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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-4920
WASATCH FUNDS, INC.
(Exact name of registrant as specified in charter)
150 Social Hall Avenue
4th Floor
Salt Lake City, Utah 84111
(Address of principal executive offices)(Zip code)
| (Name and Address of Agent for Service) | Copy to: | |
Samuel S. Stewart, Jr. Wasatch Funds, Inc. 150 Social Hall Avenue, 4th Floor Salt Lake City, Utah 84111 | Eric F. Fess, Esq. Chapman & Cutler LLP 111 West Monroe Street Chicago, IL 60603 | |
Registrant’s telephone number, including area code: (801) 533-0777
Date of fiscal year end: September 30
Date of reporting period: September 30, 2009
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| Item 1: | Report to Shareholders. |
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| ANNUAL REPORT |
| SEPTEMBER 30, 2009 | EQUITY FUNDS | |
| WASATCH CORE GROWTH FUND | ||
| WASATCH EMERGING MARKETS SMALL CAP FUND | ||
| WASATCH GLOBAL OPPORTUNITIES FUND | ||
| WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND | ||
| WASATCH HERITAGE GROWTH FUND | ||
| WASATCH HERITAGE VALUE FUND | ||
| WASATCH INTERNATIONAL GROWTH FUND | ||
| WASATCH INTERNATIONAL OPPORTUNITIES FUND | ||
| WASATCH MICRO CAP FUND | ||
| WASATCH MICRO CAP VALUE FUND | ||
| WASATCH SMALL CAP GROWTH FUND | ||
| WASATCH SMALL CAP VALUE FUND | ||
| WASATCH STRATEGIC INCOME FUND | ||
| WASATCH ULTRA GROWTH FUND | ||
| WASATCH-1ST SOURCE INCOME EQUITY FUND | ||
| WASATCH-1ST SOURCE LONG/SHORT FUND | ||
| BOND FUNDS (Sub-Advised) | ||
| WASATCH-HOISINGTON U.S. TREASURY FUND | ||
| WASATCH-1ST SOURCE INCOME FUND | ||
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WASATCH FUNDS, INC.
Salt Lake City, Utah
www.wasatchfunds.com
800.551.1700
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| TABLEOF CONTENTS | ||
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Wasatch Emerging Markets Small Cap Fund™ Management Discussion | 6 | |
| 7 | ||
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Wasatch Global Science & Technology Fund® Management Discussion | 10 | |
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Wasatch International Opportunities Fund® Management Discussion | 18 | |
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Wasatch-1st Source Income Equity Fund™ Management Discussion | 32 | |
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Wasatch-Hoisington U.S. Treasury Fund® Management Discussion | 36 | |
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This material must be accompanied or preceded by a prospectus.
Please read the prospectus carefully before you invest.
Wasatch Funds are distributed by ALPS Distributors, Inc.
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| LETTERTO SHAREHOLDERS | ||
Samuel S. Stewart, Jr. PhD, CFA President of | DEAR FELLOW SHAREHOLDERS:
A WILD YEAR
A year ago we were talking about the Lehman collapse and its likely impact on the economy. The outlook was bleak as we prepared for a prolonged recession. What I didn’t foresee was the level of fear that would envelop the market when talking heads got stirred up and began speculating about the next great depression and a global economic collapse. In March the S&P 500* finally turned north, after bottoming more than 55% off its peak, as the first signals began to emerge that the world might not be coming to an end. Positive economic signs have continued to trickle in since then and the market has moved steadily up — with somewhat surprising conviction given how rapidly it had declined. As of September 30th the S&P 500 was actually within 7% of where it started a year earlier.
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Clearly it’s been a very turbulent year, but it is now beginning to feel like we’ve made it across to the other side. However, it’s important not to get ahead of ourselves. We may have crossed what seemed like a white-water river, but we still have a steep bank to climb before the economy reaches safety. In many respects we are now back to where we were pre-Lehman, still facing a tough period of prolonged economic challenge.
THE ECONOMY & MARKET TODAY
There clearly appears to be an economic recovery underway. We hear more and more about “green shoots” (early signs of recovery) turning into “green stalks” (more substantial manifestations of recovery). Here are a number of positive signs that I see:
| • | The credit market bellwether that I have been referring to in recent quarters is finally showing traction, as credit is becoming more available to reasonable borrowers at reasonable terms |
| • | The global stimulus efforts are having an impact |
| • | Housing appears that it may have bottomed |
| • | The rate of job loss seems to be slowing |
| • | Pockets of retail sales are beginning to pick up |
| • | Gross national product (GNP)** is growing again |
| • | The stock market is functioning better, including the re-emergence of initial public offerings (IPOs)† |
But as mentioned, we still have significant work to do, and I believe we will see a slow-growth economy for some time due to continuing fundamental challenges:
| • | The financial system is far from fixed |
| • | The economy continues to deleverage,†† with less demand for credit and tighter restrictions on those seeking it |
| • | Unemployment is at high absolute levels, reaching a 26 year high of 9.8% as of September 30, 2009 |
| • | Budget gaps have increased at local, state, and national levels |
| • | Commercial real estate is still weak |
Investors have focused on the positives, taking note of the green stalks and the market has risen quickly over the last quarter. In March the economy was uncertain, but stock valuations were too compelling to overlook. Now an economic recovery feels like its underway, but stocks may be ahead of the recovery as it is much harder to find compelling valuations.
WASATCH PERFORMANCE
In the extreme market volatility of last fall we made a conscious decision to remain very disciplined in our investment approach. We even tightened our process a bit as we:
| • | Moved our Portfolio Managers into the same room to increase multiple eyes collaboration among our most experienced investors |
| • | Reviewed our assumptions on every investment, with a keen focus on the long-term prospects of each company given the changing economic environment |
| • | Increased our conversations with management teams to keep a close pulse on the economic impact being felt by our companies |
| • | Narrowed our investment focus to our best ideas |
As a result, our overall name count continued to decrease, our positions moved toward higher quality companies, and our confidence in our portfolio holdings increased. I believe our solid performance over the last 12 months was a direct result of this discipline. For the year ended September 30, 2009, our equity funds were up +6.33% on average, with 12 of 16 funds outperforming their benchmark indexes, while the S&P 500 was down -6.91% and the Russell 2000 Index‡ was down -9.55%. In such an uncertain year we have been pleased to see our steady approach rewarded.
The past year really played out in what I saw as three distinct periods in the market.
| • | First period: indiscriminant selling that took place last fall after the financial collapse. During this period our holdings sold off along with everything else. |
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| SEPTEMBER 30, 2009 | ||
| • | Second period: a move toward quality in the first quarter of 2009 as the selling continued, but on a more selective basis. It was during this period that many of our funds outperformed and built a nice lead on their respective benchmarks. |
| • | Third period: the strong rebound, with perhaps a little bit of a “junk” rally over the last few months. Our funds rebounded nicely as well, with the lead many of our funds held over the benchmark indexes narrowing slightly. |
Our performance over these three distinct periods is consistent with our investment approach. We hope that because of our focus on quality companies that we will generally outperform in a discriminating down market and lead in a gently rising market, but likely lag in a strong bull market. The past 12 months have shown us a variety of market conditions that would typically play out over much longer market cycles. We found it rewarding to see many of our funds move nicely ahead of the market and their peers over this mini-cycle, particularly after a frustrating 2008 when we weren’t able to limit shareholder losses as we would have liked.
FINAL THOUGHT
One afternoon, while on my recent trip to Africa, I watched a lion poised for attack. Time and again she passed up what appeared to be perfectly good opportunities. Clearly the lion knew what she was looking for, and was carefully selecting the appropriate time to spring. Similarly, I think we at Wasatch have learned this year to be even more selective in our investment choices — to be cautious committers of capital with a closer eye on valuation as we make each investment decision. I believe our distance from the Wall Street herd also continues to help in this regard by allowing us to avoid getting caught up in the fads of the market and to stay focused on evaluating each individual company.
Thirty four years after founding Wasatch Advisors I continue to be a firm believer in our investment approach for long-term investors. We appreciate your confidence in us as well.
Sincerely,
Samuel S. Stewart, Jr.
President of Wasatch Funds
Information in this report regarding market or economic trends or the factors influencing historical or future performance reflects the opinions of management as of the date of this report. These statements should not be relied upon for any other purpose. Past performance is no guarantee of future results, and there is no guarantee that the market forecasts discussed will be realized.
*The S&P 500 Index represents 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged, and a common measure of common stock total return performance. You cannot invest directly in this or any index.
**Gross national product (GNP) is a measure of a country’s economic performance, or what its citizens produced (i.e. goods and services) and whether they produced these items within its borders.
†Initial public offering (IPO) is the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.
††Deleverage refers to the reduction of the amount of credit (or leverage) being used in the economy.
‡The Russell 2000 Index represents the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. The Index is unmanaged and widely considered to accurately capture the universe of small company stocks. You cannot invest directly in this or any index.
CFA® is a registered trademark owned by CFA Institute.
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| WASATCH CORE GROWTH FUND (WGROX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Core Growth Fund is managed by a team of Wasatch portfolio managers led by JB Taylor and Paul Lambert.
JB Taylor |
Paul Lambert | OVERVIEW
The Wasatch Core Growth Fund returned -0.45% during the 12-month period ended September 30, 2009, strongly outperforming the -9.55% return of the Russell 2000 Index. We are pleased |
that the Fund outperformed by such a substantial margin during a difficult period for the broader market. A key factor in the Fund’s outperformance was our decision to maintain positions in what we felt were undervalued securities when the market was going against us in the first half of the annual period. Once stocks rebounded from the irrationally low valuations they hit in late 2008, we saw a broad-based recovery among companies held by the Fund that boasted strong free cash flow but whose shares had nonetheless sold off during the market downturn. We believe this illustrates how our deep due diligence of the companies in the Fund helps us distinguish between their true worth and the often irrational values afforded them in the market.
DETAILSOFTHE YEAR
The largest contribution to performance versus the Index came from stock selection in the financials sector. The financial stocks in the benchmark lost over 23%, while those held in the Fund actually gained over 15%. Much of this outperformance resulted from the fact that we held only a small position in banks, which lagged by a wide margin, in favor of what we believed were healthier companies with more stable business models. Among these were Annaly Capital Management, Inc., the insurance company Tower Group, Inc., and the financial analytics and benchmarks provider MSCI, Inc.
We also generated significant outperformance in the consumer discretionary sector, another potentially challenging area of the market. Our holdings in this group gained over 22%, well above the -1.6% return for the broader sector. The Fund’s top contributor, adding over four percentage points to absolute performance, was auto parts retailer O’Reilly Automotive, Inc. O’Reilly bucked the broader trend of slowing consumer spending and its stock registered a gain of over 34%.
The information technology sector was another important source of performance, led by a U.S.-based outsourcing company with operations in India, Cognizant Technology Solutions Corp. We purchased Cognizant last autumn, when fears were rampant that the company’s exposure to the financials sector would translate into slower growth. Our purchase was predicated upon the idea that the company’s technology services are essential for companies that
outsource such services as a way to cut costs and stay competitive. Cognizant’s shares rebounded over 120% from the time we bought it through September 30, which helps illustrate how having a deep knowledge of what you own is essential to navigating volatile markets.
As would be expected in a year when stock prices declined sharply in the first half and recovered strongly in the second, the majority of our detractors were stocks that we sold prior to the recovery in the broader market. Among these were GMX Resources, Inc. KKR Financial Holdings, LLC and Chicago Bridge & Iron Co. N.V. (Netherlands). We also lost some ground to the Index from the underperformance of our holdings in the energy sector. Current and future holdings are subject to risk.
In terms of portfolio activity, we have opted for a steady, consistent approach. Turnover was low, reflecting our enthusiasm for the companies we continue to hold in the Fund. At the same time, however, we have not been afraid to trim positions in stocks that have run ahead of fundamentals in the short term. We also maintained a focus on quality, recognizing that reasonably valued, market-leading companies with strong earnings prospects tend to outperform the broader market over the long term. We believe this is the appropriate way to position the Fund for an environment characterized by slower economic growth.
OUTLOOK
Those who follow the markets will know that the current debate is focused on the likely “shape” of the economic recovery. While there have been some positive signs in recent months, we are not among those who are analyzing every data point in order to determine the direction of macroeconomic trends. Instead, our focus is on the “micro” level — the earnings outlook for each of the individual stocks we hold in the Fund. And on this front, our outlook remains optimistic. For the first time in over a year, Wall Street analysts’ earnings estimates for the companies we hold are beginning to rise. In this light, the market’s recent optimism seems warranted. What differentiates the Wasatch Core Growth Fund is that by our estimate a high percentage of our companies are on track to post higher earnings in 2010 than they did in 2007 — a remarkable statistic given the sharp decline in earnings for the broader market during the same interval.
Looking ahead, we will be focusing our efforts on ensuring that the Fund is populated with companies that have the potential to generate steady earnings growth. By “steady” we mean growth not just in 2009 and 2010, when year-over-year comparisons will be relatively easy and cyclical factors will likely provide a tailwind, but growth that we believe can continue through 2011, 2012 and beyond, an indicator that the earnings expansion is secular, and not cyclical, in nature.
Thank you for the opportunity to manage your assets.
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| WASATCH CORE GROWTH FUND (WGROX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | 10 YEARS | ||||
Core Growth | -0.45% | 0.77% | 8.77% | |||
Russell 2000 Index | -9.55% | 2.41% | 4.88% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Core Growth Fund are 1.21%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| Emeritus Corp. | 4.68% | |
| Copart, Inc. | 4.49% | |
| MEDNAX, Inc. | 4.00% | |
| Life Time Fitness, Inc. | 3.43% | |
| Aaron’s, Inc. | 3.21% | |
| PSS World Medical, Inc. | 3.05% |
| Company | % of Fund | |
| Fidelity National Information Services, Inc. | 2.63% | |
| Alliance Data Systems Corp. | 2.54% | |
| Pharmaceutical Product Development, Inc. | 2.42% | |
| Ports Design Ltd. (China) | 2.33% | |
| 32.78% | ||
| *As | of September 30, 2009, there were 56 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. The Russell 2000 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. You cannot invest directly in this or any index.
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| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Emerging Markets Small Cap Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley and Laura Geritz.
Roger D. Edgley, CFA Portfolio Manager |
Laura Geritz, CFA Portfolio Manager | OVERVIEW
The Wasatch Emerging Markets Small Cap Fund gained 26.80% in the 12 months ended September 30, 2009, and trailed the MSCI Emerging Markets Small Cap Index, which gained |
41.18%. Most of this underperformance occurred in the fourth quarter of 2008, when world markets were melting down and commodities prices were dropping from historic highs to historic lows. Both the Fund and the Index suffered significant losses during this period. The Fund’s overweight in commodities-focused areas like Brazil and the Middle East hurt performance. Performance in 2009 has been much improved as investors have realized that emerging markets in general were oversold.
Although the Index proved a tough mark to beat, we were pleased that the Fund ended such a turbulent year with such a substantial gain. Investments in the BRIC nations — Brazil, Russia, India and China — helped to power the Fund’s return. China was by far the top contributor, followed by Brazil and India. Indonesia was also a notable contributor aided by our investments in coal producers. Looking at sectors, the Fund benefited from the strong performance of our financials, consumer discretionary and information technology holdings.
Emerging market stocks have had quite a run. Nevertheless, our stocks for the most part still seem reasonably valued given the growth we expect from our companies. The Fund’s holdings are characterized by solid fundamentals including higher return on assets, operating margins, net margins, and lower debt than the emerging market stocks in the Index. As a result, we believe the Fund is well positioned for the future.
DETAILSOFTHE YEAR
China continued to be the largest weight in the Fund due to our positive take on the growth prospects of companies focused on selling products within China. Five of the Fund’s top 10 contributors came from China including: sportswear manufacturers Anta Sports Products Ltd. and China Dongxiang Group Co. Ltd.; Wasion Group Holdings Ltd., a maker of electronic power meters and data collection terminals; Shandong Weigao Group Medical Polymer Co. Ltd., a manufacturer of single-use medical devices; and Shanda Interactive Entertainment Ltd., a provider of online games.
Members of the Wasatch team recently visited Brazil and came away feeling upbeat about Brazil’s emergence as a consumer-driven culture. Within Brazil, the Fund holds investments in a variety of industries including banks, retailers,
metals and mining, and chemicals. One of our best performing Brazilian holdings was Banco do Estado do Rio Grande do Sul S.A., a bank that we like for its strong fundamentals.
China and India are the world’s two most populous countries and they are expected to wrest the lead for global gross domestic product (GDP)* from the U.S. and Europe over the next five years. Having a strong presence in these dynamic markets has been and will be important for the Fund. As in China, the Fund is overweight relative to the benchmark in India with holdings in a multitude of industries. In India, we’re particularly attracted to lending institutions. This past year, LIC Housing Finance Ltd., one of the largest mortgage lenders in India, made a substantial contribution to the Fund’s return.
Indonesia is another important area of investment for the Fund. We like Indonesia for its young population, emerging democracy, and place as a coal producer. Indonesia is Asia’s largest supplier of thermal coal used to drive power plants. The Fund has two coal-related holdings in Indonesia that were strong contributors to performance —Tambang Batubara Bukit Asam and Indo Tambangraya Megah.
The Fund was overweight and outperformed the Index in the BRIC nations and Indonesia. In contrast, the Fund’s substantially underweight position in Taiwan and Korea hindered relative performance, especially in Taiwan, a country that benefited from strong-performing chip manufacturers and other technology-related companies. We have focused less in these countries because, although they are theoretically emerging markets, their major industries such as autos and electronics are largely dependent upon developed world growth.
On a related note, our underweight position in information technology, particularly our lack of exposure to semiconductors, computers and peripherals firms, hurt the Fund’s relative results. Information technology was the best performing sector within the Index fueled by short-term inventory replenishment in the microchip industry. Within the IT sector, we have elected to focus on online gaming, which is seeing huge growth in Asia, and on companies that produce electronic equipment and instruments used in infrastructure development. In lieu of a larger position in IT, we expect to continue overweighting sectors like consumer, financials, and health care where growth can be driven by domestic demand. Current and future holdings are subject to risk.
OUTLOOK
Generally, we have made no dramatic changes to the Fund’s country or sector weights and we still see the potential for our holdings to deliver at least 15% earnings growth. We feel we can get faster growth from small companies within emerging markets for about the same price tag as similar companies in the developed world. With this in mind, we will continue seeking to provide shareholders with the most exposure possible to true emerging markets.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
| *Gross | domestic product (GDP) is a basic measure of a country’s economic performance and is the market value of all final goods and services made within the borders of a country in a year. |
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| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR | 5 YEARS | SINCE INCEPTION 10/1/07 | ||||
Emerging Markets Small Cap | 26.80% | N/A | -11.25% | |||
MSCI Emerging Markets Small Cap Index | 41.18% | N/A | -11.42% | |||
MSCI Emerging Markets Index | 19.07% | N/A | -10.82% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Emerging Markets Small Cap Fund are 2.69%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| Bharat Electronics Ltd. (India) | 2.00% | |
| Coca-Cola Icecek AS (Turkey) | 1.81% | |
| Ports Design Ltd. (China) | 1.79% | |
| CP ALL PCL (Thailand) | 1.73% | |
| Aramex PJSC (United Arab Emirates) | 1.71% | |
| Sesa Goa Ltd. (India) | 1.67% | |
| Bolsa Mexicana de Valores S.A.B. de C.V., Series A (Mexico) | 1.60% |
| Company | % of Fund | |
| LIC Housing Finance Ltd. (India) | 1.54% | |
| JSE Ltd. (South Africa) | 1.53% | |
| Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 1.52% | |
| 16.90% | ||
| *As | of September 30, 2009, there were 116 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ††Inception: October 1, 2007. The MSCI Emerging Markets and Small-Mid Cap Indexes are free float-adjusted market capitalization indexes that are designed to measure equity market performance in the global emerging markets. As of June 2006, the MSCI Emerging Markets Index consisted of the following 25 emerging market country indexes: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. You cannot invest directly in these or any indexes.
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| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Global Opportunities Fund is managed by a team of Wasatch portfolio managers led by Robert Gardiner and Blake Walker.
Robert Gardiner, CFA Portfolio Manager |
Blake H. Walker Portfolio Manager | OVERVIEW
The Wasatch Global Opportunities Fund returned 69.00% since its inception on November 17, 2008 through September 30.* The Fund benefited from our intentional move |
to begin operations when global stock prices were depressed due to uncertainty regarding the financial crisis and the strength of the global economy. As investors became optimistic that government efforts to stabilize the financial sector were gaining traction, stock prices rebounded sharply. The Fund outperformed its benchmarks during the period. The MSCI AC World Small Cap Index returned 56.05%. The S&P Global SmallCap Index returned 51.73%. The MSCI AC World Index returned 35.26%.
Often a good year for a fund is driven by performance in just a few areas, but we are pleased to report that the Fund’s holdings provided broad-based performance over the period. Specifically, our stock picks outperformed across domestic and international markets, as well as across developed and emerging markets, and virtually every industry group and sector. Performance was constrained to a degree by the Fund’s cash position, which averaged approximately 13% over the period.
DETAILSOFTHE PERIOD
As true bottom-up investment managers, we build the portfolio company by company. Most of our holdings will be smaller companies that we believe have great management teams, sustainable competitive advantages, sound business models and the potential for strong earnings growth — we call these WBGC’s, or the World’s Best Growth Companies. We will also hold “fallen angels” — growth companies that have hit a temporary setback and have been overly punished by the market. A third category might be deemed “stalwarts” — somewhat more established companies in the mid-cap range that may not have the growth potential of smaller companies but which have dominant market positions and which we have been able to purchase at what we view as attractive valuations. Our ability to find these companies in any market in the world gives us the opportunity to seek out the best companies.
The Fund performed well across geographies, outperforming in the U.S. and developed and emerging markets. We outperformed in Western Europe led by Germany, the United Kingdom, Italy and Sweden. We also did well in Asia led by our overweight in China but also by strong performance in the important Japanese market and
in India, Singapore, Korea and Indonesia. We lagged in Australia, Brazil and Canada, markets focused on materials and energy, and areas we are underweight. We continue to broaden the number of countries we are invested in.
Through our due diligence, we ended up overweight in information technology (IT), the best performing segment of the overall market, and our technology picks outperformed within the sector. Our biggest overweight was in semiconductors, which was one of the best performing industry groups since the Fund’s inception. We were also overweight and outperformed in the IT services segment. Our largest holding, Wirecard (Germany), a developer of electronic payment systems, more than doubled.
While health care stocks lagged the market, our selections within the sector outperformed, rising over 80%. Our medical device stocks did especially well. The stock price of our largest holding at the beginning of the period — VNUS Medical Technologies, Inc. — nearly doubled. The company was acquired during the second quarter of 2009.
We had substantial exposure to consumer discretionary, another outperforming area. Our holdings there outperformed the market, notably sporting goods retailer Big 5 Sporting Goods Corp. and Ports Design Ltd. (China), a fashion and luxury goods manufacturer.
Our underweighting and stock picking drove the Fund’s strong relative performance in financials. Notably, we underweighted U.S. banks and overweighted banks in countries with less exposure to the financial crisis such as India, Brazil and Canada.
We struggled somewhat in consumer staples. While many of our holdings performed well, we had some notable detractors, including Beauty China Holdings Ltd. Overall, consumer staples is an exciting place to us, especially in emerging markets, and we feel we can do well in this area. Current and future holdings are subject to risk.
Finally, we had significant cash which held back performance as the market rallied. The cash allocation did not reflect any negative market outlook on our part, but was instead driven by our desire to put assets to work in an organic way as we find great companies globally in which to invest.
OUTLOOK
Stock prices have gone up a long way in a short time and we expect more modest returns going forward.
We will continue to look for great companies. This involves extensive research, conducting company-by-company financial analysis, and traveling around the world to meet with management teams. As global investors, we have the ability to seek out what we believe are the best stocks in every region and in every industry.
As the world continues to get smaller, we believe this benefits investors like ourselves who take a global approach. The Fund is off to an excellent start, with our picks in almost every area having outperformed since inception. We are passionate about applying Wasatch’s time-tested equity strategies on a global level, and are excited about the prospects for the Fund over the coming years and decades.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
| * | The Fund’s return since inception is not annualized. |
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| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | SINCE INCEPTION 11/17/08 | |||
Global Opportunities | N/A | 69.00%* | ||
MSCI AC World Small Cap Index | N/A | 56.05%* | ||
S&P Global SmallCap Index | N/A | 51.73%* | ||
MSCI AC World Index | N/A | 35.26%* |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Global Opportunities Fund are 2.61%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in small and micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.
| *Not | annualized. |
TOP 10 EQUITY HOLDINGS**
| Company | % of Fund | |
| Wirecard AG (Germany) | 1.88% | |
| O2Micro International Ltd. ADR (China) | 1.48% | |
| Create SD Holdings Co. Ltd. (Japan) | 1.14% | |
| Melexis N.V. (Belgium) | 1.02% | |
| Ports Design Ltd. (China) | 0.99% | |
| Resources Connection, Inc. | 0.93% |
| Company | % of Fund | |
| Audika S.A. (France) | 0.92% | |
| Ted Baker plc (United Kingdom) | 0.91% | |
| Apollo Group, Inc., Class A | 0.90% | |
| Abcam plc (United Kingdom) | 0.90% | |
| 11.07% | ||
| **As | of September 30, 2009, there were 308 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN†
| †Excludes | securities sold short and written options, if any. |
| ††Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ‡Inception: November 17, 2008. The MSCI AC World Small Cap Index is an unmanaged index and includes reinvestment of all dividends of issuers located in countries throughout the world representing developed and emerging markets, including securities of U.S. issuers, with market capitalizations between US $200 million and $1.5 billion. The S&P Global SmallCap Index is an unmanaged index and includes reinvestment of all dividends of issuers located across developed and emerging markets, including the United States, who fall in the bottom 15% of their country’s market cap range. The MSCI AC World Index is an unmanaged index and includes reinvestment of all dividends of issuers located in countries throughout the world representing developed and emerging markets, including securities of U.S. issuers, of all capitalizations. You cannot invest directly in these or any indexes.
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| WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND (WAGTX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Global Science & Technology Fund is managed by a team of Wasatch portfolio managers led by Sam Stewart.
Samuel S. Stewart, Jr. PhD, CFA Portfolio Manager | OVERVIEW
The Wasatch Global Science & Technology Fund returned 7.86% during the 12 months ended September 30, 2009, and underperformed the 10.89% return of its primary benchmark, the Russell 2000 Technology Index. Two aspects of the broader market environment contributed to the Fund’s positive absolute return. First, small- and mid-cap stocks outperformed large-caps — a positive for the Fund given that our primary focus is on smaller, |
faster-growing companies. Second, information technology stocks outpaced the return of the market as a whole. Another plus was that our stock picks outperformed by a wide margin in the portion of the Fund invested in information technology — while the tech stocks in the benchmark returned approximately 12%, those held in the Fund returned over 28%.
On the other hand, health care stocks underperformed at a time of rising investor risk appetites and uncertainty about the U.S. government’s reform efforts. The Fund’s holdings in health care produced a slightly negative return, a drag on relative performance in a positive market. Nevertheless, we continue to see a wealth of outstanding longer-term opportunities in this area. The sector as a whole may not always keep pace with the broader indexes in rapidly rising markets, but we feel confident in the long-term prospects for the health care stocks we hold in the Fund.
DETAILSOFTHE YEAR
The Fund’s largest source of outperformance was its substantial weighting in the international markets. Nearly half of the Fund’s assets are invested abroad, reflecting our view that technology investors need a global perspective to benefit from the full range of opportunities that the tech and health care sectors have to offer. Of the Fund’s top 10 contributors to performance, seven were companies domiciled abroad. Among our top contributors from outside the United States were Wasion Group Holdings Ltd., a Chinese maker of power meters and data collection terminals that is benefiting from the rapid build-out of the country’s power grid; China Automation Group Ltd., which is capitalizing on the continued investments in safety and control systems in Chinese industries; and Wirecard AG, a leading international provider of electronic payment solutions that is based in Germany.
We also added value through our longstanding holding in Cognizant Technology Solutions Corp., a provider of information technology services to businesses with significant operations in India. We held on to our position in Cognizant even when the stock was being pressured by the global economic crisis of late 2008, as we believed it would maintain steady earnings through the downturn. The stock
subsequently recovered as investors recognized Cognizant’s value, and its stock closed the annual period with a gain of nearly 70%. We believe that the company’s strong long-term business prospects and not just the momentum of the broader equity market support this rebound and we are maintaining our position in Cognizant.
Turning to detractors, a key factor in the underperformance of the Fund’s health care sector was the poor returns of the senior assisted-living companies — The Providence Service Corp., Emeritus Corp., Capital Senior Living Corp., and Sunrise Senior Living, Inc. We elected to eliminate all of the Fund’s holdings in this group during the winter, which meant that we were unable to participate in their subsequent recovery. We also lost ground through a position in Cardica, Inc., a maker of systems used in coronary bypass surgery. The company’s management team mishandled its cash position amid a tough environment for hospitals, contributing to a decline of over 80% in Cardica’s stock price. Our cash position, which averaged over 7% during the year, also proved to be a drag on relative performance in a rising market. However, with stock prices having risen so much in recent months, we prefer to keep some powder dry in the event that a market pullback creates potential buying opportunities.
OUTLOOK
We continue to believe that the information technology and health care sectors remain fertile ground for individual stock selection. The information technology sector is one of the few sectors expected to generate positive earnings growth in the year ahead, as it has the potential to benefit from increased spending among either consumers or businesses. Health care, meanwhile, remains home to an abundance of companies with compelling product cycles and attractive bottom-up growth stories. We continue to take advantage of the extensive Wasatch research base to select what we see as being the best-in-class companies within the health care sector.
Despite our optimism regarding the prospects for the companies we hold in the Fund, we are maintaining a cautious approach overall. High unemployment, continued deleveraging, and the increased role of government in the United States’ economy are all factors that point to slower growth in the months and years ahead. As a result, we are being careful to take profits in our winners and take advantage of opportunities to invest in what we consider to be high quality companies at attractive prices. For example, we are finding compelling ideas among businesses where customers can receive a favorable return on their investment, such as security, storage, and network performance management. We are also maintaining our emphasis on fundamentals in order to mitigate the potential for negative surprises from the Fund’s holdings. We believe this is the prudent approach at a time when opportunities remain abundant, but where risks remain very much in place.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
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| WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND (WAGTX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | SINCE INCEPTION 12/19/00 | ||||
Global Science & Technology | 7.86% | 4.97% | 3.21% | |||
Russell 2000 Technology Index | 10.89% | 4.16% | -3.89% | |||
Nasdaq Composite Index | 2.54% | 3.12% | -1.75% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Global Science & Technology Fund are 1.92%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in concentrated funds will be more volatile and loss of principal could be greater than investing in more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| Cognizant Technology Solutions Corp., Class A | 2.71% | |
| Abcam plc (United Kingdom) | 2.01% | |
| Wirecard AG (Germany) | 1.89% | |
| MEDNAX, Inc. | 1.74% | |
| Akamai Technologies, Inc. | 1.57% | |
| Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 1.54% |
| Company | % of Fund | |
| Interactive Intelligence, Inc. | 1.48% | |
| Opnet Technologies, Inc. | 1.46% | |
| Power Integrations, Inc. | 1.45% | |
| O2Micro International Ltd. ADR (China) | 1.43% | |
| 17.28% | ||
| *As | of September 30, 2009, there were 89 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ††Inception: December 19, 2000. The Russell 2000 Technology Index is a capitalization-weighted index of companies that serve the electronics and computer industries or that manufacture products based on the latest applied science. The Nasdaq Composite Index is unmanaged and measures all Nasdaq domestic and non-U.S. based common stocks listed on The Nasdaq Stock Market. The Index is market-value weighted. This means each company’s security affects the Index in proportion to its market value. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Due to their number and size, technology stocks tend to dominate the direction of the Index. You cannot invest directly in these or any indexes.
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| WASATCH HERITAGE GROWTH FUND (WAHGX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Heritage Growth Fund is managed by a team of Wasatch portfolio managers led by Chris Bowen and Ryan Snow.
Chris Bowen Portfolio Manager |
Ryan Snow Portfolio Manager | OVERVIEW
The past year brought with it a range of investor emotions that drove the market from one extreme to another. This reaction was initially driven by the fear of a depression, which sent |
the market into a freefall. Then, in early March, optimism gradually began to replace the doomsday mentality that had gripped the market, setting the stage for a powerful rebound, which lasted through September 30th.
Through the turmoil, our approach remained the same as always: Stay the course. It is beneficial in times like these to keep the perspective that the process of managing the Fund is a marathon and not a sprint. This prevents us from getting bogged down in the day-to-day market noise and allows us to remain disciplined to our approach of striving to invest in great companies.
Certainly, the Fund’s stock holdings were at the mercy of the market gyrations but, overall, the outstanding business results delivered by many of our companies helped the Fund significantly outpace its benchmark. While we’re not celebrating the 3.74% gain posted by the Fund over the past year, it compared favorably to the 0.40% decline of the Russell Midcap Growth Index over the same period.
While much of the economic pessimism that prevailed early in the year has dissipated, significant challenges remain. For example, it is difficult to imagine that consumer spending, which accounts for approximately two-thirds of gross domestic product (GDP)* in the U.S., can stage a meaningful and lasting rebound with unemployment levels at a 25-year high, hovering around 10%. This is one element that continues to weigh down the economy as Americans try to put the recession in the rear-view mirror.
DETAILSOFTHE YEAR
We believe that one of the reasons our companies held up so well was their relatively light use of debt. While the credit crunch was detrimental — and sometimes fatal — to many companies relying on external financing to run their businesses, this was a mild concern within the Fund. In many cases, our holdings have been able to not only survive, but thrive, as they’ve grown their businesses by reinvesting their own cash flows and capturing market share. Self-financed companies, combined with management teams that can efficiently utilize that money, have resulted in average returns on equity (ROE) and returns on assets (ROA) in the Fund that handily surpass the corresponding figures in the benchmark.** We believe that, consistently delivered, these metrics are indicators of long-term success.
Our large allocation to information technology (IT) was a meaningful contributor to the annual results. The portfolio holds a diverse group of companies, from credit card processors to semiconductor chip producers. In particular, Infosys Technologies and Cognizant Technology Solutions Corp., both information technology outsourcers, received strong votes of confidence from investors, with overall returns topping 59% apiece. As global cutbacks blurred these companies’ revenue projections in late 2008, their stocks declined in price. As companies continue to tighten their belts, we believe that IT outsourcing will become an increasingly cost-effective option. The outlook for Cognizant and Infosys has become less muddled and their stock prices rebounded.
With the uncertainty surrounding proposed health care reform legislation, many stocks in the health care sector struggled over the past 12 months. In particular Covance, Inc., a provider of research services including drug testing and trials for the pharmaceutical industry, was one of our largest detractors from performance. Late in 2008, the company revised its near-term revenue outlook primarily due to project delays as pharmaceutical companies scaled back. We are encouraged about Covance’s prospects, including its diversified client base and service offerings and growing multi-year service contracts. We were able to add to our position at attractive prices as the stock rebounded strongly from its lows. Current and future holdings are subject to risk.
OUTLOOK
Forecasting near term company performance with any degree of accuracy was nearly impossible six months ago. However, at the time, we also felt like many of our most highly esteemed companies were trading at what would prove to be attractive levels once things began to normalize. Investor fear seemed to be concealing the true value of many companies. Since then, we feel that this opinion has been validated, resulting in more normal valuations, significantly benefiting the Fund’s performance in the process.
It is a moderate concern that the stock market may have gone up too far, too fast as bullish behavior began to return in earnest. This strong upward push was driven by forecasted economic improvement, but if expectations fail to be met, the market could experience a short-term setback. We are confident that as we continue to apply our consistent, disciplined investment process, the Fund will have the potential for long-term success.
Thank you for the opportunity to invest your assets.
| *Gross | domestic product (GDP) is a basic measure of a country’s economic performance and is the market value of all final goods and services made within the borders of a country in a year. |
| **Return | on assets (ROA) measures a company’s profitability by showing how many dollars of earnings a company derives from each dollar of assets it controls. Return on equity (ROE) measures a company’s efficiency at generating profits from shareholders’ equity. |
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| WASATCH HERITAGE GROWTH FUND (WAHGX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | SINCE INCEPTION 6/18/04 | ||||
Heritage Growth | 3.74% | 1.89% | 1.52% | |||
Russell Midcap Growth Index | -0.40% | 3.75% | 3.08% | |||
S&P 500 Index | -6.91% | 1.02% | 0.75% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Heritage Growth Fund are 1.01%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in mid cap funds will be more volatile and loss of principal could be greater than investing in large cap funds. Equity investing involves risks including potential loss of the principal amount invested.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| Apollo Group, Inc., Class A | 3.76% | |
| Altera Corp. | 3.54% | |
| St. Jude Medical, Inc. | 3.37% | |
| Express Scripts, Inc. | 3.25% | |
| Redecard S.A. (Brazil) | 2.98% | |
| CVS Caremark Corp. | 2.98% |
| Company | % of Fund | |
| Copart, Inc. | 2.79% | |
| NII Holdings, Inc. | 2.71% | |
| BMC Software, Inc. | 2.69% | |
| Amphenol Corp., Class A | 2.61% | |
| 30.68% | ||
| *As | of September 30, 2009, there were 54 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ††Inception: June 18, 2004. The Russell Midcap Growth Index measures the performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in the Russell Midcap Growth Index are also members of the Russell 1000 Growth Index. The S&P 500 Index represents 500 of the United States’ largest stocks from a broad variety of industries. The index is unmanaged, and a common measure of common stock total return performance. You cannot invest directly in these or any indexes.
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| WASATCH HERITAGE VALUE FUND (WAHVX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Heritage Value Fund is managed by a team of Wasatch portfolio managers led by Brian Bythrow.
Brian Bythrow, CFA Portfolio Manager | OVERVIEW
Over the past year, we saw investors appear to lose all hope, then regain it surprisingly quickly. Over the first six months, market turmoil was severe. Risk-wary investors shed stocks in favor of less-volatile assets, as the market offered few safe havens from the market meltdown. The U.S. Federal Reserve, along with many of its global counterparts, put all its tools to work to help ease the crisis. |
Economic stimulus plans, particularly those from the U.S. and China, were also put into action. It appeared that these concerted efforts had at least some impact, and stocks began to move upward in March. Many were skeptical, though, of whether this constituted the beginning of a true recovery, or simply a bear-market* rally.
From spring through the summer, stock markets staged a significant and broad-based rally, even as evidence supporting the hope of economic recovery remained scarce. Money came off the sidelines as investors put it to work in the equity markets, boosting stock prices. Stocks benefited around the globe, among all major sectors, and across the market-cap spectrum.
Over the course of this newsworthy year, the Wasatch Heritage Value Fund posted a return of -1.13% for the 12 months ended September 30, 2009. This placed the Fund’s performance well ahead of its benchmark, the Russell 1000 Value Index, which returned -10.62% for the year.
Our underweighting in the financials sector, particularly large banks, played a definitive role in the Fund’s outperformance of the Index for the year.
DETAILSOFTHE YEAR
Although established markets staged a comeback in the second half of the year, along with developing ones, we continue to have concerns about the outlook for consumer spending in the U.S. and other mature economies. Emerging markets, however, appear to offer the potential for robust growth on the consumer side of the economy.
Among our holdings that have the potential to gain from the continued expansion of the consumer class in emerging nations is our top contributor for the period, Brazil’s Weg S.A., a manufacturer of motors used in washers, dryers, and other home appliances. Demand has been growing for Weg’s products, which are primarily destined for domestic consumption, rather than for export to developed markets. In light of the resilience of emerging consumers, and the many constraints facing those in the U.S., we are likely to continue to emphasize the former in our consumer stocks.
Health care generally is seen as an area that can sail above economic woes. It’s not certain if that is always true, but what is clear is that these stocks can be affected by concerns about the impact of cost-cutting measures by insurers and
government programs. That’s why we like companies that can benefit from an emphasis on cost-consciousness, including our second-strongest contributor, Mylan, Inc., a maker of generic prescription drugs. As consumers seek — and insurers demand — the use of less costly treatments, Mylan is positioned to benefit. The stock’s solid performance also reflects Mylan’s success in paying down some of the debt resulting from its acquisition of Merck’s** generic drug portfolio in 2008, and its continued progress in integrating the two companies’ operations.
While we de-emphasized financials over the year, the sector was home to our third-strongest contributor for the period, property/casualty insurer CNA Financial Corp. We found that CNA and other insurers offered better balance sheets and stronger earnings power than most banks, and were available to us below tangible book value. There are some early hints that we may be at the beginning of a “hardening” insurance cycle, a point at which insurers enjoy greater pricing power. This trend is driven not just by a potentially improving business climate, but also by the exit of former major competitors — notably AIG — from the field. Current and future holdings are subject to risk.
OUTLOOK
While the stock market’s recent performance indicates that most investors are confident that a full-blown economic recovery is on the horizon, we are not so sure. In fact, we had anticipated that there might be some pullback during the period’s final months, given stocks’ strong run from April through June. Instead, stocks continued on a firm path upward. Although we are happy for this positive development, we retain some concern that the markets have gotten ahead of themselves.
For that reason, we look for companies that we believe will not require a powerful economic recovery in order to do well. We believe our cautious stance makes sense. While it’s evident that world economies have come a long way from the deeply troubled environment they faced late last year, there are still many issues to be addressed. U.S. consumers still face pressure from high debt loads, tight credit, and home values that are stagnant at best. This clouds the outlook for a breakout in spending anytime soon.
We intend to continue to deploy more of our cash as we identify worthy opportunities. Given the still-uncertain state of both the U.S. and many global economies, though, we will not seek to hop rapidly into stocks, but rather will retain our commitment to deep due diligence, and seek outstanding companies at prices that make sense. This may mean that we will not be able to pare down our cash position as quickly as we would like, but we believe the negative consequences of hasty purchases can far outweigh those of some excess cash.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
| *A | bear market is generally defined as a drop of 20% or more in stock prices over at least a two-month period. |
| **As | of September 30, 2009, the Wasatch Heritage Value Fund was not invested in Merck & Co., Inc. |
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| WASATCH HERITAGE VALUE FUND (WAHVX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | SINCE INCEPTION 8/30/07 | ||||
Heritage Value | -1.13% | N/A | -9.07% | |||
Russell 1000 Value Index | -10.62% | N/A | -15.11% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Heritage Value Fund are 3.89%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investments in value stocks can perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the market for long periods of time. Loss of principal is a risk of investing. Being non-diversified, the Fund can invest a larger portion of its assets in the securities of a limited number of companies than a diversified fund. Non-diversification increases the risk of loss to the Fund if the values of these securities decline. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| Covidien plc | 3.41% | |
| Old Republic International Corp. | 3.36% | |
| Visa Inc., Class A | 3.11% | |
| Perrigo Co. | 3.06% | |
| Sonoco Products Co. | 3.02% | |
| Pfizer Inc. | 2.98% |
| Company | % of Fund | |
| American Water Works Co., Inc. | 2.97% | |
| Spectra Energy Corp. | 2.93% | |
| Fifth Third Capital Trust VI, 7.25%, 11/15/67 Pfd. | 2.88% | |
| Sherwin-Williams Co. | 2.88% | |
| 30.60% | ||
| *As | of September 30, 2009, there were 35 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ††Inception: August 30, 2007. The Russell 1000 Value Index measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. You cannot invest directly in these or any indexes.
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| WASATCH INTERNATIONAL GROWTH FUND (WAIGX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch International Growth Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley.
Roger D. Edgley, CFA Portfolio Manager | OVERVIEW
The Wasatch International Growth Fund gained 18.03% in a tumultuous 12-month period, compared to a gain of 20.13% for the MSCI AC World Ex-U.S.A. Small Cap Index. Stock prices declined dramatically in the first six months of the period as world markets were shaken by the far-reaching financial crisis. Stocks surged over the last six months as investors gained confidence that governments had succeeded in |
averting disaster and that economic stimulus efforts were beginning to take hold.
Developed markets have been hit harder by the financial crisis than emerging markets and they are taking longer to recover. Investors realized this and jumped back into emerging markets, helping fuel a strong recovery in stock prices. The Fund’s presence in emerging markets, especially in China, Brazil and India, aided performance in the last 12 months. There were also several notable performers from among our investments in developed markets, where we focus on companies that have the potential to grow despite economic headwinds.
DETAILSOFTHE YEAR
Two themes that we have discussed before continued to bolster the Fund’s results. The first is securities exchanges that we like because they virtually monopolize their markets, and because they have scaleable business models, strong balance sheets and healthy free cash flow. Two of our top contributors for the year were securities exchanges — Brazil’s BM&F Bovespa S.A. and Japan’s Osaka Securities Exchange Co. Ltd.
Finding ways to capitalize on China’s growing middle class is another prominent theme for us. Several Chinese apparel and footwear companies that sell products within China contributed to the Fund’s solid results including Anta Sports Products Ltd., China Dongxiang Group Co. Ltd. and Li Ning Co. Ltd. Over the course of the year, however, the number of new competitors entering this space has tempered our view of these companies’ prospects. As a result, we decided to trim our exposure to this area in favor of other consumer-focused investments in China.
How we approach investing in China is quite different from our approach in Japan, by far the biggest country weighting in the Index. Our overweight position in China is supported by favorable demographics including China’s more than 1.3 billion people, growing middle class, and the government’s massive infrastructure programs aimed at stimulating the economy. In contrast, Japan’s population is declining, its real estate values are stagnant, and the government has been struggling to stave off deflation. The Fund is underweight relative to the benchmark in Japan, where our careful, bottom-up research has uncovered individual companies with the potential to grow independent from macro influences. In the 12-month period, the Fund benefited from the performance of
our investments in China and Japan, and our allocations to these countries aided performance versus the Index.
In most developed markets, we tend to favor companies whose growth prospects are tied to global demand for specialized products rather than to economic growth within their home countries. Companies from four developed markets helped the Fund’s results over the past 12 months and are good examples of our investment focus. These were: DiaSorin S.p.A. (Italy), a developer of in vitro diagnostic products; Abcam plc (United Kingdom), a biotechnology company that supplies antibodies used in life science research; Wirecard AG (Germany) a leading global provider of electronic payment systems; and Tandberg ASA (Norway) a provider of videoconferencing solutions. Current and future holdings are subject to risk.
