaiting Settlement 7,510,530 1,415,803 4,069,402 649,877 2,842,498 634,623 Investment Management Fees Payable 526,538 484,150 377,381 319,584 123,209 136,354 Other Expenses Payable 299,055 253,058 140,175 91,436 131,241 133,916 _________ _________ _________ _________ _________ _________

10,348,908 10,060,341 5,347,751 8,722,736 4,131,139 1,108,299______ ______ ______ ______ ______ ______

16



as at 30 June 2005

7. Share Capital

AuthorisedThe authorised capital of the Company is US$5,000,060,000 dividedinto 60,000 Subscriber Shares of US$1 each and five billion(5,000,000,000) Shares of no par value, initially designated asunclassified shares. The unclassified shares are available forissue as Participating Shares.

Issued and Fully PaidNumber of Shares

Wanger WangerUS Smaller European Smaller

Participating Shares Companies Fund Companies Fund

Shares in Issue at 1 July 2004 7,970,376 4,292,863Shares Issued 5,756,559 2,165,811Shares Redeemed (5,099,128) (3,268,188)_____ _____Shares in Issue at 30 June 2005 8,627,807 3,190,486______ ______Subscriber shares to the value of EUR9 are fully paid up. As thesedo not form part of the Participating Shares of the Company, theydo not form part of the Net Asset Value of the Company and arethus disclosed in the financial statements by way of this note only.In the opinion of the Directors, this disclosure reflects the natureof the Company’s investment business.

Share RightsSubscriber Shares do not entitle the holder to any dividends andon a winding up entitle the holders to a return of the nominalamount of capital paid, provided that sufficient funds exist. At ageneral meeting, the holders of Subscriber Shares shall, on ashow of hands and on a poll, be entitled to one vote perSubscriber Share.

Participating Shares are entitled to such dividends as theDirectors may from time to time declare and in the event of awinding up, have the entitlements referred to in the Company’sProspectus. At a general meeting, on both a show of hands and ona poll, every Shareholder present in person or by proxy shall beentitled to one vote in respect of each Share held by him.

8. FeesThe Investment Manager is entitled to receive a monthly fee, at arate of 1.5% per annum of the Net Asset Value of each Fund. TheAdministrator and Custodian fee will be calculated on the lastdealing day of each month and payable monthly in arrears. TheAdministrator is entitled to a fee of up to 0.1% per annum of the netasset value of each Fund (subject to a minimum fee of $60,000 perannum per each Fund). The Custodian is entitled to a fee of up to0.2% per annum of the Net Asset Value of each Fund plus a fee ofup to $25 for each transaction. The Investment Manager,Administrator, Custodian and Directors are entitled toreimbursement of all out-of-pocket expenses. The actual feesincurred by the Fund are detailed in note 3.

Audit fees varied year to year due to over accruals in 2003affecting the charge for 2004. The actual fees incurred by the Fundin the year ended 30 June 2005 are detailed in note 3. Wanger USSmaller Companies incurred audit fees of €15,716 (2004:$12,672)and Wanger European Smaller Companies incurred audit fees of€13,000 (2004: €10,500) for the year ended 30 June 2005.

9. Net Asset Value And Net Asset Value Per Share

Net Asset Net Asset Value Value

USD Per ShareUSD

Wanger US Smaller Companies FundAs at 30 June 2005 316,240,975 36.65_______ ___As at 30 June 2004 260,682,289 32.71_______ ___As at 30 June 2003 110,837,804 22.87_______ ___

Net Asset Net Asset Value Value

EUR Per ShareEUR

Wanger European Smaller Companies Fund

As at 30 June 2005 96,652,448 30.29_______ ___As at 30 June 2004 102,759,180 23.94_______ ___As at 30 June 2003 92,284,790 17.95_______ ___