The financials sector contributed to the Fund’s absolute return for the 12-month period. This was primarily due to the solid gain produced by our diversified financial services holdings. Among the leaders in this group were several of our securities exchanges and India’s Infrastructure Development Finance Co. Ltd. (IDFC). IDFC provides financing for projects such as power, roads, ports and telecommunications and appears well positioned to benefit from ongoing efforts to build out and improve India’s infrastructure.
In contrast, banks with exposure to the Western world’s financial troubles detracted from the Fund’s results and caused the financials sector to be a drag on performance versus the Index. Another area of relative weakness was the industrials sector. A notable detractor was Campbell Bros. Ltd., an Australian analytical testing services provider that does lab work for mining companies. While our industrial holdings struggled during the depths of the downturn, they have been strong performers in the budding economic recovery. For example, Campbell Brothers was the Fund’s second leading contributor in the most recent quarter. Fluctuations in oil and gas prices caused significant volatility in the energy sector. This negatively impacted several of our Canadian energy holdings and resulted in the Fund underperforming the Index in Canada.
OUTLOOK
Stocks around the world have come back from the brink following the massive amounts of liquidity that were withdrawn from global markets beginning in late 2007 and extending throughout much of 2008. Now, stocks are more reasonably valued, but the easy gains are behind us. Going forward, companies will have to live up to earnings growth expectations in order for stock prices to climb higher.
In such an environment, we expect our disciplined, bottom-up research will help us find companies capable of producing the earnings growth we seek, whether they are located in developed markets still struggling with negative economic growth or in faster growing emerging markets. We expect to maintain our broad sector and geographic exposure and do not anticipate making any significant changes to the way we manage the Fund in the coming months.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
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| WASATCH INTERNATIONAL GROWTH FUND (WAIGX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | SINCE INCEPTION 6/28/02 | ||||
International Growth | 18.03% | 5.66% | 9.54% | |||
MSCI AC World Ex-U.S.A. Small Cap Index | 20.13% | 9.64% | 13.03% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Growth Fund are 1.83%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| DiaSorin S.p.A (Italy) | 3.18% | |
| Wirecard AG (Germany) | 3.13% | |
| Abcam plc (United Kingdom) | 2.72% | |
| SimCorp A/S (Denmark) | 2.39% | |
| BM&F BOVESPA S.A. (Brazil) | 2.32% | |
| Campbell Brothers Ltd. (Australia) | 2.29% |
| Company | % of Fund | |
| Natura Cosmeticos S.A. (Brazil) | 2.28% | |
| Tandberg ASA (Norway) | 2.27% | |
| Osaka Securities Exchange Co. Ltd. (Japan) | 2.05% | |
| Rotork plc (United Kingdom) | 1.99% | |
| 24.62% | ||
| *As | of September 30, 2009, there were 89 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ††Inception: June 28, 2002. The MSCI AC World Ex-U.S.A. Small Cap Index is an unmanaged index and includes reinvestment of all dividends of issuers located in countries throughout the world representing developed and emerging markets, excluding securities of U.S. issuers. This index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities. You cannot invest directly in this or any index.
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| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch International Opportunities Fund is managed by a team of Wasatch portfolio managers led by Roger Edgley and Blake Walker.
Roger D. Edgley, CFA Portfolio Manager |
Blake H. Walker Portfolio Manager | OVERVIEW
There were two very different stories to tell for the two halves of the Wasatch International Opportunities Fund’s past 12 months. The first half was a time of almost unprecedented difficulty. Through the end of 2008, |
financial institutions around the world were confronted with the global credit crunch, and concerned investors hastened their flight out of international stocks. Even China, which appeared well prepared to ride out the storm, was not immune to the global meltdown. As 2009 dawned, stocks around the world continued on a volatile path, though not all countries were moving in the same direction. A number of emerging markets posted positive results in early 2009, while many developed markets remained in negative territory.
Enthusiasm about new leadership in the U.S. and widespread, coordinated stimulus efforts around the globe allowed many markets to move toward a more rational tone in the year’s second half. From April through June, stock prices rose significantly around the world. Emerging markets, which had begun on an upward path in the year’s first quarter, led the charge, but the U.S. and other developed markets also joined in. Global stocks posted still more gains through the summer, as investors continued to have confidence that the worst of the global recession and liquidity crisis was over. The economic data to fully support this optimism, however, were not always abundant, particularly in more developed markets. Nonetheless, more and more assets came off the sidelines and went into international equities, driving stock prices substantially higher.
Over the course of this eventful period, the Wasatch International Opportunities Fund returned 23.60% for the 12 months ended September 30, 2009. This placed it well ahead of its benchmark, the MSCI World Ex-U.S.A. Small Cap Index, which returned 14.75% over the same period.
DETAILSOFTHE YEAR
For the year as a whole, our top three contributors came from China, a market we continue to overweight. In addition to beneficial stock picking, this reflects China’s early rebound out of the economic morass. As the year wore on, however, and more markets began to emerge from the recession, our strong performers came from a broader variety of markets.
China Automation Group Ltd., a provider of safety and control systems for the petrochemical and railway industries in China, made the greatest positive contribution to the Fund’s performance for the year. This company stands to benefit from China’s massive infrastructure spending plans.
So does our second-strongest contributor, Wasion Group Holdings Ltd., a producer of electronic power meters and data collection terminals for China’s gas, electricity, and water industries.
A continuing theme in our investment approach is the rise of consumers in emerging markets. Chinese athletic apparel and footwear maker Anta Sports Products Ltd. reflects this area of focus. Anta makes products for China’s growing domestic market, rather than for export, which helped the company to weather the global decline, and to benefit from China’s quick recovery.
The Fund wasn’t without strong contributors from developed markets, however. Germany’s Wirecard AG, a provider of credit card processing and electronic payment systems, saw its stock price rise due in large part to the increasing volume of online transactions and the company’s comprehensive menu of merchant services. In the financials sector, Japan’s Osaka Securities Exchange Co. Ltd., was able to avoid the turmoil rocking other parts of the sector and produce strong results for the year. The company benefited from increased trading volume in futures, options, and other derivative securities in Japan. We’re attracted by the nature of securities exchanges, as there are typically high barriers to entry for would-be competitors. Norway’s Tandberg ASA, a leader in videoconferencing systems, also landed in our top 10. Tandberg benefited from increased demand for its products and services as cost- and environment-conscious companies turned to videoconferencing in place of face-to-face meetings. The company’s stock price also rose on news that Tandberg may be acquired by Cisco Systems. Current and future holdings are subject to risk.
Over the year, our cash position was higher than we normally like. The market’s gyrations — particularly in the second half of the period — made us cautious buyers. Despite this challenge, we were able to make several new additions to the portfolio that we believe offer attractive prospects for growth.
OUTLOOK
This 12-month period certainly ended on a more positive note than it entered on. While we’re pleased with the overall direction of the global equity markets, we aren’t thoroughly convinced that the economic recovery will be as vigorous or as universal as those markets seem to indicate. Given the recent market turmoil, and the uncertain outlook that remains in many world markets, we believe it makes sense to continue to manage the Fund with a certain degree of caution.
We would like to reduce our cash position over the coming months. Despite the strong run-up of international small and micro cap stocks, there are still opportunities to buy promising stocks at reasonable prices, allowing us to identify what we believe are good places to put cash to work. The potential we see among small cap global stocks genuinely excites us. We’re finding well-managed small companies that are creating their own competitive advantages, employing innovative business models, and succeeding in a multitude of industries.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
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| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | SINCE INCEPTION 1/27/05 | ||||
International Opportunities | 23.60% | N/A | 5.89% | |||
MSCI World Ex-U.S.A. Small Cap Index | 14.75% | N/A | 3.79% | |||
MSCI AC World Ex-U.S.A. Small Cap Index | 20.13% | N/A | 6.59% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch International Opportunities Fund are 2.54%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Being non-diversified, the Fund can invest a larger portion of its assets in the stocks of a limited number of companies than a diversified fund. Non-diversification increases the risk of loss to the Fund if the values of these securities decline.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| iShares MSCI Emerging Markets Index Fund | 3.44% | |
| Wirecard AG (Germany) | 2.92% | |
| China Automation Group Ltd. (China) | 1.99% | |
| SimCorp A/S (Denmark) | 1.97% | |
| Tandberg ASA (Norway) | 1.82% | |
| Aramex PJSC (United Arab Emirates) | 1.67% |
| Company | % of Fund | |
| China Hongxing Sports Ltd. (China) | 1.55% | |
| Home Capital Group, Inc. (Canada) | 1.53% | |
| Zhuzhou CSR Times Electric Co., Ltd., Series H (China) | 1.45% | |
| Midas Holdings Ltd. (Hong Kong) | 1.44% | |
| 19.78% | ||
| *As | of September 30, 2009, there were 140 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ††Inception: January 27, 2005. The MSCI World Ex-U.S.A. Small Cap Index is an unmanaged index that measures the performance of stocks with market capitalizations between US $200 million and $1.5 billion across 22 developed markets, excluding the United States. The MSCI AC World Ex-U.S.A. Small Cap Index is an unmanaged index and includes reinvestment of all dividends of issuers located in countries throughout the world representing developed and emerging markets, excluding securities of U.S. issuers. This index is a free float-adjusted market capitalization index designed to measure the performance of small capitalization securities. You cannot invest directly in these or any indexes.
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| WASATCH MICRO CAP FUND (WMICX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Micro Cap Fund is managed by a team of Wasatch portfolio managers led by Daniel Chace.
Daniel Chace, CFA Portfolio Manager | OVERVIEW
The Wasatch Micro Cap Fund registered a 5.70% loss during the 12 months ended September. The Fund outperformed the Russell 2000 Index, which fell 9.55%, and the Russell Microcap Index, which declined 7.93%. It was an extraordinary time in the U.S. equity market. Stock prices plunged throughout much of the first half of the period, as the credit crisis led to a rapid reduction in growth expect- |
ations for the U.S. and international economies. Forced selling by hedge fund and mutual fund managers to meet redemptions pushed prices even lower, resulting in a vicious downward spiral. After sinking to multi-year lows in March, stocks rebounded on signs that the financial system and economy were stabilizing. However, the rebound was not strong enough to erase earlier losses, and broad equity indexes finished the period in negative territory.
While the Fund did not completely escape the market’s decline, it was more resilient than the small cap indexes. Compared to the Russell 2000, the Fund’s primary benchmark, the outperformance was driven by stock selection, which added value in most of the sectors we were invested in.
DETAILSOFTHE YEAR
Stock selection was particularly strong in the information technology sector, led by substantial gains from the semiconductor and software industries. One of our best-performing names was Interactive Intelligence, a provider of Internet Protocol (IP)-based software that helps businesses run their call centers more efficiently. The company has done remarkably well in the recession, increasing revenues in the second half of 2008 and maintaining flat growth in the first quarter of 2009, when the economy was at its weakest. In July, Interactive Intelligence preannounced better-than-expected revenue and earnings growth for the second quarter, supported by a number of large new contracts. We think that demand for the company’s software has remained healthy due to the robust functionality of its products and the trend away from analog-based telephone systems toward IP-based telephone systems.
Financials was another area where our stock selection contributed to outperformance relative to our benchmark. Our financial stocks lost nearly 11%, on average, but did much better than the financial stocks in the Russell 2000 Index, which fell about 23%. We have limited our exposure to banks, given our concerns that the next story for bad credit will be commercial real estate, the bread and butter of small-bank lending. Nonetheless, we have maintained a close-to-market weighting in financials by investing in companies with less credit risk. Several of these stocks had strong gains during the period, including MFA Financial, a real estate investment trust (REIT) that is benefiting from low funding costs. The
company’s portfolio is concentrated in residential mortgage-backed securities that are issued or guaranteed by government agencies, so they have little-to-no credit risk.
On the minus side, our foreign holdings* lagged our domestic holdings and were a drag on the Fund’s relative performance. International stocks, especially small caps, felt the pressure of forced selling by hedge fund and mutual fund managers last fall. Moreover, the consensus view that emerging markets like China would be fairly immune to the global economic downturn fell by the wayside in the second half of 2008. As the financial crisis deepened, it became clear that the downturn would affect both emerging and developed countries. One of our largest detractors was China Hongxing Sports (China), an athletic shoe and apparel retailer. The company’s earnings declined sharply due to weaker domestic demand, price discounting and heavy promotional spending.
Despite negatively impacting performance this period, our foreign exposure has benefited the Fund in the past, and we remain committed to investing internationally. The globalization of trade and capital flows has created exciting opportunities for small companies around the world. As a result, we want to cast a wide net when looking for interesting growth stocks to own in the Fund.
OUTLOOK
Recent news on the U.S. economy has generally been more favorable than expected, and estimates for third-quarter gross domestic product (GDP)** growth have been rising. Assuming there is no big surprise and growth is indeed positive, it will be the first time that the economy has expanded since the second quarter of 2008. That said, the widely held view is that the recovery will be slow and subdued given the high unemployment rate, which may increase even further.
Stocks are no longer trading at the dramatically low valuations they were trading at earlier in 2009 before the market began to rebound. With the compelling value opportunities behind us and the economy starting to recover, we are continuing to add more classic micro cap growth companies to the Fund. These are companies that we believe can deliver strong, long-term growth because they are well-managed, have unique products and services and are small players in big markets. Although we are always looking for these kinds of names, we have been cautious on new buys due to the state of the economy and their somewhat higher valuations. We are also looking to add new international holdings which, on balance, look attractive to us relative to prospective U.S. investments. Overall, we are optimistic that a more stable, if lower-growth, economic environment will provide us the opportunity to own a portfolio of high-quality micro cap companies at reasonable valuations.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
| *These | holdings excluded American Depositary Receipts (ADRs — receipts issued by domestic banks for shares of foreign-based corporations that trade on U.S. stock exchanges) and companies incorporated in other countries but whose shares trade on U.S. stock exchanges. |
| **Gross | domestic product (GDP) is a basic measure of a country’s economic performance and is the market value of all final goods and services made within the borders of a country in a year. |
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| WASATCH MICRO CAP FUND (WMICX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | 10 YEARS | ||||
Micro Cap | -5.70% | 1.32% | 12.74% | |||
Russell 2000 Index | -9.55% | 2.41% | 4.88% | |||
Russell Microcap Index | -7.93% | -0.41% | NA |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Micro Cap Fund are 2.11%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| O2Micro International Ltd. ADR (China) | 2.52% | |
| Power Integrations, Inc. | 2.41% | |
| Resources Connection, Inc. | 2.36% | |
| Pericom Semiconductor Corp. | 2.31% | |
| Dollar Financial Corp. | 2.25% | |
| Big 5 Sporting Goods Corp. | 2.09% |
| Company | % of Fund | |
| Abcam plc (United Kingdom) | 2.09% | |
| Micrel, Inc. | 1.83% | |
| ICON plc ADR (Ireland) | 1.77% | |
| CorVel Corp. | 1.70% | |
| 21.33% | ||
| *As | of September 30, 2009, there were 99 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. The Russell 2000 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. The Russell Microcap Index is an unmanaged total return index of the smallest 1,000 securities in the small-cap Russell 2000 Index along with the next smallest 1,000 companies, based on a ranking of all U.S. equities by market capitalization. No data was available for the Index prior to 6/30/00. Data for the Index from 6/30/00 until its official start data of July 1, 2005 was from a paper portfolio. You cannot invest directly in these or any indexes.
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| WASATCH MICRO CAP VALUE FUND (WAMVX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Micro Cap Value Fund is managed by a team of Wasatch portfolio managers led by Brian Bythrow and John Malooly.
Brian Bythrow, CFA Portfolio Manager |
John Malooly, CFA Portfolio Manager | OVERVIEW
Although this past year began on a very difficult note, by its end we experienced significant improvement. Over the first six months, severe volatility affected virtually every sector, |
investment style, and market capitalization in the equity markets. To contend with the global credit crunch, the Federal Reserve and many of the world’s other central banks took a number of bold steps. These efforts had impact, and in the later part of March, stocks began to surge upward. It was, however, unclear whether this marked the beginning of a recovery, or simply a bear-market* rally.
As the year progressed into its second half, the global liquidity crisis eased slightly, giving investors some sense that perhaps the worst of the economic crisis had passed. Investors began to take some of their money off the sidelines and put it back into the equity markets, spurring a strong stock rally. Equities from emerging markets led the way at first, but in time developed markets picked up steam as well, even though the data to support this improvement in investor confidence were at times scarce.
In this changing market environment, the Wasatch Micro Cap Value Fund posted a return of 17.22% for the 12 months ended September 30, 2009. This figure placed the Fund’s performance far ahead of its primary benchmark, the Russell 2000 Index, which returned -9.55% over the same period.
Strong individual stock selection and sector positioning drove the Fund’s outperformance. A key factor was underweighting financials and avoiding banking stocks within the sector. Our overweighting in information technology stocks also contributed positively to performance.
DETAILSOFTHE YEAR
A number of our top-performing companies for the year benefited from plans for increased infrastructure spending, both in the U.S. and around the world, as a component of economic stimulus efforts. Our top contributor, Orion Marine Group, Inc., comes from the industrials sector and fits this trend. U.S.-based Orion provides dredging services that are often required by infrastructure projects situated along waterways.
In second place was China’s Wasion Group Holdings Ltd., a producer of electronic power meters and data collection terminals for China’s gas, electricity, and water industries. China’s economic stimulus efforts are centered on infrastructure development, spurring demand for Wasion’s
products. Given the enormous size of China’s planned infrastructure development, demand for Wasion’s equipment appears likely to remain strong.
Rounding out the top three was MYR Group, Inc., a U.S. industrial company that installs equipment used in electrical transmission and distribution. MYR may benefit somewhat from stimulus spending, but perhaps gains more from growing interest in wind farms and other alternative energy sources. Because these facilities are often located long distances from existing power grids, bringing them online requires building additional transmission infrastructure. We purchased MYR at what we considered to be a reasonable valuation. As other investors recognized the company’s potential, the stock’s valuation was pushed up beyond a level we felt was reasonable. At that point we chose to sell our position.
Of course, not all of our strongest stocks were tied to infrastructure spending. For example, Sino Biopharmaceutical Ltd. and China Shineway Pharmaceutical Group Ltd., were top-10 contributors for the year. These companies allow us to tap into the strength of the emerging consumer market in that country, while also benefiting from loyalty to its older, more traditional ways. Both companies offer traditional Chinese medicines, which are still widely used in China and thus provide good cash flow along with modest growth. Current and future holdings are subject to risk.
The companies’ greater potential, however, may come from their move into branded drugs — more like those we see on the drugstore shelf in the U.S. Given the sheer size and growing sophistication of China’s consumer class, we believe this newer area of business offers the opportunity for higher growth in revenues and earnings over the long term.
OUTLOOK
In the stocks we continue to hold, and in those we are adding to the portfolio, we emphasize companies that do not require a powerful economic recovery in order to do well. While the market’s performance suggests a strong level of conviction that a full-blown economic recovery is imminent, we are not so sure.
Clearly the economy has come a long way from the deeply troubled environment it faced late last year, but that doesn’t mean that all the flaws and weaknesses have been fully corrected. Accordingly, we have continued to underweight our exposure relative to the benchmark to stocks tied closely to U.S. consumer spending, and those very sensitive to credit issues.
Despite stocks’ recent run-up, we believe the Fund holds reasonably valued stocks with significant potential for further appreciation. We expect to continue to deploy more cash as we identify worthy opportunities. Given the still-uncertain state of the U.S. and many global economies, though, we will remain sensitive to valuations when buying. This may mean that cash will remain higher than we would like for longer than we would like, but we believe the consequences of imprudent purchases far outweigh those of a bit of excess cash.
Thank you for the opportunity to manage your assets.
| CFA® | is a registered trademark of CFA Institute. |
| *A | bear market is generally defined as a drop of 20% or more in stock prices over at least a two-month period. |
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| WASATCH MICRO CAP VALUE FUND (WAMVX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | SINCE INCEPTION 7/28/03 | ||||
Micro Cap Value | 17.22% | 7.61% | 10.53% | |||
Russell 2000 Index | -9.55% | 2.41% | 5.53% | |||
Russell Microcap Index | -7.93% | -0.41% | 3.18% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Micro Cap Value Fund are 2.30%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| Globe Specialty Metals, Inc. | 1.36% | |
| United Online, Inc. | 1.29% | |
| Telvent GIT, S.A. (Spain) | 1.26% | |
| SimCorp A/S (Denmark) | 1.25% | |
| GuestLogix, Inc. (Canada) | 1.24% | |
| Wirecard AG (Germany) | 1.24% |
| Company | % of Fund | |
| Intevac, Inc. | 1.24% | |
| Transat A.T. Inc. (Canada) | 1.23% | |
| Opnet Technologies, Inc. | 1.23% | |
| Celadon Group, Inc. | 1.21% | |
| 12.55% | ||
| *As | of September 30, 2009, there were 108 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ††Inception: July 28, 2003. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. The Russell 2000 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. The Russell Microcap Index is an unmanaged total return index of the smallest 1,000 securities in the small-cap Russell 2000 Index along with the next smallest 1,000 companies, based on a ranking of all U.S. equities by market capitalization. No data was available for the Index prior to 6/30/00. Data for the Index from 6/30/00 until its official start date of July 1, 2005 was from a paper portfolio. You cannot invest directly in these or any indexes.
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| WASATCH SMALL CAP GROWTH FUND (WAAEX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Small Cap Growth Fund is managed by a team of Wasatch portfolio managers led by Jeff Cardon.
Jeff Cardon, CFA Portfolio Manager | OVERVIEW
The Wasatch Small Cap Growth Fund gained 8.20% during the 12 months ended September 30. The Fund outperformed the Russell 2000 Growth and Russell 2000 indexes, which were down 6.32% and 9.55%, respectively. During the fear phase of a bear market, a “flight to quality” occurs, a phenomenon that clearly happened during the market retreat that began last fall and ended in March 2009. The Fund |
had extremely good results relative to the Russell indexes during the market retreat, as investors sought refuge in the types of “steady-eddy” quality growth companies we like to own. As we moved off the market bottom in March of this year, lower-quality stocks began to outperform as investors’ fears started to dissipate. This “junk rally” picked up steam in the third quarter of 2009, and we gave up some ground relative to the small cap indexes. In spite of this flight to low quality, the Fund finished the 12-month period significantly ahead of the Russell benchmarks.
DETAILSOFTHE YEAR
As you know, the Fund’s prospectus allows us to invest up to 20% of our assets at the time of purchase in foreign securities. Our global reach added value this year, since our foreign investments posted stronger gains than our domestic investments. We research companies around the world, not only because there are so many interesting small cap companies to invest in outside the United States, but because it makes us smarter investors in evaluating domestic companies competing in a global marketplace. For example, in evaluating a U.S. regional bank, the main focus right now is on the size of the bank’s non-performing loans — not exactly a conversation that is interesting to a growth manager. On the other hand, when we discuss the future with HDFC Bank Ltd., the premier Indian bank we own in the Fund, the conversation is focused on growth and opportunity, not survival. Over the last 12 months ended September 30, HDFC Bank was up 39.3%,* while the regional bank segment of the Russell 2000 Growth Index was down 27.7%.
The impact of owning quality growth was even more profound to our performance than our global perspective. Many of the stocks that drove our performance are what we consider to be our highest-quality names — names like O’Reilly Automotive, MSCI, Inc., Power Integrations, Cognizant Technology Solutions and Knight Transportation. As we have discussed many times in previous reports, management vision and passion is an important input as we assess the quality of a company. This group of outperformers certainly represents the kind of attributes we like to see in our management teams.
On the minus side, Icon plc and Kendle International were two positions that did poorly. Both companies are contract research organizations (CROs) that run clinical studies for biotechnology and pharmaceutical firms. The CRO industry has been hurt by concerns that health care reform will stifle innovation in the sector. We agree that innovation is likely to decline if major health care legislation is passed. In response to this changing regulatory environment, we ended the period with an underweight in health care, an area where we have traditionally been overweight.
OUTLOOK
As our economy starts to rebound, we think it will struggle to grow at a normal rate due to massive U.S. debt. We doubt that our country will be receptive to a new financial bubble any time soon, given the string of bubbles our economy has suffered during the past 10 years, from the Internet bubble in the late 1990s to the collapse of super-levered financial institutions last year. In such a low-growth, no-frills economy, we believe quality companies will shine, and that our focus on quality will continue to benefit the Fund.
We typically do not talk about mutual fund rankings, because they tend to focus on short-term performance. However, Kiplinger’s Personal Finance magazine recently published annualized total return rankings that cover a 20-year period. The Small Cap Growth Fund placed second in the Morningstar Small and Midsize Growth category for its annualized performance during the 20 years ended June 30, 2009.** We think this performance reflects our insistence on executing to a consistent, long-run strategy. Whatever direction the market might take in the future, you can be confident that we will stay focused on one thing, which is to buy and hold high-quality growth stocks.
Thank you for the trust that you have placed in us.
CFA® is a registered trademark of CFA Institute. |
| * | Source: Wasatch. |
| ** | “And the Leaders Are…” Kiplinger’s Personal Finance, September 2009, 42. Excludes funds that are less than a year old, have a minimum investment of $100,000 or more, sold only to special groups or institutional investors, or are only available through IRAs. When a fund has many share classes sold with different fee structures but that have essentially the same returns, the oldest share class open to new investors is usually listed. As of 9/30/09, the Fund’s 1-, 5- and 10-year absolute ranks in the Morningstar Small Growth category were 55 of 782 funds, 209 of 555 funds, and 21 of 308 funds, respectively. Absolute rank is the placement of a particular fund in a simple ranking of its peers (Morningstar Category) for a specific datapoint. |
| ©2009 | Morningstar, Inc. All rights reserved. The information contained herein (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. |
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| WASATCH SMALL CAP GROWTH FUND (WAAEX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | 10 YEARS | ||||
Small Cap Growth | 8.20% | 2.93% | 7.97% | |||
Russell 2000 Growth Index | -6.32% | 2.91% | 1.10% | |||
Russell 2000 Index | -9.55% | 2.41% | 4.88% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Growth Fund are 1.21%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| MSCI, Inc., Class A | 2.89% | |
| MSC Industrial Direct Co., Inc, Class A | 2.88% | |
| Power Integrations, Inc. | 2.84% | |
| Dril-Quip, Inc. | 2.70% | |
| Cognizant Technology Solutions Corp., Class A | 2.67% | |
| Hibbett Sports, Inc. | 2.48% |
| Company | % of Fund | |
| HDFC Bank Ltd. ADR (India) | 2.43% | |
| Resources Connection, Inc. | 2.43% | |
| Knight Transportation, Inc. | 2.37% | |
| Copart, Inc. | 2.23% | |
| 25.92% | ||
| *As | of September 30, 2009, there were 92 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. The Russell 2000 Growth Index is an unmanaged total return index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. The Russell 2000 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. You cannot invest directly in these or any indexes.
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| WASATCH SMALL CAP VALUE FUND (WMCVX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Small Cap Value Fund is managed by a team of Wasatch portfolio managers led by Jim Larkins.
Jim Larkins, MBA Portfolio Manager | OVERVIEW
The Wasatch Small Cap Value Fund returned -2.48% during the 12-month period ended September 30, 2009, and substantially outperformed the - -12.61% return of its benchmark, the Russell 2000 Value Index. Negative performance aside, we are pleased that the Fund outperformed the Index by such a wide margin during such a challenging period. Notably, the Fund’s outperformance was the result |
of two important factors. First, several holdings returned to what we felt were more appropriate valuations as economic conditions stabilized, rewarding our decision to maintain these positions when broader market trends went against us at the end of 2008. We also benefited from buying “fallen angels” that we consider high quality with excellent risk/return profiles at the depths of the downturn. We believe this illustrates how deep knowledge of the companies held in the Fund helps us distinguish between their actual worth and the often irrational values afforded their stocks in the market.
DETAILSOFTHE YEAR
To better understand the Fund’s strong performance of the past year relative to that of the benchmark it’s important to appreciate the rare opportunity that presented itself during the severe market correction of late 2008 to early 2009. This downturn provided us with the chance to buy several fallen angels — companies that have been covered by Wasatch’s growth team for years, but whose stocks were often too richly valued to be held in this Fund. When the bear market* turned many of these growth stocks into value stocks, we took the opportunity to add to the Fund what we believed were best-in-class market leaders for which the recession would likely represent only a short-term disruption.
An example is Cognizant Technology Solutions Corp., an information technology outsourcing company with significant operations in India that has been held in some of the Wasatch growth funds for most of this decade. We felt comfortable owning Cognizant even at a time of slow global growth, as we believed it had the ability to grow earnings despite economic headwinds. Cognizant’s shares more than doubled from our initial purchases, which helped make the stock one of the Fund’s largest contributors for the annual period. Another fallen angel of note was NBTY, Inc., a company that sells natural foods and nutritional supplements under various brand names, including Nature’s Bounty. When NBTY’s stock was hit hard in 2008 due to the economic slowdown and problems with an acquisition, we decided to buy shares based on several factors: it is a leading company in its industry, has strong free cash flow, and an excellent long-term track record. NBTY’s stock recovered nicely, providing a boost to the Fund’s performance.
Information technology was home to some of our best performing stocks. Our holdings in this sector delivered a gain of over 15%, well above the almost 7% return for the tech stocks in the benchmark. The financials sector was also a source of outperformance. Here, we worked to identify — and avoid — companies with sensitivity to the banking and credit crisis. This resulted in a substantially underweight position in financials, which aided relative results given that this sector turned in the weakest performance within the Index.
Naturally, the Fund’s sector weights did not all add value. Certain sectors where we were underweight, namely materials and consumer discretionary, detracted from performance versus the Index. Additionally, our performance in materials was hurt by a position in Globe Specialty Metals, Inc., a producer of silicon, the material used to make solar cells. Decreased demand caused silicon prices to decline, contributing to a more than 50% drop in Globe’s stock price. Other detractors of note included The Bank of N.T. Butterfield & Son Ltd. and TETRA Technologies, Inc. Current and future holdings are subject to risk.
OUTLOOK
Even though the stock market has generated impressive gains since early March, we remain cautious in our approach. Many stocks now appear to be priced for a strong economic recovery — making them vulnerable if the economy does not continue to recover. In this environment, we are maintaining a focus on higher-quality companies. One aspect of this approach is our willingness to book profits when we think the performance of our holdings has run ahead of companies’ fundamentals, and then redeploy the proceeds into stocks that offer better risk/reward profiles. In our view, this is a trade-off investors need to make with the market up more than 50% from its lows reached in early March. A second key aspect of our strategy is our emphasis on quality, cash-rich companies with strong balance sheets, as this provides the potential for downside protection in what still could be a difficult environment. Our goal is to own companies whose stock prices are down due to temporary factors and are not driven solely by momentum or cyclical trends, but rather by the companies’ sustainable, secular growth.
The past 12 months are somewhat of a microcosm of the past decade. In the year and the decade, we have witnessed numerous occasions when market volatility caused stock prices to become divorced from companies’ actual intrinsic values. In these cases, we sought to exploit extreme market movements by investing in what we considered to be great growth companies when their stocks became undervalued. Over time, we believe the Fund’s objective will be best achieved by using Wasatch’s institutional memory, in combination with our fundamental research, to ensure that the Fund is invested in companies that we believe are high quality and attractively valued.
Thank you for the opportunity to manage your assets.
| *A | bear market is generally defined as a drop of 20% or more in stock prices over at least a two-month period. |
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| WASATCH SMALL CAP VALUE FUND (WMCVX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | 10 YEARS | ||||
Small Cap Value | -2.48% | 0.99% | 10.88% | |||
Russell 2000 Value Index | -12.61% | 1.78% | 8.05% | |||
Russell 2000 Index | -9.55% | 2.41% | 4.88% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Small Cap Value Fund are 1.81%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| Emeritus Corp. | 2.70% | |
| Pericom Semiconductor Corp. | 2.56% | |
| Cognizant Technology Solutions Corp., Class A | 2.43% | |
| HEICO Corp., Class A | 2.32% | |
| MEDNAX, Inc. | 2.16% | |
| NBTY, Inc. | 2.08% |
| Company | % of Fund | |
| Pharmaceutical Product Development, Inc. | 2.07% | |
| Copart, Inc. | 2.03% | |
| MFA Financial, Inc. | 2.02% | |
| NeuStar, Inc., Class A | 1.81% | |
| 22.18% | ||
| *As | of September 30, 2009, there were 73 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. The Russell 2000 Value Index measures the performance of those Russell 2000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. The Russell 2000 Index is widely regarded in the industry as accurately capturing the universe of small company stocks. You cannot invest directly in these or any indexes.
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| WASATCH STRATEGIC INCOME FUND (WASIX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Strategic Income Fund is managed by a team of Wasatch portfolio managers led by Sam Stewart.
Samuel S. Stewart, Jr. PhD, CFA Portfolio Manager | OVERVIEW
The past 12 months have been a roller coaster for the market and the economy. The acutely bearish events of last fall (e.g. Lehman, AIG, etc.) sent the market into a tailspin that didn’t end until March 9th. Since that date the market has rebounded dramatically, with the S&P 500 Index increasing 56% off the bottom. However, it still remains 32% below its October 2007 high. I am not satisfied that the Wasatch Strategic Income Fund declined by |
6.49% during the past year. The Fund performed slightly better than the 6.91% loss of the S&P 500 Index, but it trailed the 10.56% gain of the Barclays Capital U.S. Aggregate Bond Index, which benefited in the downturn as many investors retreated to the perceived safety of bonds. We technically achieved our goal of delivering absolute returns between those of stocks and bonds, but, frankly, we were too close to stocks in such a tumultuous period.
DETAILSOFTHE YEAR
Over the course of this year I have become a more “cautious committer of capital” in the Fund. As such, I recently sold positions when their valuations became stretched in the market rally. Early in 2009, I was seeing valuations that made me want to “back up the truck,” but as the market has recovered I’ve found it prudent to take some profits. At times, I’ve clearly sold early but I’ve been happy to avoid the growing risk in the stock’s valuation.
For example, I sold Kansas City Southern and Chesapeake Energy Corp. recently. These are good companies that shared a common theme of simply becoming overvalued. The risk/reward potential of these stocks no longer felt appropriate for the Strategic Income Fund.
As I’ve looked for new opportunities this past quarter, my primary focus has been on higher quality stocks with lower historic volatility, which I hope will help reduce the Fund’s beta.* I have been disappointed with the amplitude of the Fund’s performance swings, particularly the decline that took place during late 2008. I would like to have done a better job limiting losses through that period, so I have consciously increased my risk sensitivity.
I’ve begun rotating into what I consider to be excellent blue chip-type companies with stable business models. While I don’t look for these companies to be home runs, I think they have the potential to provide attractive returns through steady growth and dividends. Examples include International Business Machines Corp., Johnson & Johnson, McDonald’s Corp., CapLease, Inc., and Ares Capital Corp.
By design the Fund maintains an overweight position in financial companies. These firms are key contributors to the income generated by the Fund, but I also see finance companies as the lifeblood of global economic growth. The
lack of available credit from both the banking and “shadow” banking segments during the financial crisis provided evidence of their vital role as we watched the lack of financing bring economic growth to a halt.
With credit markets beginning to show signs of improvement, many financial stocks have rebounded. During the course of the year, the Fund’s financial stocks generally performed well, contributing over four percentage points to performance, while the financials sector of the S&P 500 detracted four points from the Index’s return. I attribute this outperformance to being invested in high quality companies that were able to avoid much of the carnage that gripped the weakest companies in this sector. For example, we owned a large weight in companies that invest in residential mortgage real estate investment trusts (REITs). Even though much of the talk over the last year centered on loan defaults and foreclosures, our companies invested in mortgages that carried the protection of an implicit guarantee from the federal government. With that backing these REITs were able to benefit from nice interest rate spreads and deliver solid business performance. Current and future holdings are subject to risk.
It’s worth noting that the Fund is currently holding more cash than it traditionally has just because I’m struggling to find stocks that are attractively valued. The cash position is not an explicit attempt to time the market, but rather a reflection of what I perceive to be an inadequate balance of risk versus reward potential, at least for a conservative fund like the Strategic Income Fund.
OUTLOOK
Fear is receding and positive signs are emerging in the economy. However, high unemployment, limited credit availability, and growing deficits will likely have a dampening effect on economic growth. While it’s beginning to feel like we have made it across a white-water river, there is still a steep embankment that needs to be climbed before economic safety is reached.
As investors seem to have found relief in the realization that the country is unlikely to fall into the second Great Depression, their optimism may have moved the market ahead of itself. I plan to closely follow the ABCs of investment management (Always Be Cautious), with an emphasis on high quality companies and compelling valuation as the principal components of any investment decision.
Thank you for the opportunity to manage your assets.
| CFA® is a registered trademark of CFA Institute. |
| *Beta | is the measure of a fund’s risk in relation to the market. A beta of 0.8 means the fund’s total return is likely to move up or down 80% of the market change; 1.25 means total return is likely to move up or down 25% more than the market. Beta is referred to as an index of the systematic risk due to general market conditions that cannot be diversified away. |
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| WASATCH STRATEGIC INCOME FUND (WASIX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | SINCE INCEPTION 2/1/06 | ||||
Strategic Income | -6.49% | N/A | -2.73% | |||
S&P 500 Index | -6.91% | N/A | -3.01% | |||
Barclays Capital U.S. Aggregate Bond Index | 10.56% | N/A | 6.08% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Strategic Income Fund are 1.73%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
With respect to the Fund’s assets invested in fixed income securities, you are subject, but not limited to, the same interest rate, inflation and credit risk associated with the underlying fixed-income securities owned by the Fund. Return of principal is not guaranteed. Equity investing involves risks, including potential loss of the principal amount invested. Being non-diversified, the Fund can invest a larger portion of its assets in the securities of a limited number of companies than a diversified fund. Non-diversification increases the risk of loss to the Fund if the values of these securities decline. Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.
TOP 10 HOLDINGS*
| Company | % of Fund | |
| MFA Financial, Inc. | 6.10% | |
| Capstead Mortgage Corp. | 4.87% | |
| Fifth Street Finance Corp. | 3.98% | |
| Redwood Trust, Inc. | 3.50% | |
| Ares Capital Corp. | 3.12% | |
| Paychex, Inc. | 3.06% | |
| Herbalife Ltd. | 2.89% |
| Company | % of Fund | |
| Teva Pharmaceutical Industries Ltd. ADR (Israel) | 2.52% | |
| Weg S.A. (Brazil) | 2.30% | |
| Broadview Networks Holdings, Inc., 11.375%, 9/1/12 | 2.07% | |
| 34.41% | ||
| *As | of September 30, 2009, there were 49 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ††Inception: February 1, 2006. The S&P 500 Index represents 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged, and a common measure of common stock total return performance. The Barclays Capital U.S. Aggregate Bond Index covers the U.S. investment grade fixed rate bond market, including government and corporate securities, agency mortgage pass-through securities, and asset-backed securities. To be included in the index the security must meet the following criteria: must have at least one year to final maturity, regardless of call features; must have at least $100 million par amount outstanding; must be rated investment grade or better by Moody’s Investors Service, Standard & Poor’s, or Fitch Investor’s Service; must be fixed rate, although it can carry a coupon that steps up or changes to a predetermined schedule; must be dollar-denominated and nonconvertible. All corporate and asset-backed securities must be registered with the SEC and must be publicly issued. You cannot invest directly in these or any indexes.
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| WASATCH ULTRA GROWTH FUND (WAMCX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch Ultra Growth Fund is managed by a team of Wasatch portfolio managers led by Ajay Krishnan.
Ajay Krishnan, CFA Portfolio Manager | OVERVIEW
During the 12 months ended September 30, the Wasatch Ultra Growth Fund lost 0.63% but outperformed the Russell 2000 Growth Index, which fell 6.32%. The period was a tale of two markets. From October 1 through early March, stock prices plunged as the U.S. recession deepened. The market subsequently reversed course, with stocks rallying sharply on signs the economy was stabilizing. |
The key to the Fund’s outperformance in the volatile environment was the relative fundamental strength of our portfolio companies. Generally speaking, we owned stocks of companies with better earnings than the average small cap growth company, and our stocks outperformed.
DETAILSOFTHE YEAR
In managing the Fund, our focus is on investing in small companies with the potential to consistently grow their earnings by 20% or more a year. We look for emerging leaders in fast-growing industries with good business models and differentiated products and services. If we can buy these companies at reasonable valuations, and hold onto them, we believe that we can produce attractive returns over time.
Earnings growth has been hard to come by in the recession. In fact, the weighted-average earnings-per-share of our portfolio companies fell slightly in the most recent reporting season. Although this was well below our 20% target, it was much better than the 38% earnings decline for the small cap growth market as a whole.* Our companies’ earnings surpassed the broad market earnings in every quarter of the 12-month period. So while the economic environment was difficult, our companies held their own, and investors recognized their better operating results.
One of our best-performing holdings was Cognizant Technology Solutions, a provider of information technology services. The stock posted a substantial gain, even though the company faced several concerns late last year. First, Cognizant derives more than 40% of its sales from the financials sector, which was at the epicenter of the credit crisis. In addition, the election of a Democratic president raised the possibility of policy changes that would hurt firms like Cognizant with offshore operations. Having owned the stock since 1999, we know the company well, and our ongoing discussions with management led us to believe that these concerns were overdone. Our conviction in the name paid off, and Cognizant reported double-digit revenue and earnings growth throughout the period. In the challenging economy, businesses are looking for ways to use technology to boost sales and cut costs, and Cognizant is benefiting as a result.
MSCI, a provider of equity market indexes, was another top performer. The company is capitalizing on two major trends: the increasingly global scope of investing and the
growing popularity of exchange-traded funds (ETFs). MSCI has a great competitive profile — more than 90% of all foreign equity assets managed in the United States are benchmarked against an MSCI index, and MSCI indexes are linked to over 150 ETFs. The company’s dominant market position makes its products hard to displace, creating a significant barrier to entry for potential competitors. We also like the fact that approximately 85% of MSCI’s sales come from subscription contracts because this provides good visibility into revenues.
Two of our worst-performing stocks were Kendle International and Eagle Bulk Shipping, companies with fundamental issues that we sold. Kendle is a contract research organization (CRO) that runs clinical trials for biotech and pharmaceutical firms. The CRO industry has been hurt by concerns that health care reform will slow drug development activity. In addition, current demand has weakened, since smaller biotech customers are dealing with funding issues and larger pharmaceutical customers are restructuring and cutting R&D budgets. Kendle has had a particularly hard time managing its pipeline, and the company experienced a drop in new business and an increase in project cancellations.
Eagle Bulk Shipping operates a fleet of dry-bulk vessels that transport commodities around the world. The global recession and credit crisis wreaked havoc on the dry-bulk industry because demand for commodities plunged and financing for the goods being transported dried up. Conditions have since improved, helped by an increase in imports to China. However, shipping capacity is expected to grow faster than demand, so we think that the competitive environment will become more difficult for Eagle Bulk. Current and future holdings are subject to risk.
OUTLOOK
Many investors have jumped back into the market, and price-to-earnings multiples have expanded to more normal levels. However, there is approximately $3.5 trillion in cash sitting on the sidelines in money market funds. If investors who have stayed in cash decide to put some of that money to work in equities, the rally could continue and valuations could become stretched. Valuations could become even more stretched if earnings growth remains scarce while the economy digs itself out of the recession. In the short run, this type of environment could be challenging for us given our valuation discipline. We see the potential for too much money chasing too little growth.
We believe the best course is to continue to seek and invest in companies where we think the fundamentals are solid and the valuations are still attractive. We are also focused on investing in companies that are sensitive to fast-growing emerging economies.
We expect the economy to grind along, with no sectors attracting inordinate amounts of capital. This kind of stock picker’s market bodes well for Wasatch.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
| * | Earnings for the broad small cap growth market fell 38.2% in the second quarter according to a 9/28/09 Bank of America-Merrill Lynch report. |
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| WASATCH ULTRA GROWTH FUND (WAMCX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | 10 YEARS | ||||
Ultra Growth | -0.63% | -0.77% | 5.26% | |||
Russell 2000 Growth Index | -6.32% | 2.91% | 1.10% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch Ultra Growth Fund are 1.55%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investing in small cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| Cognizant Technology Solutions Corp., Class A | 4.50% | |
| MSCI, Inc., Class A | 3.44% | |
| Power Integrations, Inc. | 2.59% | |
| Montagu Newhall Global Partners II-B, L.P. | 2.52% | |
| F5 Networks, Inc. | 2.44% | |
| O2Micro International Ltd. ADR (China) | 2.13% |
| Company | % of Fund | |
| VCA Antech, Inc. | 2.06% | |
| Silicon Laboratories, Inc. | 1.99% | |
| O’Reilly Automotive, Inc. | 1.83% | |
| Knight Transportation, Inc. | 1.76% | |
| 25.26% | ||
| *As | of September 30, 2009, there were 99 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. The Russell 2000 Growth Index is an unmanaged total return index that measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an unmanaged total return index of the smallest 2,000 companies in the Russell 3000 Index, as ranked by total market capitalization. You cannot invest directly in these or any indexes.
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| WASATCH-1ST SOURCE INCOME EQUITY FUND (FMIEX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch-1st Source Income Equity Fund is managed by a team of Wasatch portfolio managers led by Ralph Shive and Mike Shinnick.
Ralph C. Shive, CFA Portfolio Manager |
Michael L. Shinnick Portfolio Manager | OVERVIEW
The Wasatch-1st Source Income Equity Fund’s return of |
September 30, 2009. In keeping with our focus on providing investors with a degree of potential downside protection, the Fund was positioned with a conservative bias as equities experienced extreme performance both up and down over the period.
The bottom fell out of the financial markets in October and November of 2008, as issues with the financial system translated into the real economy. Deterioration in employment and rising mortgage delinquencies continued into the first quarter of 2009 and the equity markets hit new lows in early March. The next two quarters saw a rebound in stock prices that reversed much of the earlier losses. While most incoming economic data was far from positive, it was less disappointing than expected. The massive concerted effort on the part of the government to revive the financial system gained traction, and market participants had the sense that the worst-case “Depression scenario” had been averted. As the period progressed, there were additional signs of economic improvement, although much of the improvement was driven by government subsidies of key sectors including finance, housing and autos.
We maintained a relatively cautious positioning in the Fund, while trimming our cash position as market sentiment improved. Our cash exposure along with an overweight position in information technology, an underweight in financials and strong stock selection within industrials added to performance versus the Index. The Fund’s relative performance was constrained by an underweight position and weak selection within the consumer discretionary sector, along with an underweight in the materials sector.
DETAILSOFTHE YEAR
Our process incorporates both top-down analysis and bottom-up stock selection. This helps us see larger trends that drive many of the portfolio themes, which lead in turn to sector weightings and help determine stock selection and portfolio construction.
A theme we have identified is the growing importance of managing costs within the health care industry. Medical equipment and pharmaceutical supplier McKesson Corp. is an example of this theme that worked well for the Fund. While most analysts view the company as a stodgy drug wholesaler, it
has a small but profitable subsidiary that provides information technology services to the health care sector.
A major theme in the Fund has been a focus on defensive sectors that are less impacted by economic conditions. This helped performance as conditions were weak for much of the period, in particular our exposure to agricultural products giant Archer Daniels Midland Co. and leading national retail pharmacy chain Walgreen Co.
We have added a number of new positions under the theme of electrical energy generation while trimming exposure to gas utilities. Our thinking is that the trend toward greener energy sources will favor electric utilities over gas going forward. The leading contributor to performance under this theme was Cameco Corp. (Canada). Another holding under the broad “green theme” that did well was Johnson Controls, Inc. The company supplies auto parts including batteries for hybrid vehicles, and also provides energy efficient climate control systems for office buildings.
Our information technology exposure overall was a top contributor to performance, with Computer Sciences Corp., Intel Corp. and Texas Instruments Inc. noteworthy holdings.
On the downside, Lincoln National Corp. and The Hartford Financial Services Group, Inc. suffered from concerns over investment losses experienced in the insurance industry. The Dow Chemical Co. and International Paper Co. were negatively impacted by volatile commodity prices as inflation expectations gyrated throughout the period. Conglomerate General Electric Co. suffered from concerns over its financing arm, while cable giant Time Warner Inc. experienced a slowdown due to retrenchment in consumer spending. Current and future holdings are subject to risk.
OUTLOOK
Clearly, stock market investors are anticipating the next business cycle, and are expecting earnings growth to rebound from the valley of the current Great Recession. Indeed, there have been signs of improvement in finance, housing, technology and industrial production. Aggressive corporate cost cutting is setting the table for positive earnings growth as top-line sales rebound.
We subscribe to the view that the economy has begun to undergo what will be a sustained period of deleveraging as consumers repair their balance sheets. With consumer discretionary spending likely to be pinched going forward we expect a slow and erratic recovery. Key questions we are analyzing in managing the Fund include: Can housing rebound in a sustainable way without excessive government subsidies? Also: How will the extraordinary government liquidity programs that have been used to resuscitate the financial sector be unwound? Will political pressure cause these measures to be maintained beyond prudence?
Even in an environment of muted growth, there will be companies positioned to deliver attractive results aided by the shake out of weaker competitors. Our goal remains to provide returns that hold up relatively well during market corrections, while providing the potential for shareholders to participate in market rallies.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
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| WASATCH-1ST SOURCE INCOME EQUITY FUND (FMIEX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | 10 YEARS | ||||
Income Equity | -5.63% | 5.77% | 7.57% | |||
Russell 1000 Value Index | -10.62% | 0.90% | 2.59% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-1st Source Income Equity Fund are 1.16%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investments in value stocks can perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the market for long periods of time. Loss of principal is a risk of investing.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| McKesson Corp. | 1.98% | |
| Avon Products, Inc. | 1.84% | |
| Harris Corp. | 1.76% | |
| Computer Sciences Corp. | 1.67% | |
| Bank of America Corp. | 1.64% | |
| JPMorgan Chase & Co. | 1.64% |
| Company | % of Fund | |
| Hewlett-Packard Co. | 1.64% | |
| Novartis AG ADR (Switzerland) | 1.64% | |
| The Allstate Corp. | 1.63% | |
| Fluor Corp. | 1.62% | |
| 17.06% | ||
| *As | of September 30, 2009, there were 77 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | securities sold short and written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. The Russell 1000 Value Index measures the performance of Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. You cannot invest directly in these or any indexes.
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| WASATCH-1ST SOURCE LONG/SHORT FUND (FMLSX) — Management Discussion | SEPTEMBER 30, 2009 | |
The Wasatch-1st Source Long/Short Fund is managed by a team of Wasatch portfolio managers led by Mike Shinnick and Ralph Shive.
Michael L. Shinnick Portfolio Manager |
Ralph C. Shive, CFA Portfolio Manager | OVERVIEW
The Wasatch-1st Source Long/Short Fund provided a total return of 5.35% for the 12 months ended September 30, 2009. This compared to a return of -6.91% for the Fund’s benchmark, |
the S&P 500 Index. We are very pleased with the Fund’s positive performance over the year on both an absolute basis and relative to the Index.
In the fourth quarter of 2008, issues with the financial system translated into the real economy, causing a severe decline in the financial markets. This extended into the first quarter of 2009 as the equity markets hit new lows. The next two quarters saw much of the earlier losses recovered, as stock prices rebounded based on economic data that was less disappointing than expected. As the unprecedented government efforts to revive the financial system gained traction, it seemed that investors were ebullient over averting the worst-case scenarios. There were additional signs of economic improvement as the period progressed, driven in part by government subsidies of key sectors including finance, housing and autos.
The Fund’s long and short positions added to performance relative to the benchmark. Among the Fund’s long positions, select holdings within the energy and materials sectors were strong contributors to performance. In terms of what hurt performance, we would like to have been more aggressive in shorting stocks in the fourth quarter of 2008.
DETAILSOFTHE YEAR
We generally start with a thematic approach, looking to identify sectors of the economy that are positioned to outperform over time based on some trend we have identified. Then we look at companies that fall under that theme and seek to identify those that are attractively valued and that have good fundamentals, such as strong cash flow, a strong brand or hidden assets. In choosing companies to sell short, we simply invert the analysis.
Several leading contributors were companies with characteristics that positioned them to weather an uncertain environment characterized by less-than-robust consumer spending. A good example was Cerner Corp., a provider of information technology solutions to the health care sector, an area of the economy that is in sharp focus as the country attempts to reduce escalating medical costs.
Companies that provide offshore drilling services to the oil and gas industry including Loews, ENSCO International, Inc., Noble Corp. and Atwood Oceanics, Inc. continued to
benefit from increased investor confidence in the stability of their revenue backlogs. Loews is a conglomerate with insurance and hotel holdings in addition to its oil and gas exposure, and we have felt its value has not been well understood by the market. We also own shares of Loews’ property and casualty insurance subsidiary CNA Financial Corp., and CNA was one of the top contributors to performance for the period.
Several of our basic materials holdings performed well as global demand showed signs of improvement and many commodity prices increased. These included coal producer Alpha Natural Resources, Inc., steel mini-mill Nucor Corp. and fertilizer companies The Mosaic Co. and Potash Corp. of Saskatchewan, Inc.
The biggest detractor from performance for the year among our long positions was Noble International, Ltd., a supplier to the auto industry that filed for bankruptcy. Other detractors included mobile device manufacturer Nokia Corp. and computer giant Microsoft Corp., both of which suffered from the retrenchment in consumer spending and product lifecycle vagaries.
Shorting real estate investment trusts (REITs) added to the Fund’s performance as these issues fell sharply early in 2009. We continue to expect negative pressure on REITs given declining asset values and stress on revenues caused by declining occupancy and rents. Our shorting of select financial and consumer discretionary stocks was also positive for performance. Current and future holdings are subject to risk.
OUTLOOK
Looking ahead, on balance we expect that the stubborn challenges to the real economy posed by continued weakness in the housing sector and high unemployment will eventually cause further revenue and earnings challenges for many companies. However, we are cognizant of the fact that most stocks are in an upward trend and that there are marginal signs of economic improvement and recovery. As a result, we intend to maintain overall flexibility and will not be aggressive in taking short positions until we see actual weakness in the market. We expect there will be additional opportunities to short stocks within the consumer discretionary and financials sectors, as the strength of the current recovery is called into question in the upcoming year.
While we are cautious with respect to stock valuations overall, we remain excited about the prospects for many of our long positions, as high quality business models have not yet been awarded a premium in this market.
We appreciate your support over this first year that we have been part of the Wasatch organization. We look forward to helping you for many years to come as you strive to grow, protect and compound your assets.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
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| WASATCH-1ST SOURCE LONG/SHORT FUND (FMLSX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | SINCE INCEPTION 8/1/03 | ||||
Long/Short | 5.35% | 5.15% | 5.35% | |||
S&P 500 Index | -6.91% | 1.02% | 3.11% | |||
Citigroup U.S. Domestic 3-Month Treasury Bills Index | 0.39% | 2.96% | 2.59% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-1st Source Long/Short Fund are 1.67%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
The Fund makes short sales of securities which involve the risk that losses may exceed the original amount invested. Equity investing involves risks, including potential loss of the principal amount invested. Being non-diversified, the Fund can invest a larger portion of its assets in the securities of a limited number of companies than a diversified fund. Non-diversification increases the risk of loss to the Fund if the values of these securities decline.
TOP 10 EQUITY HOLDINGS*
| Company | % of Fund | |
| Loews Corp. | 4.69% | |
| Wal-Mart Stores, Inc. | 4.20% | |
| ENSCO International Inc. | 2.91% | |
| Akamai Technologies, Inc. | 2.69% | |
| Hasbro, Inc. | 2.66% | |
| Electronic Arts, Inc. | 2.61% |
| Company | % of Fund | |
| The Allstate Corp. | 2.52% | |
| Republic Services, Inc. | 2.36% | |
| Transocean Ltd. | 2.34% | |
| Noble Corp. | 2.34% | |
| 29.32% | ||
| *As | of September 30, 2009, there were 47 long holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
SECTOR BREAKDOWN**
| **Excludes | written options, if any. |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. ††Inception: August 1, 2003. The S&P 500 Index includes 500 of the United States’ largest stocks from a broad variety of industries. The Index is unmanaged but is a commonly used measure of common stock total return performance. The Citigroup 3-Month U.S. Treasury Bills Index tracks the performance of U.S. Treasury bills with a remaining maturity of three months. U.S. Treasury bills, which are short-term loans to the U.S. government, are full-faith-and-credit obligations of the U.S. Treasury and are generally regarded as being free of any risk of default. You cannot invest directly in these or any indexes.
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| WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) — Management Discussion | SEPTEMBER 30, 2009 | |
Van R. Hoisington Portfolio Manager | OVERVIEW
For the 12 months ended September 30, 2009, the Wasatch-Hoisington U.S. Treasury Fund gained 12.49%, and outperformed the Barclays Capital U.S. Aggregate Bond Index, which returned 10.56%.
DETAILSOFTHE YEAR
In the three months ended September 30, the Fund returned 5.84%, compared to 3.74% return for the Index. The yield |
on 30-year Treasury bonds was 4.05% at the close of the quarter, down from 4.31% a year ago. Thus, for the 12-month period, a drop in bond yields meant that the market value of the Fund increased, enhancing the coupon (interest) on the Treasury bonds held by the Fund. The lower Treasury bond yields reflected very depressed economic conditions.
OUTLOOK
The Federal Reserve reported that as of June 30, 2009 total U.S. debt was $52.8 trillion. Total U.S. debt includes government, corporate and consumer debt. Importantly, however, it does not include a few trillion dollars in “off balance sheet” financing, contingent unfunded pension plans for corporations and state and local governments, or unfunded liabilities of the U.S. government for such items as Medicare, Social Security and other programs. Currently, gross domestic product (GDP)* stands at $14.2 trillion, so there is approximately $3.73 in debt for every dollar of output in the United States, a level unprecedented in our history. Normally, debt levels as a percent of GDP would be uninteresting and immaterial; however, the current level of debt is unique in two ways. First, the value of the assets purchased by the debt is declining. Second, the money that was borrowed to purchase those assets was often fraudulently expended — neither the borrower nor the lender really expected the debt to be serviced. Rather, each party expected the asset price to rise so that when the asset was sold the proceeds would extinguish the debt.
Presently, in this worst of all post-war recessions we are witnessing the collapse of asset prices that were inflated by the speculation of earlier years. The aftermath of that speculation and its impact on the economy has been thoroughly studied prior to our present business cycle by the economists of yesteryear. The most famous of these economists was Irving Fisher (1867-1947), who in 1933 wrote about this problem of over-indebtedness (Irving Fisher, 1933, Econometrica, “The Debt-Deflation Theory of Great Depressions”). He stated that over-indebtedness was the difference between normal business cycles (recessions), and extreme business cycle fluctuations (depressions). Based on his analysis of the great depressions of 1837, 1873, and 1929 he outlined a pattern of economic developments that will take place when the debt cycle is broken. Seemingly old news, but it is interesting to apply his sequence of events to today’s economic developments as there are disturbing similarities.
The uncomfortable conclusion of Fisher’s analysis is that major business cycle fluctuations are, in fact, caused by over-indebtedness and the fall in asset prices. Our present situation appears to mirror the exact sequence of events that have occurred in previous depressions. This suggests that our current “great recession” may morph into a more serious and elongated downward business cycle.
The inflation outlook from the monetary and fiscal standpoint looks truly deflationary, yet some believe that dollar weakness will reverse this circumstance and create inflation. This is unlikely. First, our imports are about 13% of GDP, and even if the dollar were to halve in value, the price of imported goods would not only have to compete with U.S. producers, but also their price adjustment would have to offset the other 87% of factors included in the pricing indexes. Second, unlike the 1930s a 50% decline in the dollar would be difficult to engineer. Fisher recommended to Roosevelt that the U.S. should exit the gold standard, which he did in April of 1933. That was a fixed exchange rate system, and within three months the dollar lost more than 30% against the gold block countries and fell to 60% of its former value within the next five months. This spurred our exports and provided some price inflation (2.9% per year, GDP deflator**) for the next four years. Then, in 1937 the tax increases (the next policy mistake) reversed the positive growth rate of the economy and drove price levels and economic activity downward again. However, even with that small period of price increases the overall price level never recovered from the 25% decline that occurred from 1929 to 1933, and thus deflation reigned. Today, the declining dollar is a good thing in terms of our trade balance, but the modest change will be insufficient to offset the negative forces of insufficient domestic demand.
Next year, we expect the core GDP deflator to fall to at least zero. Likewise, long-term interest rates, which are highly sensitive to inflation, may continue to move toward lower levels. Longer dated Treasury interest rates could mirror those of Japan, which provides a modern signpost for a deflationary environment. Currently, the Japanese 10-year note stands at 1.3% with Japan’s 30-year bond yielding 2.1%.
Such an environment has the potential to be beneficial for patient investors in long-dated U.S. Treasury securities (maturities longer than 20 years) like those held in the Wasatch-Hoisington U.S. Treasury Fund.
Thank you for the opportunity to manage your assets.
| *Gross | domestic product (GDP) is a basic measure of a country’s economic performance and is the market value of all final goods and services made within the borders of a country in a year. |
| **The | GDP deflator is a measure of the level of prices (whether they have gone up — inflation, or down — deflation) of all new, domestically produced, final goods and services in an economy. The GDP deflator is not based on a fixed basket of goods and services. The basket is allowed to change with people’s consumption patterns. Therefore, new expenditure patterns are allowed to show up in the deflator as people respond to changing prices. |
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| WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | 10 YEARS | ||||
U.S. Treasury | 12.49% | 7.90% | 8.55% | |||
Barclays Capital U.S. Aggregate Bond Index | 10.56% | 5.13% | 6.30% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-Hoisington U.S. Treasury Fund are 0.74%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investments in fixed income funds are subject to the same interest rate, inflation, credit and other risks associated with the underlying bonds. Return of principal is not guaranteed.
TOP 10 HOLDINGS*
| Holding | Maturity Date | % of Fund | ||
| U. S. Treasury Strip, principal only | 11/15/27 | 27.15% | ||
| U.S. Treasury Bond, 4.75% | 2/15/37 | 17.23% | ||
| U.S. Treasury Strip, principal only | 2/15/37 | 15.15% | ||
| U.S. Treasury Bond, 4.50% | 2/15/36 | 11.36% | ||
| U.S. Treasury Bond, 4.25% | 5/15/39 | 7.96% | ||
| U.S. Treasury Bond, 4.50% | 5/15/38 | 6.98% |
| Holding | Maturity Date | % of Fund | ||
| U. S. Treasury Strip, principal only | 5/15/39 | 3.50% | ||
| U.S. Treasury Bond, 5.25% | 2/15/29 | 3.40% | ||
| U.S. Treasury Bond, 4.50% | 8/15/39 | 3.15% | ||
| U.S. Treasury Bond, 5.375% | 2/15/31 | 2.31% | ||
| 98.19% | ||||
| *As | of September 30, 2009, there were 11 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
INVESTMENTS & CASH
| **Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. The Barclays Capital U.S. Aggregate Bond Index covers the U.S. investment grade fixed rate bond market, including government and corporate securities, agency mortgage pass-through securities, and asset-backed securities. To be included in the index the security must meet the following criteria: must have at least one year to final maturity, regardless of call features; must have at least $100 million par amount outstanding; must be rated investment grade or better by Moody’s Investors Service, Standard & Poor’s, or Fitch Investor’s Service; must be fixed rate, although it can carry a coupon that steps up or changes to a predetermined schedule; must be dollar-denominated and nonconvertible. All corporate and asset-backed securities must be registered with the SEC and must be publicly issued. You cannot invest directly in this or any index.
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| WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Management Discussion | SEPTEMBER 30, 2009 | |
Paul W. Gifford, CFA Portfolio Manager | OVERVIEW
The Wasatch-1st Source Income Fund returned 8.42% during the 12-months ended September 30, 2009. Over the same time period, the Barclays Capital U.S. Intermediate Government/Credit Bond Index returned 10.01%. Interest rates fell during the period adding significant price appreciation to fixed income securities. |
FULL CIRCLE
Normally, the idea that interest rates fell would be a good start for explaining why bonds provided a better return than their stated coupon rate. The problem is that this has been anything but a normal year, as we all know. In managing fixed income investments over the past 20 plus years, I have seen many different market conditions — bond funds with negative returns (1994), rapidly falling interest rates (1995), illiquid bonds (Asian currency crisis 1998) and a credit crisis (2001-02). Each market taught lessons that served as a basis to help manage the portfolio in 2008-09 when all four conditions were present during various parts of the year!!
During the fourth quarter of 2008, we were seeing enormous government intervention primarily focused on providing capital to banks via the Troubled Asset Relief Program (TARP). At this time many non-traditional finance and brokerage companies did everything in their power to become banks and receive capital injections from the U.S. government.
In the first quarter of 2009, we saw more new programs aimed at unfreezing the credit markets, namely the Treasury Loan Guarantee Fund (TLGF) and the Term Asset-Backed Securities Loan Facility (TALF). TLGF put the balance sheet of the Federal Deposit Insurance Corporation (FDIC) into play as it guarantees the bonds issued under this program. TLGF did succeed in allowing banks to issue new debt, rollover maturing debt and avoid defaults.
The second quarter of 2009 was marked by the tremendous bond purchase program put in place by the Federal Reserve. During the last six months, the Federal Reserve has purchased over $1 trillion of Treasury, agency and mortgage-backed debt. That is equivalent to 10% of the value of the Barclays Capital U.S. Aggregate Bond Index.
The third quarter was when we saw credit spreads tighten to the ranges seen prior to the crisis. We have also seen the first programs put in place last year begin to expire with no disruption in the markets. This is very good news.
You might think that with all that has happened this year the markets would still be awry. But that is not the case. When you look at the current bond market and consider several points you will see why we have come “full circle.” Interest rates are starting to rise as the economy begins a very modest recovery. Credit spreads are back to levels seen prior to the summer of 2008 when government agencies Freddie Mac and Fannie Mae were placed in conservatorship. Buying
and selling of bonds is again possible. Lastly, bond fund returns are again positive.
THE AFTERMATH
While it is good news that we have come full circle, many issues will challenge bond investors going forward. First, the slow recovery will still put pressure on fixed income securities and we will see more defaults, possibly even in investment grade securities. Second, the incredible amount of debt issued by the U.S. government will have unknown impacts. Finally, the Federal Reserve has implied that it will be slow to raise interest rates, meaning that rates for bonds with very short maturities will be near zero percent. The last time the Fed kept interest rates low for a long period of time we had the housing bubble as a consequence.
We remain defensive as we enter the new fiscal year. We will continue to position the Fund by employing strategies to keep interest rate risk in check, focusing on high-quality fixed income securities and keeping a close eye on inflation.
Thank you for the opportunity to manage your assets.
CFA® is a registered trademark of CFA Institute. |
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| WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Portfolio Summary | SEPTEMBER 30, 2009 | |
AVERAGE ANNUAL TOTAL RETURNS
| 1 YEAR | 5 YEARS | 10 YEARS | ||||
Income Fund | 8.42% | 3.90% | 4.89% | |||
Barclays Capital U.S. Intermediate Government/Credit Bond Index | 10.01% | 4.68% | 5.90% |
Data shows past performance, which is not indicative of future performance. Current performance may be lower or higher than the performance quoted. To obtain the most recent month-end performance data available, please visit www.wasatchfunds.com. The Advisor may absorb certain Fund expenses, without which total return would have been lower. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
As of the January 31, 2009 prospectus, the Total Annual Fund Operating Expenses for the Wasatch-1st Source Income Fund are 0.82%. The expense ratio shown elsewhere in this report may be higher. Total Annual Fund Operating Expenses include direct expenses paid to the Advisor as well as indirect expenses incurred by the Fund as a result of its investments in other investment companies (each an “Acquired Fund”), before any expense reimbursements by the Advisor. The Net Expense includes any reimbursement by the Advisor. See the prospectus for additional information regarding Fund expenses.
Wasatch Funds will deduct a 2.00% redemption proceeds fee on Fund shares held 60 days or less. Performance data does not reflect the deduction of fees or taxes, which if reflected, would reduce the performance quoted. For more complete information including charges, risks and expenses, read the prospectus carefully.
Investments in fixed income funds are subject to the same interest rate, inflation, credit and other risks associated with the underlying bonds. Return of principal is not guaranteed.
TOP 10 HOLDINGS*
| Holding | Maturity Date | % of Fund | ||
| U.S. Treasury Note, 3.75% | 11/15/18 | 4.70% | ||
| U.S. Treasury Note, 1.625% | 1/15/18 | 4.35% | ||
| U.S. Treasury Note, 4.25% | 8/15/15 | 3.80% | ||
| Federal Home Loan Mortgage Corp., 5.50%, Series R010, Class AB | 12/15/19 | 2.05% | ||
| Government National Mortgage Assoc., 5.00%, Class A | 9/16/31 | 1.63% | ||
| Federal Home Loan Bank, 5.00% | 9/14/12 | 1.48% |
| Holding | Maturity Date | % of Fund | ||
| Federal National Mortgage Assoc., 4.375% | 7/17/13 | 1.42% | ||
| Citibank Credit Card Issuance Trust, 5.45%, Series 2006-A4, Class A4 | 5/10/13 | 1.39% | ||
| iShares iBoxx Investment Grade Corporate Bond Fund | 1.30% | |||
| Federal Home Loan Mortgage Corp., 5.50% | 3/28/16 | 1.29% | ||
| 23.41% | ||||
| *As | of September 30, 2009, there were 168 holdings in the Fund. Portfolio holdings are subject to change at any time. References to specific securities should not be construed as recommendations by the Funds or their Advisor. Current and future holdings are subject to risk. |
INVESTMENTS & CASH
| **Collateralized | Mortgage Obligations |
| †Also | includes Other Assets and Liabilities. |
GROWTHOFA HYPOTHETICAL $10,000 INVESTMENT
Past performance does not predict future performance and the graph above does not reflect the deduction of taxes that you would pay on fund distributions or the redemption of fund shares. Performance shown in the chart above does not include any applicable sales charges and fees. Wasatch does not charge any sales fees. The Barclays Capital U.S. Intermediate Government/Credit Bond Index is an unmanaged index considered representative of the performance of government and corporate bonds with maturities of less than 10 years. You cannot invest directly in this or any index.
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Table of Contents
| WASATCH FUNDS — OPERATING EXPENSES (UNAUDITED) | ||
EXPENSE EXAMPLE
As a shareholder of Wasatch Funds, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Wasatch Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000.00 invested at the beginning of the period and held for the entire six month period ended September 30, 2009.
ACTUAL EXPENSES
The first line of the table below provides information about actual account values and actual expenses, based upon the actual total return of the fund during the most recent six month period ended September 30. You may use the information in this line, together with the amount you invested, to estimate the expenses you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
In addition, the Funds charge a $15.00 IRA distribution fee, a $12.50 IRA annual maintenance fee and a $15.00 fee for redemptions paid by wire. To the extent these fees apply to your account, your expenses paid during the period would be higher and your ending account value would be lower than the amounts shown in the table below.
HYPOTHETICAL EXAMPLEFOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Wasatch Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
In addition, the Funds charge a $15.00 IRA distribution fee, a $12.50 IRA annual maintenance fee and a $15.00 fee for redemptions paid by wire. To the extent these fees apply to your account, your expenses paid during the period would be higher and your ending account value would be lower than the amounts shown in the table below. If another fund’s fees differ from those listed above, your expenses paid and your ending account value could be higher or lower than those of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
40
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Account Value | Expenses Paid During Period* | Annualized Expense Ratio* | ||||||
| Fund/Class and Return | Beginning of Period April 1, 2009 | End of Period September 30, 2009 | ||||||
Core Growth Fund | ||||||||
Actual | $1,000.00 | $1,488.20 | $7.98 | 1.28% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.65 | $6.48 | 1.28% | ||||
Emerging Markets Small Cap Fund | ||||||||
Actual | $1,000.00 | $1,914.60 | $15.34 | 2.10% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,014.54 | $10.61 | 2.10% | ||||
Global Opportunities Fund | ||||||||
Actual | $1,000.00 | $1,536.40 | $14.31 | 2.25% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.79 | $11.36 | 2.25% | ||||
Global Science & Technology Fund | ||||||||
Actual | $1,000.00 | $1,486.60 | $12.16 | 1.95% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.29 | $9.85 | 1.95% | ||||
Heritage Growth Fund | ||||||||
Actual | $1,000.00 | $1,362.70 | $5.63 | 0.95% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,020.31 | $4.81 | 0.95% | ||||
Heritage Value Fund | ||||||||
Actual | $1,000.00 | $1,277.70 | $5.42 | 0.95% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,020.31 | $4.81 | 0.95% | ||||
International Growth Fund | ||||||||
Actual | $1,000.00 | $1,673.90 | $12.87 | 1.92% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.44 | $9.70 | 1.92% | ||||
International Opportunities Fund | ||||||||
Actual | $1,000.00 | $1,713.00 | $15.30 | 2.25% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.79 | $11.36 | 2.25% | ||||
Micro Cap Fund | ||||||||
Actual | $1,000.00 | $1,479.10 | $13.61 | 2.19% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,014.09 | $11.06 | 2.19% | ||||
Micro Cap Value Fund1 | ||||||||
Actual | $1,000.00 | $1,688.00 | $15.30 | 2.27% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,013.69 | $11.46 | 2.27% | ||||
Small Growth Fund | ||||||||
Actual | $1,000.00 | $1,431.60 | $7.56 | 1.24% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,018.85 | $6.28 | 1.24% | ||||
Small Cap Value Fund | ||||||||
Actual | $1,000.00 | $1,580.50 | $12.16 | 1.88% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.64 | $9.50 | 1.88% | ||||
Strategic Income Fund1 | ||||||||
Actual | $1,000.00 | $1,353.40 | $6.08 | 1.03% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.90 | $5.22 | 1.03% | ||||
Ultra Growth Fund | ||||||||
Actual | $1,000.00 | $1,483.00 | $10.89 | 1.75% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,016.29 | $8.85 | 1.75% | ||||
Wasatch-1st Source Income Equity Fund | ||||||||
Actual | $1,000.00 | $1,305.00 | $6.41 | 1.11% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,019.50 | $5.62 | 1.11% | ||||
Wasatch-1st Source Long/Short Fund | ||||||||
Actual | $1,000.00 | $1,272.00 | $10.99 | 1.93% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,015.39 | $9.75 | 1.93% | ||||
U.S. Treasury Fund | ||||||||
Actual | $1,000.00 | $942.50 | $3.65 | 0.75% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,021.31 | $3.80 | 0.75% | ||||
Wasatch-1st Source Income Fund | ||||||||
Actual | $1,000.00 | $1,046.80 | $4.26 | 0.83% | ||||
Hypothetical (5% before expenses) | $1,000.00 | $1,020.91 | $4.20 | 0.83% | ||||
*Expenses are equal to the Funds’ annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the full fiscal year (183/365).
1 The annualized expense ratio includes dividend payments for securities sold short and/or line of credit interest fees. Excluding these items the annualized expense ratio would have been 2.25% and .95% for the Micro Cap Value and Strategic Income funds respectively. Dividend payments for securities sold short and line of credit interest fees are not a reimbursable expense under the contractual agreement between the Fund and the Advisor.
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Table of Contents
| WASATCH CORE GROWTH FUND (WGROX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 94.1% | |||||
| Agricultural Products 1.9% | |||||
| 5,388,871 | Chaoda Modern Agriculture Holdings Ltd. (China) | $ | 3,275,022 | ||
| 5,348,400 | China Green Holdings Ltd. (China) | 4,547,836 | |||
| 7,822,858 | |||||
| Airlines 1.5% | |||||
| 164,349 | Allegiant Travel Co.* | 6,260,053 | |||
| Apparel, Accessories & Luxury Goods 2.3% | |||||
| 3,831,042 | Ports Design Ltd. (China) | 9,570,128 | |||
| Application Software 1.2% | |||||
| 299,300 | Tyler Technologies, Inc.* | 5,115,037 | |||
| Asset Management & Custody Banks 5.3% | |||||
| 45,994 | Affiliated Managers Group, Inc.* | 2,990,070 | |||
| 434,364 | SEI Investments Co. | 8,548,283 | |||
| 880,060 | Solar Capital, LLC** *** † | 7,304,498 | |||
| 96,720 | Waddell & Reed Financial, Inc., Class A | 2,751,684 | |||
| 21,594,535 | |||||
| Automotive Retail 3.4% | |||||
| 154,141 | Monro Muffler Brake, Inc. | 4,900,143 | |||
| 244,674 | O’Reilly Automotive, Inc.* | 8,842,518 | |||
| 13,742,661 | |||||
| Construction & Engineering 0.9% | |||||
| 87,693 | URS Corp.* | 3,827,799 | |||
| Consumer Finance 2.6% | |||||
| 462,099 | Dollar Financial Corp.* | 7,402,826 | |||
| 187,235 | First Cash Financial Services, Inc.* | 3,207,336 | |||
| 10,610,162 | |||||
| Data Processing & Outsourced Services 5.2% | |||||
| 170,125 | Alliance Data Systems Corp.* | 10,391,235 | |||
| 422,485 | Fidelity National Information Services, Inc. | 10,777,592 | |||
| 21,168,827 | |||||
| Distributors 1.6% | |||||
| 356,855 | LKQ Corp.* | 6,616,092 | |||
| Diversified Banks 1.7% | |||||
| 338,626 | Axis Bank Ltd. (India) | 6,934,776 | |||
| Diversified Support Services 5.5% | |||||
| 554,517 | Copart, Inc.* | 18,415,510 | |||
| 390,471 | LPS Brasil-Consultoria de Imoveis S.A.* (Brazil) | 4,058,821 | |||
| 22,474,331 | |||||
| Environmental & Facilities Services 2.0% | |||||
| 285,940 | Waste Connections, Inc.* | 8,252,228 | |||
| Footwear 1.0% | |||||
| 26,994,340 | China Hongxing Sports Ltd. (China) | 4,026,287 | |||
| Health Care Distributors 3.0% | |||||
| 572,177 | PSS World Medical, Inc.* | 12,490,624 | |||
| Health Care Facilities 6.0% | |||||
| 874,542 | Emeritus Corp.* | 19,196,197 | |||
| 204,740 | VCA Antech, Inc.* | 5,505,459 | |||
| 24,701,656 | |||||
| Health Care Services 4.0% | |||||
| 298,794 | MEDNAX, Inc.* | 16,409,766 | |||
| Shares | Value | ||||
| Homefurnishing Retail 3.2% | |||||
| 498,035 | Aaron’s, Inc. | $ | 13,148,124 | ||
| Industrial Machinery 2.4% | |||||
| 127,675 | Graco, Inc. | 3,558,302 | |||
| 218,330 | IDEX Corp. | 6,102,324 | |||
| 9,660,626 | |||||
| Insurance Brokers 1.7% | |||||
| 358,065 | Brown & Brown, Inc. | 6,860,525 | |||
| Internet Software & Services 1.5% | |||||
| 204,181 | DealerTrack Holdings, Inc.* | 3,861,063 | |||
| 179,210 | ValueClick, Inc.* | 2,363,780 | |||
| 6,224,843 | |||||
| IT Consulting & Other Services 1.9% | |||||
| 204,950 | Cognizant Technology Solutions Corp., Class A* | 7,923,367 | |||
| Leisure Facilities 3.4% | |||||
| 501,558 | Life Time Fitness, Inc.* | 14,068,702 | |||
| Leisure Products 1.4% | |||||
| 251,314 | Pool Corp. | 5,584,197 | |||
| Life Sciences Tools & Services 2.4% | |||||
| 451,515 | Pharmaceutical Product Development, Inc. | 9,906,239 | |||
| Mortgage REITs 3.4% | |||||
| 478,290 | Annaly Capital Management, Inc. | 8,676,181 | |||
| 349,406 | Redwood Trust, Inc. | 5,415,793 | |||
| 14,091,974 | |||||
| Oil & Gas Equipment & Services 2.8% | |||||
| 130,265 | Dril-Quip, Inc.* | 6,466,355 | |||
| 527,770 | TETRA Technologies, Inc.* | 5,114,091 | |||
| 11,580,446 | |||||
| Oil & Gas Exploration & Production 2.1% | |||||
| 354,375 | Petrohawk Energy Corp.* | 8,579,419 | |||
| Personal Products 1.7% | |||||
| 218,015 | Herbalife Ltd. | 7,137,811 | |||
| Research & Consulting Services 3.9% | |||||
| 262,493 | CRA International, Inc.* | 7,163,434 | |||
| 511,532 | Resources Connection, Inc.* | 8,726,736 | |||
| 15,890,170 | |||||
| Semiconductors 4.3% | |||||
| 133,940 | Hittite Microwave Corp.* | 4,926,313 | |||
| 387,065 | Melexis N.V. (Belgium) | 3,938,713 | |||
| 507,309 | Micrel, Inc. | 4,134,568 | |||
| 95,913 | Silicon Laboratories, Inc.* | 4,446,527 | |||
| 17,446,121 | |||||
| Specialized Finance 2.4% | |||||
| 10,861 | Crisil Ltd. (India) | 908,806 | |||
| 294,430 | MSCI, Inc., Class A* | 8,721,016 | |||
| 9,629,822 | |||||
| Specialty Stores 1.2% | |||||
| 271,425 | Hibbett Sports, Inc.* | 4,948,078 | |||
| Thrifts & Mortgage Finance 1.3% | |||||
| 90,280 | Housing Development Finance Corp. Ltd. (India) | 5,235,227 | |||
| Trading Companies & Distributors 2.7% | |||||
| 151,922 | MSC Industrial Direct Co., Inc, Class A* | 6,620,761 | |||
| 391,893 | Rush Enterprises, Inc., Class B* | 4,267,715 | |||
| 10,888,476 | |||||
42
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Shares | Value | ||||
| Trucking 1.3% | |||||
| 179,335 | Old Dominion Freight Line, Inc.* | $ | 5,457,164 | ||
| Total Common Stocks (cost $356,287,719) | 385,879,151 | ||||
| PREFERRED STOCKS 1.3% | |||||
| Regional Banks 1.3% | |||||
| 1,062,475 | Banco Daycoval S.A. Pfd. (Brazil) | 5,170,341 | |||
| Total Preferred Stocks (cost $7,702,883) | 5,170,341 | ||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 5.1% | ||||||
| Repurchase Agreement 5.1% | ||||||
| $20,923,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $21,560,000 of United States Treasury Notes 2.625% due 2/29/16; value: $21,344,400; repurchase proceeds: $20,923,006 (cost $20,923,000) | $ | 20,923,000 | |||
| Total Short-Term Investments (cost $20,923,000) | 20,923,000 | |||||
| Total Investments (cost $384,913,602) 100.5% | 411,972,492 | |||||
| Liabilities less Other Assets (0.5)% | (2,023,462 | ) | ||||
| NET ASSETS 100.0% | $ | 409,949,030 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||
At September 30, 2009, Wasatch Core Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Belgium | 1.0 | ||
Brazil | 2.4 | ||
China | 5.5 | ||
India | 3.3 | ||
United States | 87.8 | ||
TOTAL | 100.0 | % | |
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Table of Contents
| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 92.9% | |||||
| Aerospace & Defense 2.0% | |||||
| 31,620 | Bharat Electronics Ltd. (India) | $ | 1,008,152 | ||
| Agricultural Products 1.6% | |||||
| 736,609 | Chaoda Modern Agriculture Holdings Ltd. (China) | 447,665 | |||
| 434,065 | China Green Holdings Ltd. (China) | 369,093 | |||
| 816,758 | |||||
| Air Freight & Logistics 1.7% | |||||
| 1,788,389 | Aramex PJSC* (United Arab Emirates) | 861,827 | |||
| Aluminum 1.1% | |||||
| 911,000 | Midas Holdings Ltd. (Singapore) | 553,219 | |||
| Apparel Retail 1.2% | |||||
| 103,100 | Padini Holdings Berhad (Malaysia) | 89,367 | |||
| 88,670 | Truworths International Ltd. (South Africa) | 501,628 | |||
| 590,995 | |||||
| Apparel, Accessories & Luxury Goods 2.7% | |||||
| 199,295 | Anta Sports Products Ltd. (China) | 246,867 | |||
| 366,815 | China Dongxiang Group Co. (China) | 243,279 | |||
| 361,595 | Ports Design Ltd. (China) | 903,282 | |||
| 1,393,428 | |||||
| Application Software 0.6% | |||||
| 1,694,255 | Kingdee International Software Group Co. Ltd. (China) | 286,382 | |||