10. TaxationUnder current law and practice, the Company qualifies as aninvestment undertaking as defined in Section 739B of the TaxesConsolidation Act, 1997, as amended. It is not chargeable to Irishtax on its income or capital gains. However, a tax can arise on thehappening of a “chargeable event” in the Company. A chargeableevent includes any distribution payments to shareholders or anyencashment, redemption or transfer of shares. Any tax arising ona chargeable event is a liability of the shareholder, albeit it is paidby the Company (although if the Company fails to deduct the tax orthe correct amount of tax it becomes ultimately a liability of theCompany). No tax will arise in respect of chargeable events inrespect of a shareholder who is an Exempt Irish Investor (asdefined by Section 739D of the Taxes Consolidation Act,1997, asamended) or who is neither Irish resident nor Irish ordinarilyresident at the time of the chargeable event provided that thenecessary signed declaration is in place.

11. Related Party Disclosures Page 2 discloses the Company’s Directors and Columbia WangerAsset Management, LP as the Investment Manager of theCompany. Amounts earned by both the Directors and theInvestment Manager are disclosed in note 3.

The interests of the Directors in related parties are as follows:

Ralph Wanger is a retired officer in Columbia Wanger AssetManagement, LPBruce H Lauer is an officer in Columbia Wanger AssetManagement, LPDaniel Morrissey is a partner in William Fry, Solicitors, Irish legaladvisers to the Company.The Secretary, Wilton Secretarial Limited is owned by the partnersof William Fry.David Shubotham was a director in J & E Davy, sponsoringstockbroker of the Company. until 1 May 2005.

17



as at 30 June 2005

12. Derivatives And Other Financial Instruments

The main risks arising from the Company’s financial instrumentsare market price, foreign currency, liquidity and credit risks.

(a) Market price risk

The Company’s investments are susceptible to market price riskarising from uncertainties about future prices. The Company’smarket price risk is managed through diversification of theinvestment portfolio and the Company’s overall market positionsare monitored regularly by the Investment Manager and reviewedby the Board of Directors.

(b) Foreign currency risk

US Smaller Companies FundAll the financial assets/net assets of the Fund are denominated ina single currency, i.e. US Dollars.

European Smaller Companies FundA substantial portion of the the financial assets/net assets of theFund are denominated in currencies other than the base currencywith the effect that the balance sheet and total return can besignificantly affected by currency movements. The following setsout the Fund’s total exposure to foreign currency risk;

Amount in EUR Amount in EUR2005 2004

CurrencyCHF 2,612,625 1,714,028GBP 20,518,469 22,296,258NOK 1,461,392 2,029,197SEK 8,135,981 7,818,840USD (2) 1,610,115________ ________

32,728,465 35,468,438________ ________

No derivatives were used during the accounting year to protectagainst adverse exchange rate fluctuations.

(c) Liquidity risk

The Company’s assets comprise mainly of realisable securities,which can be readily sold. The main liability of the Company is theredemption of any shares that investors wish to sell.

(d) Credit risk

The Company will be exposed to a credit risk on parties with whomit trades and will also bear the risk of settlement default. TheCompany minimises concentration of credit risk by undertakingtransactions with a large number of customers and counterpartieson recognised and reputable exchanges.

(e) Fair value of financial assets and financial liabilities

All of the financial assets and financial liabilities of the Companyare held at fair value. Realised gains and losses on financialassets are disclosed in the Statement of Operations on page 12.

13. Soft Commission Arrangements

Soft commission arrangements entered into by the InvestmentManager on behalf of the Wanger US Smaller Companies Fundwere USD29,969 (2004: USD 35,108) and on behalf of the WangerEuropean Smaller Companies Fund were EUR 12,559 (2004:EUR54,545.)

14. Approval Of The Financial Statements

The financial statements were approved by the Board of Directorson 13 September 2005.