| Brewers 1.2% | |||||
| 42,730 | Anadolu Efes Biracilik ve Malt Sanayii AS (Turkey) | 466,459 | |||
| 62,000 | Guinness Anchor Berhad (Malaysia) | 123,606 | |||
| 590,065 | |||||
| Broadcasting 0.8% | |||||
| 575,000 | BEC World Public Co. Ltd. (Thailand) | 388,955 | |||
| Building Products 0.4% | |||||
| 934,000 | Home Product Center Public Co. Ltd. (Thailand) | 216,657 | |||
| Coal & Consumable Fuels 2.1% | |||||
| 230,180 | PT Indo Tambangraya Megah (Indonesia) | 577,534 | |||
| 341,400 | Tambang Batubara Bukit Asam Tbk PT (Indonesia) | 498,059 | |||
| 1,075,593 | |||||
| Construction & Engineering 1.5% | |||||
| 62,570 | Aveng Ltd. (South Africa) | 360,220 | |||
| 34,615 | Heerim Architects & Planners (Korea) | 376,042 | |||
| 736,262 | |||||
| Construction Materials 6.0% | |||||
| 63,515 | Adana Cimento Sanayii Turk Anonim Sirketi (Turkey) | 258,939 | |||
| 1,236 | Ceramic Industries Ltd. (South Africa) | 16,025 | |||
| 218,700 | Corp Moctezuma S.A.B de C.V. (Mexico) | 437,343 | |||
| 1,140 | HOLCIM Maroc S.A. (Morocco) | 277,912 | |||
| 129,735 | Pretoria Portland Cement Co. Ltd. (South Africa) | 585,426 | |||
| 237,000 | PT Indocement Tunggal Prakarsa Tbk (Indonesia) | 259,928 | |||
| 1,049,280 | PT Semen Gresik (Persero) Tbk (Indonesia) | 683,959 | |||
| 7,900 | Shree Cement Ltd. (India) | 271,512 | |||
| 15,600 | Ultra Tech Cement Ltd. (India) | 259,303 | |||
| 3,050,347 | |||||
| Consumer Finance 1.3% | |||||
| 184,805 | Banco Compartamos S.A. de C.V. (Mexico) | 674,793 | |||
| Shares | Value | ||||
| Department Stores 4.2% | |||||
| 437,170 | Golden Eagle Retail Group Ltd. (China) | $ | 732,184 | ||
| 42,495 | Lojas Renner S.A. (Brazil) | 746,864 | |||
| 6,726,400 | PT Ramayana Lestari Sentosa Tbk (Indonesia) | 452,370 | |||
| 595,000 | Robinson Department Store Public Co. Ltd. (Thailand) | 190,557 | |||
| 2,121,975 | |||||
| Distillers & Vintners 0.4% | |||||
| 22,650 | Distell Group Ltd. (South Africa) | 189,763 | |||
| Diversified Banks 4.6% | |||||
| 294,020 | Allahabad Bank Ltd. (India) | 730,390 | |||
| 311,380 | Asya Katilim Bankasi AS* (Turkey) | 650,457 | |||
| 39,860 | Bank of Baroda (India) | 399,138 | |||
| 36,220 | Commercial International Bank GDR (Egypt) | 371,979 | |||
| 37,310 | National Societe Generale Bank (Egypt) | 192,043 | |||
| 2,344,007 | |||||
| Diversified Metals & Mining 0.6% | |||||
| 18,555 | Hindustan Zinc Ltd. (India) | 318,797 | |||
| Drug Retail 0.4% | |||||
| 27,000 | Corporativo Fragua S.A.B., Class B (Mexico) | 207,973 | |||
| Education Services 0.8% | |||||
| 2,080 | MegaStudy Co. Ltd. (Korea) | 428,093 | |||
| Electrical Components & Equipment 3.0% | |||||
| 14,600 | Voltamp Transformers Ltd. (India) | 252,423 | |||
| 591,990 | Wasion Group Holdings Ltd. (China) | 516,365 | |||
| 426,240 | Zhuzhou CSR Times Electric Co. Ltd., Series H (China) | 744,678 | |||
| 1,513,466 | |||||
| Electronic Equipment & Instruments 0.5% | |||||
| 140,000 | Chroma ATE, Inc. (Taiwan) | 273,050 | |||
| Environmental & Facilities Services 0.6% | |||||
| 10,550 | Korea Plant Service & Engineering Co. Ltd. (Korea) | 290,108 | |||
| Food Retail 5.5% | |||||
| 17,125 | BIM Birlesik Magazalar AS (Turkey) | 698,155 | |||
| 1,450,930 | CP ALL PCL (Thailand) | 872,903 | |||
| 103,270 | Eurocash S.A. (Poland) | 502,985 | |||
| 30,515 | Magnit OJSC GDR (Russia) | 418,056 | |||
| 37,135 | Shoprite Holdings Ltd. (South Africa) | 306,472 | |||
| 2,798,571 | |||||
| Gas Utilities 0.9% | |||||
| 134,280 | Indraprastha Gas Ltd.* (India) | 455,835 | |||
| Gold 0.8% | |||||
| 55,585 | Kingsgate Consolidated Ltd. (Australia) | 399,207 | |||
| Health Care Equipment 0.3% | |||||
| 4,915 | Mindray Medical International Ltd. ADR (China) | 160,426 | |||
| Health Care Facilities 0.8% | |||||
| 324,930 | KPJ Healthcare Berhad (Malaysia) | 386,799 | |||
| Health Care Supplies 1.5% | |||||
| 232,190 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 766,971 | |||
| Heavy Electrical Equipment 0.4% | |||||
| 97,000 | China High Speed Transmission Equipment Group Co. Ltd. (China) | 199,005 | |||
44
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Shares | Value | ||||
| Highways & Railtracks 1.4% | |||||
| 3,758,555 | PT Jasa Marga (Indonesia) | $ | 727,211 | ||
| Home Entertainment Software 1.2% | |||||
| 2,240 | NCsoft Corp. (Korea) | 321,290 | |||
| 5,825 | Shanda Interactive Entertainment Ltd. ADR* (China) | 298,240 | |||
| 619,530 | |||||
| Home Improvement Retail 1.9% | |||||
| 3,893,750 | Ace Hardware Indonesia (Indonesia) | 495,532 | |||
| 46,225 | Cashbuild Ltd. (South Africa) | 465,480 | |||
| 961,012 | |||||
| Hotels, Resorts & Cruise Lines 0.5% | |||||
| 704,335 | Minor International PCL (Thailand) | 261,411 | |||
| Industrial Gases 0.9% | |||||
| 167,205 | African Oxygen Ltd. (South Africa) | 456,267 | |||
| Industrial Machinery 4.7% | |||||
| 52,035 | AIA Engineering Ltd. (India) | 337,002 | |||
| 1,338,930 | China Automation Group Ltd. (China) | 687,601 | |||
| 55,910 | Cummins India Ltd. (India) | 406,264 | |||
| 4,170 | Duoyuan Global Water, Inc. ADR* (China) | 138,861 | |||
| 24,515 | Thermax India Ltd. (India) | 278,326 | |||
| 55,340 | Weg S.A. (Brazil) | 528,584 | |||
| 2,376,638 | |||||
| Investment Banking & Brokerage 0.8% | |||||
| 38,110 | Egyptian Financial Group-Hermes Holding GDR (Egypt) | 402,060 | |||
| Life & Health Insurance 1.0% | |||||
| 63,800 | Amil Participacoes S.A. (Brazil) | 350,544 | |||
| 39,930 | Discovery Holdings Ltd. (South Africa) | 155,202 | |||
| 505,746 | |||||
| Managed Health Care 0.8% | |||||
| 19,235 | OdontoPrev S.A. (Brazil) | 391,285 | |||
| Marine Ports & Services 1.8% | |||||
| 779,749 | International Container Terminal Services, Inc. (Philippines) | 362,062 | |||
| 70,290 | Santos Brasil Participacoes S.A.** (Brazil) | 556,433 | |||
| 918,495 | |||||
| Motorcycle Manufacturers 0.6% | |||||
| 9,000 | Bajaj Auto Ltd. (India) | 279,654 | |||
| Oil & Gas Exploration & Production 2.6% | |||||
| 208,550 | Afren plc* (United Kingdom) | 267,585 | |||
| 87,295 | Dragon Oil plc* (Ireland) | 540,649 | |||
| 48,055 | Gran Tierra Energy, Inc.* | 199,909 | |||
| 63,285 | JKX Oil and Gas plc (United Kingdom) | 280,986 | |||
| 1,289,129 | |||||
| Other Diversified Financial Services 0.5% | |||||
| 13,360 | Intergroup Financial Services Corp. (Peru) | 247,160 | |||
| Packaged Foods & Meats 0.5% | |||||
| 25,400 | Nestle (Malaysia) Berhad (Malaysia) | 253,193 | |||
| Personal Products 1.5% | |||||
| 19,200 | Colgate-Palmolive (India) Ltd. (India) | 252,527 | |||
| 168,485 | Dabur India Ltd. (India) | 498,748 | |||
| 751,275 | |||||
| Shares | Value | ||||
| Pharmaceuticals 3.2% | |||||
| 35,500 | Egypt International Pharmaceutical Industries Co. (Egypt) | $ | 224,214 | ||
| 197,800 | Genomma Lab Internacional S.A.* (Mexico) | 262,381 | |||
| 38,305 | Pharmstandard GDR* (Russia) | 690,256 | |||
| 53,990 | Piramal Healthcare Ltd. (India) | 430,304 | |||
| 1,607,155 | |||||
| Precious Metals & Minerals 0.6% | |||||
| 63,500 | Northam Platinum Ltd. (South Africa) | 278,935 | |||
| Railroads 1.0% | |||||
| 20,005 | Container Corp. of India (India) | 497,661 | |||
| Restaurants 2.1% | |||||
| 281,570 | Ajisen China Holdings Ltd. (China) | 250,687 | |||
| 216,400 | Alsea de Mexico S.A.B. de C.V.* (Mexico) | 139,600 | |||
| 231,600 | FUJI Food & Catering Services Holdings Ltd.* *** (China) | 114,864 | |||
| 271,700 | Jollibee Foods Corp. (Philippines) | 283,857 | |||
| 112,780 | KFC Holdings (Malaysia) Berhad (Malaysia) | 247,653 | |||
| 1,036,661 | |||||
| Soft Drinks 1.8% | |||||
| 128,910 | Coca-Cola Icecek AS (Turkey) | 912,099 | |||
| Specialized Finance 5.1% | |||||
| 71,620 | BM&F BOVESPA S.A. (Brazil) | 529,273 | |||
| 653,100 | Bolsa Mexicana de Valores S.A., Series A (Mexico)* | 807,804 | |||
| 5,281 | Crisil Ltd. (India) | 451,018 | |||
| 93,445 | JSE Ltd. (South Africa) | 771,193 | |||
| 2,559,288 | |||||
| Specialty Chemicals 1.1% | |||||
| 8,320 | Asian Paints Ltd. (India) | 243,132 | |||
| 108,390 | China Steel Chemical Corp. (Taiwan) | 288,608 | |||
| 531,740 | |||||
| Specialty Stores 1.0% | |||||
| 28,500 | Dufry South America Ltd. (Brazil) | 482,835 | |||
| Steel 1.7% | |||||
| 152,320 | Sesa Goa Ltd. (India) | 841,314 | |||
| Technology Distributors 0.5% | |||||
| 1,867,300 | Inspur International Ltd. (China) | 245,759 | |||
| Thrifts & Mortgage Finance 1.5% | |||||
| 48,505 | LIC Housing Finance Ltd. (India) | 778,571 | |||
| Tobacco 2.4% | |||||
| 13,010 | Eastern Tobacco (Egypt) | 314,018 | |||
| 500 | Phillip Morris CR a.s. (Czech Republic) | 255,088 | |||
| 425,000 | PT Gudang Garam Tbk (Indonesia) | 655,199 | |||
| 1,224,305 | |||||
| Water Utilities 0.7% | |||||
| 1,153,400 | Manila Water Co., Inc. (Philippines) | 377,326 | |||
| Total Common Stocks (cost $38,887,651) | 46,911,194 | ||||
| PREFERRED STOCKS 4.5% | |||||
| Diversified Banks 2.7% | |||||
| 121,400 | Banco do Estado do Rio Grande do Sul S.A., Series B Pfd (Brazil) | 748,768 | |||
| 91,000 | Banco Industrial e Comercial S.A. (Bic Banco) Pfd. (Brazil) | 597,312 | |||
| 1,346,080 | |||||
45
Table of Contents
| WASATCH EMERGING MARKETS SMALL CAP FUND (WAEMX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Fertilizers & Agricultural Chemicals 0.7% | |||||
| 35,550 | Fertilizantes Fosfatados S.A. Pfd.* (Brazil) | $ | 368,123 | ||
| Regional Banks 1.1% | |||||
| 110,445 | Banco Daycoval S.A. Pfd. (Brazil) | 537,460 | |||
| Total Preferred Stocks (cost $1,690,535) | 2,251,663 | ||||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 2.1% | |||||
| Repurchase Agreement 2.1% | |||||
| $1,066,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $1,100,000 of United States Treasury Notes 2.625% due 2/29/16; value: $1,089,000; repurchase proceeds: $1,066,000 (cost $1,066,000) | $ | 1,066,000 | ||
| Total Short-Term Investments (cost $1,066,000) | 1,066,000 | ||||
| Total Investments (cost $41,644,186) 99.5% | 50,228,857 | ||||
| Other Assets less Liabilities 0.5% | 260,515 | ||||
| NET ASSETS 100.0% | $ | 50,489,372 | |||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
See Notes to Financial Statements. | |||||
At September 30, 2009, Wasatch Emerging Markets Small Cap Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 0.8 | ||
Brazil | 11.9 | ||
China | 15.0 | ||
Czech Republic | 0.5 | ||
Egypt | 3.1 | ||
India | 18.3 | ||
Indonesia | 8.8 | ||
Ireland | 1.1 | ||
Korea | 2.9 | ||
Malaysia | 2.2 | ||
Mexico | 5.1 | ||
Morocco | 0.6 | ||
Peru | 0.5 | ||
Philippines | 2.1 | ||
Poland | 1.0 | ||
Russia | 2.3 | ||
Singapore | 1.1 | ||
South Africa | 8.3 | ||
Taiwan | 1.1 | ||
Thailand | 3.9 | ||
Turkey | 6.1 | ||
United Arab Emirates | 1.8 | ||
United Kingdom | 1.1 | ||
United States | 0.4 | ||
TOTAL | 100.0 | % | |
46
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| COMMON STOCKS 86.0% | |||||
| Advertising 0.3% | |||||
| 8,350 | 1000mercis* (France) | $ | 336,206 | ||
| Aerospace & Defense 0.3% | |||||
| 10,800 | Bharat Electronics Ltd. (India) | 344,341 | |||
| Agricultural Products 0.5% | |||||
| 718,920 | Chaoda Modern Agriculture Holdings Ltd. (China) | 436,915 | |||
| 152,000 | China Green Holdings Ltd. (China) | 129,248 | |||
| 566,163 | |||||
| Air Freight & Logistics 0.7% | |||||
| 1,549,400 | Aramex PJSC* (United Arab Emirates) | 746,658 | |||
| 2,200 | Forward Air Corp. | 50,930 | |||
| 83,000 | Goodpack Ltd. (Singapore) | 59,541 | |||
| 857,129 | |||||
| Airlines 0.1% | |||||
| 3,200 | Allegiant Travel Co.* | 121,888 | |||
| Alternative Carriers 0.1% | |||||
| 6,800 | Neutral Tandem, Inc.* | 154,768 | |||
| Aluminum 0.2% | |||||
| 386,000 | Midas Holdings Ltd. (Singapore) | 234,405 | |||
| Apparel Retail 0.9% | |||||
| 1,020 | Camaieu (France) | 246,402 | |||
| 34,600 | Esprit Holdings Ltd. (Hong Kong) | 232,153 | |||
| 8,900 | JOS. A. Bank Clothiers, Inc.* | 398,453 | |||
| 18,700 | KappAhl Holding AB (Sweden) | 133,228 | |||
| 1,010,236 | |||||
| Apparel, Accessories & Luxury Goods 4.8% | |||||
| 466,000 | Anta Sports Products Ltd. (China) | 577,235 | |||
| 4,250 | Bijou Brigitte AG (Germany) | 762,149 | |||
| 20,800 | Billabong International Ltd. (Australia) | 220,222 | |||
| 845,000 | China Dongxiang Group Co. (China) | 560,422 | |||
| 5,900 | Fossil, Inc.* | 167,855 | |||
| 19,700 | Gerry Weber International AG (Germany) | 653,888 | |||
| 48,000 | Li Ning Co. Ltd. (China) | 148,025 | |||
| 17,453 | Odd Molly International AB (Sweden) | 265,735 | |||
| 464,000 | Ports Design Ltd. (China) | 1,159,095 | |||
| 154,400 | Ted Baker plc (United Kingdom) | 1,068,296 | |||
| 5,000 | Volcom, Inc.* | 82,400 | |||
| 5,665,322 | |||||
| Application Software 1.6% | |||||
| 2,500 | Aveva Group plc (United Kingdom) | 36,714 | |||
| 4,000 | Computer Modelling Group Ltd. (Canada) | 58,489 | |||
| 3,600 | FactSet Research Systems, Inc. | 238,464 | |||
| 2,296,000 | Kingdee International Software Group Co. Ltd. (China) | 388,096 | |||
| 13,704 | Longtop Financial Technologies Ltd. ADR* (China) | 390,016 | |||
| 2,450 | SimCorp A/S (Denmark) | 502,586 | |||
| 13,635 | Tyler Technologies, Inc.* | 233,022 | |||
| 1,847,387 | |||||
| Shares | Value | ||||
| Asset Management & Custody Banks 1.8% | |||||
| 6,000 | Artio Global Investors, Inc.* | $ | 156,900 | ||
| 1,000 | Bank of New York Mellon Corp. | 28,990 | |||
| 4,000 | Diamond Hill Investment Group, Inc.* | 231,880 | |||
| 7,700 | Eaton Vance Corp. | 215,523 | |||
| 41,800 | SEI Investments Co. | 822,624 | |||
| 692 | T. Rowe Price Group, Inc. | 31,624 | |||
| 47,109 | Treasury Group Ltd. (Australia) | 230,682 | |||
| 8,645 | Waddell & Reed Financial, Inc., Class A | 245,950 | |||
| 4,000 | Westwood Holdings Group, Inc. | 138,800 | |||
| 2,102,973 | |||||
| Auto Parts & Equipment 0.0% | |||||
| 1,235,000 | Norstar Founders Group Ltd.* *** (Hong Kong) | 29,082 | |||
| Automotive Retail 0.6% | |||||
| 50,000 | Halfords Group plc (United Kingdom) | 281,557 | |||
| 11,500 | O’Reilly Automotive, Inc.* | 415,610 | |||
| 697,167 | |||||
| Biotechnology 0.7% | |||||
| 31,915 | Orexigen Therapeutics, Inc.* | 314,363 | |||
| 2,311,981 | Sino Biopharmaceutical Ltd. (China) | 533,989 | |||
| 848,352 | |||||
| Communications Equipment 0.9% | |||||
| 16,050 | Riverbed Technology, Inc.* | 352,458 | |||
| 27,575 | Tandberg ASA (Norway) | 660,562 | |||
| 1,013,020 | |||||
| Computer Storage & Peripherals 0.8% | |||||
| 38,000 | Intevac, Inc.* | 510,720 | |||
| 185 | Wacom Co. Ltd. (Japan) | 441,105 | |||
| 951,825 | |||||
| Construction & Engineering 0.7% | |||||
| 22,500 | Heerim Architects & Planners (Korea) | 244,430 | |||
| 37,000 | Lycopodium Ltd. (Australia) | 89,448 | |||
| 195,000 | Rotary Engineering Ltd. (Singapore) | 159,274 | |||
| 39,800 | SWECO AB (Sweden) | 331,576 | |||
| 824,728 | |||||
| Construction & Farm Machinery & Heavy Trucks 0.2% | |||||
| 2,800 | Faiveley S.A. (France) | 240,771 | |||
| Construction Materials 0.5% | |||||
| 80,500 | Corp Moctezuma S.A.B de C.V. (Mexico) | 160,979 | |||
| 52,000 | Pretoria Portland Cement Co. Ltd. (South Africa) | 234,649 | |||
| 375,000 | PT Semen Gresik (Persero) Tbk (Indonesia) | 244,439 | |||
| 640,067 | |||||
| Consumer Finance 1.1% | |||||
| 66,000 | Banco Compartamos S.A. de C.V. (Mexico) | 240,991 | |||
| 24,516 | Dollar Financial Corp.* | 392,746 | |||
| 27,400 | First Cash Financial Services, Inc.* | 469,362 | |||
| 24,700 | United PanAm Financial Corp.* | 85,215 | |||
| 5,900 | World Acceptance Corp.* | 148,739 | |||
| 1,337,053 | |||||
47
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Data Processing & Outsourced Services 3.5% | |||||
| 53,700 | Cia Brasileira de Meios de Pagamentos (Brazil) | $ | 534,189 | ||
| 20,700 | DIBS Payment Services AB* (Sweden) | 171,710 | |||
| 10,800 | Fidelity National Information Services, Inc. | 275,508 | |||
| 5,300 | NeuStar, Inc., Class A* | 119,780 | |||
| 40,900 | Redecard S.A. (Brazil) | 630,655 | |||
| 4,050 | Syntel, Inc. | 193,306 | |||
| 184,950 | Wirecard AG (Germany) | 2,204,268 | |||
| 4,129,416 | |||||
| Department Stores 0.2% | |||||
| 12,400 | Lojas Renner S.A. (Brazil) | 217,934 | |||
| Distributors 0.3% | |||||
| 18,200 | LKQ Corp.* | 337,428 | |||
| Diversified Banks 1.4% | |||||
| 195,039 | Allahabad Bank Ltd. (India) | 484,506 | |||
| 22,100 | Axis Bank Ltd. (India) | 452,590 | |||
| 1,030 | HDFC Bank Ltd. ADR (India) | 121,921 | |||
| 5,300 | ICICI Bank Ltd. ADR (India) | 204,368 | |||
| 81,800 | Union Bank of India Ltd. (India) | 407,512 | |||
| 1,670,897 | |||||
| Diversified Support Services 0.6% | |||||
| 12,700 | Copart, Inc.* | 421,767 | |||
| 150 | Prestige International, Inc. (Japan) | 253,651 | |||
| 675,418 | |||||
| Drug Retail 1.1% | |||||
| 58,035 | Create SD Holdings Co. Ltd. (Japan) | 1,339,120 | |||
| Education Services 1.5% | |||||
| 14,400 | Apollo Group, Inc., Class A* | 1,060,848 | |||
| 5,275 | Capella Education Co.* | 355,218 | |||
| 12,900 | Kroton Educacional S.A.** (Brazil) | 115,259 | |||
| 1,150 | MegaStudy Co. Ltd. (Korea) | 236,686 | |||
| 1,768,011 | |||||
| Electrical Components & Equipment 0.6% | |||||
| 6,100 | Emerson Electric Co. | 244,488 | |||
| 265,000 | Wasion Group Holdings Ltd. (China) | 231,147 | |||
| 147,000 | Zhuzhou CSR Times Electric Co. Ltd., Series H (China) | 256,821 | |||
| 732,456 | |||||
| Electronic Components 0.4% | |||||
| 12,084 | Amphenol Corp., Class A | 455,325 | |||
| Electronic Equipment & Instruments 0.6% | |||||
| 600 | KEYENCE Corp. (Japan) | 128,280 | |||
| 27,400 | Rotork plc (United Kingdom) | 495,474 | |||
| 16,675 | Viscom AG* (Germany) | 71,779 | |||
| 695,533 | |||||
| Electronic Manufacturing Services 0.6% | |||||
| 173,000 | Ju Teng International Holdings Ltd. (China) | 146,435 | |||
| 17,500 | TTM Technologies, Inc.* | 200,725 | |||
| 48,000 | Venture Corp. Ltd. (Singapore) | 306,488 | |||
| 653,648 | |||||
| Environmental & Facilities Services 0.1% | |||||
| 8,300 | Daiseki Co. Ltd. (Japan) | 163,761 | |||
| Shares | Value | ||||
| Food Retail 1.1% | |||||
| 948,000 | BreadTalk Group Ltd. (Singapore) | $ | 350,126 | ||
| 18,600 | Daikokutenbussan Co. Ltd. (Japan) | 405,339 | |||
| 11,700 | Ozeki Co. Ltd. (Japan) | 486,468 | |||
| 1,241,933 | |||||
| Footwear 0.5% | |||||
| 3,715,000 | China Hongxing Sports Ltd. (China) | 554,103 | |||
| General Merchandise Stores 0.7% | |||||
| 16,200 | Dollar Tree, Inc.* | 788,616 | |||
| Gold 0.1% | |||||
| 10,000 | Petropavlovsk plc* (United Kingdom) | 144,776 | |||
| Health Care Distributors 0.3% | |||||
| 9,300 | MWI Veterinary Supply, Inc.* | 371,535 | |||
| Health Care Equipment 6.0% | |||||
| 21,000 | Abaxis, Inc.* | 561,750 | |||
| 34,950 | Audika (France) | 1,084,847 | |||
| 41,800 | Cardica, Inc.* | 63,118 | |||
| 80,000 | Cardica, Inc. PIPE* *** † | 106,304 | |||
| 59,100 | Cyberonics, Inc.* | 942,054 | |||
| 28,400 | DiaSorin S.p.A (Italy) | 956,383 | |||
| 4,400 | Edwards Lifesciences Corp.* | 307,604 | |||
| 3,100 | IDEXX Laboratories, Inc.* | 155,000 | |||
| 6,627,900 | LMA International N.V.* (Singapore) | 1,035,646 | |||
| 5,150 | Nakanishi, Inc. (Japan) | 453,517 | |||
| 30,600 | Somanetics Corp.* | 493,272 | |||
| 4,500 | St. Jude Medical, Inc.* | 175,545 | |||
| 24,100 | STRATEC Biomedical Systems AG (Germany) | 750,534 | |||
| 7,085,574 | |||||
| Health Care Facilities 1.7% | |||||
| 43,561 | AmSurg Corp.* | 924,800 | |||
| 67,750 | NovaMed, Inc.* | 306,907 | |||
| 479,000 | Raffles Medical Group Ltd. (Singapore) | 462,687 | |||
| 11,200 | VCA Antech, Inc.* | 301,168 | |||
| 1,995,562 | |||||
| Health Care Services 2.0% | |||||
| 8,100 | Bio-Reference Laboratories, Inc.* | 278,640 | |||
| 8,112 | CorVel Corp.* | 230,381 | |||
| 12,400 | Genoptix, Inc.* | 431,272 | |||
| 34,642 | Healthways, Inc.* | 530,715 | |||
| 14,500 | LHC Group, Inc.* | 433,985 | |||
| 7,700 | MEDNAX, Inc.* | 422,884 | |||
| 2,327,877 | |||||
| Health Care Supplies 1.5% | |||||
| 76,125 | Abcam plc (United Kingdom) | 1,058,898 | |||
| 3,800 | ICU Medical, Inc.* | 140,068 | |||
| 101,500 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 335,275 | |||
| 10,000 | Standard Diagnostics, Inc. (Korea) | 212,179 | |||
| 1,746,420 | |||||
| Health Care Technology 0.2% | |||||
| 29,000 | RaySearch Laboratories AB* (Sweden) | 107,471 | |||
| 5,535 | Vital Images, Inc.* | 69,298 | |||
| 176,769 | |||||
| Home Entertainment Software 1.0% | |||||
| 145 | GameOn Co. Ltd. (Japan) | 146,115 | |||
| 30,300 | Hudson Soft Co. Ltd. (Japan) | 169,891 | |||
| 235,000 | Kingsoft Corp. Ltd. (China) | 220,747 | |||
| 5,000 | Perfect World Co. Ltd., Class B ADR* (China) | 240,500 | |||
| 15,440 | Shanda Games Ltd. ADR* (China) | 180,648 | |||
| 4,200 | Shanda Interactive Entertainment Ltd. ADR* (China) | 215,040 | |||
| 1,172,941 | |||||
48
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Shares | Value | ||||
| Home Improvement Retail 1.4% | |||||
| 2,350,000 | Ace Hardware Indonesia (Indonesia) | $ | 299,069 | ||
| 22,000 | Cashbuild Ltd. (South Africa) | 221,537 | |||
| 26,500 | Clas Ohlson AB (Sweden) | 473,901 | |||
| 14,200 | Lumber Liquidators, Inc.* | 307,998 | |||
| 67,100 | Swedol AB, Class B (Sweden) | 318,060 | |||
| 1,620,565 | |||||
| Homefurnishing Retail 0.2% | |||||
| 10,000 | Aaron’s, Inc. | 264,000 | |||
| Household Appliances 0.3% | |||||
| 2,500 | Rational AG (Germany) | 350,261 | |||
| Household Products 0.1% | |||||
| 27,000 | Kimberly-Clark de Mexico S.A.B de C.V. (Mexico) | 112,005 | |||
| Human Resource & Employment Services 1.7% | |||||
| 130 | Benefit One, Inc. (Japan) | 110,422 | |||
| 156,800 | Michael Page International plc (United Kingdom) | 838,841 | |||
| 34,200 | Robert Half International, Inc. | 855,684 | |||
| 50,700 | Sthree plc (United Kingdom) | 209,950 | |||
| 2,014,897 | |||||
| Industrial Machinery 2.5% | |||||
| 3,200 | Burckhardt Compression Holding AG (Switzerland) | 524,919 | |||
| 921,000 | China Automation Group Ltd. (China) | 472,975 | |||
| 16,145 | China Valves Technology, Inc.* | 116,890 | |||
| 3,300 | Danaher Corp. | 222,156 | |||
| 9,905 | Duoyuan Global Water, Inc. ADR* (China) | 329,836 | |||
| 6,700 | Graco, Inc. | 186,729 | |||
| 6,000 | Illinois Tool Works, Inc. | 256,260 | |||
| 5,500 | Konecranes Oyj (Finland) | 156,869 | |||
| 35,000 | ODIM ASA (Norway) | 197,028 | |||
| 6,900 | technotrans AG* (Germany) | 60,515 | |||
| 41,100 | Weg S.A. (Brazil) | 392,569 | |||
| 2,916,746 | |||||
| Insurance Brokers 0.5% | |||||
| 29,000 | Brown & Brown, Inc. | 555,640 | |||
| Internet Retail 0.9% | |||||
| 111,655 | ASOS plc* (United Kingdom) | 624,818 | |||
| 215 | START TODAY Co. Ltd. (Japan) | 432,588 | |||
| 1,057,406 | |||||
| Internet Software & Services 1.1% | |||||
| 6,500 | Daum Communications Corp.* (Korea) | 299,003 | |||
| 135 | Macromill, Inc. (Japan) | 202,402 | |||
| 4,800 | NetEase.com, Inc. ADR* (China) | 219,264 | |||
| 30,600 | Neurones (France) | 312,725 | |||
| 6,115 | VistaPrint N.V.* | 310,336 | |||
| 1,343,730 | |||||
| Investment Banking & Brokerage 0.4% | |||||
| 7,300 | Charles Schwab Corp. (The) | 139,795 | |||
| 95 | GCA Savvian Group Corp. (Japan) | 119,663 | |||
| 13,100 | optionsXpress Holdings, Inc. | 226,368 | |||
| 485,826 | |||||
| Shares | Value | ||||
| IT Consulting & Other Services 1.9% | |||||
| 16,075 | Alten* (France) | $ | 431,890 | ||
| 9,000 | Cognizant Technology Solutions Corp., Class A* | 347,940 | |||
| 15,000 | Connecta AB (Sweden) | 122,811 | |||
| 830,000 | CSE Global Ltd. (Singapore) | 468,660 | |||
| 320 | Future Architect, Inc. (Japan) | 135,548 | |||
| 50,800 | HiQ International AB (Sweden)* | 215,257 | |||
| 8,700 | Infosys Technologies Ltd. ADR (India) | 421,863 | |||
| 14,470 | Yucheng Technologies Ltd.* (China) | 103,750 | |||
| 2,247,719 | |||||
| Leisure Products 0.3% | |||||
| 8,700 | Pool Corp. | 193,314 | |||
| 3,500 | Shimano, Inc. (Japan) | 151,377 | |||
| 344,691 | |||||
| Life Sciences Tools & Services 3.7% | |||||
| 1,020 | CMIC Co. Ltd.* (Japan) | 281,520 | |||
| 5,100 | Covance, Inc.* | 276,165 | |||
| 210 | EPS Co. Ltd. (Japan) | 873,147 | |||
| 28,800 | ICON plc ADR* (Ireland) | 705,312 | |||
| 103,700 | Life Sciences Research, Inc.* | 825,452 | |||
| 2,100 | MorphoSys AG* (Germany) | 52,578 | |||
| 43,200 | Pharmaceutical Product Development, Inc. | 947,808 | |||
| 2,700 | Techne Corp. | 168,885 | |||
| 3,300 | Waters Corp.* | 184,338 | |||
| 4,315,205 | |||||
| Managed Health Care 0.4% | |||||
| 9,200 | AMERIGROUP Corp.* | 203,964 | |||
| 10,800 | OdontoPrev S.A. (Brazil) | 219,697 | |||
| 423,661 | |||||
| Mortgage REITs 0.2% | |||||
| 9,500 | Annaly Capital Management, Inc. | 172,330 | |||
| Multi-Line Insurance 0.3% | |||||
| 13,900 | HCC Insurance Holdings, Inc. | 380,165 | |||
| Oil & Gas Drilling 0.4% | |||||
| 27,000 | Cathedral Energy Services Income Trust** (Canada) | 99,205 | |||
| 43,000 | China Oilfield Services Ltd., Series H (China) | 40,226 | |||
| 43,400 | Phoenix Technology Income Fund** (Canada) | 314,463 | |||
| 453,894 | |||||
| Oil & Gas Equipment & Services 1.5% | |||||
| 311,000 | Anhui Tianda Oil Pipe Co. Ltd., Class H (China) | 111,157 | |||
| 1,071,915 | Anton Oilfield Services Group (China) | 94,051 | |||
| 900 | Core Laboratories N.V. | 92,781 | |||
| 12,000 | Gulf Island Fabrication, Inc. | 224,880 | |||
| 47,800 | Lamprell plc (United Arab Emirates) | 132,750 | |||
| 24,900 | Pason Systems, Inc. (Canada) | 289,833 | |||
| 15,000 | Petrofac Ltd. (United Kingdom) | 236,829 | |||
| 8,000 | Schoeller-Bleckmann Oilfield Equipment AG (Austria) | 383,842 | |||
| 14,100 | TGS-NOPEC Geophysical Co. ASA* (Norway) | 211,257 | |||
| 2,000 | Wellstream Holdings plc (United Kingdom) | 19,506 | |||
| 1,796,886 | |||||
49
Table of Contents
| WASATCH GLOBAL OPPORTUNITIES FUND (WAGOX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Oil & Gas Exploration & Production 1.0% | |||||
| 191,000 | Afren plc* (United Kingdom) | $ | 245,068 | ||
| 62,000 | Dragon Oil plc* (Ireland) | 377,680 | |||
| 41,600 | Gran Tierra Energy, Inc.* | 173,056 | |||
| 27,500 | JKX Oil and Gas plc (United Kingdom) | 122,100 | |||
| 6,500 | Petrominerales Ltd.* (Canada) | 86,841 | |||
| 7,975 | Premier Oil plc* (United Kingdom) | 154,285 | |||
| 1,159,030 | |||||
| Other Diversified Financial Services 0.1% | |||||
| 104,000 | Count Financial Ltd. (Australia) | 142,227 | |||
| Packaged Foods & Meats 0.3% | |||||
| 19,800 | Zhongpin, Inc.* | 291,456 | |||
| Personal Products 0.3% | |||||
| 706,000 | Beauty China Holdings Ltd.* *** (Singapore) | 5,014 | |||
| 10,105 | Natura Cosmeticos S.A. (Brazil) | 182,688 | |||
| 5,000 | Proctor & Gamble Hygiene and Healthcare Ltd. (India) | 149,210 | |||
| 336,912 | |||||
| Pharmaceuticals 1.3% | |||||
| 173,000 | China Shineway Pharmaceutical Group Ltd. (China) | 184,830 | |||
| 6,300 | Daewoong Pharmaceutical Co. Ltd. (Korea) | 308,517 | |||
| 78,400 | Dechra Pharmaceuticals plc (United Kingdom) | 536,371 | |||
| 35,000 | Egypt International Pharmaceutical Industries Co. (Egypt) | 221,056 | |||
| 18,600 | Whanin Pharmaceutical Co. Ltd. (Korea) | 216,270 | |||
| 1,467,044 | |||||
| Property & Casualty Insurance 0.2% | |||||
| 151,525 | Beazley Group plc (United Kingdom) | 285,873 | |||
| Publishing 0.1% | |||||
| 2,600 | Morningstar, Inc.* | 126,256 | |||
| Regional Banks 1.1% | |||||
| 35,800 | Boston Private Financial Holdings, Inc. | 233,058 | |||
| 8,500 | Canadian Western Bank (Canada) | 157,746 | |||
| 6,000 | City National Corp. | 233,580 | |||
| 10,500 | First of Long Island Corp. (The) | 279,195 | |||
| 135 | Seven Bank Ltd. (Japan) | 334,076 | |||
| 1,237,655 | |||||
| Research & Consulting Services 3.7% | |||||
| 14,375 | Bureau Veritas S.A. (France) | 811,579 | |||
| 4,484 | Campbell Brothers Ltd. (Australia) | 117,065 | |||
| 29,400 | CRA International, Inc.* | 802,326 | |||
| 15,000 | Intertek Group plc (United Kingdom) | 304,341 | |||
| 80 | Nihon M&A Center, Inc. (Japan) | 362,947 | |||
| 64,135 | Resources Connection, Inc.* | 1,094,143 | |||
| 130 | SGS S.A. (Switzerland) | 174,989 | |||
| 29,000 | Stantec, Inc.* (Canada) | 726,627 | |||
| 4,394,017 | |||||
| Restaurants 0.9% | |||||
| 478,000 | Ajisen China Holdings Ltd. (China) | 425,572 | |||
| 14,700 | Chimney Co. Ltd. (Japan) | 254,804 | |||
| 700 | Saint Marc Holdings Co. Ltd. (Japan) | 22,160 | |||
| 10,800 | Tim Hortons, Inc. | 305,640 | |||
| 1,008,176 | |||||
| Shares | Value | ||||
| Semiconductor Equipment 0.4% | |||||
| 4,600 | Cabot Microelectronics Corp.* | $ | 160,356 | ||
| 1,300 | Disco Corp. (Japan) | 86,657 | |||
| 104,747 | inTEST Corp.* | 32,576 | |||
| 3,400 | KLA-Tencor Corp. | 121,924 | |||
| 3,500 | Tessera Technologies, Inc.* | 97,615 | |||
| 499,128 | |||||
| Semiconductors 5.8% | |||||
| 20,300 | Advanced Analogic Technologies, Inc.* | 80,591 | |||
| 11,000 | CSR plc (United Kingdom)* | 82,502 | |||
| 32,000 | ELMOS Semiconductor AG* (Germany) | 229,579 | |||
| 7,450 | Hittite Microwave Corp.* | 274,011 | |||
| 13,100 | Linear Technology Corp. | 361,953 | |||
| 8,700 | Maxim Integrated Products, Inc. | 157,818 | |||
| 117,100 | Melexis N.V. (Belgium) | 1,191,591 | |||
| 61,700 | Micrel, Inc. | 502,855 | |||
| 26,400 | Microchip Technology, Inc. | 699,600 | |||
| 2,500 | Netlogic Microsystems, Inc.* | 112,500 | |||
| 331,099 | O2Micro International Ltd. ADR* (China) | 1,738,270 | |||
| 63,700 | PLX Technology, Inc.* | 214,669 | |||
| 8,100 | Power Integrations, Inc. | 269,973 | |||
| 7,500 | Semtech Corp.* | 127,575 | |||
| 6,600 | Silicon Laboratories, Inc.* | 305,976 | |||
| 6,800 | Supertex, Inc.* | 204,000 | |||
| 129,500 | Wolfson Microelectronics plc (United Kingdom)* | 286,248 | |||
| 6,839,711 | |||||
| Soft Drinks 0.1% | |||||
| 21,700 | Coca-Cola Icecek AS (Turkey) | 153,538 | |||
| Specialized Consumer Services 0.1% | |||||
| 40 | Best Bridal, Inc. (Japan) | 155,167 | |||
| Specialized Finance 1.6% | |||||
| 187,000 | Bolsa Mexicana de Valores S.A., Series A* (Mexico) | 231,296 | |||
| 6,100 | Hong Kong Exchanges & Clearing Ltd. (Hong Kong) | 110,586 | |||
| 9,600 | IMAREX ASA* (Norway) | 83,141 | |||
| 1,500 | IntercontinentalExchange, Inc*. | 145,785 | |||
| 14,300 | MSCI, Inc., Class A* | 423,566 | |||
| 8,500 | NASDAQ OMX Group, Inc. (The)* | 178,925 | |||
| 2,100 | NYSE Euronext | 60,669 | |||
| 45 | Osaka Securities Exchange Co. Ltd. (Japan) | 204,660 | |||
| 13,043 | Oslo Bors VPS Holding ASA (Norway) | 124,256 | |||
| 6,300 | Portfolio Recovery Associates, Inc.* | 285,579 | |||
| 1,848,463 | |||||
| Specialty Chemicals 1.4% | |||||
| 9,870 | C. Uyemura & Co. Ltd. (Japan) | 491,795 | |||
| 1,485,000 | EcoGreen Fine Chemical Group Ltd. (Hong Kong) | 354,481 | |||
| 80 | Japan Pure Chemical Co. Ltd. (Japan) | 278,230 | |||
| 42,600 | MEC Co. Ltd. (Japan) | 341,902 | |||
| 9,500 | TechnoSemiChem Co. Ltd. (Korea) | 153,999 | |||
| 1,620,407 | |||||
| Specialty Stores 1.2% | |||||
| 59,300 | Big 5 Sporting Goods Corp. | 895,430 | |||
| 32,140 | easyhome Ltd. (Canada) | 270,438 | |||
| 15,100 | Hibbett Sports, Inc.* | 275,273 | |||
| 1,441,141 | |||||
| Systems Software 1.0% | |||||
| 33,300 | Opnet Technologies, Inc. | 363,969 | |||
| 1,190 | Simplex Technology, Inc. (Japan) | 567,077 | |||
| 7,815 | Trend Micro, Inc. (Japan) | 291,832 | |||
| 1,222,878 | |||||
50
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Shares | Value | ||||
| Thrifts & Mortgage Finance 0.9% | |||||
| 12,275 | Home Capital Group, Inc. (Canada) | $ | 438,967 | ||
| 4,600 | Housing Development Finance Corp. Ltd. (India) | 266,748 | |||
| 11,000 | LIC Housing Finance Ltd. (India) | 176,565 | |||
| 7,300 | Washington Federal, Inc. | 123,078 | |||
| 1,005,358 | |||||
| Trading Companies & Distributors 3.3% | |||||
| 7,800 | Fastenal Co. | 301,860 | |||
| 53,980 | Houston Wire & Cable Co. | 596,479 | |||
| 24,000 | Indutrade AB (Sweden) | 467,976 | |||
| 17,500 | MISUMI Group, Inc. (Japan) | 366,932 | |||
| 8,800 | MSC Industrial Direct Co., Inc, Class A | 383,504 | |||
| 48,800 | Richelieu Hardware Ltd. (Canada) | 888,766 | |||
| 4,080 | Thermador Groupe (France) | 585,426 | |||
| 2,500 | W.W. Grainger, Inc. | 223,400 | |||
| 3,814,343 | |||||
| Trucking 0.5% | |||||
| 19,500 | Knight Transportation, Inc. | 327,210 | |||
| 800 | Landstar System, Inc. | 30,448 | |||
| 4,500 | Old Dominion Freight Line, Inc.* | 136,935 | |||
| 9,100 | Universal Truckload Services, Inc. | 150,241 | |||
| 644,834 | |||||
| Wireless Telecommunication Services 0.1% | |||||
| 5,400 | NII Holdings, Inc.* | 161,892 | |||
| Total Common Stocks (cost $74,430,172) | 100,979,069 | ||||
| PREFERRED STOCKS 0.7% | |||||
| Diversified Banks 0.3% | |||||
| 49,000 | Parana Banco S.A. Pfd. (Brazil) | 270,335 | |||
| Regional Banks 0.4% | |||||
| 103,000 | Banco Daycoval S.A. Pfd. (Brazil) | 501,231 | |||
| Total Preferred Stocks (cost $467,677) | 771,566 | ||||
| WARRANTS 0.0% | |||||
| Health Care Equipment 0.0% | |||||
| 40,000 | Cardica, Inc., expiring 9/29/14* *** † | 5,000 | |||
| Total Warrants (cost $5,000) | 5,000 | ||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 13.6% | ||||||
| Repurchase Agreement 13.6% | ||||||
| $15,949,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $15,065,000 of United States Treasury Notes 4.00% due 2/15/15; value: $16,273,213; repurchase proceeds: $15,949,004 (cost $15,949,000) | $ | 15,949,000 | |||
| Total Short-Term Investments (cost $15,949,000) | 15,949,000 | |||||
| Total Investments (cost $90,851,849) 100.3% | 117,704,635 | |||||
| Liabilities less Other Assets (0.3)% | (319,586 | ) | ||||
| NET ASSETS 100.0% | $ | 117,385,049 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
REIT Real Estate Investment Trust.
See Notes to Financial Statements.
|
| |||||
At September 30, 2009, Wasatch Global Opportunities Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 0.8 | ||
Austria | 0.4 | ||
Belgium | 1.2 | ||
Brazil | 3.0 | ||
Canada | 3.3 | ||
China | 10.2 | ||
Denmark | 0.5 | ||
Egypt | 0.2 | ||
Finland | 0.2 | ||
France | 4.0 | ||
Germany | 5.0 | ||
Hong Kong | 0.7 | ||
India | 3.0 | ||
Indonesia | 0.5 | ||
Ireland | 1.1 | ||
Italy | 0.9 | ||
Japan | 9.9 | ||
Korea | 1.6 | ||
Mexico | 0.7 | ||
Norway | 1.3 | ||
Singapore | 3.0 | ||
South Africa | 0.4 | ||
Sweden | 2.6 | ||
Switzerland | 0.7 | ||
Turkey | 0.1 | ||
United Arab Emirates | 0.9 | ||
United Kingdom | 6.9 | ||
United States | 36.9 | ||
TOTAL | 100.0 | % | |
51
Table of Contents
| WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND (WAGTX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 85.1% | |||||
| Air Freight & Logistics 1.0% | |||||
| 819,205 | Goodpack Ltd. (Singapore) | $ | 587,661 | ||
| Application Software 5.2% | |||||
| 18,045 | Adobe Systems, Inc.* ††† | 596,207 | |||
| 8,795 | FactSet Research Systems, Inc. | 582,581 | |||
| 46,050 | Interactive Intelligence, Inc.* | 880,015 | |||
| 2,475,510 | Kingdee International Software Group Co. Ltd. (China) | 418,438 | |||
| 3,100 | SimCorp A/S (Denmark) | 635,926 | |||
| 3,113,167 | |||||
| Biotechnology 1.1% | |||||
| 2,811,352 | Sino Biopharmaceutical Ltd. (China) | 649,327 | |||
| Communications Equipment 3.6% | |||||
| 24,705 | Cisco Systems, Inc.* | 581,556 | |||
| 21,145 | F5 Networks, Inc.* | 837,976 | |||
| 30,540 | Tandberg ASA (Norway) | 731,589 | |||
| 2,151,121 | |||||
| Computer Hardware 1.0% | |||||
| 4,800 | International Business Machines Corp. | 574,128 | |||
| Computer Storage & Peripherals 1.0% | |||||
| 46,405 | Intevac, Inc.* | 623,683 | |||
| Data Processing & Outsourced Services 5.3% | |||||
| 8,270 | Alliance Data Systems Corp.* | 505,132 | |||
| 25,600 | Cia Brasileira de Meios de | ||||
| Pagamentos (Brazil) | 254,660 | ||||
| 25,600 | Fidelity National Information Services, Inc. | 653,056 | |||
| 38,200 | Redecard S.A. (Brazil) | 589,022 | |||
| 94,450 | Wirecard AG (Germany) | 1,125,672 | |||
| 3,127,542 | |||||
| Electrical Components & Equipment 1.1% | |||||
| 727,050 | Wasion Group Holdings Ltd. (China) | 634,171 | |||
| Electronic Equipment & Instruments 1.0% | |||||
| 33,900 | Rotork plc (United Kingdom) | 613,013 | |||
| Electronic Manufacturing Services 1.1% | |||||
| 55,055 | TTM Technologies, Inc.* | 631,481 | |||
| Health Care Equipment 7.4% | |||||
| 15,450 | Abaxis, Inc.* | 413,288 | |||
| 130,414 | Cardica, Inc.* | 196,925 | |||
| 143,000 | Cardica, Inc. PIPE* *** † | 190,018 | |||
| 38,000 | Cyberonics, Inc.* | 605,720 | |||
| 18,705 | DiaSorin S.p.A (Italy) | 629,899 | |||
| 27,875 | Invacare Corp. | 621,055 | |||
| 4,235,440 | LMA International N.V.* (Singapore) | 661,811 | |||
| 11,625 | NuVasive, Inc.* | 485,460 | |||
| 15,000 | St. Jude Medical, Inc.* | 585,150 | |||
| 4,389,326 | |||||
| Health Care Facilities 2.0% | |||||
| 674,000 | Raffles Medical Group Ltd. (Singapore) | 651,046 | |||
| 21,000 | VCA Antech, Inc.* | 564,690 | |||
| 1,215,736 | |||||
| Shares | Value | ||||
| Health Care Services 5.7% | |||||
| 17,325 | Bio-Reference Laboratories, Inc.* | $ | 595,980 | ||
| 20,987 | CorVel Corp.* | 596,031 | |||
| 7,800 | Express Scripts, Inc.* | 605,124 | |||
| 38,000 | Healthways, Inc.* | 582,160 | |||
| 18,865 | MEDNAX, Inc.* | 1,036,066 | |||
| 3,415,361 | |||||
| Health Care Supplies 2.8% | |||||
| 86,158 | Abcam plc (United Kingdom) | 1,198,457 | |||
| 149,240 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 492,970 | |||
| 1,691,427 | |||||
| Health Care Technology 1.9% | |||||
| 7,675 | Cerner Corp.* | 574,090 | |||
| 151,100 | RaySearch Laboratories AB* (Sweden) | 559,959 | |||
| 1,134,049 | |||||
| Home Entertainment Software 1.0% | |||||
| 11,900 | Shanda Interactive Entertainment Ltd. ADR* (China) | 609,280 | |||
| Industrial Machinery 3.0% | |||||
| 1,318,345 | China Automation Group Ltd. (China) | 677,030 | |||
| 15,605 | Duoyuan Global Water, Inc. ADR* (China) | 519,646 | |||
| 62,500 | Weg S.A. (Brazil) | 596,973 | |||
| 1,793,649 | |||||
| Integrated Telecommunication Services 1.0% | |||||
| 37,000 | Cbeyond, Inc.* | 596,810 | |||
| Internet Software & Services 3.5% | |||||
| 47,600 | Akamai Technologies, Inc.* | 936,768 | |||
| 26,905 | DealerTrack Holdings, Inc.* | 508,774 | |||
| 1,230 | Google, Inc., Class A* | 609,895 | |||
| 6,528 | Xtera* *** † | 2,154 | |||
| 2,057,591 | |||||
| IT Consulting & Other Services 4.6% | |||||
| 41,800 | Cognizant Technology Solutions Corp., Class A* | 1,615,988 | |||
| 13,410 | Infosys Technologies Ltd. (India) | 642,944 | |||
| 16,015 | NCI, Inc., Class A* | 458,990 | |||
| 2,717,922 | |||||
| Life Sciences Tools & Services 6.4% | |||||
| 10,590 | Covance, Inc.* | 573,448 | |||
| 141 | EPS Co. Ltd. (Japan) | 586,256 | |||
| 8,800 | Eurofins Scientific (France) | 412,949 | |||
| 25,730 | ICON plc ADR* (Ireland) | 630,128 | |||
| 21,460 | MorphoSys AG* (Germany) | 537,293 | |||
| 27,000 | Pharmaceutical Product Development, Inc. | 592,380 | |||
| 7,730 | Techne Corp. | 483,512 | |||
| 3,815,966 | |||||
| Managed Health Care 1.1% | |||||
| 33,495 | OdontoPrev S.A. (Brazil) | 681,367 | |||
| Oil & Gas Equipment & Services 2.3% | |||||
| 55,510 | Pason Systems, Inc. (Canada) | 646,129 | |||
| 47,750 | TGS-NOPEC Geophysical Co. ASA* (Norway) | 715,427 | |||
| 1,361,556 | |||||
52
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Shares | Value | ||||
| Pharmaceuticals 3.0% | |||||
| 495,000 | China Shineway Pharmaceutical Group Ltd. (China) | $ | 528,848 | ||
| 89,500 | Dechra Pharmaceuticals plc (United Kingdom) | 612,312 | |||
| 13,250 | Teva Pharmaceutical Industries Ltd. ADR (Israel) | 669,920 | |||
| 1,811,080 | |||||
| Semiconductor Equipment 0.8% | |||||
| 17,503 | Tessera Technologies, Inc.* | 488,159 | |||
| Semiconductors 13.0% | |||||
| 27,400 | Altera Corp. | 561,974 | |||
| 13,880 | Hittite Microwave Corp.* | 510,506 | |||
| 18,140 | Linear Technology Corp. | 501,208 | |||
| 60,134 | Melexis N.V. (Belgium) | 611,914 | |||
| 57,815 | Micrel, Inc. | 471,192 | |||
| 22,525 | Microchip Technology, Inc. | 596,913 | |||
| 13,731 | Netlogic Microsystems, Inc.* | 617,895 | |||
| 161,879 | O2Micro International Ltd. ADR* (China) | 849,865 | |||
| 56,750 | Pericom Semiconductor Corp.* | 556,718 | |||
| 25,968 | Power Integrations, Inc. | 865,513 | |||
| 14,505 | Silicon Laboratories, Inc.* | 672,452 | |||
| 83,420 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 914,283 | |||
| 7,730,433 | |||||
| Systems Software 4.2% | |||||
| 15,170 | BMC Software, Inc.* | 569,330 | |||
| 40,900 | NetSuite, Inc.* | 625,770 | |||
| 79,235 | Opnet Technologies, Inc. | 866,039 | |||
| 19,675 | Oracle Corp. | 410,027 | |||
| 2,471,166 | |||||
| Total Common Stocks (cost $44,167,613) | 50,686,172 | ||||
| PREFERRED STOCKS 1.6% | |||||
| Computer Storage & Peripherals 1.6% | |||||
| 78,502 | BlueArc Corp., Series DD Pfd.* *** † | 324,998 | |||
| 138,725 | BlueArc Corp., Series FF Pfd.* *** † | 628,067 | |||
| 953,065 | |||||
| Internet Software & Services 0.0% | |||||
| 30,265 | Incipient, Inc., Series D Pfd.* *** † | — | |||
| Total Preferred Stocks (cost $1,092,283) | 953,065 | ||||
| EXCHANGE TRADED FUNDS 1.0% | |||||
| Asset Management & Custody Banks 1.0% | |||||
| 45,220 | Direxionshares Technology Bear 3X Shares | 572,033 | |||
| Total Exchange Traded Funds (cost $706,130) | 572,033 | ||||
| LIMITED PARTNERSHIP INTEREST 0.6% | |||||
| Other 0.6% | |||||
| Montagu Newhall Global Partners II-B, L.P.*** † | 339,596 | ||||
| Total Limited Partnership Interest (cost $399,387) | 339,596 | ||||
| Shares | Value | |||||
| WARRANTS 0.0% | ||||||
| Computer Storage & Peripherals 0.0% | ||||||
| 1 | BlueArc Corp. expiring 4/2/18* *** † | $ | — | |||
| Health Care Equipment 0.0% | ||||||
| 71,500 | Cardica, Inc., expiring 9/29/14* *** † | 8,937 | ||||
| Total Warrants (cost $8,937) | 8,937 | |||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 13.3% | ||||||
| Repurchase Agreement 13.3% | ||||||
| $7,933,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $8,175,000 of United States Treasury Notes 2.625% due 2/29/16; value: $8,093,250; repurchase proceeds: $7,933,002††† (cost $7,933,000) | $ | 7,933,000 | |||
| Total Short-Term Investments (cost $7,933,000) | 7,933,000 | |||||
| Total Investments (cost $54,307,350) 101.6% | 60,492,803 | |||||
| Liabilities less Other Assets (1.6)% | (952,910 | ) | ||||
| NET ASSETS 100.0% | $ | 59,539,893 | ||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
†††All or a portion of this security has been designated as collateral for future commitments (see Note 10).