18


Wanger US Smaller Companies Fund Schedule of Investments as at 30 June 2005

Holding Investment Value % ofUSD Fund

EQUITIESUNITED STATESTransportation

87,800 Heartland Express Incorporated 1,705,954 0.54

Consumer Goods/ServicesApparel

114,000 Oxford Industries 4,907,700 1.55

Other Consumer Services35,000 ITT Educational Services 1,869,700 0.59

Food60,000 NBTY 1,556,400 0.49

Furniture/Textiles50,000 Herman Miller 1,542,000 0.49

Leisure Products165,000 Callaway Golf 2,545,950 0.8180,000 International Speedway 4,500,800 1.42

Nondurables49,000 The Scotts Company 3,489,290 1.10

Other Consumer Services146,700 Central Parking Corporation 2,017,125 0.64140,000 Coinstar 3,176,600 1.0080,000 Weight Watchers International 4,128,800 1.31

Retail90,000 Aeropostale 3,024,000 0.96

109,500 AnnTaylor Stores 2,658,660 0.84176,200 Brookstone 3,326,656 1.0550,000 Chico’s FAS 1,714,000 0.5480,000 Hot Topic 1,529,600 0.48

140,000 Petco Animal Supplies 4,104,800 1.30350,000 Restoration Hardware 2,863,000 0.9190,000 West Marine 1,625,400 0.51

Energy/MineralsOil & Gas Producers

120,000 McMoRan Exploration 2,341,200 0.74250,000 Vaalco Energy Incorporated 865,000 0.28152,000 Western Gas Resources 5,304,800 1.68

Oil Refining/Marketing/Distribution63,000 Atmos Energy 1,814,400 0.58

165,000 Oneok 5,387,250 1.70

Oil Services77,000 Chicago Bridge & Iron 1,760,220 0.56

170,000 FMC Technologies 5,434,900 1.72270,000 Key Energy Services 3,267,000 1.03350,000 Newpark Resources 2,625,000 0.83131,900 Pioneer Drilling 2,012,794 0.63220,000 Pride International 5,654,000 1.79

Other Resources142,000 Layne Christensen Company 2,820,830 0.89


FinanceBanks/Savings & Loans

70,000 Anchor BanCorp Wisconsin 2,118,200 0.6749,279 Associated Banc 1,658,731 0.5275,750 BOK Financial 3,493,590 1.1120,000 First Financial Bankshares 676,800 0.21

130,000 Provident Bancorp 1,574,300 0.50120,000 TCF Financial 3,105,600 0.9860,000 West Bancorporation 1,128,000 0.3650,000 West Coast BanCorp Oregon 1,220,500 0.39

Finance Companies377,000 AmeriCredit 9,613,500 3.0486,300 World Acceptance 2,593,315 0.82

Insurance100,000 HCC Insurance Holdings 3,787,000 1.20

Money Management75,000 Nuveen Investments 2,821,500 0.89

Health CareBiotechnology/Drug Delivery

100,000 AtheroGenics 1,598,000 0.5180,000 Dov Pharmaceutical 1,492,800 0.47

200,000 Lexicon Genetics 988,000 0.3155,000 Neurocrine Biosciences

Incorporated 2,313,300 0.73150,000 Pozen 1,230,000 0.39

Health Services90,000 Charles River Laboratories

International 4,342,500 1.3730,715 Coventry Health Care

Incorporated 2,173,087 0.69180,000 Dendrite International 2,484,000 0.7935,000 Lincare Holdings 1,429,400 0.45

111,200 NDCHealth 1,998,264 0.63

Hospital/Laboratory Supplies102,000 Diagnostic Products 4,827,660 1.53

Medical Equipment60,000 Arrow International

Incorporated 1,914,000 0.60100,000 Cytyc Corporation 2,206,000 0.70104,000 Edwards Lifesciences 4,474,080 1.41120,000 Intermagnetics General 3,691,200 1.17

Pharmaceuticals80,000 Par Pharmaceutical 2,544,800 0.80

Industrial Goods/ServicesConstruction

53,000 Florida Rock Industries 3,887,550 1.23

Electrical Components138,000 Genlyte 6,726,120 2.13

19


Wanger US Smaller Companies Fund Schedule of Investments as at 30 June 2005


UNITED STATES (cont.)Industrial Goods/Services (cont.)Industrial Distribution

103,000 NuCo2 2,644,010 0.8450,000 Watsco 2,130,000 0.67

Machinery162,000 Ametek 6,779,700 2.14140,000 Clarcor 4,095,000 1.2970,000 Donaldson Company 2,123,100 0.6773,000 Esco Technologies 7,358,400 2.33

111,700 Nordson Corporation 3,829,076 1.2180,000 Pentair 3,424,800 1.08

Outsourcing Services350,000 Quanta Services 3,080,000 0.97

Speciality Chemicals/Industrial Materials230,000 Spartech 4,094,000 1.30150,000 Zoltek Companies

Incorporated 1,684,500 0.53

Water41,000 CUNO 2,929,040 0.93

InformationBusiness Software

230,000 Aspect Communications Incorporated 2,582,900 0.82

173,800 E Piphany 604,824 0.19250,000 Indus International 615,000 0.20200,000 JDA Software Group 2,276,000 0.72240,000 MRO Software 3,506,400 1.11690,000 Novell 4,278,000 1.35244,800 Pegasus Systems 2,729,520 0.8661,700 Ssa Global Technologies

Incorporated 740,400 0.23

Business Information/Marketing Services100,000 Ceridian 1,948,000 0.6219,400 FTI Consulting 405,460 0.13

150,000 InfoUSA 1,755,000 0.5595,000 MAXIMUS 3,352,550 1.06

Computer Hardware & Related Equipment55,000 Belden CDT 1,166,000 0.37

130,000 CTS 1,597,700 0.5130,000 Excel Technology 729,000 0.23

170,000 Symbol Technologies 1,677,900 0.53200,000 Unova 5,326,000 1.68

Computer Services250,000 RCM Technologies 1,086,250 0.34

Internet Related505,000 SkillSoft 1,742,250 0.55145,000 Valueclick 1,787,850 0.57

Mobile Communications180,000 American Tower 3,783,600 1.2080,000 Western Wireless 3,384,000 1.07


Radio90,000 Salem Communications 1,785,600 0.57

330,500 Spanish Broadcasting Systems 3,301,695 1.04

Semiconductors/Related Equipment70,000 Integrated Circuit Systems 1,444,800 0.4610,300 Pericom Semiconductor 83,842 0.02

Telecommunications Equipment225,000 Andrew Corporation 2,871,000 0.91175,000 Symmetricom 1,814,750 0.57200,000 Tellabs Incorporated 1,740,000 0.55

TV Broadcasting440,000 Entravision Communications 3,427,600 1.08140,000 Gray Television 1,688,400 0.54

Other IndustriesReal Estate

135,000 Crescent Real Estate Equities 2,531,250 0.80

Waste Management80,000 Waste Connections 2,983,200 0.94

Total Value of Listed Investments 290,603,993 91.89Cash* 29,690,394 9.39Other Net Liabilities (4,053,412) (1.28)

Total Value of Fund 316,240,975 100.00

*All cash holdings are held at State Street Bank and Trust Company.All of the above securities are listed on a recognised stock exchange ortraded on a regulated market unless otherwise stated.