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
See Notes to Financial Statements. |
| |||||
At September 30, 2009, Wasatch Global Science & Technology Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Belgium | 1.2 | ||
Brazil | 4.0 | ||
Canada | 1.2 | ||
China | 10.2 | ||
Denmark | 1.2 | ||
France | 0.8 | ||
Germany | 3.2 | ||
India | 1.2 | ||
Ireland | 1.2 | ||
Israel | 1.3 | ||
Italy | 1.2 | ||
Japan | 1.1 | ||
Norway | 2.8 | ||
Singapore | 3.6 | ||
Sweden | 1.1 | ||
Taiwan | 1.7 | ||
United Kingdom | 4.6 | ||
United States | 58.4 | ||
TOTAL | 100.0 | % | |
53
Table of Contents
| WASATCH HERITAGE GROWTH FUND (WAHGX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 95.5% | |||||
| Aerospace & Defense 5.3% | |||||
| 12,085 | L-3 Communications Holdings, Inc. | $ | 970,667 | ||
| 16,740 | Lockheed Martin Corp. | 1,307,059 | |||
| 36,085 | TransDigm Group, Inc.* | 1,797,394 | |||
| 4,075,120 | |||||
| Air Freight & Logistics 2.9% | |||||
| 20,760 | C.H. Robinson Worldwide, Inc. | 1,198,890 | |||
| 28,990 | Expeditors International of Washington, Inc. | 1,018,999 | |||
| 2,217,889 | |||||
| Apparel Retail 0.8% | |||||
| 92,510 | Esprit Holdings Ltd. (Hong Kong) | 620,708 | |||
| Asset Management & Custody Banks 2.4% | |||||
| 39,440 | SEI Investments Co. | 776,179 | |||
| 24,635 | T. Rowe Price Group, Inc. | 1,125,820 | |||
| 1,901,999 | |||||
| Automotive Retail 0.8% | |||||
| 16,968 | O’Reilly Automotive, Inc.* | 613,224 | |||
| Communications Equipment 3.6% | |||||
| 64,650 | Cisco Systems, Inc.* | 1,521,861 | |||
| 32,250 | F5 Networks, Inc.* | 1,278,068 | |||
| 2,799,929 | |||||
| Data Processing & Outsourced Services 10.4% | |||||
| 19,540 | Alliance Data Systems Corp.* | 1,193,503 | |||
| 42,200 | Cia Brasileira de Meios de Pagamentos (Brazil) | 419,791 | |||
| 61,305 | Fidelity National Information Services, Inc. | 1,563,891 | |||
| 8,155 | Mastercard, Inc., Class A | 1,648,533 | |||
| 31,745 | Paychex, Inc. | 922,192 | |||
| 149,130 | Redecard S.A. (Brazil) | 2,299,501 | |||
| 8,047,411 | |||||
| Diversified Metals & Mining 1.7% | |||||
| 14,330 | BHP Billiton plc ADR (United Kingdom) | 789,583 | |||
| 2,984 | Rio Tinto plc ADR (United Kingdom) | 508,145 | |||
| 1,297,728 | |||||
| Diversified Support Services 2.8% | |||||
| 64,850 | Copart, Inc.* | 2,153,669 | |||
| Drug Retail 3.0% | |||||
| 64,280 | CVS Caremark Corp. | 2,297,367 | |||
| Education Services 3.7% | |||||
| 39,390 | Apollo Group, Inc., Class A* | 2,901,861 | |||
| Electronic Components 2.6% | |||||
| 53,385 | Amphenol Corp., Class A | 2,011,547 | |||
| Health Care Equipment 3.4% | |||||
| 66,710 | St. Jude Medical, Inc.* | 2,602,357 | |||
| Health Care Services 3.2% | |||||
| 32,345 | Express Scripts, Inc.* | 2,509,325 | |||
| Investment Banking & Brokerage 1.5% | |||||
| 58,676 | Charles Schwab Corp. (The) | 1,123,646 | |||
| IT Consulting & Other Services 4.0% | |||||
| 47,075 | Cognizant Technology Solutions Corp., Class A* | 1,819,919 | |||
| 27,005 | Infosys Technologies Ltd. (India) | 1,294,758 | |||
| 3,114,677 | |||||
| Shares | Value | ||||
| Life Sciences Tools & Services 2.5% | |||||
| 35,855 | Covance, Inc.* | $ | 1,941,548 | ||
| Mortgage REITs 1.9% | |||||
| 80,929 | Annaly Capital Management, Inc. | 1,468,052 | |||
| Multi-Line Insurance 1.2% | |||||
| 34,220 | HCC Insurance Holdings, Inc. | 935,917 | |||
| Oil & Gas Equipment & Services 1.3% | |||||
| 25,975 | Cameron International Corp.* | 982,374 | |||
| Oil & Gas Exploration & Production 5.2% | |||||
| 55,925 | Chesapeake Energy Corp. | 1,588,270 | |||
| 57,735 | Petrohawk Energy Corp.* | 1,397,764 | |||
| 25,043 | XTO Energy, Inc. | 1,034,777 | |||
| 4,020,811 | |||||
| Pharmaceuticals 1.8% | |||||
| 27,120 | Teva Pharmaceutical Industries Ltd. ADR (Israel) | 1,371,187 | |||
| Restaurants 2.1% | |||||
| 56,315 | Tim Hortons, Inc. | 1,593,714 | |||
| Semiconductors 9.2% | |||||
| 133,400 | Altera Corp. | 2,736,034 | |||
| 53,335 | Linear Technology Corp. | 1,473,646 | |||
| 56,660 | Maxim Integrated Products, Inc. | 1,027,812 | |||
| 28,345 | Microchip Technology, Inc. | 751,143 | |||
| 100,752 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 1,104,242 | |||
| 7,092,877 | |||||
| Specialized Finance 4.3% | |||||
| 104,300 | BM&F BOVESPA S.A. (Brazil) | 770,778 | |||
| 10,443 | IntercontinentalExchange, Inc.* | 1,014,955 | |||
| 51,220 | MSCI, Inc., Class A* | 1,517,137 | |||
| 3,302,870 | |||||
| Specialty Chemicals 1.4% | |||||
| 22,893 | Ecolab, Inc. | 1,058,343 | |||
| Specialty Stores 1.0% | |||||
| 33,680 | Staples, Inc. | 782,050 | |||
| Systems Software 2.7% | |||||
| 55,290 | BMC Software, Inc.* | 2,075,034 | |||
| Thrifts & Mortgage Finance 2.5% | |||||
| 14,600 | Housing Development Finance Corp. Ltd.* (India) | 846,636 | |||
| 92,890 | New York Community Bancorp, Inc. | 1,060,804 | |||
| 1,907,440 | |||||
| Trading Companies & Distributors 2.5% | |||||
| 29,670 | Fastenal Co. | 1,148,229 | |||
| 18,265 | MSC Industrial Direct Co., Inc, Class A | 795,989 | |||
| 1,944,218 | |||||
| Trucking 1.1% | |||||
| 26,605 | J.B. Hunt Transport Services, Inc. | 854,819 | |||
| Wireless Telecommunication Services 2.7% | |||||
| 69,790 | NII Holdings, Inc.* | 2,092,304 | |||
| Total Common Stocks (cost $66,824,303) | 73,712,015 | ||||
54
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 1.9% | |||||
| Repurchase Agreement 1.9% | |||||
| $1,455,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $1,500,000 of United States Treasury Notes 2.625% due 2/29/16; value: $1,485,000; repurchase proceeds: $1,455,000 (cost $1,455,000) | $ | 1,455,000 | ||
| Total Short-Term Investments (cost $1,455,000) | 1,455,000 | ||||
| Total Investments (cost $68,279,303) 97.4% | 75,167,015 | ||||
| Other Assets less Liabilities 2.6% | 2,026,796 | ||||
| NET ASSETS 100.0% | $ | 77,193,811 | |||
*Non-income producing.
ADR American Depositary Receipt.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. | |||||
At September 30, 2009, Wasatch Heritage Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Brazil | 4.7 | ||
Hong Kong | 0.8 | ||
India | 2.9 | ||
Israel | 1.9 | ||
Taiwan | 1.5 | ||
United Kingdom | 1.8 | ||
United States | 86.4 | ||
TOTAL | 100.0 | % | |
55
Table of Contents
| WASATCH HERITAGE VALUE FUND (WAHVX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| COMMON STOCKS 86.7% | |||||
| Aerospace & Defense 1.9% | |||||
| 1,400 | Raytheon Co. | $ | 67,158 | ||
| Agricultural Products 2.0% | |||||
| 116,000 | Chaoda Modern Agriculture Holdings Ltd. (China) | 70,498 | |||
| Apparel, Accessories & Luxury Goods 2.4% | |||||
| 4,400 | Gildan Activewear, Inc.* (Canada) | 86,768 | |||
| Computer & Electronics Retail 2.3% | |||||
| 3,100 | GameStop Corp., Class A* | 82,057 | |||
| Construction & Engineering 1.9% | |||||
| 2,500 | Aecom Technology Corp.* | 67,850 | |||
| Data Processing & Outsourced Services 8.0% | |||||
| 7,500 | Cia Brasileira de Meios de Pagamentos (Brazil) | 74,607 | |||
| 3,900 | Fidelity National Information Services, Inc. | 99,489 | |||
| 1,600 | Visa, Inc., Class A | 110,576 | |||
| 284,672 | |||||
| Diversified Support Services 1.9% | |||||
| 2,000 | Copart, Inc.* | 66,420 | |||
| Education Services 2.1% | |||||
| 1,000 | Apollo Group, Inc., Class A* | 73,670 | |||
| Health Care Equipment 3.4% | |||||
| 2,800 | Covidien plc | 121,128 | |||
| Health Care Technology 2.2% | |||||
| 5,000 | IMS Health, Inc. | 76,750 | |||
| Heavy Electrical Equipment 2.6% | |||||
| 4,600 | ABB Ltd. ADR* (Switzerland) | 92,184 | |||
| Home Improvement Retail 2.9% | |||||
| 1,700 | Sherwin-Williams Co. (The) | 102,272 | |||
| Industrial Machinery 2.2% | |||||
| 8,200 | Weg S.A. (Brazil) | 78,323 | |||
| Internet Software & Services 2.2% | |||||
| 3,900 | Akamai Technologies, Inc.* | 76,752 | |||
| Life Sciences Tools & Services 2.1% | |||||
| 3,400 | Pharmaceutical Product Development, Inc. | 74,596 | |||
| Oil & Gas Drilling 5.2% | |||||
| 2,500 | Fred Olsen Energy ASA (Norway) | 93,274 | |||
| 2,400 | Noble Corp. | 91,104 | |||
| 184,378 | |||||
| Oil & Gas Exploration & Production 2.8% | |||||
| 5,200 | ARC Energy Trust** (Canada) | 98,205 | |||
| Oil & Gas Storage & Transportation 2.9% | |||||
| 5,500 | Spectra Energy Corp. | 104,170 | |||
| Packaged Foods & Meats 2.6% | |||||
| 1,600 | Ralcorp Holdings, Inc.* | 93,552 | |||
| Paper Packaging 3.0% | |||||
| 3,900 | Sonoco Products Co. | 107,406 | |||
| Pharmaceuticals 8.4% | |||||
| 5,200 | Mylan, Inc.* | 83,252 | |||
| 3,200 | Perrigo Co. | 108,768 | |||
| 6,400 | Pfizer, Inc. | 105,920 | |||
| 297,940 | |||||
| Shares | Value | ||||
| Property & Casualty Insurance 5.9% | |||||
| 3,000 | Allstate Corp. (The) | $ | 91,860 | ||
| 9,800 | Old Republic International Corp. | 119,364 | |||
| 211,224 | |||||
| Railroads 2.2% | |||||
| 1,000 | Burlington Northern Santa Fe Corp. | 79,830 | |||
| Specialized Finance 2.8% | |||||
| 4,800 | NASDAQ OMX Group, Inc. (The)* | 101,040 | |||
| Specialty Chemicals 2.7% | |||||
| 5,300 | RPM International, Inc. | 97,997 | |||
| Steel 5.1% | |||||
| 2,500 | Allegheny Technologies, Inc. | 87,475 | |||
| 2,000 | Nucor Corp. | 94,020 | |||
| 181,495 | |||||
| Water Utilities 3.0% | |||||
| 5,300 | American Water Works Co., Inc. | 105,682 | |||
| Total Common Stocks (cost $2,702,942) | 3,084,017 | ||||
| PREFERRED STOCKS 2.9% | |||||
| Regional Banks 2.9% | |||||
| 5,000 | Fifth Third Capital Trust VI, 7.25%, 11/15/67 Pfd.* ^^^ | 102,500 | |||
| Total Preferred Stocks (cost $71,300) | 102,500 | ||||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 10.1% | |||||
| Repurchase Agreement 10.1% | |||||
| $360,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $375,000 of United States Treasury Notes 2.625% due 2/29/16; value: $371,250; repurchase proceeds: $360,000 (cost $360,000) | $ | 360,000 | ||
| Total Short-Term Investments (cost $360,000) | 360,000 | ||||
| Total Investments (cost $3,134,242) 99.7% | 3,546,517 | ||||
| Other Assets less Liabilities 0.3% | 10,317 | ||||
| NET ASSETS 100.0% | $ | 3,556,834 | |||
*Non-income producing.
**Common units.
^^^ Variable Rate Securities.
ADR American Depositary Receipt.
See Notes to Financial Statements.
| |||||
At September 30, 2009, Wasatch Heritage Value Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Brazil | 4.8 | ||
Canada | 5.8 | ||
China | 2.2 | ||
Norway | 2.9 | ||
Switzerland | 2.9 | ||
United States | 81.4 | ||
TOTAL | 100.0 | % | |
56
Table of Contents
| WASATCH INTERNATIONAL GROWTH FUND (WAIGX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| COMMON STOCKS 94.7% | |||||
| Aerospace & Defense 2.8% | |||||
| 34,900 | Chemring Group plc (United Kingdom) | $ | 1,363,748 | ||
| 141,230 | Kongsberg Gruppen ASA (Norway) | 1,798,002 | |||
| 81,700 | Ultra Electronics Holdings plc (United Kingdom) | 1,747,775 | |||
| 4,909,525 | |||||
| Agricultural Products 1.6% | |||||
| 2,687,340 | Chaoda Modern Agriculture Holdings Ltd. (China) | 1,633,199 | |||
| 1,319,280 | China Green Holdings Ltd. (China) | 1,121,806 | |||
| 2,755,005 | |||||
| Aluminum 1.8% | |||||
| 3,500,000 | Midas Holdings Ltd. (Singapore) | 2,125,430 | |||
| 124,970 | National Aluminum Co. Ltd. (India) | 904,185 | |||
| 3,029,615 | |||||
| Apparel Retail 1.0% | |||||
| 25,054 | Point, Inc. (Japan) | 1,658,909 | |||
| Apparel, Accessories & Luxury Goods 5.6% | |||||
| 1,378,199 | Anta Sports Products Ltd. (China) | 1,707,177 | |||
| 2,648,515 | China Dongxiang Group Co. (China) | 1,756,552 | |||
| 543,655 | Li Ning Co. Ltd. (China) | 1,676,551 | |||
| 1,252,595 | Ports Design Ltd. (China) | 3,129,043 | |||
| 197,495 | Ted Baker plc (United Kingdom) | 1,366,472 | |||
| 9,635,795 | |||||
| Application Software 2.4% | |||||
| 20,152 | SimCorp A/S (Denmark) | 4,133,927 | |||
| Asset Management & Custody Banks 1.2% | |||||
| 17,390 | Partners Group Holding AG (Switzerland) | 2,120,998 | |||
| Brewers 0.8% | |||||
| 124,400 | Anadolu Efes Biracilik ve Malt Sanayii AS (Turkey) | 1,358,005 | |||
| Coal & Consumable Fuels 0.7% | |||||
| 855,385 | Tambang Batubara Bukit Asam Tbk PT (Indonesia) | 1,247,897 | |||
| Communications Equipment 2.3% | |||||
| 164,475 | Tandberg ASA (Norway) | 3,940,016 | |||
| Construction & Farm Machinery & Heavy Trucks 0.5% | |||||
| 25,904 | Demag Cranes AG* (Germany) | 930,737 | |||
| Construction Materials 3.0% | |||||
| 719,900 | Corp Moctezuma S.A.B de C.V. (Mexico) | 1,439,613 | |||
| 1,687,000 | PT Indocement Tunggal Prakarsa Tbk (Indonesia) | 1,850,202 | |||
| 2,919,380 | PT Semen Gresik (Persero) Tbk (Indonesia) | 1,902,959 | |||
| 5,192,774 | |||||
| Data Processing & Outsourced Services 3.1% | |||||
| 454,798 | Wirecard AG (Germany) | 5,420,366 | |||
| Diversified Banks 3.8% | |||||
| 351,670 | Allahabad Bank Ltd. (India) | 873,601 | |||
| 102,671 | Axis Bank Ltd. (India) | 2,102,616 | |||
| 398,400 | Bank of N.T. Butterfield & Son Ltd. (Bermuda) | 1,992,000 | |||
| 47,747 | HDFC Bank Ltd. (India) | 1,638,217 | |||
| 6,606,434 | |||||
| Shares | Value | ||||
| Diversified Metals & Mining 1.7% | |||||
| 89,345 | Hindustan Zinc Ltd. (India) | $ | 1,535,051 | ||
| 23,320 | Inmet Mining Corp. (Canada) | 1,307,281 | |||
| 2,842,332 | |||||
| Drug Retail 0.5% | |||||
| 37,820 | Create SD Holdings Co. Ltd. (Japan) | 872,672 | |||
| Electrical Components & Equipment 1.2% | |||||
| 2,362,300 | Wasion Group Holdings Ltd.* (China) | 2,060,522 | |||
| Electronic Equipment & Instruments 2.0% | |||||
| 190,214 | Rotork plc (United Kingdom) | 3,439,636 | |||
| Environmental & Facilities Services 1.6% | |||||
| 268,245 | Connaught plc (United Kingdom) | 1,736,977 | |||
| 55,045 | Daiseki Co. Ltd. (Japan) | 1,086,051 | |||
| 2,823,028 | |||||
| Food Retail 1.0% | |||||
| 42,845 | BIM Birlesik Magazalar AS (Turkey) | 1,746,713 | |||
| Gold 0.7% | |||||
| 85,865 | Petropavlovsk plc* (United Kingdom) | 1,243,117 | |||
| Health Care Equipment 4.3% | |||||
| 163,388 | DiaSorin S.p.A (Italy) | 5,502,166 | |||
| 59,250 | Mindray Medical International Ltd. ADR (China) | 1,933,920 | |||
| 7,436,086 | |||||
| Health Care Supplies 4.2% | |||||
| 339,280 | Abcam plc (United Kingdom) | 4,719,380 | |||
| 788,385 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 2,604,197 | |||
| 7,323,577 | |||||
| Health Care Technology 0.9% | |||||
| 437,279 | RaySearch Laboratories AB* (Sweden) | 1,620,506 | |||
| Home Entertainment Software 1.1% | |||||
| 35,330 | Shanda Interactive Entertainment Ltd. ADR* (China) | 1,808,896 | |||
| Household Products 0.9% | |||||
| 381,900 | Kimberly-Clark de Mexico S.A.B de C.V. (Mexico) | 1,584,255 | |||
| Industrial Machinery 4.1% | |||||
| 34,690 | Andritz AG (Austria) | 1,730,970 | |||
| 9,963 | Burckhardt Compression Holding AG (Switzerland) | 1,634,303 | |||
| 35,325 | Konecranes Oyj (Finland) | 1,007,527 | |||
| 289,800 | Weg S.A. (Brazil) | 2,768,043 | |||
| 7,140,843 | |||||
| Internet Retail 1.7% | |||||
| 305,520 | ASOS plc* (United Kingdom) | 1,709,681 | |||
| 610 | START TODAY Co. Ltd. (Japan) | 1,227,344 | |||
| 2,937,025 | |||||
| Internet Software & Services 2.6% | |||||
| 460 | Gourmet Navigator, Inc. (Japan) | 1,138,335 | |||
| 193,000 | Net Entertainment NE AB * (Sweden) | 1,864,326 | |||
| 10,415 | NHN Corp.* (Korea) | 1,533,632 | |||
| 4,536,293 | |||||
57
Table of Contents
| WASATCH INTERNATIONAL GROWTH FUND (WAIGX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Life Sciences Tools & Services 2.9% | |||||
| 405 | EPS Co. Ltd. (Japan) | $ | 1,683,926 | ||
| 18,084 | Eurofins Scientific (France) | 848,610 | |||
| 40,715 | ICON plc ADR* (Ireland) | 997,110 | |||
| 61,605 | MorphoSys AG * (Germany) | 1,542,403 | |||
| 5,072,049 | |||||
| Oil & Gas Equipment & Services 4.3% | |||||
| 105,195 | Pason Systems, Inc. (Canada) | 1,224,456 | |||
| 138,125 | Petrofac Ltd. (United Kingdom) | 2,180,805 | |||
| 37,385 | Schoeller-Bleckmann Oilfield Equipment AG (Austria) | 1,793,740 | |||
| 154,785 | TGS-NOPEC Geophysical Co. ASA* (Norway) | 2,319,107 | |||
| 7,518,108 | |||||
| Oil & Gas Exploration & Production 3.9% | |||||
| 1,070,075 | Afren plc* (United Kingdom) | 1,372,988 | |||
| 1,097,845 | DNO International ASA* (Norway) | 772,236 | |||
| 136,250 | Dragon Oil plc (Ireland) | 829,982 | |||
| 171,555 | Gran Tierra Energy, Inc.* | 713,669 | |||
| 250,442 | JKX Oil and Gas plc (United Kingdom) | 1,111,963 | |||
| 96,149 | Premier Oil plc* (United Kingdom) | 1,860,105 | |||
| 6,660,943 | |||||
| Packaged Foods & Meats 0.5% | |||||
| 24,776 | Unicharm PetCare Corp. (Japan) | 922,437 | |||
| Personal Products 2.5% | |||||
| 218,470 | Natura Cosmeticos S.A. (Brazil) | 3,949,705 | |||
| 8,300 | Oriflame Cosmetics S.A. (Sweden) | 425,617 | |||
| 4,375,322 | |||||
| Pharmaceuticals 0.8% | |||||
| 201,239 | Dechra Pharmaceuticals plc (United Kingdom) | 1,376,771 | |||
| Regional Banks 1.2% | |||||
| 810 | Seven Bank Ltd. (Japan) | 2,004,459 | |||
| Research & Consulting Services 3.7% | |||||
| 151,651 | Campbell Brothers Ltd. (Australia) | 3,959,193 | |||
| 386 | Nihon M&A Center, Inc. (Japan) | 1,751,220 | |||
| 29,305 | Stantec, Inc.* (Canada) | 734,269 | |||
| 6,444,682 | |||||
| Semiconductors 0.7% | |||||
| 122,224 | Melexis N.V. (Belgium) | 1,243,732 | |||
| Specialized Finance 8.3% | |||||
| 544,355 | BM&F BOVESPA S.A. (Brazil) | 4,022,790 | |||
| 82,950 | IMAREX ASA* (Norway) | 718,393 | |||
| 1,002,935 | Infrastructure Development Finance Co. Ltd. (India) | 3,044,978 | |||
| 780 | Osaka Securities Exchange Co. Ltd. (Japan) | 3,547,431 | |||
| 302,035 | Rural Electrification Corp. Ltd. (India) | 1,264,522 | |||
| 296,000 | Singapore Exchange Ltd. (Singapore) | 1,770,177 | |||
| 14,368,291 | |||||
| Specialty Chemicals 1.3% | |||||
| 53,855 | SGL Carbon SE* (Germany) | 2,204,697 | |||
| Systems Software 2.1% | |||||
| 204,440 | F-Secure Oyj (Finland) | 871,053 | |||
| 5,597 | Simplex Technology, Inc. (Japan) | 2,667,169 | |||
| 3,538,222 | |||||
| Thrifts & Mortgage Finance 2.5% | |||||
| 50,555 | Home Capital Group, Inc. (Canada) | 1,807,899 | |||
| 157,000 | LIC Housing Finance Ltd. (India) | 2,520,061 | |||
| 4,327,960 | |||||
| Shares | Value | ||||
| Wireless Telecommunication Services 0.9% | |||||
| 38,800 | Egyptian Co. for Mobile Services (Egypt) | $ | 1,557,007 | ||
| Total Common Stocks (cost $134,256,008) | 163,970,184 | ||||
| PREFERRED STOCKS 2.1% | |||||
| Fertilizers & Agricultural Chemicals 1.1% | |||||
| 177,750 | Fertilizantes Fosfatados S.A. Pfd.* (Brazil) | 1,840,614 | |||
| Regional Banks 1.0% | |||||
| 355,775 | Banco Daycoval S.A. Pfd. (Brazil) | 1,731,314 | |||
| Total Preferred Stocks (cost $3,813,393) | 3,571,928 | ||||
Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 2.0% | |||||
| Repurchase Agreement 2.0% | |||||
| $3,546,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $3,655,000 of United States Treasury Notes 2.625% due 2/29/16; value: $3,618,450; repurchase proceeds: $3,546,001 (cost $3,546,000) | $ | 3,546,000 | ||
| Total Short-Term Investments (cost $3,546,000) | 3,546,000 | ||||
| Total Investments (cost $141,615,401) 98.8% | 171,088,112 | ||||
| Other Assets less Liabilities 1.2% | 2,137,617 | ||||
| NET ASSETS 100.0% | $ | 173,225,729 | |||
*Non-income producing.
ADR American Depositary Receipt.
See Notes to Financial Statements. | |||||
58
Table of Contents
| SEPTEMBER 30, 2009 | ||
At September 30, 2009, Wasatch International Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 2.4 | ||
Austria | 2.1 | ||
Belgium | 0.7 | ||
Bermuda | 1.2 | ||
Brazil | 8.5 | ||
Canada | 3.0 | ||
China | 11.6 | ||
Denmark | 2.5 | ||
Egypt | 0.9 | ||
Finland | 1.1 | ||
France | 0.5 | ||
Germany | 6.0 | ||
India | 8.3 | ||
Indonesia | 3.0 | ||
Ireland | 1.1 | ||
Italy | 3.3 | ||
Japan | 11.1 | ||
Korea | 0.9 | ||
Mexico | 1.8 | ||
Norway | 5.7 | ||
Singapore | 2.4 | ||
Sweden | 2.3 | ||
Switzerland | 2.2 | ||
Turkey | 1.9 | ||
United Kingdom | 15.1 | ||
United States | 0.4 | ||
TOTAL | 100.0 | % | |
59
Table of Contents
| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 82.8% | |||||
| Advertising 0.3% | |||||
| 6,805 | 1000mercis* (France) | $ | 273,997 | ||
| Aerospace & Defense 0.5% | |||||
| 12,400 | Chemring Group plc (United Kingdom) | 484,541 | |||
| Agricultural Products 1.4% | |||||
| 920,000 | Chaoda Modern Agriculture Holdings Ltd. (China) | 559,119 | |||
| 874,430 | China Green Holdings Ltd. (China) | 743,543 | |||
| 1,302,662 | |||||
| Air Freight & Logistics 2.6% | |||||
| 3,248,806 | Aramex PJSC * (United Arab Emirates) | 1,565,605 | |||
| 1,135,183 | Goodpack Ltd. (Singapore) | 814,329 | |||
| 2,379,934 | |||||
| Aluminum 1.5% | |||||
| 2,231,960 | Midas Holdings Ltd. (Singapore) | 1,355,393 | |||
| Apparel, Accessories & Luxury Goods 5.5% | |||||
| 648,836 | Anta Sports Products Ltd. (China) | 803,714 | |||
| 2,805 | Bijou Brigitte AG (Germany) | 503,018 | |||
| 550,000 | China Dongxiang Group Co. (China) | 364,772 | |||
| 15,110 | Gerry Weber International AG (Germany) | 501,535 | |||
| 20,000 | LG Fashion Corp. (Korea) | 452,366 | |||
| 470,000 | Lilang China Co. Ltd.* (Hong Kong) | 225,599 | |||
| 12,704 | Odd Molly International AB (Sweden) | 193,428 | |||
| 488,503 | Ports Design Ltd. (China) | 1,220,304 | |||
| 124,865 | Ted Baker plc (United Kingdom) | 863,943 | |||
| 5,128,679 | |||||
| Application Software 3.4% | |||||
| 29,040 | Computer Modelling Group Ltd. (Canada) | 424,631 | |||
| 3,321,000 | Kingdee International Software Group Co. Ltd. (China) | 561,353 | |||
| 10,955 | Longtop Financial Technologies Ltd. ADR* (China) | 311,779 | |||
| 9,000 | SimCorp A/S (Denmark) | 1,846,236 | |||
| 3,143,999 | |||||
| Asset Management & Custody Banks 0.3% | |||||
| 50,314 | Treasury Group Ltd. (Australia) | 246,376 | |||
| Auto Parts & Equipment 0.1% | |||||
| 2,500,000 | Norstar Founders Group Ltd. * *** (Hong Kong) | 58,871 | |||
| Biotechnology 1.2% | |||||
| 4,765,960 | Sino Biopharmaceutical Ltd. (China) | 1,100,776 | |||
| Communications Equipment 2.1% | |||||
| 387,000 | Sepura Ltd. (United Kingdom) | 295,455 | |||
| 71,165 | Tandberg ASA (Norway) | 1,704,765 | |||
| 2,000,220 | |||||
| Construction & Engineering 3.1% | |||||
| 62,100 | Aecon Group, Inc. (Canada) | 683,355 | |||
| 45,300 | Heerim Architects & Planners (Korea) | 492,120 | |||
| 174,300 | Lycopodium Ltd. (Australia) | 421,371 | |||
| 20,820 | Outotec Oyj (Finland) | 662,714 | |||
| 772,000 | Rotary Engineering Ltd. (Singapore) | 630,562 | |||
| 2,890,122 | |||||
| Construction & Farm Machinery & Heavy Trucks 0.4% | |||||
| 4,380 | Faiveley S.A. (France) | 376,634 | |||
| Shares | Value | ||||
| Construction Materials 0.0% | |||||
| 2,973 | Ceramic Industries Ltd. (South Africa) | $ | 38,545 | ||
| Consumer Finance 0.9% | |||||
| 235,235 | Banco Compartamos S.A. de C.V. (Mexico) | 858,932 | |||
| Data Processing & Outsourced Services 2.9% | |||||
| 229,790 | Wirecard AG (Germany) | 2,738,679 | |||
| Diversified Banks 1.2% | |||||
| 370,294 | Allahabad Bank Ltd. (India) | 919,865 | |||
| 25,000 | Corporation Bank (India) | 219,884 | |||
| 1,139,749 | |||||
| Drug Retail 0.7% | |||||
| 26,465 | Create SD Holdings Co. Ltd. (Japan) | 610,663 | |||
| Education Services 0.9% | |||||
| 60,000 | China Education Alliance, Inc.* | 316,200 | |||
| 59,470 | Kroton Educacional S.A. ** (Brazil) | 531,352 | |||
| 1,040,150 | Oriental Century Ltd. * *** (China) | 7,387 | |||
| 854,939 | |||||
| Electrical Components & Equipment 3.7% | |||||
| 41,820 | Harbin Electric, Inc.* | 705,922 | |||
| 25,000 | Voltamp Transformers Ltd. (India) | 432,232 | |||
| 1,097,157 | Wasion Group Holdings Ltd. (China) | 956,998 | |||
| 777,000 | Zhuzhou CSR Times Electric Co. Ltd., Series H (China) | 1,357,485 | |||
| 3,452,637 | |||||
| Electronic Equipment & Instruments 0.2% | |||||
| 10,500 | Smartrac N.V. * (Netherlands) | 188,326 | |||
| Electronic Manufacturing Services 0.3% | |||||
| 346,000 | Ju Teng International Holdings Ltd. (China) | 292,870 | |||
| Environmental & Facilities Services 0.4% | |||||
| 20,025 | Daiseki Co. Ltd. (Japan) | 395,098 | |||
| Food Retail 1.7% | |||||
| 1,496,397 | BreadTalk Group Ltd. (Singapore) | 552,666 | |||
| 24,065 | Daikokutenbussan Co. Ltd. (Japan) | 524,435 | |||
| 12,000 | Ozeki Co. Ltd. (Japan) | 498,941 | |||
| 1,576,042 | |||||
| Footwear 2.1% | |||||
| 9,726,395 | China Hongxing Sports Ltd. (China) | 1,450,721 | |||
| 673,000 | Daphne International Holdings Ltd. (Hong Kong) | 487,162 | |||
| 1,937,883 | |||||
| Health Care Equipment 3.0% | |||||
| 5,729 | Audika (France) | 177,828 | |||
| 39,671 | DiaSorin S.p.A (Italy) | 1,335,939 | |||
| 8,762 | Infopia Co. Ltd. (Korea) | 89,237 | |||
| 1,546,660 | LMA International N.V.* (Singapore) | 241,674 | |||
| 13,280 | Mindray Medical International Ltd. ADR (China) | 433,459 | |||
| 2,900 | Nakanishi, Inc. (Japan) | 255,379 | |||
| 8,090 | STRATEC Biomedical Systems AG (Germany) | 251,943 | |||
| 2,785,459 | |||||
| Health Care Facilities 1.3% | |||||
| 1,298,670 | Raffles Medical Group Ltd. (Singapore) | 1,254,442 | |||
60
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Shares | Value | ||||
| Health Care Supplies 1.4% | |||||
| 79,620 | Abcam plc (United Kingdom) | $ | 1,107,513 | ||
| 62,000 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 204,799 | |||
| 1,312,312 | |||||
| Health Care Technology 1.0% | |||||
| 253,230 | RaySearch Laboratories AB* (Sweden) | 938,441 | |||
| Home Entertainment Software 1.9% | |||||
| 205 | GameOn Co. Ltd. (Japan) | 206,577 | |||
| 29,540 | Hudson Soft Co. Ltd. (Japan) | 165,629 | |||
| 683,000 | Kingsoft Corp. Ltd. (China) | 641,575 | |||
| 9,555 | Perfect World Co. Ltd., Class B * ADR (China) | 459,596 | |||
| 25,120 | Shanda Games Ltd.* ADR (China) | 293,904 | |||
| 1,767,281 | |||||
| Industrial Gases 0.2% | |||||
| 74,950 | African Oxygen Ltd. (South Africa) | 204,523 | |||
| Industrial Machinery 3.7% | |||||
| 5,955 | Burckhardt Compression Holding AG (Switzerland) | 976,842 | |||
| 3,642,845 | China Automation Group Ltd. (China) | 1,870,765 | |||
| 25,835 | China Valves Technology, Inc.* | 187,045 | |||
| 6,135 | Duoyuan Global Water, Inc. ADR* (China) | 204,296 | |||
| 3,500 | Taewoong Co. Ltd. (Korea) | 224,867 | |||
| 3,463,815 | |||||
| Internet Retail 1.9% | |||||
| 194,825 | ASOS plc* (United Kingdom) | 1,090,235 | |||
| 331 | START TODAY Co. Ltd. (Japan) | 665,985 | |||
| 1,756,220 | |||||
| Internet Software & Services 1.0% | |||||
| 14,700 | Daum Communications Corp.* (Korea) | 676,206 | |||
| 290,500 | Vendtek Systems, Inc.* *** (Canada) | 209,130 | |||
| 885,336 | |||||
| Investment Banking & Brokerage 0.2% | |||||
| 173 | GCA Savvian Group Corp. (Japan) | 217,913 | |||
| IT Consulting & Other Services 1.5% | |||||
| 5,900 | Alten* (France) | 158,516 | |||
| 104,500 | China Information Security Technology, Inc.* | 578,930 | |||
| 350,000 | CSE Global Ltd. (Singapore) | 197,628 | |||
| 565 | Future Architect, Inc. (Japan) | 239,327 | |||
| 38,835 | Yucheng Technologies Ltd.* (China) | 278,447 | |||
| 1,452,848 | |||||
| Life Sciences Tools & Services 3.1% | |||||
| 2,034 | CMIC Co. Ltd. * (Japan) | 561,385 | |||
| 197 | EPS Co. Ltd. (Japan) | 819,095 | |||
| 7,600 | Eurofins Scientific (France) | 356,637 | |||
| 18,965 | ICON plc ADR* (Ireland) | 464,453 | |||
| 28,720 | MorphoSys AG* (Germany) | 719,062 | |||
| 2,920,632 | |||||
| Managed Health Care 0.5% | |||||
| 25,200 | OdontoPrev S.A. (Brazil) | 512,627 | |||
| Oil & Gas Drilling 0.5% | |||||
| 70,660 | Phoenix Technology Income Fund* ** (Canada) | 511,981 | |||
| Oil & Gas Equipment & Services 2.3% | |||||
| 1,750,750 | Anton Oilfield Services Group (China) | 153,613 | |||
| 306,885 | Ezra Holdings Ltd.* (Singapore) | 409,776 | |||
| 141,425 | Lamprell plc (United Arab Emirates) | 392,766 | |||
| 76,210 | Pason Systems, Inc. (Canada) | 887,074 | |||
| 75,000 | Total Energy Services, Inc. (Canada) | 340,080 | |||
| 2,183,309 | |||||
| Shares | Value | ||||
| Oil & Gas Exploration & Production 3.8% | |||||
| 405,180 | Afren plc* (United Kingdom) | $ | 519,877 | ||
| 163,930 | Dragon Oil plc* (Ireland) | 998,598 | |||
| 112,972 | Gran Tierra Energy, Inc.* | 469,964 | |||
| 42,000 | Ithaca Energy, Inc.* (Canada) | 29,843 | |||
| 97,125 | JKX Oil and Gas plc (United Kingdom) | 431,235 | |||
| 53,695 | Petrominerales Ltd.* (Canada) | 717,372 | |||
| 21,530 | Premier Oil plc* (United Kingdom) | 416,521 | |||
| 3,583,410 | |||||
| Packaged Foods & Meats 0.9% | |||||
| 60,000 | Zhongpin, Inc.* | 883,200 | |||
| Personal Products 0.6% | |||||
| 1,200,000 | Beauty China Holdings Ltd. * *** (Singapore) | 8,523 | |||
| 17,205 | Proctor & Gamble Hygiene and Healthcare Ltd. (India) | 513,432 | |||
| 521,955 | |||||
| Pharmaceuticals 1.9% | |||||
| 206,000 | China Shineway Pharmaceutical Group Ltd. (China) | 220,086 | |||
| 11,000 | CKD Bio Corp. (Korea) | 157,777 | |||
| 6,560 | Daewoong Pharmaceutical Co. Ltd. (Korea) | 321,249 | |||
| 64,619 | Dechra Pharmaceuticals plc (United Kingdom) | 442,089 | |||
| 506,600 | Genomma Lab Internacional S.A.* (Mexico) | 672,002 | |||
| 1,813,203 | |||||
| Property & Casualty Insurance 0.5% | |||||
| 263,730 | Beazley Group plc (United Kingdom) | 497,564 | |||
| Regional Banks 0.6% | |||||
| 31,590 | Canadian Western Bank (Canada) | 586,258 | |||
| Research & Consulting Services 0.7% | |||||
| 140 | Nihon M&A Center, Inc. (Japan) | 635,158 | |||
| Restaurants 1.9% | |||||
| 691,000 | Ajisen China Holdings Ltd. (China) | 615,209 | |||
| 13,000 | Chimney Co. Ltd. (Japan) | 225,337 | |||
| 581,950 | FU JI Food & Catering Services Holdings Ltd.* *** (China) | 288,623 | |||
| 200,000 | KFC Holdings (Malaysia) Berhad (Malaysia) | 439,180 | |||
| 7,300 | Saint Marc Holdings Co. Ltd. (Japan) | 231,100 | |||
| 1,799,449 | |||||
| Semiconductors 1.5% | |||||
| 75,145 | Melexis N.V. (Belgium) | 764,664 | |||
| 128,497 | O2Micro International Ltd. ADR* (China) | 674,609 | |||
| 1,439,273 | |||||
| Specialized Finance 3.1% | |||||
| 518,600 | Bolsa Mexicana de Valores S.A., Series A (Mexico) * | 641,444 | |||
| 62,880 | IMAREX ASA* (Norway) | 544,576 | |||
| 30,000 | JSE Ltd. (South Africa) | 247,587 | |||
| 251 | Osaka Securities Exchange Co. Ltd. (Japan) | 1,141,545 | |||
| 32,625 | Oslo Bors VPS Holding ASA (Norway) | 310,806 | |||
| 2,885,958 | |||||
| Specialty Chemicals 0.8% | |||||
| 9,575 | C. Uyemura & Co. Ltd. (Japan) | 477,096 | |||
| 1,150,000 | EcoGreen Fine Chemical Group Ltd. (Hong Kong) | 274,514 | |||
| 751,610 | |||||
61
Table of Contents
| WASATCH INTERNATIONAL OPPORTUNITIES FUND (WAIOX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Specialty Stores 1.1% | |||||
| 14,500 | Dufry South America Ltd. (Brazil) | $ | 245,653 | ||
| 69,735 | easyhome Ltd. (Canada) | 586,775 | |||
| 1,000,000 | Water Oasis Group Ltd. (Hong Kong) | 232,257 | |||
| 1,064,685 | |||||
| Systems Software 2.1% | |||||
| 786,573 | GuestLogix, Inc.* (Canada) | 676,559 | |||
| 2,629 | Simplex Technology, Inc. (Japan) | 1,252,812 | |||
| 1,929,371 | |||||
| Technology Distributors 0.4% | |||||
| 3,009,300 | Inspur International Ltd. (China) | 396,060 | |||
| Thrifts & Mortgage Finance 1.5% | |||||
| 40,130 | Home Capital Group, Inc. (Canada) | 1,435,090 | |||
| Trading Companies & Distributors 0.5% | |||||
| 12,025 | Richelieu Hardware Ltd. (Canada) | 219,004 | |||
| 1,970 | Thermador Groupe (France) | 282,669 | |||
| 501,673 | |||||
| Total Common Stocks (cost $58,579,472) | 77,717,623 | ||||
| PREFERRED STOCKS 1.3% | |||||
| Diversified Banks 0.3% | |||||
| 48,300 | Parana Banco S.A. Pfd. (Brazil) | 266,473 | |||
| Regional Banks 1.0% | |||||
| 199,510 | Banco Daycoval S.A. Pfd. (Brazil) | 970,879 | |||
| Total Preferred Stocks (cost $836,656) | 1,237,352 | ||||
| EXCHANGE TRADED FUNDS 3.4% | |||||
| Asset Management & Custody Banks 3.4% | |||||
| 83,025 | iShares MSCI Emerging Markets Index Fund* (China) | 3,230,503 | |||
| Total Exchange Traded Funds (cost $1,803,303) | 3,230,503 | ||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 13.1% | ||||||
| Short Term Investments 13.1% | ||||||
| $12,273,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $12,645,000 of United States Treasury Notes 2.625% due 2/29/16; value: $12,518,550; repurchase proceeds: $12,273,003 (cost $12,273,000) | $ | 12,273,000 | |||
| Total Short-Term Investments (cost $12,273,000) | 12,273,000 | |||||
| Total Investments (cost $73,492,431) 100.6% | 94,458,478 | |||||
| Liabilities less Other Assets (0.6)% | (602,524 | ) | ||||
| NET ASSETS 100.0% | $ | 93,855,954 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
ADR American Depositary Receipt.