20


Wanger European Smaller Companies Fund Schedule of Investments as at 30 June 2005

Holding Investment Value % ofEUR Fund

EQUITIESFRANCEBusiness Information/Marketing Services

72,200 Fininfo 1,252,670 1.30

Computer Hardware & Related Equipment27,300 Neopost 1,986,075 2.05

Consumer Goods Distribution20,000 U10 1,000,000 1.03

Steel13,100 Vallourec 55,282 0.0613,100 Vallourec Usin 3,115,180 3.22

Industrial Materials53,900 Carbone Lorraine 2,115,575 2.19

Insurance101,600 April Group 2,615,184 2.71

Internet Related67,900 Iliad 2,098,789 2.17

Other Consumer Services17,600 Pierre & Vacances 1,074,480 1.11

Other Industrial Services15,300 Bacou-Dalloz 1,035,810 1.07

Pharmaceuticals170,000 Cerep 1,696,600 1.76

Transportation27,200 Norbert Dentressangle 1,060,256 1.10

FRANCE–TOTAL 19,105,901 19.77

GERMANYApparel

54,000 Hugo Boss Designs 1,467,180 1.52

Business Information/Marketing Services64,300 GFK Group 2,098,752 2.17

Computer Hardware & Related Equipment22,900 Wincor Nixdorf 1,545,979 1.60

Construction50,200 Bilfinger Berger 1,934,206 2.00

Finance Company40,000 Grenke 1,404,000 1.45

Hospital Management46,000 Rhoen - Klinikum 2,635,800 2.73

Machinery16,900 Rational 1,504,100 1.56


Money Management140,000 Deutsche Beteiligung 1,806,000 1.87

GERMANY–TOTAL 14,396,017 14.90

GREECEGaming

82,000 Intralot 1,039,760 1.08GREECE–TOTAL 1,039,760 1.08

IRELANDFood

200,000 IAWS 2,312,000 2.39

Industrial Distribution150,000 Grafton Group 1,437,000 1.49

Pharmaceuticals870,000 United Drug 3,088,500 3.19

Travel69,600 Jurys Doyle Hotels 1,080,192 1.12

IRELAND–TOTAL 7,917,692 8.19

ITALYIndustrial Materials

207,100 GranitiFiandre 1,503,546 1.56

Other Durable Goods1,534,100 Ducati Motors 1,503,418 1.56

67,000 Sabaf 1,088,750 1.54

Transportation45,000 Aeroporto Venezia 1,040,400 1.08

ITALY–TOTAL 5,136,114 5.31

NETHERLANDSBusiness Software

100,000 Unit 4 Aggresso 1,265,000 1.31

Conglomerates56,000 Aalberts Industries 2,122,400 2.20

Oil Services66,000 Fugro Nv 1,356,300 1.40

Food36,825 Sligro Food Group 1,226,273 1.27

Healthcare Services32,000 OPG Groep 1,848,000 1.91

Industrial Materials18,942 Koninklijke Ten Cate 1,411,179 1.46

Other Industrial Services35,600 IM Tech 1,032,044 1.07

Outsourcing Services62,500 United Services Group 1,374,375 1.42

21


Wanger European Smaller Companies Fund Schedule of Investments as at 30 June 2005


NETHERLANDSTransportation

32,000 Smit International Nv 1,227,200 1.27NETHERLANDS–TOTAL 12,862,771 13.31

NORWAYFurniture/Textiles

84,000 Ekornes 1,347,823 1.39NORWAY–TOTAL 1,347,823 1.39

SWEDENConglomerates

146,700 Hexagon 2,451,750 2.54

Furniture/Textiles104,100 Nobia 1,249,786 1.29

Healthcare Services18,985 Medicover Holding 156,637 0.16

Medical Equipment1,620,500 Biotage 1,816,954 1.88

Other Industrial Services96,000 Sweco 1,431,790 1.48

SWEDEN–TOTAL 6,963,357 7.20

SWITZERLANDRegulated Utilities

15,400 BKW Energie 796,828 0.82

Specialty Chemicals3,450 Sika 1,778,427 1.84

SWITZERLAND–TOTAL 2,575,255 2.66

UNITED KINGDOMFinance Companies

121,800 Debt Free Direct Group 359,765 0.3775,000 Intermediate Capital 1,160,395 1.20

300,000 Kensington 2,498,458 2.58119,100 Northgate 1,601,128 1.66250,000 Paragon Group 1,571,253 1.63