See Notes to Financial Statements. |
| |||||
At September 30, 2009, Wasatch International Opportunities Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 0.8 | ||
Belgium | 0.9 | ||
Brazil | 3.1 | ||
Canada | 8.9 | ||
China | 24.0 | ||
Denmark | 2.3 | ||
Finland | 0.8 | ||
France | 2.0 | ||
Germany | 5.7 | ||
Hong Kong | 1.6 | ||
India | 2.5 | ||
Ireland | 1.8 | ||
Italy | 1.6 | ||
Japan | 11.1 | ||
Korea | 2.9 | ||
Malaysia | 0.5 | ||
Mexico | 2.7 | ||
Netherlands | 0.2 | ||
Norway | 3.1 | ||
Singapore | 6.6 | ||
South Africa | 0.6 | ||
Sweden | 1.4 | ||
Switzerland | 1.2 | ||
United Arab Emirates | 2.4 | ||
United Kingdom | 7.5 | ||
United States | 3.8 | ||
TOTAL | 100.0 | % | |
62
Table of Contents
| WASATCH MICRO CAP FUND (WMICX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| COMMON STOCKS 94.1% | |||||
| Air Freight & Logistics 0.9% | |||||
| 3,501,725 | Goodpack Ltd. (Singapore) | $ | 2,511,980 | ||
| Apparel Retail 0.8% | |||||
| 128,468 | Zumiez, Inc.* | 2,108,160 | |||
| Apparel, Accessories & Luxury Goods 2.8% | |||||
| 1,773,285 | Ports Design Ltd. (China) | 4,429,752 | |||
| 188,192 | Volcom, Inc.* | 3,101,404 | |||
| 7,531,156 | |||||
| Application Software 3.3% | |||||
| 223,065 | Interactive Intelligence, Inc.* | 4,262,772 | |||
| 202,865 | Tyler Technologies, Inc.* | 3,466,963 | |||
| 47,030 | Ultimate Software Group, Inc.* | 1,350,702 | |||
| 9,080,437 | |||||
| Asset Management & Custody Banks 4.6% | |||||
| 67,702 | Diamond Hill Investment Group, Inc.* | 3,924,685 | |||
| 889,022 | Treasury Group Ltd. (Australia) | 4,353,333 | |||
| 122,961 | Westwood Holdings Group, Inc. | 4,266,747 | |||
| 12,544,765 | |||||
| Automotive Retail 1.1% | |||||
| 97,725 | Monro Muffler Brake, Inc. | 3,106,678 | |||
| Biotechnology 0.2% | |||||
| 64,330 | Orexigen Therapeutics, Inc.* | 633,650 | |||
| Computer Storage & Peripherals 1.3% | |||||
| 268,340 | Intevac, Inc.* | 3,606,490 | |||
| Construction & Engineering 0.5% | |||||
| 64,360 | Orion Marine Group, Inc.* | 1,321,954 | |||
| Consumer Finance 3.9% | |||||
| 382,116 | Dollar Financial Corp.* | 6,121,498 | |||
| 542,750 | United PanAm Financial Corp.* | 1,872,488 | |||
| 106,325 | World Acceptance Corp.* | 2,680,453 | |||
| 10,674,439 | |||||
| Education Services 1.7% | |||||
| 42,735 | Capella Education Co.* | 2,877,775 | |||
| 201,547 | Kroton Educacional S.A. ** (Brazil) | 1,800,779 | |||
| 4,678,554 | |||||
| Electronic Manufacturing Services 1.0% | |||||
| 239,675 | TTM Technologies, Inc.* | 2,749,072 | |||
| Environmental & Facilities Services 1.9% | |||||
| 131,530 | American Ecology Corp. | 2,459,611 | |||
| 158,145 | Team, Inc.* | 2,680,558 | |||
| 5,140,169 | |||||
| Footwear 1.0% | |||||
| 18,602,545 | China Hongxing Sports Ltd. (China) | 2,774,626 | |||
| Health Care Distributors 1.4% | |||||
| 91,961 | MWI Veterinary Supply, Inc.* | 3,673,842 | |||
| Health Care Equipment 5.3% | |||||
| 141,400 | Abaxis, Inc.* | 3,782,450 | |||
| 476,001 | Cardica, Inc.* | 718,761 | |||
| 645,000 | Cardica, Inc. PIPE* *** † | 857,076 | |||
| 161,302 | Cardiovascular Systems, Inc.* | 1,172,666 | |||
| 121,700 | Invacare Corp. | 2,711,476 | |||
| 24,315,170 | LMA International N.V.* (Singapore) | 3,799,380 | |||
| 34,625 | NuVasive, Inc.* | 1,445,940 | |||
| 14,487,749 | |||||
| Shares | Value | ||||
| Health Care Facilities 2.2% | |||||
| 124,406 | AmSurg Corp.* | $ | 2,641,139 | ||
| 722,700 | NovaMed, Inc.* | 3,273,831 | |||
| 5,914,970 | |||||
| Health Care Services 7.4% | |||||
| 308,275 | American Caresource Holding, Inc.* | 1,347,162 | |||
| 113,601 | Bio-Reference Laboratories, Inc.* | 3,907,874 | |||
| 441,705 | Clarient, Inc.* | 1,859,578 | |||
| 163,182 | CorVel Corp.* | 4,634,369 | |||
| 254,305 | Healthways, Inc.* | 3,895,953 | |||
| 41,950 | IPC The Hospitalist Co. Inc.* | 1,319,327 | |||
| 102,755 | LHC Group, Inc.* | 3,075,457 | |||
| 20,039,720 | |||||
| Health Care Supplies 2.5% | |||||
| 408,857 | Abcam plc (United Kingdom) | 5,687,195 | |||
| 34,566 | Neogen Corp.* | 1,116,136 | |||
| 6,803,331 | |||||
| Health Care Technology 1.2% | |||||
| 38,605 | Computer Programs & Systems, Inc. | 1,598,633 | |||
| 471,045 | RaySearch Laboratories AB* (Sweden) | 1,745,639 | |||
| 3,344,272 | |||||
| Household Products 0.3% | |||||
| 45,875 | Orchids Paper Products Co.* | 917,500 | |||
| Internet Software & Services 2.7% | |||||
| 120,790 | Constant Contact, Inc.* | 2,325,207 | |||
| 188,690 | DealerTrack Holdings, Inc.* | 3,568,128 | |||
| 27,361 | VistaPrint N.V.* | 1,388,571 | |||
| 7,281,906 | |||||
| IT Consulting & Other Services 1.0% | |||||
| 92,895 | NCI, Inc., Class A* | 2,662,371 | |||
| Life Sciences Tools & Services 3.2% | |||||
| 197,444 | ICON plc ADR* (Ireland) | 4,835,404 | |||
| 84,093 | Kendle International, Inc.* | 1,406,035 | |||
| 194,670 | Life Sciences Research, Inc.* | 1,549,573 | |||
| 115,275 | MEDTOX Scientific, Inc.* | 1,049,002 | |||
| 8,840,014 | |||||
| Marine Ports & Services 0.9% | |||||
| 325,422 | CAI International, Inc.* | 2,398,360 | |||
| Mortgage REITs 2.0% | |||||
| 343,540 | MFA Financial, Inc. | 2,734,578 | |||
| 168,247 | Redwood Trust, Inc. | 2,607,829 | |||
| 5,342,407 | |||||
| Oil & Gas Equipment & Services 1.1% | |||||
| 252,800 | Pason Systems, Inc. (Canada) | 2,942,558 | |||
| Oil & Gas Exploration & Production 1.7% | |||||
| 201,651 | Approach Resources, Inc.* | 1,830,991 | |||
| 138,310 | GMX Resources, Inc.* | 2,172,850 | |||
| 1,030,430 | Ithaca Energy, Inc.* † (Canada) | 732,168 | |||
| 26,150 | Ithaca Energy, Inc.* (Canada) | 18,581 | |||
| 4,754,590 | |||||
| Pharmaceuticals 0.2% | |||||
| 326,809 | Alexza Pharmaceuticals, Inc. PIPE* *** † | 676,495 | |||
| Property & Casualty Insurance 1.0% | |||||
| 246,765 | Seabright Insurance Holdings, Inc.* | 2,818,056 | |||
| Regional Banks 2.2% | |||||
| 295,505 | Boston Private Financial Holdings, Inc. | 1,923,737 | |||
| 133,114 | Commonwealth Bankshares, Inc. | 694,855 | |||
| 161,300 | Nara Bancorp, Inc. | 1,121,035 | |||
63
Table of Contents
| WASATCH MICRO CAP FUND (WMICX) — Schedule of Investments (continued) | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| 154,363 | Tamalpais Bancorp | $ | 217,652 | ||
| 116,440 | Washington Trust Bancorp PIPE* † | 2,040,029 | |||
| 5,997,308 | |||||
| Research & Consulting Services 4.3% | |||||
| 95,620 | CRA International, Inc.* | 2,609,470 | |||
| 377,865 | Resources Connection, Inc.* | 6,446,377 | |||
| 108,025 | Stantec, Inc.* (Canada) | 2,711,427 | |||
| 11,767,274 | |||||
| Restaurants 1.2% | |||||
| 116,175 | Peet’s Coffee & Tea, Inc.* | 3,279,620 | |||
| Semiconductor Equipment 0.6% | |||||
| 59,960 | Tessera Technologies, Inc.* | 1,672,285 | |||
| Semiconductors 12.4% | |||||
| 265,807 | Melexis N.V. (Belgium) | 2,704,811 | |||
| 611,815 | Micrel, Inc. | 4,986,292 | |||
| 555,194 | Microtune, Inc.* | 1,010,453 | |||
| 57,696 | Netlogic Microsystems, Inc.* | 2,596,320 | |||
| 1,305,427 | O2Micro International Ltd. ADR* (China) | 6,853,492 | |||
| 642,973 | Pericom Semiconductor Corp.* | 6,307,565 | |||
| 197,428 | Power Integrations, Inc. | 6,580,275 | |||
| 87,470 | Supertex, Inc.* | 2,624,100 | |||
| 33,663,308 | |||||
| Specialized Finance 1.6% | |||||
| 154,000 | Goldwater Bank, N.A.* *** † | 1,111,880 | |||
| 735 | Osaka Securities Exchange Co. Ltd. (Japan) | 3,342,771 | |||
| 4,454,651 | |||||
| Specialty Chemicals 0.9% | |||||
| 696,205 | Neo Material Technologies, Inc.* (Canada) | 2,492,956 | |||
| Specialty Stores 4.4% | |||||
| 377,420 | Big 5 Sporting Goods Corp. | 5,699,042 | |||
| 197,015 | easyhome Ltd. (Canada) | 1,657,755 | |||
| 247,377 | Hibbett Sports, Inc.* | 4,509,683 | |||
| 11,866,480 | |||||
| Systems Software 2.4% | |||||
| 89,560 | ArcSight, Inc.* | 2,155,709 | |||
| 395,405 | Opnet Technologies, Inc. | 4,321,777 | |||
| 6,477,486 | |||||
| Thrifts & Mortgage Finance 2.1% | |||||
| 112,730 | Home Capital Group, Inc. (Canada) | 4,031,341 | |||
| 167,403 | Encore Bancshares, Inc.* | 1,504,953 | |||
| 5,536,294 | |||||
| Trading Companies & Distributors 0.9% | |||||
| 220,363 | Rush Enterprises, Inc., Class B* | 2,399,753 | |||
| Trucking 2.0% | |||||
| 65,890 | Old Dominion Freight Line, Inc.* | 2,005,033 | |||
| 389,918 | Vitran Corp., Inc.* | 3,517,060 | |||
| 5,522,093 | |||||
| Total Common Stocks (cost $265,673,721) | 256,489,779 | ||||
| PREFERRED STOCKS 1.2% | |||||
| Regional Banks 1.2% | |||||
| 638,700 | Banco Daycoval S.A. Pfd. (Brazil) | 3,108,117 | |||
| Total Preferred Stocks (cost $2,446,922) | 3,108,117 | ||||
| Shares | Value | |||||
| WARRANTS 0.0% | ||||||
| Health Care Distributors 0.0% | ||||||
| 25,946 | Familymeds Group, Inc. expiring 11/30/09* *** † | $ | — | |||
| Health Care Equipment 0.0% | ||||||
| 121,124 | Cardica, Inc. expiring 6/7/12* *** † | — | ||||
| 322,500 | Cardica, Inc., expiring 9/29/14* *** † | 40,312 | ||||
| 40,312 | ||||||
| Pharmaceuticals 0.0% | ||||||
| 294,128 | Alexza Pharmaceuticals, Inc. expiring 10/5/16* *** † | 36,766 | ||||
| Total Warrants (cost $96,458) | 77,078 | |||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 5.3% | ||||||
| Repurchase Agreement 5.3% | ||||||
| $14,428,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $14,870,000 of United States Treasury Notes 2.625% due 2/29/16; value: $14,721,300; repurchase proceeds: $14,428,004 (cost $14,428,000) | $ | 14,428,000 | |||
| Total Short-Term Investments (cost $14,428,000) | 14,428,000 | |||||
| Total Investments (cost $282,645,101) 100.6% | 274,102,974 | |||||
| Liabilities less Other Assets (0.6)% | (1,565,596 | ) | ||||
| NET ASSETS 100.0% | $ | 272,537,378 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||
At September 30, 2009, Wasatch Micro Cap Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 1.7 | ||
Belgium | 1.0 | ||
Brazil | 1.9 | ||
Canada | 5.6 | ||
China | 5.4 | ||
Ireland | 1.9 | ||
Japan | 1.3 | ||
Singapore | 2.4 | ||
Sweden | 0.7 | ||
United Kingdom | 2.2 | ||
United States | 75.9 | ||
TOTAL | 100.0 | % | |
64
Table of Contents
| WASATCH MICRO CAP VALUE FUND (WAMVX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| COMMON STOCKS 87.1% | |||||
| Air Freight & Logistics 1.2% | |||||
| 90,000 | Transat A.T., Inc. (Canada) | $ | 1,421,185 | ||
| Apparel, Accessories & Luxury Goods 0.8% | |||||
| 42,000 | LG Fashion Corp. (Korea) | 949,968 | |||
| Application Software 3.4% | |||||
| 22,000 | Ebix, Inc.* | 1,217,920 | |||
| 57,000 | JDA Software Group, Inc.* | 1,250,580 | |||
| 7,000 | SimCorp A/S (Denmark) | 1,435,961 | |||
| 3,904,461 | |||||
| Asset Management & Custody Banks 1.1% | |||||
| 250,000 | Treasury Group Ltd. (Australia) | 1,224,192 | |||
| Auto Parts & Equipment 0.6% | |||||
| 110,000 | Martinrea International, Inc.* (Canada) | 741,492 | |||
| Biotechnology 2.7% | |||||
| 202,000 | Dyadic International, Inc.* | 242,400 | |||
| 391,263 | Luna Innovations, Inc.* | 841,216 | |||
| 85,000 | NeurogesX, Inc. PIPE* † | 680,000 | |||
| 5,800,000 | Sino Biopharmaceutical Ltd. (China) | 1,339,604 | |||
| 3,103,220 | |||||
| Computer Storage & Peripherals 1.2% | |||||
| 106,000 | Intevac, Inc.* | 1,424,640 | |||
| Construction & Engineering 1.1% | |||||
| 35,000 | Michael Baker Corp. | 1,271,900 | |||
| Construction & Farm Machinery & Heavy Trucks 0.9% | |||||
| 80,000 | Titan Machinery, Inc.* | 1,001,600 | |||
| Construction Materials 0.9% | |||||
| 280,000 | Headwaters, Inc.* | 1,083,600 | |||
| Consumer Finance 0.5% | |||||
| 25,000 | World Acceptance Corp.* | 630,250 | |||
| Data Processing & Outsourced Services 2.3% | |||||
| 200,000 | Online Resources Corp.* | 1,234,000 | |||
| 120,000 | Wirecard AG (Germany) | 1,430,182 | |||
| 2,664,182 | |||||
| Department Stores 0.9% | |||||
| 15,519,000 | PT Ramayana Lestari Sentosa Tbk (Indonesia) | 1,043,699 | |||
| Distributors 0.8% | |||||
| 34,000 | Delticom AG (Germany) | 969,238 | |||
| Diversified Banks 0.2% | |||||
| 55,556 | Idaho Trust Bancorp* *** † | 246,113 | |||
| Diversified Capital Markets 0.8% | |||||
| 90,000 | JMP Group, Inc. | 869,400 | |||
| Diversified Support Services 0.9% | |||||
| 57,000 | Healthcare Services Group, Inc. | 1,046,520 | |||
| Education Services 1.8% | |||||
| 70,500 | AcadeMedia AB* (Sweden) | 967,085 | |||
| 200,000 | China Education Alliance, Inc.* | 1,054,000 | |||
| 2,021,085 | |||||
Electrical Components & Equipment 1.0% | |||||
| 1,370,925 | Wasion Group Holdings Ltd. (China) | 1,195,793 | |||
| Shares | Value | ||||
| Electronic Manufacturing Services 1.1% | |||||
| 150,000 | Sanmina-SCI Corp.* | $ | 1,290,000 | ||
| Environmental & Facilities Services 2.1% | |||||
| 113,000 | EnergySolutions, Inc. | 1,041,860 | |||
| 105,000 | Heritage-Crystal Clean, Inc.* | 1,338,750 | |||
| 2,380,610 | |||||
| Footwear 0.7% | |||||
| 5,400,000 | China Hongxing Sports Ltd. (China) | 805,426 | |||
| Gas Utilities 0.9% | |||||
| 300,000 | Indraprastha Gas Ltd.* (India) | 1,018,397 | |||
| General Merchandise Stores 1.0% | |||||
| 61,000 | Duckwall-ALCO Stores, Inc.* | 1,094,950 | |||
| Health Care Distributors 1.4% | |||||
| 300,000 | Animal Health International, Inc.* | 636,000 | |||
| 24,000 | MWI Veterinary Supply, Inc.* | 958,800 | |||
| 1,594,800 | |||||
| Health Care Equipment 5.3% | |||||
| 170,000 | AtriCure, Inc.* | 802,400 | |||
| 103,865 | Cardica, Inc.* | 156,836 | |||
| 221,000 | Cardica, Inc. PIPE* *** † | 293,665 | |||
| 115,000 | Cardiovascular Systems, Inc.* | 836,050 | |||
| 55,000 | Hill-Rom Holdings, Inc. | 1,197,900 | |||
| 30,000 | Invacare Corp. | 668,400 | |||
| 400,000 | Solta Medical, Inc.* | 908,000 | |||
| 58,000 | Zoll Medical Corp.* | 1,248,160 | |||
| 6,111,411 | |||||
| Health Care Services 4.8% | |||||
| 44,000 | Almost Family, Inc.* | 1,309,000 | |||
| 25,000 | Bio-Reference Laboratories, Inc.* | 860,000 | |||
| 200,000 | Health Grades, Inc.* | 990,000 | |||
| 64,000 | Healthways, Inc.* | 980,480 | |||
| 45,000 | LHC Group, Inc.* | 1,346,850 | |||
| 5,486,330 | |||||
| Health Care Supplies 0.7% | |||||
| 144,000 | MTS Medication Technologies, Inc.* | 823,680 | |||
| Health Care Technology 0.8% | |||||
| 440,000 | iCAD, Inc.* | 946,000 | |||
| Home Entertainment Software 0.7% | |||||
| 900,000 | Kingsoft Corp. Ltd. (China) | 845,414 | |||
| Home Improvement Retail 1.0% | |||||
| 9,000,000 | Ace Hardware Indonesia (Indonesia) | 1,145,370 | |||
| Industrial Machinery 3.5% | |||||
| 5,000 | Burckhardt Compression Holding AG (Switzerland) | 820,186 | |||
| 73,820 | China Valves Technology, Inc.* | 534,457 | |||
| 24,000 | Duoyuan Global Water, Inc. ADR* (China) | 799,200 | |||
| 80,000 | Gencor Industries, Inc.* | 694,400 | |||
| 66,000 | Hurco Cos. Inc.* | 1,127,280 | |||
| 3,975,523 | |||||
| Integrated Telecommunication Services 0.6% | |||||
| 41,000 | Cbeyond, Inc.* | 661,330 | |||
| Internet Software & Services 2.0% | |||||
| 105,000 | InfoSpace, Inc.* | 812,700 | |||
| 185,000 | United Online, Inc. | 1,487,400 | |||
| 2,300,100 | |||||
65
Table of Contents
| WASATCH MICRO CAP VALUE FUND (WAMVX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Investment Banking & Brokerage 1.8% | |||||
| 68,000 | Duff & Phelps Corp., Class A | $ | 1,302,880 | ||
| 105,000 | GFI Group, Inc. | 759,150 | |||
| 2,062,030 | |||||
| IT Consulting & Other Services 3.3% | |||||
| 240,000 | China Information Security Technology, Inc.* | 1,329,600 | |||
| 300,000 | Matrikon, Inc. (Canada) | 723,635 | |||
| 50,000 | Telvent GIT S.A. (Spain) | 1,449,000 | |||
| 43,215 | Yucheng Technologies Ltd.* (China) | 309,852 | |||
| 3,812,087 | |||||
| Life & Health Insurance 0.8% | |||||
| 30,000 | Kansas City Life Insurance Co. | 934,200 | |||
| Marine 0.8% | |||||
| 209,000 | Euroseas Ltd. (Greece) | 898,700 | |||
| Oil & Gas Equipment & Services 1.6% | |||||
| 500,000 | Boots & Coots, Inc.* | 805,000 | |||
| 110,000 | TETRA Technologies, Inc.* | 1,065,900 | |||
| 1,870,900 | |||||
| Oil & Gas Exploration & Production 2.1% | |||||
| 82,000 | GMX Resources, Inc.* | 1,288,220 | |||
| 265,000 | Gran Tierra Energy, Inc.* | 1,102,400 | |||
| 2,390,620 | |||||
| Packaged Foods & Meats 0.9% | |||||
| 70,000 | Zhongpin, Inc.* | 1,030,400 | |||
| Paper Products 0.7% | |||||
| 250,000 | Verso Paper Corp. | 747,500 | |||
| Personal Products 0.9% | |||||
| 150,000 | Prestige Brands Holdings, Inc.* | 1,056,000 | |||
| Pharmaceuticals 1.6% | |||||
| 800,000 | China Shineway Pharmaceutical Group Ltd. (China) | 854,704 | |||
| 20,000 | Daewoong Pharmaceutical Co. Ltd. (Korea) | 979,419 | |||
| 1,834,123 | |||||
| Property & Casualty Insurance 1.1% | |||||
| 111,000 | Seabright Insurance Holdings, Inc.* | 1,267,620 | |||
| Regional Banks 3.3% | |||||
| 1,900,000 | City Union Bank Ltd. (India) | 1,216,506 | |||
| 52,000 | Columbia Banking System, Inc. | 860,600 | |||
| 220,653 | First Bank of Delaware* | 330,979 | |||
| 25,000 | First of Long Island Corp. (The) | 664,750 | |||
| 53,000 | Southwest Bancorp, Inc. | 744,120 | |||
| 3,816,955 | |||||
| Research & Consulting Services 1.7% | |||||
| 42,000 | CRA International, Inc.* | 1,146,180 | |||
| 46,000 | Resources Connection, Inc.* | 784,760 | |||
| 1,930,940 | |||||
| Residential REITs 1.0% | |||||
| 195,000 | Education Realty Trust, Inc. | 1,156,350 | |||
| Restaurants 1.5% | |||||
| 1,300,000 | Ajisen China Holdings Ltd. (China) | 1,157,412 | |||
| 170,000 | Brazil Fast Food Corp.* | 610,300 | |||
| 1,767,712 | |||||
| Semiconductors 0.6% | |||||
| 350,000 | Microtune, Inc.* | 637,000 | |||
| Shares | Value | ||||
| Specialized Finance 1.8% | |||||
| 860,000 | Bolsa Mexicana de Valores S.A., | ||||
| Series A (Mexico)* | $ | 1,063,714 | |||
| 41,900 | Goldwater Bank, N.A.* *** † | 302,518 | |||
| 84,000 | IMAREX ASA (Norway)* | 727,487 | |||
| 2,093,719 | |||||
| Specialty Chemicals 0.8% | |||||
| 250,000 | Neo Material Technologies, Inc.* (Canada) | 895,194 | |||
| Specialty Stores 1.3% | |||||
| 45,000 | Big 5 Sporting Goods Corp. | 679,500 | |||
| 100,000 | easyhome Ltd. (Canada) | 841,436 | |||
| 1,520,936 | |||||
| Steel 2.4% | |||||
| 180,310 | Globe Specialty Metals, Inc.* *** | 1,561,340 | |||
| 39,000 | Haynes International, Inc.* | 1,240,980 | |||
| 2,802,320 | |||||
| Systems Software 3.2% | |||||
| 1,664,666 | GuestLogix, Inc.* (Canada) | 1,431,837 | |||
| 130,000 | Opnet Technologies, Inc. | 1,420,900 | |||
| 1,800 | Simplex Technology, Inc. (Japan) | 857,764 | |||
| 3,710,501 | |||||
| Thrifts & Mortgage Finance 0.9% | |||||
| 252,000 | United Western Bancorp, Inc. | 1,000,440 | |||
| Trading Companies & Distributors 1.4% | |||||
| 98,245 | Essex Rental Corp.* | 589,470 | |||
| 64,000 | Interline Brands, Inc.* | 1,078,400 | |||
| 1,667,870 | |||||
| Trucking 1.9% | |||||
| 123,000 | Celadon Group, Inc.* | 1,391,130 | |||
| 91,000 | Vitran Corp., Inc.* | 820,820 | |||
| 2,211,950 | |||||
| Total Common Stocks (cost $81,149,197) | 100,407,946 | ||||
| WARRANTS 0.0% | |||||
| Biotechnology 0.0% | |||||
| 30,399 | NeurogesX, Inc., expiring 12/28/12* *** † | — | |||
| Health Care Distributors 0.0% | |||||
| 6,486 | Familymeds Group, Inc. expiring 11/30/09* *** † | — | |||
| Health Care Equipment 0.0% | |||||
| 58,140 | Cardica, Inc. expiring 6/7/12* *** † | — | |||
| 110,500 | Cardica, Inc., expiring 9/29/14* *** † | 13,813 | |||
| 13,813 | |||||
| Total Warrants (cost $26,914) | 13,813 | ||||
66
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 12.1% | |||||
| Repurchase Agreement 12.1% | |||||
| $13,928,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $13,155,000 of United States Treasury Notes 4.00% due 2/15/15; value: $14,210,031; repurchase proceeds: $13,928,004 (cost $13,928,000) | $ | 13,928,000 | ||
| Total Short-Term Investments (cost $13,928,000) | 13,928,000 | ||||
| Total Investments (cost $95,104,111) 99.2% | 114,349,759 | ||||
| Other Assets less Liabilities 0.8% | 866,634 | ||||
| NET ASSETS 100.0% | $ | 115,216,393 | |||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. | |||||
At September 30, 2009, Wasatch Micro Cap Value Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 1.2 | ||
Canada | 6.0 | ||
China | 7.3 | ||
Denmark | 1.4 | ||
Germany | 2.4 | ||
Greece | 0.9 | ||
India | 2.2 | ||
Indonesia | 2.2 | ||
Japan | 0.9 | ||
Korea | 1.9 | ||
Mexico | 1.1 | ||
Norway | 0.7 | ||
Spain | 1.4 | ||
Sweden | 1.0 | ||
Switzerland | 0.8 | ||
United States | 68.6 | ||
TOTAL | 100.0 | % | |
67
Table of Contents
| WASATCH SMALL CAP GROWTH FUND (WAAEX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 90.0% | |||||
| Aerospace & Defense 1.5% | |||||
| 194,850 | HEICO Corp. | $ | 8,448,696 | ||
| 97,443 | HEICO Corp., Class A | 3,304,292 | |||
| 11,752,988 | |||||
| Air Freight & Logistics 1.5% | |||||
| 24,866,692 | Aramex PJSC (United Arab Emirates)* | 11,983,295 | |||
| Alternative Carriers 0.7% | |||||
| 262,774 | Neutral Tandem, Inc.* | 5,980,736 | |||
| Aluminum 0.9% | |||||
| 11,305,282 | Midas Holdings Ltd. (Singapore) | 6,865,312 | |||
| Apparel Retail 1.2% | |||||
| 584,774 | Zumiez, Inc.* | 9,596,141 | |||
| Apparel, Accessories & Luxury Goods 2.3% | |||||
| 5,073,340 | Ports Design Ltd. (China) | 12,673,449 | |||
| 384,108 | Volcom, Inc.* | 6,330,100 | |||
| 19,003,549 | |||||
| Application Software 2.9% | |||||
| 62,615 | Concur Technologies, Inc.* | 2,489,572 | |||
| 76,162 | FactSet Research Systems, Inc. | 5,044,971 | |||
| 561,010 | Ultimate Software Group, Inc.* | 16,112,207 | |||
| 23,646,750 | |||||
| Asset Management & Custody Banks 1.5% | |||||
| 421,085 | Waddell & Reed Financial, Inc., Class A | 11,979,868 | |||
| Automotive Retail 1.6% | |||||
| 349,275 | O’Reilly Automotive, Inc.* ††† | 12,622,798 | |||
| Biotechnology 1.7% | |||||
| 17,896 | Myriad Genetics, Inc.* | 490,350 | |||
| 4,474 | Myriad Pharmaceuticals, Inc.* | 26,218 | |||
| 225,795 | Orexigen Therapeutics, Inc.* | 2,224,081 | |||
| 146,199 | Orexigen Therapeutics, Inc., Series C PIPE* † | 1,440,060 | |||
| 259,725 | Sangamo BioSciences, Inc.* | 2,132,342 | |||
| 469,510 | Seattle Genetics, Inc.* | 6,587,225 | |||
| 205,700 | ZymoGenetics, Inc.* | 1,242,428 | |||
| 14,142,704 | |||||
| Communications Equipment 2.4% | |||||
| 256,665 | F5 Networks, Inc.* | 10,171,634 | |||
| 438,555 | Riverbed Technology, Inc.* | 9,630,668 | |||
| �� | |||||
| 19,802,302 | |||||
| Computer & Electronics Retail 0.5% | |||||
| 250,578 | hhgregg, Inc.* | 4,244,791 | |||
| Construction & Farm Machinery & Heavy Trucks 1.5% | |||||
| 331,826 | Bucyrus International, Inc., Class A | 11,819,642 | |||
| Data Processing & Outsourced Services 3.1% | |||||
| 483,365 | NeuStar, Inc., Class A* | 10,924,049 | |||
| 1,184,760 | Wirecard AG (Germany) | 14,120,187 | |||
| 25,044,236 | |||||
| Distributors 1.0% | |||||
| 425,555 | LKQ Corp.* | 7,889,790 | |||
| Diversified Banks 2.4% | |||||
| 166,191 | HDFC Bank Ltd. ADR (India) | 19,672,029 | |||
| Diversified Support Services 2.2% | |||||
| 543,576 | Copart, Inc.* | 18,052,159 | |||
| Shares | Vialue | ||||
| Education Services 1.2% | |||||
| 138,396 | Capella Education Co.* | $ | 9,319,586 | ||
| Environmental & Facilities Services 1.7% | |||||
| 528,645 | Tetra Tech, Inc.* | 14,024,952 | |||
| Footwear 0.3% | |||||
| 18,556,345 | China Hongxing Sports Ltd. (China) | 2,767,735 | |||
| Health Care Distributors 1.5% | |||||
| 295,456 | MWI Veterinary Supply, Inc.* | 11,803,467 | |||
| Health Care Equipment 2.1% | |||||
| 479,552 | Abaxis, Inc.* | 12,828,016 | |||
| 466,111 | DexCom, Inc.* | 3,696,260 | |||
| 1,620,220 | Zonare Medical Systems, Inc.* *** † | 194,427 | |||
| 16,718,703 | |||||
| Health Care Services 2.2% | |||||
| 287,910 | Bio-Reference Laboratories, Inc.* | 9,904,104 | |||
| 139,085 | MEDNAX, Inc.* | 7,638,548 | |||
| 17,542,652 | |||||
| Health Care Technology 1.8% | |||||
| 161,960 | athenahealth, Inc.* | 6,214,405 | |||
| 208,055 | Computer Programs & Systems, Inc. | 8,615,558 | |||
| 14,829,963 | |||||
| Human Resource & Employment Services 0.9% | |||||
| 1,381,683 | Michael Page International plc (United Kingdom) | 7,391,656 | |||
| Integrated Telecommunication Services 0.8% | |||||
| 405,190 | Cbeyond, Inc.* | 6,535,715 | |||
| Internet Software & Services 2.8% | |||||
| 458,170 | DealerTrack Holdings, Inc.* | 8,663,995 | |||
| 943,390 | LoopNet, Inc.* | 8,528,246 | |||
| 115,350 | VistaPrint N.V.* | 5,854,012 | |||
| 23,046,253 | |||||
| Investment Banking & Brokerage 0.7% | |||||
| 343,360 | optionsXpress Holdings, Inc. | 5,933,261 | |||
| IT Consulting & Other Services 2.7% | |||||
| 558,518 | Cognizant Technology Solutions Corp., Class A* | 21,592,306 | |||
| Leisure Facilities 1.3% | |||||
| 377,125 | Life Time Fitness, Inc.* | 10,578,356 | |||
| Life Sciences Tools & Services 2.4% | |||||
| 500,880 | ICON plc ADR* (Ireland) | 12,266,551 | |||
| 115,284 | Techne Corp. | 7,211,014 | |||
| 19,477,565 | |||||
| Mortgage REITs 1.3% | |||||
| 665,608 | Redwood Trust, Inc. | 10,316,924 | |||
| Oil & Gas Equipment & Services 4.7% | |||||
| 440,555 | Dril-Quip, Inc.* | 21,869,150 | |||
| 790,890 | Pason Systems, Inc. (Canada) | 9,205,853 | |||
| 455,035 | TGS-NOPEC Geophysical Co. ASA* (Norway) | 6,817,683 | |||
| 37,892,686 | |||||
Oil & Gas Exploration & Production 0.8% | |||||
| 413,670 | GMX Resources, Inc.* | 6,498,756 | |||
68
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Shares | Value | ||||
| Other Diversified Financial Services 0.5% | |||||
| 2,661,038 | Count Financial Ltd. (Australia) | $ | 3,639,144 | ||
| Packaged Foods & Meats 0.6% | |||||
| 202,306 | Glaxo SmithKline Consumer Healthcare Ltd. (India) | 4,870,610 | |||
| Pharmaceuticals 0.9% | |||||
| 656,923 | Alexza Pharmaceuticals, Inc.* | 1,478,077 | |||
| 409,401 | Alexza Pharmaceuticals, Inc. PIPE* *** † | 847,460 | |||
| 680,112 | Dechra Pharmaceuticals plc (United Kingdom) | 4,652,968 | |||
| 6,978,505 | |||||
| Regional Banks 0.8% | |||||
| 164,505 | City National Corp. | 6,404,180 | |||
| Research & Consulting Services 5.5% | |||||
| 324,938 | CRA International, Inc.* | 8,867,558 | |||
| 1,399 | Exponent, Inc.* | 39,410 | |||
| 1,153,294 | Resources Connection, Inc.* ††† | 19,675,196 | |||
| 645,594 | Stantec, Inc.* (Canada) | 16,204,409 | |||
| 44,786,573 | |||||
| Restaurants 1.6% | |||||
| 472,411 | Peet’s Coffee & Tea, Inc.* | 13,336,163 | |||
| Semiconductors 7.8% | |||||
| 317,795 | Hittite Microwave Corp.* | 11,688,500 | |||
| 189,729 | Netlogic Microsystems, Inc.* | 8,537,805 | |||
| 1,509,480 | O2Micro International Ltd. ADR* (China) | 7,924,770 | |||
| 688,621 | Power Integrations, Inc. | 22,951,738 | |||
| 258,135 | Silicon Laboratories, Inc.* | 11,967,139 | |||
| 63,069,952 | |||||
| Specialized Finance 2.9% | |||||
| 789,810 | MSCI, Inc., Class A* | 23,394,172 | |||
| Specialty Stores 2.5% | |||||
| 1,099,155 | Hibbett Sports, Inc.* | 20,037,596 | |||
| Systems Software 3.1% | |||||
| 432,785 | ArcSight, Inc.* | 10,417,135 | |||
| 730,937 | NetSuite, Inc.* | 11,183,336 | |||
| 177,135 | Sourcefire, Inc.* | 3,803,089 | |||
| 25,403,560 | |||||
| Trading Companies & Distributors 2.9% | |||||
| 534,700 | MSC Industrial Direct Co., Inc, Class A | 23,302,226 | |||
| Trucking 2.8% | |||||
| 115,170 | J.B. Hunt Transport Services, Inc. | 3,700,412 | |||
| 1,145,242 | Knight Transportation, Inc.††† | 19,217,161 | |||
| 22,917,573 | |||||
| Total Common Stocks (cost $587,995,535) | 728,509,880 | ||||
| PREFERRED STOCKS 0.4% | |||||
| Biotechnology 0.1% | |||||
| 677,966 | Nanosys, Inc., Series D Pfd.* *** † | 1,105,085 | |||
| Health Care Equipment 0.0% | |||||
| 750,000 | Orqis Medical Corp., Series D Pfd.* *** † | — | |||
| Health Care Services 0.0% | |||||
| 362,782 | TargetRX, Inc., Series D Pfd.* *** † | 3,628 | |||
| Internet Software & Services 0.0% | |||||
| 404,517 | Incipient, Inc., Series D Pfd.* *** † | — | |||
| Shares | Value | ||||
| Life Sciences Tools & Services 0.3% | |||||
| 178,571 | Fluidigm Corp., Series E Pfd.* *** † | $ | 1,932,138 | ||
| Total Preferred Stocks (cost $8,329,870) | 3,040,851 | ||||
| LIMITED PARTNERSHIP INTEREST 0.5% | |||||
| Other 0.5% | |||||
| Montagu Newhall Global Partners II-B, L.P.*** † | 3,395,960 | ||||
| Montagu Newhall Global Partners III-B, L.P.* *** † | 809,385 | ||||
| 4,205,345 | |||||
| Total Limited Partnership Interest (cost $4,938,853) | 4,205,345 | ||||
| Principal Amount | Value | ||||
| CONVERTIBLE NOTES 0.0% | |||||
| Life Sciences Tools & Services 0.0% | |||||
| $113,374 | Fluidigm Corp. Bridge Financing, 12.00%, 12/31/09† | $ | 113,374 | ||
| Total Convertible Notes (cost $113,374) | 113,374 | ||||
| Shares | Value | ||||
| WARRANTS 0.0% | |||||
| Health Care Equipment 0.0% | |||||
| 243,033 | Zonare Medical Systems, Inc. expiring 6/30/11* *** † | $ | — | ||
| Life Sciences Tools & Services 0.0% | |||||
| 113,400 | Fluidigm Corp. expiring 8/18/19* † | 11 | |||
| Pharmaceuticals 0.0% | |||||
| 368,461 | Alexza Pharmaceuticals, Inc. expiring 10/5/16* *** † | 46,058 | |||
| Total Warrants (cost $46,069) | 46,069 | ||||
| RIGHTS 0.0% | |||||
| Life Sciences Tools & Services 0.0% | |||||
| 208,525 | Valera Pharmaceuticals, Inc. Ureteral Stent CSR* *** † | — | |||
| Pharmaceuticals 0.0% | |||||
| 208,525 | Valera Pharmaceuticals, Inc. VP003 (Octreotide Implant) CSR* *** † | — | |||
| Total Rights (cost $406,537) | — | ||||
69
Table of Contents
| WASATCH SMALL CAP GROWTH FUND (WAAEX) — Schedule of Investments (continued) | SEPTEMBER 30, 2009 | |
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 10.1% | ||||||
| Repurchase Agreement 10.1% | ||||||
| $81,535,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $81,990,000 of United States Treasury Notes 2.625% due 2/29/16; value: $28,284,300; United States Treasury Notes 1.75% due 8/15/12; value: $9,817,200; United States Treasury Notes 3.625% due 8/15/19; value: $45,065,625; repurchase proceeds: $81,535,023††† (cost $81,535,000) | $ | 81,535,000 | |||
| Total Short-Term Investments (cost $81,535,000) | 81,535,000 | |||||
| Total Investments (cost $683,365,238) 101.0% | 817,450,519 | |||||
| Liabilities less Other Assets (1.0)% | (8,132,584 | ) | ||||
| NET ASSETS 100.0% | $ | 809,317,935 | ||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
†††All or a portion of this security has been designated as collateral for purchase commitments (see Note 10).
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||
At September 30, 2009, Wasatch Small Cap Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Australia | 0.5 | ||
Canada | 3.5 | ||
China | 3.2 | ||
Germany | 1.9 | ||
India | 3.3 | ||
Ireland | 1.7 | ||
Norway | 0.9 | ||
Singapore | 0.9 | ||
United Arab Emirates | 1.6 | ||
United Kingdom | 1.7 | ||
United States | 80.8 | ||
TOTAL | 100.0 | % | |
70
Table of Contents
| WASATCH SMALL CAP VALUE FUND (WMCVX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| COMMON STOCKS 96.0% | |||||
| Aerospace & Defense 2.3% | |||||
| 149,490 | HEICO Corp., Class A | $ | 5,069,206 | ||
| Air Freight & Logistics 1.4% | |||||
| 4,320,486 | Goodpack Ltd. (Singapore) | 3,099,322 | |||
| Apparel, Accessories & Luxury Goods 1.2% | |||||
| 166,795 | Volcom, Inc.* | 2,748,782 | |||
| Application Software 1.1% | |||||
| 41,437 | Ebix, Inc.* | 2,293,952 | |||
| Asset Management & Custody Banks 4.4% | |||||
| 276,276 | Fifth Street Finance Corp. | 3,019,697 | |||
| 139,215 | SEI Investments Co. | 2,739,751 | |||
| 471,940 | Solar Capital, LLC** *** † | 3,917,102 | |||
| 9,676,550 | |||||
| Automotive Retail 1.8% | |||||
| 77,285 | Monro Muffler Brake, Inc. | 2,456,890 | |||
| 37,590 | O’Reilly Automotive, Inc.* | 1,358,503 | |||
| 3,815,393 | |||||
| Communications Equipment 1.7% | |||||
| 141,395 | Polycom, Inc.* | 3,782,316 | |||
| Construction & Engineering 1.1% | |||||
| 348,336 | Great Lakes Dredge & Dock Co. | 2,431,385 | |||
| Construction & Farm Machinery & Heavy Trucks 1.0% | |||||
| 63,970 | Bucyrus International, Inc., Class A | 2,278,611 | |||
| Consumer Finance 3.6% | |||||
| 234,253 | Dollar Financial Corp.* | 3,752,733 | |||
| 532,416 | United PanAm Financial Corp.* | 1,836,835 | |||
| 86,665 | World Acceptance Corp.* | 2,184,825 | |||
| 7,774,393 | |||||
| Data Processing & Outsourced Services 1.8% | |||||
| 174,535 | NeuStar, Inc., Class A* | 3,944,491 | |||
| Distributors 0.9% | |||||
| 100,425 | LKQ Corp.* | 1,861,880 | |||
| Diversified Banks 0.9% | |||||
| 377,021 | Bank of N.T. Butterfield & Son Ltd. (Bermuda) | 1,885,105 | |||
| Diversified Capital Markets 0.9% | |||||
| 198,343 | JMP Group, Inc. | 1,915,993 | |||
| Diversified REITs 0.0% | |||||
| 60,000 | Star Asia Financial Ltd. * † | 54,000 | |||
| Diversified Support Services 2.0% | |||||
| 133,245 | Copart, Inc.* | 4,425,066 | |||
| Education Services 0.7% | |||||
| 179,780 | Kroton Educacional S.A.** (Brazil) | 1,606,296 | |||
| Electrical Components & Equipment 0.8% | |||||
| 2,115,868 | Wasion Group Holdings Ltd. (China) | 1,845,571 | |||
| Footwear 0.9% | |||||
| 13,044,115 | China Hongxing Sports Ltd. (China) | 1,945,569 | |||
| Health Care Equipment 1.0% | |||||
| 101,705 | Invacare Corp. | 2,265,987 | |||
| Shares | Value | ||||
| Health Care Facilities 5.2% | |||||
| 135,356 | AmSurg Corp.* | $ | 2,873,608 | ||
| 268,502 | Emeritus Corp.* | 5,893,619 | |||
| 94,795 | VCA Antech, Inc.* | 2,549,037 | |||
| 11,316,264 | |||||
| Health Care Services 7.1% | |||||
| 138,468 | CorVel Corp.* | 3,932,491 | |||
| 194,855 | Healthways, Inc.* | 2,985,179 | |||
| 129,880 | LHC Group, Inc.* | 3,887,308 | |||
| 85,885 | MEDNAX, Inc.* | 4,716,804 | |||
| 15,521,782 | |||||
| Health Care Technology 2.0% | |||||
| 204,110 | IMS Health, Inc. | 3,133,089 | |||
| 95,531 | Vital Images, Inc.* | 1,196,048 | |||
| 4,329,137 | |||||
| Homefurnishing Retail 1.2% | |||||
| 96,905 | Aaron’s, Inc. | 2,558,292 | |||
| Industrial Machinery 1.1% | |||||
| 87,310 | IDEX Corp. | 2,440,314 | |||
| Insurance Brokers 1.0% | |||||
| 108,965 | Brown & Brown, Inc. | 2,087,769 | |||
| Integrated Telecommunication Services 1.5% | |||||
| 203,130 | Cbeyond, Inc.* | 3,276,487 | |||
| Internet Software & Services 1.9% | |||||
| 111,469 | DealerTrack Holdings, Inc.* | 2,107,879 | |||
| 239,808 | RADVision Ltd. (Israel)* | 2,124,699 | |||
| 4,232,578 | |||||
| Investment Banking & Brokerage 1.6% | |||||
| 197,875 | optionsXpress Holdings, Inc. | 3,419,280 | |||
| IT Consulting & Other Services 2.4% | |||||
| 137,115 | Cognizant Technology Solutions Corp., Class A* | 5,300,866 | |||
| Life Sciences Tools & Services 2.1% | |||||
| 206,425 | Pharmaceutical Product Development, Inc. | 4,528,965 | |||
| Mortgage REITs 3.5% | |||||
| 553,170 | MFA Financial, Inc. | 4,403,233 | |||
| 207,605 | Redwood Trust, Inc. | 3,217,878 | |||
| 7,621,111 | |||||
| Office Services & Supplies 0.9% | |||||
| 211,405 | American Reprographics Co.* | 2,012,576 | |||
| Oil & Gas Equipment & Services 1.7% | |||||
| 383,891 | TETRA Technologies, Inc.* | 3,719,904 | |||
| Oil & Gas Exploration & Production 1.1% | |||||
| 95,050 | Petrohawk Energy Corp.* | 2,301,161 | |||
| Packaged Foods & Meats 1.0% | |||||
| 143,575 | Zhongpin, Inc.* | 2,113,424 | |||
| Personal Products 4.8% | |||||
| 94,080 | Herbalife Ltd. | 3,080,179 | |||
| 114,460 | NBTY, Inc.* | 4,530,327 | |||
| 405,017 | Prestige Brands Holdings, Inc.* | 2,851,320 | |||
| 10,461,826 | |||||
| Property & Casualty Insurance 2.0% | |||||
| 212,130 | Seabright Insurance Holdings, Inc.* | 2,422,525 | |||
| 77,545 | Tower Group, Inc. | 1,891,322 | |||
| 4,313,847 | |||||
71
Table of Contents
| WASATCH SMALL CAP VALUE FUND (WMCVX) — Schedule of Investments (continued) | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| Regional Banks 5.7% | |||||
| 318,507 | Boston Private Financial Holdings, Inc. | $ | 2,073,481 | ||
| 88,665 | City National Corp. | 3,451,728 | |||
| 159,925 | Columbia Banking System, Inc. | 2,646,759 | |||
| 231,445 | Commonwealth Bankshares, Inc. | 1,208,143 | |||
| 178,653 | Washington Trust Bancorp PIPE* † | 3,130,000 | |||
| 12,510,111 | |||||
| Research & Consulting Services 3.3% | |||||
| 88,080 | Corporate Executive Board Co. | 2,193,192 | |||
| 113,985 | Huron Consulting Group, Inc.* | 2,944,233 | |||
| 122,290 | Resources Connection, Inc.* | 2,086,267 | |||
| 7,223,692 | |||||
| Semiconductors 4.9% | |||||
| 569,011 | Pericom Semiconductor Corp.* | 5,581,998 | |||
| 123,830 | Standard Microsystems Corp.* | 2,874,094 | |||
| 76,807 | Supertex, Inc.* | 2,304,210 | |||
| 10,760,302 | |||||
| Specialized Finance 1.2% | |||||
| 86,405 | MSCI, Inc., Class A* | 2,559,316 | |||
| Steel 2.4% | |||||
| 343,825 | Globe Specialty Metals, Inc.* *** | 2,977,249 | |||
| 71,525 | Haynes International, Inc.* | 2,275,926 | |||
| 5,253,175 | |||||
| Systems Software 1.2% | |||||
| 239,840 | Opnet Technologies, Inc. | 2,621,451 | |||
| Trading Companies & Distributors 3.0% | |||||
| 220,905 | Interline Brands, Inc.* | 3,722,249 | |||
| 66,085 | MSC Industrial Direct Co., Inc, Class A | 2,879,985 | |||
| 6,602,234 | |||||
| Trucking 2.7% | |||||
| 72,236 | Old Dominion Freight Line, Inc.* | 2,198,141 | |||
| 406,942 | Vitran Corp., Inc.* | 3,670,617 | |||
| 5,868,758 | |||||
| Total Common Stocks (cost $200,762,846) | 209,674,490 | ||||
Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 4.2% | ||||||
| Repurchase Agreement 4.2% | ||||||
| $9,146,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $8,640,000 of United States Treasury Notes 4.00% due 2/15/15; value: $9,332,928; repurchase proceeds: $9,146,003 (cost $9,146,000) | $ | 9,146,000 | |||
| Total Short-Term Investments (cost $9,146,000) | 9,146,000 | |||||
| Total Investments (cost $209,908,846) 100.2% | 218,820,490 | |||||
| Liabilities less Other Assets (0.2)% | (462,819 | ) | ||||
| NET ASSETS 100.0% | $ | 218,357,671 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
PIPE Private Investment in a Public Equity.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. |
| |||||
At September 30, 2009, Wasatch Small Cap Value Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Bermuda | 0.9 | ||
Brazil | 0.8 | ||
China | 1.8 | ||
Israel | 1.0 | ||
Singapore | 1.5 | ||
United States | 94.0 | ||
TOTAL | 100.0 | % | |
72
Table of Contents
| WASATCH STRATEGIC INCOME FUND (WASIX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| COMMON STOCKS 73.3% | |||||
| Asset Management & Custody Banks 10.0% | |||||
| 18,891 | Apollo Investment Corp. | $ | 180,409 | ||
| 50,075 | Ares Capital Corp. | 551,826 | |||
| 64,440 | Fifth Street Finance Corp. | 704,329 | |||
| 9,115 | SEI Investments Co. | 179,383 | |||
| 19,600 | Solar Capital, LLC** *** † | 162,680 | |||
| 1,778,627 | |||||
| Computer Hardware 2.0% | |||||
| 2,900 | International Business Machines Corp. | 346,869 | |||
| Data Processing & Outsourced Services 5.6% | |||||
| 8,100 | Cia Brasileira de Meios de Pagamentos (Brazil) | 80,576 | |||
| 18,660 | Paychex, Inc. | 542,073 | |||
| 23,600 | Redecard S.A. (Brazil) | 363,899 | |||
| 986,548 | |||||
| Diversified Banks 4.7% | |||||
| 74,932 | Bank of East Asia Ltd. (Hong Kong) | 270,720 | |||
| 48,160 | Bank of N.T. Butterfield & Son Ltd. (Bermuda) | 240,800 | |||
| 16,164 | Itau Unibanco Holding S.A. ADR (Brazil) | 325,705 | |||
| 837,225 | |||||
| Diversified REITs 1.0% | |||||
| 42,000 | CapLease, Inc. | 169,260 | |||
| 17,279 | Star Asia Financial Ltd.* † | 15,551 | |||
| 184,811 | |||||
| Diversified Support Services 1.1% | |||||
| 7,585 | Ritchie Bros. Auctioneers, Inc. (Canada) | 186,136 | |||
| Fertilizers & Agricultural Chemicals 1.4% | |||||
| 3,250 | Monsanto Co. | 251,550 | |||
| Gold 0.0% | |||||
| 95,680 | Redcorp Ventures Ltd. PIPE* *** † (Canada) | — | |||
| Health Care Services 1.5% | |||||
| 5,900 | Chemed Corp. | 258,951 | |||
| Hypermarkets & Super Centers 2.0% | |||||
| 7,255 | Wal-Mart Stores, Inc. | 356,148 | |||
| Industrial Machinery 2.3% | |||||
| 42,700 | Weg S.A. (Brazil) | 407,852 | |||
| Leisure Products 1.8% | |||||
| 14,300 | Pool Corp.††† | 317,746 | |||
| Life Sciences Tools & Services 3.9% | |||||
| 7,100 | Eurofins Scientific (France) | 333,175 | |||
| 16,445 | Pharmaceutical Product Development, Inc. | 360,803 | |||
| 693,978 | |||||
| Mortgage REITs 14.5% | |||||
| 61,990 | Capstead Mortgage Corp. | 862,281 | |||
| 135,700 | MFA Financial, Inc. | 1,080,172 | |||
| 39,940 | Redwood Trust, Inc. | 619,070 | |||
| 2,561,523 | |||||
| Multi-Line Insurance 2.0% | |||||
| 10,255 | Loews Corp. | 351,234 | |||
| Oil & Gas Exploration & Production 1.8% | |||||
| 2,810 | Range Resources Corp.††† | 138,702 | |||
| 3,500 | Ultra Petroleum Corp.* (Canada) | 171,360 | |||
| 310,062 | |||||
| Shares | Value | ||||
| Personal Products 2.9% | |||||
| 15,650 | Herbalife Ltd. | $ | 512,381 | ||
| Pharmaceuticals 5.5% | |||||
| 9,630 | Forest Laboratories, Inc.* | 283,507 | |||
| 4,095 | Johnson & Johnson | 249,344 | |||
| 8,835 | Teva Pharmaceutical Industries Ltd. ADR (Israel) | 446,698 | |||
| 979,549 | |||||
| Railroads 1.1% | |||||
| 3,330 | Union Pacific Corp. | 194,305 | |||
| Semiconductors 3.9% | |||||
| 6,470 | Linear Technology Corp.††† | 178,766 | |||
| 6,315 | Microchip Technology, Inc. | 167,348 | |||
| 31,165 | Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan) | 341,568 | |||
| 687,682 | |||||
| Trading Companies & Distributors 2.2% | |||||
| 3,800 | MSC Industrial Direct Co., Inc, Class A††† | 165,604 | |||
| 2,530 | W.W. Grainger, Inc. | 226,081 | |||
| 391,685 | |||||
| Wireless Telecommunication Services 2.1% | |||||
| 8,345 | America Movil S.A.B. de C.V., Series L ADR (Mexico) | 365,761 | |||
Total Common Stocks (cost $12,968,960) | 12,960,623 | ||||
| EXCHANGE TRADED FUNDS 2.2% | |||||
| Asset Management & Custody Banks 2.2% | |||||
| 5,576 | Direxion Daily Financial Bear 3X Shares | 115,925 | |||
| 2,310 | ProShares UltraShort 20+ Year Treasury ETF | 101,663 | |||
| 3,300 | Energy Select Sector SPDR Fund | 177,936 | |||
| 395,524 | |||||
Total Exchange Traded Funds (cost $751,857) | 395,524 | ||||
| LIMITED PARTNERSHIP INTEREST 1.9% | |||||
| Oil & Gas Storage & Transportation 1.9% | |||||
| 9,048 | Magellan Midstream Partners L.P.** | 340,202 | |||
| Total Limited Partnership Interest (cost $221,100) | 340,202 | ||||
| ROYALTY INTEREST 0.0% | |||||
| Gold 0.0% | |||||
| 299 | Redcorp Ventures Ltd. — NSR Interest* *** † (Canada) | — | |||
| Total Royalty Interest (cost $0) | — | ||||
73
Table of Contents
| WASATCH STRATEGIC INCOME FUND (WASIX) — Schedule of Investments (continued) | SEPTEMBER 30, 2009 | |
| Principal Amount | Value | ||||
| CORPORATE BONDS 2.2% | |||||
| Gold 0.1% | |||||
| $255,698 | Redcorp Ventures Ltd., 13.00%, 7/11/12*** † (Canada) | $ | 23,906 | ||
| Integrated Telecommunication Services 2.1% | |||||
| 400,000 | Broadview Networks Holdings, Inc., 11.375%, 9/1/12 | 366,500 | |||
Total Corporate Bonds (cost $648,512) | 390,406 | ||||
| Shares | Value | ||||
| WARRANTS 0.0% | |||||
| Gold 0.0% | |||||
| 209,599 | Redcorp Ventures Ltd. expiring 11/11/21* *** † (Canada) | $ | — | ||
| Total Warrants (cost $0) | — | ||||
| Number of Contracts | Value | ||||
| PUT OPTIONS PURCHASED 0.4% | |||||
| Specialized Finance 0.4% | |||||
| 200 | S&P 500 Index, expiring 12/19/09, exercise price $800 | $ | 76,000 | ||
| Total Put Options Purchased (premium $222,200) | 76,000 | ||||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 17.8% | |||||
| Repurchase Agreement 17.8% | |||||
| $3,149,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $3,245,000 of United States Treasury Notes 2.625% due 2/29/16; value: $3,212,550; repurchase proceeds: $3,149,001††† (cost $3,149,000) | $ | 3,149,000 | ||
Total Short-Term Investments (cost $3,149,000) | 3,149,000 | ||||
Total Investments (cost $17,961,629) 97.8% | 17,311,755 | ||||
| Other Assets less Liabilities 2.2% | 398,292 | ||||
| NET ASSETS 100.0% | $ | 17,710,047 | |||
| Number of Contracts | Value | ||||
| CALL OPTIONS WRITTEN 0.1% | |||||
| Leisure Products 0.0% | |||||
| 143 | Pool Corp., expiring 10/17/09, exercise price $25 | $ | 715 | ||
| Number of Contracts | Value | ||||
| Oil & Gas Exploration & Production 0.0% | |||||
| 28 | Range Resources Corp., expiring 10/17/09, exercise price $52.50 | $ | 1,540 | ||
| Semiconductors 0.1% | |||||
| 64 | Linear Technology Corp., expiring 10/17/09, exercise price $27 | 8,000 | |||
| Trading Companies & Distributors 0.0% | |||||
| 38 | MSC Industrial Direct Co., expiring 10/17/09, exercise price $45 | 2,090 | |||
Total Call Options Written (premium $20,877) | 12,345 | ||||
| Shares | Value | ||||
| SECURITIES SOLD SHORT 0.5% | |||||
| Mortgage REITs 0.0% | |||||
| 6,000 | NovaStar Financial, Inc. | $ | 6,900 | ||
| Regional Banks 0.3% | |||||
| 3,310 | Heartland Financial USA, Inc. | 48,823 | |||
| Thrifts & Mortgage Finance 0.2% | |||||
| 8,322 | First Federal Bancshares of Arkansas, Inc. | 32,206 | |||
| Total Securities Sold Short (proceeds $460,105) | 87,929 | ||||
*Non-income producing.
**Common units.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
†††All or a portion of this security has been designated as collateral for short sales and call options written (see Note 2).
ADR American Depositary Receipt.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. | |||||
At September 30, 2009, Wasatch Strategic Income Fund’s investments, excluding short-term investments, written options, and securities sold short, were in the following countries:
| Country | % | ||
Bermuda | 1.7 | ||
Brazil | 8.4 | ||
Canada | 1.5 | ||
France | 2.4 | ||
Hong Kong | 1.9 | ||
Israel | 3.2 | ||
Mexico | 2.6 | ||
Taiwan | 2.4 | ||
United States | 75.9 | ||
TOTAL | 100.0 | % | |
74
Table of Contents
| WASATCH ULTRA GROWTH FUND (WAMCX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Shares | Value | ||||
| COMMON STOCKS 93.5% | |||||
| Air Freight & Logistics 1.0% | |||||
| 2,585,000 | Aramex PJSC* (United Arab Emirates) | $ | 1,245,715 | ||
| Aluminum 0.6% | |||||
| 1,164,000 | Midas Holdings Ltd. (Singapore) | 706,858 | |||
| Apparel Retail 1.0% | |||||
| 69,935 | Zumiez, Inc.* | 1,147,633 | |||
| Apparel, Accessories & Luxury Goods 1.6% | |||||
| 784,000 | Ports Design Ltd. (China) | 1,958,470 | |||
| Application Software 5.6% | |||||
| 17,055 | Concur Technologies, Inc.* | 678,107 | |||
| 20,845 | FactSet Research Systems, Inc. | 1,380,773 | |||
| 86,841 | Interactive Intelligence, Inc.* | 1,659,532 | |||
| 83,625 | Tyler Technologies, Inc.* | 1,429,151 | |||
| 58,110 | Ultimate Software Group, Inc.* | 1,668,919 | |||
| 6,816,482 | |||||
| Asset Management & Custody Banks 1.7% | |||||
| 58,253 | Westwood Holdings Group, Inc. | 2,021,379 | |||
| Automotive Retail 1.8% | |||||
| 61,395 | O’Reilly Automotive, Inc.* | 2,218,815 | |||
| Biotechnology 0.4% | |||||
| 46,960 | Orexigen Therapeutics, Inc.* | 462,556 | |||
| Communications Equipment 5.0% | |||||
| 74,740 | F5 Networks, Inc.* | 2,961,946 | |||
| 91,305 | Riverbed Technology, Inc.* | 2,005,058 | |||
| 43,035 | Starent Networks Corp.* | 1,093,950 | |||
| 6,060,954 | |||||
| Construction & Engineering 1.3% | |||||
| 63,000 | MYR Group, Inc.* | 1,328,670 | |||
| 13,685 | Orion Marine Group, Inc.* | 281,090 | |||
| 1,609,760 | |||||
| Construction & Farm Machinery & Heavy Trucks 1.0% | |||||
| 34,907 | Bucyrus International, Inc., Class A††† | 1,243,387 | |||
| Consumer Finance 0.4% | |||||
| 30,320 | First Cash Financial Services, Inc.* | 519,382 | |||
| Data Processing & Outsourced Services 2.6% | |||||
| 52,000 | Cia Brasileira de Meios de Pagamentos (Brazil) | 517,278 | |||
| 24,915 | NeuStar, Inc., Class A* | 563,079 | |||
| 167,175 | Wirecard AG (Germany) | 1,992,423 | |||
| 3,072,780 | |||||
| Distributors 1.7% | |||||
| 113,220 | LKQ Corp.* | 2,099,099 | |||
| Diversified Banks 3.4% | |||||
| 63,000 | Axis Bank Ltd. (India) | 1,290,187 | |||
| 45,210 | HDFC Bank Ltd. (India) | 1,551,172 | |||
| 10,951 | HDFC Bank Ltd. ADR (India) | 1,296,270 | |||
| 4,137,629 | |||||
| Diversified Support Services 1.6% | |||||
| 57,140 | Copart, Inc.* | 1,897,619 | |||
| Education Services 1.5% | |||||
| 26,545 | Capella Education Co.* | 1,787,540 | |||
| Shares | Value | ||||
| Environmental & Facilities Services 2.3% | |||||
| 60,684 | Heritage-Crystal Clean, Inc.* | $ | 773,721 | ||
| 57,950 | Team, Inc.* | 982,253 | |||
| 36,600 | Tetra Tech, Inc.* | 970,998 | |||
| 2,726,972 | |||||
| Footwear 0.4% | |||||
| 3,375,860 | China Hongxing Sports Ltd. (China) | 503,520 | |||
| General Merchandise Stores 1.5% | |||||
| 37,040 | Dollar Tree, Inc.* | 1,803,107 | |||
| Health Care Equipment 4.1% | |||||
| 61,075 | Abaxis, Inc.* | 1,633,756 | |||
| 203,255 | Cardica, Inc.* ††† | 306,915 | |||
| 330,000 | Cardica, Inc. PIPE* *** † | 438,504 | |||
| 35,474 | Cardiovascular Systems, Inc.* | 257,896 | |||
| 56,445 | DexCom, Inc.* | 447,609 | |||
| 21,750 | DiaSorin S.p.A (Italy) | 732,441 | |||
| 24,681 | NuVasive, Inc.* | 1,030,679 | |||
| 1,080,146 | Zonare Medical Systems, Inc.* *** † | 129,618 | |||
| 4,977,418 | |||||
| Health Care Facilities 3.4% | |||||
| 75,970 | Emeritus Corp.* | 1,667,542 | |||
| 92,715 | VCA Antech, Inc.* | 2,493,106 | |||
| 4,160,648 | |||||
| Health Care Services 2.4% | |||||
| 36,120 | Bio-Reference Laboratories, Inc.* | 1,242,528 | |||
| 234,845 | Clarient, Inc.* | 988,697 | |||
| 18,180 | Genoptix, Inc.* | 632,300 | |||
| 2,863,525 | |||||
| Health Care Supplies 1.9% | |||||
| 77,800 | Abcam plc (United Kingdom) | 1,082,197 | |||
| 367,205 | Shandong Weigao Group Medical Polymer Co. Ltd., Class H (China) | 1,212,953 | |||
| 2,295,150 | |||||
| Health Care Technology 1.5% | |||||
| 15,130 | athenahealth, Inc.* | 580,538 | |||
| 30,050 | Computer Programs & Systems, Inc. | 1,244,370 | |||
| 253,064 | Transoma Medical, Inc.,* *** † | 2,531 | |||
| 1,827,439 | |||||
| Home Entertainment Software 0.3% | |||||
| 31,600 | Shanda Games Ltd. ADR* (China) | 369,720 | |||
| Industrial Machinery 0.5% | |||||
| 17,890 | Duoyuan Global Water, Inc. ADR* (China) | 595,737 | |||
| Integrated Telecommunication Services 1.0% | |||||
| 75,195 | Cbeyond, Inc.* | 1,212,895 | |||
| Internet Software & Services 2.0% | |||||
| 27,020 | Constant Contact, Inc.* | 520,135 | |||
| 56,225 | DealerTrack Holdings, Inc.* | 1,063,215 | |||
| 15,710 | VistaPrint N.V.* | 797,282 | |||
| 91,388 | Xtera* *** † | 30,158 | |||
| 2,410,790 | |||||
| IT Consulting & Other Services 4.9% | |||||
| 141,316 | Cognizant Technology Solutions Corp., Class A* | 5,463,277 | |||
| 138,110 | Rolta India Ltd. (India) | 509,317 | |||
| 5,972,594 | |||||
| Leisure Facilities 1.6% | |||||
| 69,800 | Life Time Fitness, Inc.* | 1,957,890 | |||
75
Table of Contents
| WASATCH ULTRA GROWTH FUND (WAMCX) — Schedule of Investments (continued) | ||
| Shares | Value | ||||
| Life Sciences Tools & Services 2.1% | |||||
| 61,353 | ICON plc ADR* (Ireland) | $ | 1,502,535 | ||
| 15,825 | Techne Corp. | 989,854 | |||
| 2,492,389 | |||||
| Oil & Gas Equipment & Services 2.1% | |||||
| 31,825 | Dril-Quip, Inc.* | 1,579,793 | |||
| 80,185 | Pason Systems, Inc. (Canada) | 933,343 | |||
| 2,513,136 | |||||
| Oil & Gas Exploration & Production 1.6% | |||||
| 28,955 | GMX Resources, Inc.* | 454,883 | |||
| 61,820 | Petrohawk Energy Corp.* | 1,496,662 | |||
| 1,951,545 | |||||
| Packaged Foods & Meats 0.5% | |||||
| 26,000 | Glaxo SmithKline Consumer Healthcare Ltd. (India) | 625,962 | |||
| Personal Products 1.0% | |||||
| 38,445 | Herbalife Ltd. | 1,258,689 | |||
| 50,403 | Ophthonix, Inc.* *** † | 504 | |||
| 1,259,193 | |||||
| Pharmaceuticals 0.2% | |||||
| 57,562 | Alexza Pharmaceuticals, Inc.* | 129,514 | |||
| 75,769 | Alexza Pharmaceuticals, Inc.* *** † PIPE | 156,842 | |||
| 286,356 | |||||
| Publishing 1.1% | |||||
| 28,361 | Morningstar, Inc.* | 1,377,210 | |||
| Research & Consulting Services 2.7% | |||||
| 99,280 | Resources Connection, Inc.* | 1,693,717 | |||
| 63,000 | Stantec, Inc.* (Canada) | 1,581,300 | |||
| 3,275,017 | |||||
| Restaurants 0.9% | |||||
| 37,580 | Peet’s Coffee & Tea, Inc.* | 1,060,883 | |||
| Semiconductor Equipment 0.9% | |||||
| 39,922 | Tessera Technologies, Inc.* | 1,113,425 | |||
| Semiconductors 8.7% | |||||
| 31,785 | Hittite Microwave Corp.* | 1,169,052 | |||
| 27,825 | Netlogic Microsystems, Inc.* | 1,252,125 | |||
| 493,000 | O2Micro International Ltd. ADR* (China) | 2,588,250 | |||
| 94,315 | Power Integrations, Inc. | 3,143,519 | |||
| 51,950 | Silicon Laboratories, Inc.* | 2,408,402 | |||
| 10,561,348 | |||||
| Specialized Finance 3.4% | |||||
| 140,750 | MSCI, Inc., Class A* | 4,169,015 | |||
| Specialty Stores 1.2% | |||||
| 79,390 | Hibbett Sports, Inc.* | 1,447,280 | |||
| Systems Software 3.2% | |||||
| 49,095 | ArcSight, Inc.* | 1,181,717 | |||
| 80,742 | NetSuite, Inc.* | 1,235,352 | |||
| 133,500 | Opnet Technologies, Inc. | 1,459,155 | |||
| 3,876,224 | |||||
| Thrifts & Mortgage Finance 1.1% | |||||
| 82,510 | LIC Housing Finance Ltd. (India) | 1,324,397 | |||
| Trucking 2.8% | |||||
| 126,975 | Knight Transportation, Inc. | 2,130,640 | |||
| 39,965 | Old Dominion Freight Line, Inc.* | 1,216,135 | |||
| 3,346,775 | |||||
| Total Common Stocks (cost $89,022,984) | 113,363,618 | ||||
| Shares | Value | ||||
| PREFERRED STOCKS 1.2% | |||||
| Biotechnology 0.2% | |||||
| 169,492 | Nanosys, Inc., Series D Pfd.* *** † | $ | 276,272 | ||
| Health Care Services 0.0% | |||||
| 108,917 | TargetRX, Inc., Series D Pfd.* *** † | 1,089 | |||
| Health Care Technology 1.0% | |||||
| 253,064 | Data Sciences International, Inc. Series B Pfd.* *** † | 817,574 | |||
| 243,902 | TherOx, Inc., Series I Pfd.* *** † | 429,267 | |||
| 1,246,841 | |||||
| Total Preferred Stocks (cost $2,205,906) | 1,524,202 | ||||
| LIMITED PARTNERSHIP INTEREST 3.2% | |||||
| Other 3.2% | |||||
| Montagu Newhall Global Partners II-B, L.P.*** † | 3,056,369 | ||||
| Montagu Newhall Global Partners III-B, L.P.* *** † | 809,385 | ||||
| 3,865,754 | |||||
| Total Limited Partnership Interest (cost $4,539,467) | 3,865,754 | ||||
| WARRANTS 0.0% | |||||
| Health Care Equipment 0.0% | |||||
| 165,000 | Cardica, Inc., expiring 9/29/14*** † | 20,625 | |||
| 162,021 | Zonare Medical Systems, Inc., expiring 6/30/11*** † | — | |||
| 20,625 | |||||
| Pharmaceuticals 0.0% | |||||
| 68,192 | Alexza Pharmaceuticals, Inc., expiring 10/5/16*** † | 8,524 | |||
| Total Warrants (cost $29,149) | 29,149 | ||||
76
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 2.3% | ||||||
| Repurchase Agreement 2.3% | ||||||
| $2,745,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/01/09 with Fixed Income Clearing Corporation collateralized by $2,830,000 of United States Treasury Notes 2.625% due 2/29/16; value: $2,801,700; repurchase proceeds: $2,745,001††† (cost $2,745,000) | $ | 2,745,000 | |||
| Total Short-Term Investments (cost $2,745,000) | 2,745,000 | |||||
| Total Investments (cost $98,542,506) 100.2% | 121,527,723 | |||||
| Liabilities less Other Assets (0.2)% | (243,487 | ) | ||||
| NET ASSETS 100.0% | $ | 121,284,236 | ||||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
†Security purchased in a private placement transaction or under Rule 144A of the Securities Act of 1933 (see Note 9).
†††All or a portion of this security has been designated as collateral for future commitments (see Note 10).
ADR American Depositary Receipt.
PIPE Private Investment in a Public Equity.
See Notes to Financial Statements. |
| |||||
At September 30, 2009, Wasatch Ultra Growth Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Brazil | 0.4 | ||
Canada | 2.1 | ||
China | 6.1 | ||
Germany | 1.7 | ||
India | 5.6 | ||
Ireland | 1.3 | ||
Italy | 0.6 | ||
Singapore | 0.6 | ||
United Arab Emirates | 1.0 | ||
United Kingdom | 0.9 | ||
United States | 79.7 | ||
TOTAL | 100.0 | % | |
77
Table of Contents
| WASATCH-1ST SOURCE INCOME EQUITY FUND (FMIEX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 95.0% | |||||
| Advertising 1.2% | |||||
| 443,000 | Omnicom Group, Inc. | $ | 16,364,420 | ||
| Aerospace & Defense 3.2% | |||||
| 360,000 | Raytheon Co. | 17,269,200 | |||
| 310,000 | Rockwell Collins, Inc. | 15,748,000 | |||
| 195,000 | United Technologies Corp. | 11,881,350 | |||
| 44,898,550 | |||||
| Agricultural Products 1.5% | |||||
| 705,750 | Archer-Daniels-Midland Co. | 20,622,015 | |||
| Aluminum 1.3% | |||||
| 1,361,130 | Alcoa, Inc. | 17,858,025 | |||
| Asset Management & Custody Banks 1.7% | |||||
| 450,000 | Federated Investors, Inc., Class B | 11,866,500 | |||
| 410,000 | Waddell & Reed Financial, Inc., Class A | 11,664,500 | |||
| 23,531,000 | |||||
| Auto Parts & Equipment 1.5% | |||||
| 840,000 | Johnson Controls, Inc. | 21,470,400 | |||
| Coal & Consumable Fuels 0.9% | |||||
| 430,000 | Cameco Corp. (Canada) | 11,954,000 | |||
| Communications Equipment 2.7% | |||||
| 650,000 | Harris Corp. | 24,440,000 | |||
| 901,000 | Nokia OYJ ADR (Finland) | 13,172,620 | |||
| 37,612,620 | |||||
| Computer Hardware 1.6% | |||||
| 480,000 | Hewlett-Packard Co. | 22,660,800 | |||
| Construction & Engineering 2.6% | |||||
| 440,000 | Fluor Corp. | 22,374,000 | |||
| 440,000 | Shaw Group, Inc. (The)* | 14,119,600 | |||
| 36,493,600 | |||||
| Data Processing & Outsourced Services 1.7% | |||||
| 440,000 | Computer Sciences Corp.* | 23,192,400 | |||
| Diversified Chemicals 1.3% | |||||
| 556,555 | El Du Pont de Nemours and Co. | 17,887,678 | |||
| Diversified Metals & Mining 1.3% | |||||
| 1,100,000 | Anglo American plc* ADR (United Kingdom) | 17,468,000 | |||
| Drug Retail 1.5% | |||||
| 550,000 | Walgreen Co. | 20,608,500 | |||
| Electric Utilities 2.1% | |||||
| 973,000 | Duke Energy Corp. | 15,315,020 | |||
| 249,000 | FPL Group, Inc. | 13,752,270 | |||
| 29,067,290 | |||||
| Electrical Components & Equipment 1.3% | |||||
| 440,000 | Emerson Electric Co. | 17,635,200 | |||
| Environmental & Facilities Services 2.7% | |||||
| 660,000 | Republic Services, Inc. | 17,536,200 | |||
| 679,000 | Waste Management, Inc. | 20,247,780 | |||
| 37,783,980 | |||||
| Fertilizers & Agricultural Chemicals 1.9% | |||||
| 150,000 | Potash Corp. of Saskatchewan, Inc. | 13,551,000 | |||
| 277,000 | Syngenta AG ADR (Switzerland) | 12,728,150 | |||
| 26,279,150 | |||||
| Shares | Value | ||||
| Food Distributors 1.4% | |||||
| 770,000 | Sysco Corp. | $ | 19,134,500 | ||
| Food Retail 1.3% | |||||
| 1,200,000 | SUPERVALU, Inc. | 18,072,000 | |||
| Health Care Distributors 2.0% | |||||
| 460,000 | McKesson Corp. | 27,393,000 | |||
| Health Care Equipment 2.8% | |||||
| 140,000 | C. R. Bard, Inc. | 11,005,400 | |||
| 235,000 | Covidien plc | 10,166,100 | |||
| 325,000 | Zimmer Holdings, Inc.* | 17,371,250 | |||
| 38,542,750 | |||||
| Home Improvement Retail 1.2% | |||||
| 620,000 | Home Depot, Inc. | 16,516,800 | |||
| Household Products 1.4% | |||||
| 330,000 | Kimberly-Clark Corp. | 19,463,400 | |||
| Hypermarkets & Super Centers 1.1% | |||||
| 310,000 | Wal-Mart Stores, Inc. | 15,217,900 | |||
| Industrial Conglomerates 1.0% | |||||
| 850,000 | General Electric Co. | 13,957,000 | |||
| Industrial Machinery 1.3% | |||||
| 340,000 | Parker Hannifin Corp. | 17,625,600 | |||
| Insurance Brokers 0.6% | |||||
| 332,000 | Marsh & McLennan Cos. Inc. | 8,210,360 | |||
| Integrated Oil & Gas 3.9% | |||||
| 250,000 | Chevron Corp. | 17,607,500 | |||
| 390,000 | ConocoPhillips | 17,612,400 | |||
| 580,000 | Marathon Oil Corp. | 18,502,000 | |||
| 53,721,900 | |||||
| Integrated Telecommunication Services 3.4% | |||||
| 686,000 | AT&T, Inc. | 18,528,860 | |||
| 880,000 | Deutsche Telekom AG ADR (Germany) | 12,020,800 | |||
| 561,000 | Verizon Communications, Inc. | 16,981,470 | |||
| 47,531,130 | |||||
| Life & Health Insurance 0.6% | |||||
| 206,700 | MetLife, Inc., Class A | 7,869,069 | |||
| Multi-Line Insurance 1.5% | |||||
| 610,000 | Loews Corp. | 20,892,500 | |||
| Oil & Gas Drilling 1.4% | |||||
| 440,350 | ENSCO International, Inc. | 18,732,489 | |||
| Oil & Gas Equipment & Services 1.5% | |||||
| 355,000 | Schlumberger Ltd. | 21,158,000 | |||
| Oil & Gas Exploration & Production 1.2% | |||||
| 270,000 | Anadarko Petroleum Corp. | 16,937,100 | |||
| Oil & Gas Storage & Transportation 2.7% | |||||
| 900,000 | Spectra Energy Corp. | 17,046,000 | |||
| 1,130,000 | Williams Cos. Inc. (The) | 20,193,100 | |||
| 37,239,100 | |||||
| Other Diversified Financial Services 3.3% | |||||
| 1,344,000 | Bank of America Corp. | 22,740,480 | |||
| 518,000 | JPMorgan Chase & Co. | 22,698,760 | |||
| 45,439,240 | |||||
78
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Shares | Value | ||||
| Packaged Foods & Meats 2.3% | |||||
| 840,000 | ConAgra Foods, Inc. | $ | 18,211,200 | ||
| 350,000 | HJ Heinz Co. | 13,912,500 | |||
| 32,123,700 | |||||
| Personal Products 1.8% | |||||
| 750,000 | Avon Products, Inc. | 25,470,000 | |||
| Pharmaceuticals 7.6% | |||||
| 385,000 | Abbott Laboratories | 19,045,950 | |||
| 440,000 | Eli Lilly and Co. | 14,533,200 | |||
| 280,000 | Johnson & Johnson | 17,049,200 | |||
| 589,000 | Merck & Co., Inc. | 18,630,070 | |||
| 450,000 | Novartis AG ADR (Switzerland) | 22,671,000 | |||
| 830,000 | Pfizer, Inc. | 13,736,500 | |||
| 105,665,920 | |||||
| Property & Casualty Insurance 4.1% | |||||
| 737,860 | Allstate Corp. (The) | 22,593,273 | |||
| 1,375,000 | Old Republic International Corp. | 16,747,500 | |||
| 365,000 | Travelers Cos. Inc. (The) | 17,968,950 | |||
| 57,309,723 | |||||
| Railroads 0.6% | |||||
| 196,000 | Norfolk Southern Corp. | 8,449,560 | |||
| Semiconductors 3.0% | |||||
| 1,110,000 | Intel Corp. | 21,722,700 | |||
| 818,000 | Texas Instruments, Inc. | 19,378,420 | |||
| 41,101,120 | |||||
| Soft Drinks 1.3% | |||||
| 300,000 | PepsiCo, Inc. | 17,598,000 | |||
| Specialized Consumer Services 0.7% | |||||
| 500,000 | H&R Block, Inc. | 9,190,000 | |||
| Specialized Finance 0.9% | |||||
| 421,175 | NYSE Euronext | 12,167,746 | |||
| Steel 2.4% | |||||
| 366,500 | Nucor Corp. | 17,229,165 | |||
| 372,300 | United States Steel Corp. | 16,518,951 | |||
| 33,748,116 | |||||
| Systems Software 1.5% | |||||
| 800,000 | Microsoft Corp. | 20,712,000 | |||
| Technology Distributors 1.5% | |||||
| 780,000 | Avnet, Inc.* | 20,256,600 | |||
| Water Utilities 0.5% | |||||
| 360,355 | American Water Works Co., Inc. | 7,185,479 | |||
| Wireless Telecommunication Services 1.2% | |||||
| 350,000 | China Mobile Ltd. ADR (China) | 17,188,500 | |||
| Total Common Stocks (cost $1,214,385,180) | 1,315,207,930 | ||||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 5.8% | ||||||
| Repurchase Agreement 5.8% | ||||||
| $80,694,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $83,140,000 of United States Treasury Notes 1.75% due 1/31/14; value: $82,308,600; repurchase proceeds: $80,694,022 (cost $80,694,000) | $ | 80,694,000 | |||
| Total Short-Term Investments (cost $80,694,000) | 80,694,000 | |||||
| Total Investments (cost $1,295,079,180) 100.8% | 1,395,901,930 | |||||
| Liabilities less Other Assets (0.8)% | (10,394,214 | ) | ||||
| NET ASSETS 100.0% | $ | 1,385,507,716 | ||||
*Non-income producing.
ADR American Depositary Receipt.
See Notes to Financial Statements. |
| |||||
At September 30, 2009, Wasatch-1st Source Income Equity Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Canada | 0.9 | ||
China | 1.3 | ||
Finland | 1.0 | ||
Germany | 0.9 | ||
Switzerland | 2.7 | ||
United Kingdom | 1.3 | ||
United States | 91.9 | ||
TOTAL | 100.0 | % | |
79
Table of Contents
| WASATCH-1ST SOURCE LONG/SHORT FUND (FMLSX) — Schedule of Investments | ||
| Shares | Value | ||||
| COMMON STOCKS 75.7% | |||||
| Application Software 0.9% | |||||
| 140,000 | TIBCO Software, Inc.* | $ | 1,328,600 | ||
| Coal & Consumable Fuels 1.5% | |||||
| 60,000 | Alpha Natural Resources, Inc.* ††† | 2,106,000 | |||
| Communications Equipment 1.9% | |||||
| 75,000 | Harris Corp. | 2,820,000 | |||
| Construction & Engineering 1.5% | |||||
| 120,000 | Chicago Bridge & Iron Co. N.V.††† (Netherlands) | 2,241,600 | |||
| Construction & Farm Machinery & Heavy Trucks 0.6% | |||||
| 70,000 | Titan Machinery, Inc.* | 876,400 | |||
| Electrical Components & Equipment 1.0% | |||||
| 50,000 | Thomas & Betts Corp.* | 1,504,000 | |||
| Environmental & Facilities Services 4.6% | |||||
| 130,000 | Republic Services, Inc .††† | 3,454,100 | |||
| 110,000 | Waste Management, Inc. | 3,280,200 | |||
| 6,734,300 | |||||
| Food Distributors 1.7% | |||||
| 100,000 | Sysco Corp .††† | 2,485,000 | |||
| Gas Utilities 1.8% | |||||
| 60,000 | Energen Corp. ††† | 2,586,000 | |||
| Gold 1.0% | |||||
| 35,000 | Newmont Mining Corp. ††† | 1,540,700 | |||
| Health Care Distributors 2.0% | |||||
| 40,000 | Cardinal Health, Inc. | 1,072,000 | |||
| 30,000 | McKesson Corp. | 1,786,500 | |||
| 2,858,500 | |||||
| Health Care Equipment 5.1% | |||||
| 87,000 | Medtronic, Inc. | 3,201,600 | |||
| 281,926 | Symmetry Medical, Inc.* | 2,923,573 | |||
| 64,000 | Zoll Medical Corp.* | 1,377,280 | |||
| 7,502,453 | |||||
| Health Care Technology 1.4% | |||||
| 27,200 | Cerner Corp.* ††† | 2,034,560 | |||
| Home Entertainment Software 2.6% | |||||
| 200,000 | Electronic Arts, Inc. (EA)* | 3,810,000 | |||
| Hypermarkets & Super Centers 4.2% | |||||
| 125,000 | Wal-Mart Stores, Inc .††† | 6,136,250 | |||
| Insurance Brokers 1.3% | |||||
| 75,000 | Marsh & McLennan Cos. Inc. | 1,854,750 | |||
| Integrated Oil & Gas 2.3% | |||||
| 105,000 | Marathon Oil Corp .††† | 3,349,500 | |||
| Integrated Telecommunication Services 2.8% | |||||
| 80,000 | AT&T, Inc. | 2,160,800 | |||
| 65,000 | Verizon Communications, Inc .††† | 1,967,550 | |||
| 4,128,350 | |||||
| Internet Software & Services 4.3% | |||||
| 200,000 | Akamai Technologies, Inc.* | 3,936,000 | |||
| 100,000 | eBay, Inc.* ††† | 2,361,000 | |||
| 6,297,000 | |||||
| Shares | Value | ||||
| Leisure Products 2.7% | |||||
| 140,000 | Hasbro, Inc .††† | $ | 3,885,000 | ||
| Multi-Line Insurance 4.7% | |||||
| 200,000 | Loews Corp .††† | 6,850,000 | |||
| Oil & Gas Drilling 7.6% | |||||
| 100,000 | ENSCO International, Inc.††† | 4,254,000 | |||
| 90,000 | Noble Corp. | 3,416,400 | |||
| 40,000 | Transocean Ltd.* | 3,421,200 | |||
| 11,091,600 | |||||
| Oil & Gas Equipment & Services 1.2% | |||||
| 1,100,000 | Boots & Coots, Inc.* | 1,771,000 | |||
| Oil & Gas Storage & Transportation 0.9% | |||||
| 70,000 | Spectra Energy Corp .††† | 1,325,800 | |||
| Personal Products 0.9% | |||||
| 40,000 | Avon Products, Inc .††† | 1,358,400 | |||
| Pharmaceuticals 3.2% | |||||
| 45,000 | Johnson & Johnson | 2,740,050 | |||
| 115,000 | Pfizer, Inc .††† | 1,903,250 | |||
| 4,643,300 | |||||
| Property & Casualty Insurance 4.2% | |||||
| 120,000 | Allstate Corp. (The) | 3,674,400 | |||
| 100,000 | CNA Financial Corp.* ††† | 2,414,000 | |||
| 6,088,400 | |||||
| Restaurants 1.9% | |||||
| 50,000 | McDonald’s Corp. | 2,853,500 | |||
| Semiconductors 1.3% | |||||
| 100,000 | Intel Corp.††† | 1,957,000 | |||
| Steel 2.8% | |||||
| 60,000 | Nucor Corp.††† | 2,820,600 | |||
| 80,000 | Steel Dynamics, Inc.††† | 1,227,200 | |||
| 4,047,800 | |||||
| Systems Software 1.8% | |||||
| 125,000 | Oracle Corp. | 2,605,000 | |||
Total Common Stocks (cost $94,626,570) | 110,670,763 | ||||
| PREFERRED STOCKS 4.4% | |||||
| Cable & Satellite 1.2% | |||||
| 70,000 | Comcast Corp., 7.00%, Series B Pfd.* | 1,748,600 | |||
| Retail REITs 0.9% | |||||
| 22,000 | Simon Property Group, Inc., 8.375%, Series J Pfd. | 1,287,000 | |||
| Specialized REITs 2.3% | |||||
| 75,000 | Public Storage, 6.625%, Series M Pfd. | 1,707,750 | |||
| 69,600 | Public Storage, 7.25%, Series K Pfd. | 1,733,736 | |||
| 3,441,486 | |||||
Total Preferred Stocks (cost $5,425,487) | 6,477,086 | ||||
| LIMITED PARTNERSHIP INTEREST 1.6% | |||||
| Oil & Gas Storage & Transportation 1.6% | |||||
| 50,000 | Plains All American Pipeline L.P.** ††† | 2,314,500 | |||
| Total Limited Partnership Interest (cost $1,925,300) | 2,314,500 | ||||
80
Table of Contents
| SEPTEMBER 30, 2009 | ||
| Principal Amount | Value | |||||
| SHORT-TERM INVESTMENTS 21.5% | ||||||
| Repurchase Agreement 21.5% | ||||||
| $31,385,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $29,640,000 of United States Treasury Notes 4.00% due 2/15/15; value: $32,017,128; repurchase proceeds: $31,385,009 ††† (cost $31,385,000) | $ | 31,385,000 | |||
Total Short-Term Investments (cost $31,385,000) | 31,385,000 | |||||
Total Investments (cost $133,362,357) 103.2% | 150,847,349 | |||||
| Liabilities less Other Assets (3.2)% | (4,720,365 | ) | ||||
| NET ASSETS 100.0% | $ | 146,126,984 | ||||
| Number of Contracts | Value | |||||
| CALL OPTIONS WRITTEN 1.1% | ||||||
| Coal & Consumable Fuels 0.1% | ||||||
| 600 | Alpha Natural Resources, Inc., expiring 12/19/09, exercise price $37 | $ | 192,000 | |||
| Construction & Engineering 0.0% | ||||||
| 40 | Chicago Bridge & Iron Co. N.V., expiring 11/21/09, exercise price $17.50 | 7,600 | ||||
| Gas Utilities 0.1% | ||||||
| 600 | Energen Corp., expiring 10/17/09, exercise price $40 | 192,000 | ||||
| Gold 0.1% | ||||||
| 350 | Newmont Mining Corp., expiring 12/19/09, exercise price $46 | 100,800 | ||||
| Health Care Technology 0.1% | ||||||
| 272 | Cerner Corp., expiring 11/21/09, exercise price $72.50 | 138,720 | ||||
| Oil & Gas Drilling 0.4% | ||||||
| 1,000 | ENSCO International, Inc., expiring 12/19/09, exercise price $40 |
| 480,000 |
| ||
| Semiconductors 0.1% | ||||||
| 1,000 | Intel Corp., expiring 10/17/09, exercise price $18 | 170,000 | ||||
| Steel 0.2% | ||||||
| 600 | Nucor Corp., expiring 1/16/10, exercise price $48 | 213,000 | ||||
| 800 | Steel Dynamics, Inc., expiring 11/21/09, exercise price $17.50 | 48,000 | ||||
| 261,000 | ||||||
Total Call Options Written (premium $1,604,392) | 1,542,120 | |||||
| Shares | Value | ||||
| SECURITIES SOLD SHORT 15.3% | |||||
| Application Software 1.2% | |||||
| 35,000 | SAP AG ADR (Germany) | $ | 1,710,450 | ||
| Communications Equipment 1.0% | |||||
| 32,000 | QUALCOMM, Inc. | 1,439,360 | |||
| Diversified Banks 0.8% | |||||
| 40,000 | Comerica, Inc. | 1,186,800 | |||
| Homebuilding 0.5% | |||||
| 35,000 | Toll Brothers, Inc. | 683,900 | |||
| Integrated Oil & Gas 1.9% | |||||
| 40,000 | Exxon Mobil Corp. | 2,744,400 | |||
| Metal & Glass Containers 1.1% | |||||
| 60,000 | Pactiv Corp. | 1,563,000 | |||
| Motorcycle Manufacturers 0.6% | |||||
| 40,000 | Harley-Davidson, Inc. | 920,000 | |||
| Restaurants 0.9% | |||||
| 85,000 | Brinker International, Inc. | 1,337,050 | |||
| Retail REITs 4.0% | |||||
| 20,000 | Federal Realty Investment Trust | 1,227,400 | |||
| 25,000 | Regency Centers Corp. | 926,250 | |||
| 27,013 | Simon Property Group, Inc. | 1,875,513 | |||
| 50,000 | Tanger Factory Outlet Centers, Inc. | 1,867,000 | |||
| 5,896,163 | |||||
| Specialized Finance 0.9% | |||||
| 65,000 | Moody’s Corp. | 1,329,900 | |||
| Specialized REITs 2.4% | |||||
| 75,000 | Plum Creek Timber Co., Inc. | 2,298,000 | |||
| 30,000 | Rayonier, Inc. | 1,227,300 | |||
| 3,525,300 | |||||
Total Securities Sold Short (proceeds $20,513,050) | 22,336,323 | ||||
*Non-income producing.