Insurance700,000 Charles Taylor Group 2,502,900 2.59

Nondurables190,000 International Greetings 1,279,951 1.32

Oil & Gas Producers406,900 Tullow Oil 1,123,557 1.16

Oil Services232,000 Expro International 1,557,735 1.61285,100 Offshore Hydrocarbon Mapping 896,984 0.93

Other Durable Goods220,000 Vitec Group 1,087,921 1.13

Other Industrial Services164,952 Business Post 1,558,141 1.61110,000 Exel 1,382,702 1.43


Real Estate284,718 Workspace Group 1,000,114 1.04

Regulated Utilities90,000 Viridian 1,041,358 1.08

UNITED KINGDOM–TOTAL 20,622,362 21.34

Total Value of Investments 92,110,612 95.30Cash* 5,405,817 5.59Other Net Liabilities (863,981) (0.89)

Total Value of Fund 96,652,448 100.00

*All cash holdings are held at State Street Bank and Trust Company.All of the above securities are listed on a recognised stock exchange ortraded on a regulated market unless otherwise stated.

22


Wanger US Smaller Companies Fund Schedule of Portfolio Changes for the year ended 30 June 2005 (Unaudited)

Largest Purchases

220,000 Pride International90,000 Charles Rivers Laboratories International

190,000 Spartech111,700 Nordson520,000 Novell410,000 Skillsoft180,000 American Tower39,000 Genlyte Group80,000 Waste Connections75,000 Nuveen95,000 MAXIMUS

100,000 Denbury230,000 Aspect Communications120,000 FTI Consulting45,000 International Speedway

142,000 Layne Christensen55,000 Neurocrine Biosciences

100,000 Cytyc350,000 Quanta Services170,000 Symbol Technologies

Largest Sales

315,000 Western Wireless225,000 Chicago Bridge & Iron220,000 CTI Molecular Imaging70,000 Downey Financial71,000 Equitable Resources80,000 Quicksilver Resources

100,000 Denbury Resources148,374 Peoplesoft171,500 First Health Group97,500 Trimble Navigation

115,000 Range Resources145,300 Euronet Worldwide35,000 Carbo Ceramics

138,900 Steven Madden100,600 FTI Consulting110,000 Investment Technology Group95,500 Williams Clayton Energy

130,000 Seachange International136,000 Mapics110,000 Nektar Therapeutics

Largest Purchases and Largest Sales are defined as the top twentyaggregate purchases or sales of a security for the year.

23


Wanger European Smaller Companies Fund Schedule of Portfolio Changes for the year ended 30 June 2005 (Unaudited)

Largest Purchases

370,000 IAWS Group108,800 Iliad215,000 Northgate200,000 Autogrill47,289 Koninklijke Ten Cate56,600 Carbone Lorraine

405,500 Expro International Group180,000 Unit 4 Aggresso523,189 United Drug50,000 Bilfinger Berger25,100 Pierre & Vacances34,600 Wincor Nixdorf97,800 Sabaf

1,534,100 Ducati Motor Holding250,000 Paragon100,000 Intermediate Cap50,000 Bankinter

424,700 Hit Entertainment425,000 Offshore Hydrocarbon Mapping55,600 GFK AG

Largest Sales

25,900 Vallourec70,220 Fugro58,200 Koninklijke Ten Cate

1,593,100 Tullow Oil180,000 Anglo Irish Bank140,000 Kerry Group74,800 Bilfinger Berger

285,000 Abengoa305,000 Takkt AG25,000 Camaieu

200,000 Autogrill63,981 Aalberts Industrie75,275 Central European Distribution

950,000 RPS Group50,000 Bankinter

170,000 IAWS Group142,400 Jurys Doyle Hotel Group280,000 Kensington Group424,700 Hit Entertainment103,500 Hexagon

Largest Purchases and Largest Sales are defined as the top twentyaggregate purchases or sales of a security for the year.

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