**Common units.
†††All or a portion of this security has been designated as collateral for short sales and call options written (see Note 2).
ADR American Depositary Receipt.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. | |||||
At September 30, 2009, Wasatch-1st Source Long/Short Fund’s investments, excluding short-term investments, written options and securities sold short, were in the following countries:
| Country | % | ||
Netherlands | 1.9 | ||
United States | 98.1 | ||
TOTAL | 100.0 | % | |
81
Table of Contents
| WASATCH-HOISINGTON U.S. TREASURY FUND (WHOSX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Principal Amount | Value | ||||
| U.S. GOVERNMENT OBLIGATIONS 99.1% | |||||
| $11,865,000 | U.S. Treasury Bond, 4.25%, 5/15/39 | $ | 12,274,710 | ||
| 1,400,000 | U.S. Treasury Bond, 4.375%, 2/15/38 | 1,474,813 | |||
| 16,300,000 | U.S. Treasury Bond, 4.50%, 2/15/36 | 17,507,211 | |||
| 10,000,000 | U.S. Treasury Bond, 4.50%, 5/15/38 | 10,760,940 | |||
| 4,500,000 | U.S. Treasury Bond, 4.50%, 8/15/39 | 4,851,562 | |||
| 23,800,000 | U.S. Treasury Bond, 4.75%, 2/15/37 | 26,555,588 | |||
| 4,520,000 | U.S. Treasury Bond, 5.25%, 2/15/29 | 5,246,730 | |||
| 3,000,000 | U.S. Treasury Bond, 5.375%, 2/15/31 | 3,564,375 | |||
| 90,000,000 | U.S. Treasury Strip, principal only, 11/15/27 | 41,829,570 | |||
| 71,837,000 | U.S. Treasury Strip, principal only, 2/15/37 | 23,350,401 | |||
| 18,101,000 | U.S. Treasury Strip, principal only, 5/15/39 | 5,387,926 | |||
| Total U.S. Government Obligations (cost $143,459,574) | 152,803,826 | ||||
| SHORT-TERM INVESTMENTS 0.6% | |||||
| Repurchase Agreement 0.6% | |||||
| 879,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/1/09 with Fixed Income Clearing Corporation collateralized by $910,000 of United States Treasury Notes 2.625% due 2/29/16; value: $900,900; repurchase proceeds: $879,000 (cost $879,000) | 879,000 | |||
Total Short-Term Investments (cost $879,000) | 879,000 | ||||
| Total Investments (cost $144,338,574) 99.7% | 153,682,826 | ||||
| Other Assets less Liabilities 0.3% | 415,719 | ||||
| NET ASSETS 100.0% | $ | 154,098,545 | |||
| See Notes to Financial Statements. | |||||
82
Table of Contents
| WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Schedule of Investments | SEPTEMBER 30, 2009 | |
| Principal Amount | Value | ||||
| ASSET BACKED SECURITIES 3.2% | |||||
| $600,000 | Capital One Multi-Asset Execution Trust, 4.70%, 6/15/15, Series 2005-A7, Class A7 | $ | 638,755 | ||
| 1,500,000 | Citibank Credit Card Issuance Trust, 5.45%, 5/10/13, Series 2006-A4, Class A4 | 1,595,626 | |||
| 650,000 | MBNA Credit Card Master Note Trust, 4.10%, 10/15/12, Series 2005-A3, Class A3 | 663,525 | |||
| 750,000 | World Financial Network Credit Card Master Note Trust, 4.60%, 9/15/15, Series 2009-A, Class A | 771,646 | |||
| Total Asset Backed Securities (cost $3,525,233) | 3,669,552 | ||||
| COLLATERALIZED MORTGAGE OBLIGATIONS 28.7% | |||||
| 409,771 | ABN Amro Mortgage Corp., 5.50%, 2/25/18, Series 2003-13, Class A2 | 412,467 | |||
| 46,690 | Banc of America Mortgage Securities, Inc., 4.831343%, 2/25/33, Series 2003-A, Class 3A1^^^ | 41,406 | |||
| 250,000 | Bank of America Commercial Mortgage, Inc., 5.141243%, 11/10/42, Series 2005-1, Class A4^^^ | 250,859 | |||
| 390,000 | Bear Stearns Commerical Mortgage Securities, 4.735%, 9/11/42, Series 2005- PWR9, Class A2 | 392,061 | |||
| 536,558 | Citicorp Mortgage Securities, Inc., 5.50%, 2/25/26, Series 2006-1, Class 5A1 | 497,111 | |||
| 497,481 | Countrywide Home Loans, 4.50%, 8/25/19, Series 2004-J7, Class 2A1 | 469,401 | |||
| 114,967 | Credit Suisse First Boston Mortgage Securities Corp., 4.302%, 7/15/36, Series 2004-C3, Class A3 | 114,750 | |||
| 955,737 | Federal Home Loan Bank, 4.75%, 10/25/10, Class H | 989,188 | |||
| 165,138 | Federal Home Loan Mortgage Corp., 3.722%, 5/1/31, Series 847292^^^ | 168,715 | |||
| 58,063 | Federal Home Loan Mortgage Corp., 3.954%, 8/1/33, Series 847281^^^ | 60,222 | |||
| 295,126 | Federal Home Loan Mortgage Corp., 4.00%, 12/15/11, Series 2892, Class UJ | 298,442 | |||
| 238,780 | Federal Home Loan Mortgage Corp., 4.00%, 12/15/13, Series 2584, Class LE | 244,537 | |||
| 1,046,520 | Federal Home Loan Mortgage Corp., 4.00%, 12/15/16, Series 2672, Class NF, | 1,083,067 | |||
| 133,536 | Federal Home Loan Mortgage Corp., 4.453%, 12/1/32, Series 847527^^^ | 136,088 | |||
| 518,818 | Federal Home Loan Mortgage Corp., 4.50%, 12/15/13, Series 2717, Class HP | 542,727 | |||
| 464,675 | Federal Home Loan Mortgage Corp., 4.50%, 12/15/13, Series 2723, Class AT | 472,543 | |||
| 173,426 | Federal Home Loan Mortgage Corp., 4.50%, 6/15/15, Series 2622, Class PC | 176,455 | |||
| 524,693 | Federal Home Loan Mortgage Corp., 4.50%, 7/15/15, Series 2864, Class CV | 545,242 | |||
| 915,502 | Federal Home Loan Mortgage Corp., 4.50%, 12/01/18, Pool G11657 | 967,097 | |||
| 187,101 | Federal Home Loan Mortgage Corp., 5.00%, 12/1/09, Series M80784 | 189,041 | |||
| 319,235 | Federal Home Loan Mortgage Corp., 5.00%, 8/1/12, Series M80984 | 328,236 | |||
| 265,631 | Federal Home Loan Mortgage Corp., 5.00%, 2/15/16, Series 2541, Class JB | 269,385 | |||
| 350,150 | Federal Home Loan Mortgage Corp., 5.00%, 5/15/16, Series R007, Class AL | 360,038 | |||
| 463,153 | Federal Home Loan Mortgage Corp., 5.00%, 2/15/23, Series 2960, Class KP | 481,885 | |||
| Principal Amount | Value | ||||
| $218,588 | Federal Home Loan Mortgage Corp., 5.125%, 12/15/13, Series 3137, Class PJ | $ | 219,801 | ||
| 415,253 | Federal Home Loan Mortgage Corp., 5.125%, 6/15/18, Series R016, Class AM | 433,550 | |||
| 412,294 | Federal Home Loan Mortgage Corp., 5.50%, 10/15/14, Series R014, Class AL | 422,020 | |||
| 592,187 | Federal Home Loan Mortgage Corp., 5.50%, 5/15/15, Series 2808, Class VA | 637,468 | |||
| 2,247,545 | Federal Home Loan Mortgage Corp., 5.50%, 12/15/19, Series R010, Class AB | 2,344,115 | |||
| 278,974 | Federal Home Loan Mortgage Corp., 5.50%, 10/1/25, Series C90925 | 295,491 | |||
| 629,143 | Federal Home Loan Mortgage Corp., 5.50%, 8/1/29, Series C46102 | 662,796 | |||
| 227,769 | Federal Home Loan Mortgage Corp., 5.744%, 11/1/35, Series 1M0010^^^ | 240,562 | |||
| 560,240 | Federal Home Loan Mortgage Corp., 5.875%, 5/15/16, Series R007, Class AC | 578,078 | |||
| 733,491 | Federal Home Loan Mortgage Corp., 6.00%, 2/15/27, Series 3164, Class NA | 753,413 | |||
| 18,209 | Federal National Mortgage Assoc., 3.35%, 10/1/32, Series 659657^^^ | 18,525 | |||
| 325,356 | Federal National Mortgage Assoc., 3.728%, 11/1/34, Series 782320^^^ | 338,251 | |||
| 898,048 | Federal National Mortgage Assoc., 3.875%, 1/25/39 | 921,428 | |||
| 258,146 | Federal National Mortgage Assoc., 4.00%, 10/1/10, Series 254955 | 260,223 | |||
| 743,487 | Federal National Mortgage Assoc., 4.00%, 10/25/32, Series 2003-28, Class GA | 761,939 | |||
| 379,408 | Federal National Mortgage Assoc., 4.013%, 1/1/35, Series 825245^^^ | 385,112 | |||
| 396,795 | Federal National Mortgage Assoc., 4.25%, 9/25/22, Series 2003-17, Class ED | 410,641 | |||
| 836,477 | Federal National Mortgage Assoc., 4.50%, 1/1/13 | 860,826 | |||
| 849,070 | Federal National Mortgage Assoc., 4.50%, 5/01/19, Series 725445 | 894,268 | |||
| 842,140 | Federal National Mortgage Assoc.., 4.50%, 7/1/19 | 886,970 | |||
| 630,853 | Federal National Mortgage Assoc., 4.50%, 6/25/29 | 644,610 | |||
| 1,301,800 | Federal National Mortgage Assoc., 5.00%, 7/25/23, Series 2005-4, Class VG | 1,373,447 | |||
| 250,000 | Federal National Mortgage Assoc., 5.50%, 5/25/23, Series 2003-42, Class EK | 267,373 | |||
| 207,178 | Federal National Mortgage Assoc., 5.50%, 11/25/26, Series 2007-63, Class PA | 212,667 | |||
| 276,194 | First Horizon Mortgage, Inc., 5.75%, 2/25/33, Series 2002-9, Class 1A3 | 273,021 | |||
| 988,098 | Government National Mortgage Assoc., 3.387%, 6/16/30, Series 2006-19, Class A | 1,005,473 | |||
| 559,688 | Government National Mortgage Assoc., 4.50%, 1/20/31, Series 2005-38, Class A | 577,037 | |||
| 650,000 | Government National Mortgage Assoc., 4.658%, 12/16/30, Series 2005-12, Class C | 682,958 | |||
| 322,430 | Government National Mortgage Assoc., 5.00%, 11/20/28, Series 2004-1, Class TB | 324,934 | |||
| 638,387 | Government National Mortgage Assoc., 5.00%, 12/20/29, Series 2004-101, Class MA | 664,309 | |||
| 900,000 | Government National Mortgage Assoc., 5.00%, 5/20/31, Series 2004-19, Class PD | 937,321 | |||
| 1,765,444 | Government National Mortgage Assoc., 5.00%, 9/16/31, Class A | 1,865,438 | |||
| 938,388 | Government National Mortgage Assoc., 5.00%, 4/20/33, Series 2009-8, Class LA | 983,578 | |||
| 500,000 | Government National Mortgage Assoc., 5.00%, 7/20/34, Series 2004-105, Class MC | 522,531 | |||
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| WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Schedule of Investments (continued) | ||
| Principal Amount | Value | ||||
| $499,417 | Government National Mortgage Assoc., 5.00%, 8/20/39 Pool 004513 Jumbo | $ | 514,509 | ||
| 106,950 | Impac CMB Trust, 0.67625%, 5/25/35, Series 2005-4, Class 1M1^^^ | 26,016 | |||
| 209,168 | LB-UBS Commercial Mortgage Trust, 4.187%, 8/15/29, Series 2004-C6, Class A2 | 209,199 | |||
| Total Collateralized Mortgage Obligations (cost $32,136,489) | 32,900,861 | ||||
| CORPORATE BONDS 26.1% | |||||
| Aerospace & Defense 0.2% | |||||
| 250,000 | Martin Marietta Corp., 7.375%, 4/15/13 | 285,609 | |||
| Air Freight & Logistics 0.5% | |||||
| 500,000 | United Parcel Service, Inc., 3.875%, 4/1/14 | 524,247 | |||
| Automotive Retail 0.3% | |||||
| 300,000 | AutoZone, Inc., 5.50%, 11/15/15 | 318,286 | |||
| Biotechnology 0.6% | |||||
| 300,000 | Amgen, Inc., 4.00%, 11/18/09 | 301,579 | |||
| 300,000 | Amgen, Inc., 4.85%, 11/18/14 | 324,558 | |||
| 626,137 | |||||
| Cable & Satellite 0.5% | |||||
| 550,000 | Comcast Corp., 5.30%, 1/15/14 | 588,534 | |||
| Computer Hardware 0.3% | |||||
| 300,000 | Hewlett-Packard Co., 6.50%, 7/1/12 | 335,361 | |||
| Construction & Farm Machinery & Heavy Trucks 0.2% | |||||
| 250,000 | John Deere Capital Corp., 4.90%, 9/9/13, MTN | 267,325 | |||
| Consumer Finance 0.5% | |||||
| 100,000 | American Express Co., 4.875%, 7/15/13 | 103,043 | |||
| 400,000 | American Express Credit Corp., 5.875%, 5/2/13 MTN | 424,109 | |||
| 527,152 | |||||
| Distillers & Vintners 0.5% | |||||
| 504,000 | Diageo Capital plc, 7.375%, 1/15/14 (United Kingdom) | 584,085 | |||
| Diversified Banks 2.9% | |||||
| 500,000 | HSBC Capital Funding L.P., 4.61%, 6/27/13 (Jersey, C.I.)^^^ | 391,798 | |||
| 325,000 | HSBC Finance Corp., 6.375%, 10/15/11 | 344,729 | |||
| 700,000 | Royal Bank of Canada, 5.65%, 7/20/11 (Canada) | 752,182 | |||
| 500,000 | SouthTrust Corp., 5.80%, 6/15/14 | 508,672 | |||
| 650,000 | U.S. Bancorp, 4.20%, 5/15/14 | 679,245 | |||
| 700,000 | Wells Fargo & Co., 0.59188%, 1/24/12^^^ | 691,958 | |||
| 3,368,584 | |||||
| Principal Amount | Value | ||||
| Diversified Metals & Mining 0.4% | |||||
| $450,000 | Rio Tinto Alcan, Inc., 4.50%, 5/15/13 (Canada) | $ | 460,734 | ||
| Drug Retail 0.9% | |||||
| 550,000 | CVS Caremark Corp., 5.75%, 8/15/11 | 588,021 | |||
| 400,000 | Walgreen Co., 4.875%, 8/1/13 | 431,176 | |||
| 1,019,197 | |||||
| Electric Utilities 0.6% | |||||
| 350,000 | Energy East Corp., 6.75%, 6/15/12 | 388,172 | |||
| 300,000 | Florida Power & Light Co., 4.85%, 2/1/13 | 320,353 | |||
| 10,000 | Progress Energy, Inc., 7.10%, 3/1/11 | 10,601 | |||
| 719,126 | |||||
| Footwear 0.6% | |||||
| 600,000 | Nike, Inc., 5.15%, 10/15/15 MTN | 617,247 | |||
| Health Care Distributors 0.4% | |||||
| 400,000 | Cardinal Health, Inc., 6.75%, 2/15/11 | 421,986 | |||
| Health Care Equipment 0.2% | |||||
| 250,000 | Baxter International, Inc., 4.625%, 3/15/15 | 267,963 | |||
| Household Appliances 0.3% | |||||
| 350,000 | Whirlpool Corp., 8.00%, 5/1/12 | 377,791 | |||
| Independent Power Producers & Energy Traders 0.2% | |||||
| 250,000 | Constellation Energy Grp, Inc., 7.00%, 4/1/12 | 268,919 | |||
| Industrial Conglomerates 2.4% | |||||
| 500,000 | 3M Co., 4.375%, 8/15/13 MTN | 535,363 | |||
| 1,000,000 | General Electric Capital Corp., 5.40%, 2/15/17 MTN | 996,942 | |||
| 887,000 | General Electric Capital Corp., 5.50%, 4/28/11 MTN | 932,530 | |||
| 240,000 | Tyco International Finance Ltd. S.A., 6.00%, 11/15/13 | 257,360 | |||
| 2,722,195 | |||||
| Industrial Machinery 0.5% | |||||
| 600,000 | Parker Hannifin Corp., 4.875%, 2/15/13 | 625,798 | |||
| Integrated Oil & Gas 1.6% | |||||
| 360,000 | BP Capital Markets plc, 5.25%, 11/7/13 (United Kingdom) | 394,355 | |||
| 500,000 | ConocoPhillips, 4.60%, 1/15/15 | 533,647 | |||
| 750,000 | Marathon Oil Canada Corp., 8.375%, 5/1/12 (Canada) | 849,163 | |||
| 1,777,165 | |||||
| Integrated Telecommunication Services 1.0% | |||||
| 191,619 | Ameritech Capital Funding, 9.10%, 6/1/16 | 220,195 | |||
| 500,000 | AT&T Corp., 7.30%, 11/15/11 | 553,838 | |||
| 300,000 | Verizon Communications, 4.375%, 6/1/13 | 315,553 | |||
| 1,089,586 | |||||
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| SEPTEMBER 30, 2009 | ||
| Principal Amount | Value | ||||
| Investment Banking & Brokerage 0.5% | |||||
| $100,000 | Goldman Sachs Group, Inc. (The), 0.5475%, 3/2/10 MTN^^^ | $ | 100,191 | ||
| 500,000 | Goldman Sachs Group, Inc. (The), 5.35%, 1/15/16 | 516,414 | |||
| 616,605 | |||||
| Life & Health Insurance 1.0% | |||||
| 500,000 | Principal Life Income Funding Trusts, 5.30%, 4/24/13 MTN | 512,943 | |||
| 600,000 | Prudential Financial, Inc., 6.20%, 1/15/15 | 634,778 | |||
| 1,147,721 | |||||
| Movies & Entertainment 0.2% | |||||
| 250,000 | Walt Disney Co. (The), 4.50%, 12/15/13 | 266,802 | |||
| Oil & Gas Exploration & Production 0.3% | |||||
| 300,000 | Apache Corp., 6.25%, 4/15/12 | 330,795 | |||
| Other Diversified Financial Services 1.4% | |||||
| 600,000 | Bear Stearns Co., LLC (The), 5.70%, 11/15/14 | 642,654 | |||
| 600,000 | JPMorgan Chase & Co., 4.85%, 6/16/11 | 628,558 | |||
| 260,000 | Source One Mortgage Services, Series B, 9.00%, 6/1/12 | 279,914 | |||
| 1,551,126 | |||||
| Personal Products 0.6% | |||||
| 655,000 | Avon Products, Inc., 5.625%, 3/1/14 | 712,184 | |||
| Pharmaceuticals 1.2% | |||||
| 600,000 | AstraZeneca plc, 5.40%, 9/15/12 (United Kingdom) | 657,591 | |||
| 625,000 | Pfizer, Inc., 5.35%, 3/15/15 | 692,067 | |||
| 1,349,658 | |||||
| Property & Casualty Insurance 1.3% | |||||
| 435,000 | Allstate Corp. (The), 7.50%, 6/15/13 | 486,489 | |||
| 650,000 | Berkshire Hathaway Finance Corp., 4.625%, 10/15/13 | 687,596 | |||
| 325,000 | Progressive Corp. (The), 6.375%, 1/15/12 | 338,979 | |||
| 1,513,064 | |||||
| Railroads 0.7% | |||||
| 300,000 | Burlington Northern Santa Fe, 4.30%, 7/1/13 | 313,023 | |||
| 500,000 | Union Pacific Corp., 6.125%, 1/15/12 | 538,607 | |||
| 851,630 | |||||
| Regional Banks 1.1% | |||||
| 800,000 | BB&T Corp., 4.75%, 10/1/12 | 834,367 | |||
| 200,000 | Fifth Third Bancorp, 5.45%, 1/15/17 | 174,210 | |||
| 250,000 | Old National Bancorp, 5.00%, 5/20/10 MTN | 251,411 | |||
| 1,259,988 | |||||
| Principal Amount | Value | ||||
| Residential REITs 0.2% | |||||
| $192,000 | Equity Residential Operating L.P., 6.625%, 3/15/12 | $ | 204,889 | ||
| Soft Drinks 0.6% | |||||
| 600,000 | Bottling Group, LLC, 4.625%, 11/15/12 | 647,018 | |||
| Special Purpose Entity 0.2% | |||||
| 244,000 | Targeted Return Index Fund, 6.814%, 1/15/12, Series 2002-10*** ^^^ | 265,169 | |||
| Systems Software 0.6% | |||||
| 650,000 | Oracle Corp., 4.95%, 4/15/13 | 703,503 | |||
| Utilities 0.6% | |||||
| 600,000 | Georgia Power Co., 5.125%, 11/15/12, Series K | 649,938 | |||
| Total Corporate Bonds (cost $28,498,892) | 29,863,117 | ||||
| MUNICIPAL BONDS 2.4% | |||||
| 550,000 | Access Group, Inc., DE, 1.15%, 9/1/37, Series 2002-1, Class A4*** ^^^ | 526,185 | |||
| 650,000 | Arizona State Transportation Board Highway Revenue, 5.00%, 7/1/23 | 715,007 | |||
| 500,000 | Iowa Student Loan Liquidity Corp., 12/1/37, 0.00% G*** ^^^ | 478,350 | |||
| 600,000 | Kentucky Higher Education Student Loan Corp., 6/1/36, 1.746%, Series A-2*** ^^^ | 574,020 | |||
| 500,000 | Richmond, CA Joint Powers Financing Authority Revenue, 8.25%, 7/01/19 | 504,550 | |||
| Total Municipal Bonds (cost $2,803,209) | 2,798,112 | ||||
| Shares | Value | ||||
| MUTUAL FUNDS 0.6% | |||||
| Mutual Funds 0.6% | |||||
| 42,765 | Eaton Vance Short Duration Diversified Income Fund* | $ | 694,076 | ||
| Total Mutual Funds (cost $633,077) | 694,076 | ||||
| EXCHANGE TRADED FUNDS 1.3% | |||||
| 14,000 | iShares iBoxx Investment Grade Corporate Bond Fund* | 1,493,520 | |||
| Total Exchange Traded Funds (cost $1,253,951) | 1,493,520 | ||||
| Principal Amount | Value | ||||
| U.S. GOVERNMENT AGENCY SECURITIES 20.4% | |||||
| $1,000,000 | Federal Farm Credit Bank, 2.25%, 4/24/12 | $ | 1,016,972 | ||
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| WASATCH-1ST SOURCE INCOME FUND (FMEQX) — Schedule of Investments (continued) | SEPTEMBER 30, 2009 | |
| Principal Amount | Value | ||||
| $1,000,000 | Federal Farm Credit Bank, 3.85%, 2/11/15 | $ | 1,043,958 | ||
| 650,000 | Federal Farm Credit Bank, 4.875%, 4/1/14 | 713,274 | |||
| 500,000 | Federal Farm Credit Bank, 4.875%, 1/17/17 | 542,562 | |||
| 650,000 | Federal Farm Credit Bank, 5.20%, 12/27/12 | 684,342 | |||
| 1,000,000 | Federal Home Loan Bank, 1.00%, 3/22/13 | 1,001,487 | |||
| 1,000,000 | Federal Home Loan Bank, 2.00%, 7/27/12 | 1,003,591 | |||
| 1,000,000 | Federal Home Loan Bank, 2.00%, 9/10/13 | 1,001,454 | |||
| 1,000,000 | Federal Home Loan Bank, 4.875%, 11/15/11, Series RY11 | 1,080,065 | |||
| 400,000 | Federal Home Loan Bank, 5.00%, 12/16/11, Series WE11 | 433,867 | |||
| 1,550,000 | Federal Home Loan Bank, 5.00%, 9/14/12 | 1,692,595 | |||
| 500,000 | Federal Home Loan Bank, 5.375%, 11/20/13 | 503,579 | |||
| 1,000,000 | Federal Home Loan Mortgage Corp., 2.125%, 9/21/12 | 1,012,746 | |||
| 1,400,000 | Federal Home Loan Mortgage Corp., 5.50%, 3/28/16 | 1,478,291 | |||
| 700,000 | Federal Home Loan Mortgage Corp., 5.55%, 10/4/16 | 746,266 | |||
| 1,000,000 | Federal National Mortgage Assoc., 1.45%, 5/12/11 | 1,005,812 | |||
| 700,000 | Federal National Mortgage Assoc., 2.20%, 12/3/12 | 703,020 | |||
| 900,000 | Federal National Mortgage Assoc., 2.375%, 3/23/12 | 911,477 | |||
| 1,250,000 | Federal National Mortgage Assoc., 4.375%, 9/15/12 | 1,343,846 | |||
| 1,500,000 | Federal National Mortgage Assoc., 4.375%, 7/17/13 | 1,625,253 | |||
| 350,000 | Federal National Mortgage Assoc., 4.625%, 10/15/14 | 382,055 | |||
| 700,000 | Federal National Mortgage Assoc., 5.00%, 4/26/17 | 714,577 | |||
| 600,000 | Federal National Mortgage Assoc., 5.24%, 8/7/18 | 636,857 | |||
| 800,000 | Tennessee Valley Authority, 6.00%, 3/15/13, Series C | 904,990 | |||
| 1,000,000 | Tennessee Valley Authority, 6.25%, 12/15/17, Series E | 1,156,651 | |||
| Total U.S. Government Agency Securities (cost $22,586,851) | 23,339,587 | ||||
| U.S. TREASURY NOTES 8.5% | |||||
| 5,200,000 | U.S. Treasury Note, 3.75%, 11/15/18 | 5,380,783 | |||
| 4,000,000 | U.S. Treasury Note, 4.25%, 8/15/15 | 4,356,248 | |||
| Total U.S. Treasury Notes (cost $9,480,445) | 9,737,031 | ||||
| U.S. TREASURY INFLATION PROTECTED BONDS 4.4% | |||||
| 4,934,400 | U.S. Treasury Note, 1.625%, 1/15/18 | 4,983,744 | |||
| Total U.S. Treasury Inflation Protected Bonds (cost $4,935,196) | 4,983,744 | ||||
| Shares | Value | ||||
| PREFERRED STOCKS 0.6% | |||||
| Diversified Banks 0.3% | |||||
| 19,700 | CABCO TST For GS CAP 1, 3.25%, 2/15/34, Series GS Pfd.* ^^^ | $ | 295,697 | ||
| Investment Banking & Brokerage 0.1% | |||||
| 5,000 | Morgan Stanley Cap Tr VI , 6.60%, 2/1/46 Pfd.* | 114,250 | |||
| Other Diversified Financial Services 0.2% | |||||
| 5,000 | Bank of America Corp., Series H, 8.20%, 5/1/13 Pfd.* | 116,900 | |||
| 8,000 | ING Groep N.V., 7.375% Pfd.* (Netherlands) | 132,800 | |||
| 249,700 | |||||
| Total Preferred Stocks (cost $906,511) | 659,647 | ||||
| Principal Amount | Value | ||||
| SHORT-TERM INVESTMENTS 3.0% | |||||
| Repurchase Agreement 3.0% | |||||
| $3,440,000 | Repurchase Agreement dated 9/30/09, 0.01% due 10/01/09 with Fixed Income Clearing Corporation collateralized by $3,545,000 of United States Treasury Notes 2.625% due 2/29/16; value: $3,509,550; repurchase proceeds: $3,440,001 (cost $3,440,000) | $ | 3,440,000 | ||
| Total Short-Term Investments (cost $3,440,000) | 3,440,000 | ||||
| Total Investments (cost $110,199,854) 99.2% | 113,579,247 | ||||
| Other Assets less Liabilities 0.8% | 917,142 | ||||
| NET ASSETS 100.0% | $ | 114,496,389 | |||
*Non-income producing.
***Security was fair valued under procedures adopted by the Board of Directors (see Note 2).
^^^ Variable Rate Securities.
MTN Medium Term Note.
REIT Real Estate Investment Trust.
See Notes to Financial Statements. | |||||
At September 30, 2009, Wasatch-1st Source Income Fund’s investments, excluding short-term investments, were in the following countries:
| Country | % | ||
Canada | 1.9 | ||
Jersey, C.I. | 0.4 | ||
Netherlands | 0.1 | ||
United Kingdom | 1.5 | ||
United States | 96.1 | ||
TOTAL | 100.0 | % | |
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87
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| WASATCH FUNDS — Statements of Assets and Liabilities | ||
| CORE GROWTH FUND | EMERGING MARKETS SMALL CAP FUND | GLOBAL OPPORTUNITIES FUND1 | GLOBAL SCIENCE & TECHNOLOGY FUND | |||||||||||||
Assets: | ||||||||||||||||
Investments, at cost | ||||||||||||||||
Unaffiliated issuers | $ | 363,990,602 | $ | 40,578,186 | $ | 74,902,849 | $ | 46,374,350 | ||||||||
Repurchase agreements | 20,923,000 | 1,066,000 | 15,949,000 | 7,933,000 | ||||||||||||
| $ | 384,913,602 | $ | 41,644,186 | $ | 90,851,849 | $ | 54,307,350 | |||||||||
Investments, at market value | ||||||||||||||||
Unaffiliated issuers | $ | 391,049,492 | $ | 49,162,857 | $ | 101,755,635 | $ | 52,559,803 | ||||||||
Repurchase agreements | 20,923,000 | 1,066,000 | 15,949,000 | 7,933,000 | ||||||||||||
| 411,972,492 | 50,228,857 | 117,704,635 | 60,492,803 | |||||||||||||
Cash | 552 | 648 | 1,097 | 855 | ||||||||||||
Foreign currency on deposit (cost of $27, $10,126, $4,649, $0, $241,140, $0, $32,494, $8,057, and $11, respectively) | 29 | 10,231 | 4,663 | — | ||||||||||||
Receivable for investment securities sold | — | 832,244 | 611,775 | 423,585 | ||||||||||||
Capital shares receivable | 74,489 | 227,465 | 78,454 | 8,819 | ||||||||||||
Interest and dividends receivable | 668,836 | 44,474 | 123,057 | 32,409 | ||||||||||||
Receivable from Investment Advisor | — | 16,307 | 35,378 | 5,561 | ||||||||||||
Prepaid expenses and other assets | 32,264 | 12,495 | 28,590 | 10,599 | ||||||||||||
Unrealized appreciation on foreign currency contracts | — | — | 192 | — | ||||||||||||
Total Assets | 412,748,662 | 51,372,721 | 118,587,841 | 60,974,631 | ||||||||||||
Liabilities: | ||||||||||||||||
Payable for securities purchased | 1,439,801 | 473,702 | 812,393 | 1,191,193 | ||||||||||||
Capital shares payable | 763,384 | 19,755 | 45,432 | 99,681 | ||||||||||||
Accrued investment advisory fees | 332,806 | 67,570 | 181,162 | 72,158 | ||||||||||||
Accrued expenses and other liabilities | 263,641 | 72,024 | 79,287 | 71,701 | ||||||||||||
Other payables | — | 249,303 | 84,518 | — | ||||||||||||
Unrealized depreciation on foreign currency contracts | — | 995 | — | 5 | ||||||||||||
Total Liabilities | 2,799,632 | 883,349 | 1,202,792 | 1,434,738 | ||||||||||||
Net Assets | $ | 409,949,030 | $ | 50,489,372 | $ | 117,385,049 | $ | 59,539,893 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Capital stock | $ | 158,418 | $ | 321,996 | $ | 347,510 | $ | 53,556 | ||||||||
Paid-in capital in excess of par | 505,953,096 | 65,681,850 | 87,432,697 | 91,964,772 | ||||||||||||
Undistributed net investment income (loss) | 2,481,460 | 208,395 | (352,634 | ) | (367,611 | ) | ||||||||||
Undistributed net realized gain (loss) on investments and foreign currency translations | (125,702,890 | ) | (23,911,342 | ) | 3,188,707 | (38,297,206 | ) | |||||||||
Net unrealized appreciation (depreciation) on investments and foreign currency translations | 27,058,946 | 8,188,473 | 26,768,769 | 6,186,382 | ||||||||||||
Net Assets | $ | 409,949,030 | $ | 50,489,372 | $ | 117,385,049 | $ | 59,539,893 | ||||||||
Capital Stock, $.01 par value: | ||||||||||||||||
Authorized | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | ||||||||||||
Issued and outstanding | 15,841,771 | 32,199,645 | 34,751,049 | 5,355,629 | ||||||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING | $ | 25.88 | $ | 1.57 | $ | 3.38 | $ | 11.12 | ||||||||
| 1 | Fund inception date was November 17, 2008. |
See Notes to Financial Statements.
88
Table of Contents
| SEPTEMBER 30, 2009 | ||
| HERITAGE GROWTH FUND | HERITAGE VALUE FUND | INTERNATIONAL GROWTH FUND | INTERNATIONAL OPPORTUNITIES FUND | MICRO CAP FUND | ||||||||||||||
| $ | 66,824,303 | $ | 2,774,242 | $ | 138,069,401 | $ | 61,219,431 | $ | 268,217,101 | |||||||||
| 1,455,000 | 360,000 | 3,546,000 | 12,273,000 | 14,428,000 | ||||||||||||||
| $ | 68,279,303 | $ | 3,134,242 | $ | 141,615,401 | $ | 73,492,431 | $ | 282,645,101 | |||||||||
| $ | 73,712,015 | $ | 3,186,517 | $ | 167,542,112 | $ | 82,185,478 | $ | 259,674,974 | |||||||||
| 1,455,000 | 360,000 | 3,546,000 | 12,273,000 | 14,428,000 | ||||||||||||||
| 75,167,015 | 3,546,517 | 171,088,112 | 94,458,478 | 274,102,974 | ||||||||||||||
| 660 | 518 | 314 | 76,269 | 64,167 | ||||||||||||||
| | 241,140 | | — | 33,337 | 8,067 | 10 | ||||||||||||
| 2,718,493 | 22,232 | 3,220,318 | — | 142,954 | ||||||||||||||
| 8,447 | — | 23,033 | 60,024 | 174,905 | ||||||||||||||
| 80,262 | 2,532 | 332,329 | 166,059 | 246,524 | ||||||||||||||
| 14,053 | 12,483 | 756 | 41,781 | — | ||||||||||||||
| 11,859 | 11,475 | 16,428 | 8,041 | 21,288 | ||||||||||||||
| 4,315 | — | — | 977 | — | ||||||||||||||
| 78,246,244 | 3,595,757 | 174,714,627 | 94,819,696 | 274,752,822 | ||||||||||||||
| 878,188 | — | 867,988 | 590,471 | 1,564,195 | ||||||||||||||
| 54,663 | — | 66,078 | 40,138 | 96,215 | ||||||||||||||
| 43,818 | 2,022 | 209,116 | 146,717 | 432,333 | ||||||||||||||
| 75,764 | 36,901 | 123,791 | 116,011 | 122,701 | ||||||||||||||
| — | — | 210,735 | 70,405 | — | ||||||||||||||
| — | — | 11,190 | — | — | ||||||||||||||
| 1,052,433 | 38,923 | 1,488,898 | 963,742 | 2,215,444 | ||||||||||||||
| $ | 77,193,811 | $ | 3,556,834 | $ | 173,225,729 | $ | 93,855,954 | $ | 272,537,378 | |||||||||
| $ | 83,220 | $ | 4,469 | $ | 124,559 | $ | 476,036 | $ | 700,196 | |||||||||
| 80,269,356 | 4,528,827 | 224,623,200 | 88,542,846 | 367,225,279 | ||||||||||||||
| 499,398 | 26,890 | (815,682 | ) | (726,819 | ) | (15,825 | ) | |||||||||||
| (10,539,085 | ) | (1,415,638 | ) | (79,954,408 | ) | (15,332,961 | ) | (86,830,633 | ) | |||||||||
| | 6,880,922 | | 412,286 | 29,248,060 | 20,896,852 | (8,541,639 | ) | |||||||||||
| $ | 77,193,811 | $ | 3,556,834 | $ | 173,225,729 | $ | 93,855,954 | $ | 272,537,378 | |||||||||
| 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | ||||||||||||||
| 8,321,993 | 446,902 | 12,455,911 | 47,603,619 | 70,019,640 | ||||||||||||||
| $ | 9.28 | | $ | 7.96 | $ | 13.91 | $ | 1.97 | $ | 3.89 | ||||||||
89
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| WASATCH FUNDS — Statements of Assets and Liabilities (continued) | ||
| MICRO CAP VALUE FUND | SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | STRATEGIC INCOME FUND | |||||||||||||
Assets: | ||||||||||||||||
Investments, at cost | ||||||||||||||||
Unaffiliated issuers | $ | 81,176,111 | $ | 601,830,238 | $ | 200,762,846 | $ | 14,812,629 | ||||||||
Affiliated issuers* | — | — | — | — | ||||||||||||
Repurchase agreements | 13,928,000 | 81,535,000 | 9,146,000 | 3,149,000 | ||||||||||||
| $ | 95,104,111 | $ | 683,365,238 | $ | 209,908,846 | $ | 17,961,629 | |||||||||
Investments, at market value | ||||||||||||||||
Unaffiliated issuers | $ | 100,421,759 | $ | 735,915,519 | $ | 209,674,490 | $ | 14,162,755 | ||||||||
Affiliated issuers* | — | — | — | — | ||||||||||||
Repurchase agreements | 13,928,000 | 81,535,000 | 9,146,000 | 3,149,000 | ||||||||||||
| 114,349,759 | 817,450,519 | 218,820,490 | 17,311,755 | |||||||||||||
Cash | 216,806 | 925 | 49,264 | 722 | ||||||||||||
Foreign currency on deposit (cost of $0, $0, $0, $0, $572,242, $0, $0, $0, and $0, respectively) | — | — | — | — | ||||||||||||
Receivable for investment securities sold | 2,715,194 | — | 521,175 | 384,212 | ||||||||||||
Receivable from broker for securities sold short | — | — | — | 223,868 | ||||||||||||
Capital shares receivable | 256,170 | 1,362,410 | 33,119 | 1,000 | ||||||||||||
Interest and dividends receivable | 38,892 | 547,637 | 171,642 | 87,181 | ||||||||||||
Receivable from Investment Advisor | 6,892 | — | — | 12,081 | ||||||||||||
Prepaid expenses and other assets | 13,477 | 46,896 | 14,387 | 5,643 | ||||||||||||
Unrealized appreciation on foreign currency contracts | 92 | — | — | 406 | ||||||||||||
Total Assets | 117,597,282 | 819,408,387 | 219,610,077 | 18,026,868 | ||||||||||||
Liabilities: | ||||||||||||||||
Call options written at value (premiums of $0, $0, $0, $20,877, $0, $0, $1,604,392, $0, and $0, respectively) | — | — | — | 12,345 | ||||||||||||
Securities sold short, at value (proceeds of $0, $0, $0, $460,105, $0, $0 $20,513,050, $0, and $0, respectively) | — | — | — | 87,929 | ||||||||||||
Bank overdraft of foreign currency (cost of $0, $749, $0, $0, $0, $0, $0, $0, and $0, respectively) | — | 749 | — | — | ||||||||||||
Payable for securities purchased | 2,070,796 | 8,478,455 | 697,306 | 158,088 | ||||||||||||
Capital shares payable | 57,127 | 591,363 | 134,700 | 3,355 | ||||||||||||
Dividends payable to shareholders | — | — | — | 2,683 | ||||||||||||
Accrued investment advisory fees | 176,153 | 642,735 | 268,116 | 10,023 | ||||||||||||
Accrued expenses and other liabilities | 76,813 | 339,521 | 152,284 | 42,398 | ||||||||||||
Other payables | — | 37,629 | — | — | ||||||||||||
Total Liabilities | 2,380,889 | 10,090,452 | 1,252,406 | 316,821 | ||||||||||||
Net Assets | $ | 115,216,393 | $ | 809,317,935 | $ | 218,357,671 | $ | 17,710,047 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Capital stock | $ | 545,839 | $ | 283,098 | $ | 794,347 | $ | 26,153 | ||||||||
Paid-in capital in excess of par | 128,850,298 | 747,275,725 | 364,916,347 | 27,394,324 | ||||||||||||
Undistributed net investment income (loss) | (218,261 | ) | (70,280 | ) | 741,563 | 179,094 | ||||||||||
Undistributed net realized gain (loss) on investments | (33,206,563 | ) | (72,217,597 | ) | (157,006,231 | ) | (9,620,682 | ) | ||||||||
Net unrealized appreciation (depreciation) on | 19,245,080 | 134,046,989 | 8,911,645 | (268,842 | ) | |||||||||||
Net Assets | $ | 115,216,393 | $ | 809,317,935 | $ | 218,357,671 | $ | 17,710,047 | ||||||||
Capital Stock, $.01 par value: | ||||||||||||||||
Authorized | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | ||||||||||||
Issued and outstanding | 54,583,879 | 28,309,775 | 79,434,694 | 2,615,252 | ||||||||||||
NET ASSET VALUE, REDEMPTION PRICEAND OFFERING | $ | 2.11 | $ | 28.59 | $ | 2.75 | $ | 6.77 | ||||||||
| * | See Note 8 for information on affiliated issuers. |
See Notes to Financial Statements.
90
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| SEPTEMBER 30, 2009 | ||
| ULTRA GROWTH FUND | INCOME EQUITY FUND | LONG/SHORT | U.S. TREASURY FUND | INCOME FUND | |||||||||||||
| $ | 95,797,506 | $ | 1,214,385,180 | $ | 101,977,357 | $ | 143,459,574 | $ | 106,759,854 | ||||||||
| — | — | — | — | — | |||||||||||||
| 2,745,000 | 80,694,000 | 31,385,000 | 879,000 | 3,440,000 | |||||||||||||
| $ | 98,542,506 | $ | 1,295,079,180 | $ | 133,362,357 | $ | 144,338,574 | $ | 110,199,854 | ||||||||
| $ | 118,782,723 | $ | 1,315,207,930 | $ | 119,462,349 | $ | 152,803,826 | $ | 110,139,247 | ||||||||
| — | — | — | — | — | |||||||||||||
| 2,745,000 | 80,694,000 | 31,385,000 | 879,000 | 3,440,000 | |||||||||||||
| 121,527,723 | 1,395,901,930 | 150,847,349 | 153,682,826 | 113,579,247 | |||||||||||||
| 140 | 835 | 694 | 382 | 528 | |||||||||||||
| | 570,636 | | — | — | — | — | |||||||||||
| — | — | 4,178,848 | — | — | |||||||||||||
| — | — | 19,495,698 | — | — | |||||||||||||
| 349,020 | 2,748,068 | 318,389 | 173,115 | 148,102 | |||||||||||||
| 58,241 | 2,087,593 | 89,564 | 683,094 | 934,626 | |||||||||||||
| — | 77,666 | — | 6,167 | — | |||||||||||||
| 13,321 | 151,073 | 20,446 | 24,283 | 19,464 | |||||||||||||
| — | — | — | — | — | |||||||||||||
| 122,519,081 | 1,400,967,165 | 174,950,988 | 154,569,867 | 114,681,967 | |||||||||||||
| | — | | — | 1,542,120 | — | — | |||||||||||
| | — | | — | 22,336,323 | — | — | |||||||||||
| | — | | — | — | — | — | |||||||||||
| 914,361 | 12,101,236 | 4,684,615 | — | — | |||||||||||||
| 93,698 | 1,484,266 | 41,873 | 240,264 | 27,584 | |||||||||||||
| — | 385,917 | — | 91,459 | 45,366 | |||||||||||||
| 121,597 | 1,010,309 | 127,956 | 61,452 | 51,014 | |||||||||||||
| 105,189 | 477,721 | 73,917 | 78,147 | 61,614 | |||||||||||||
| — | — | 17,200 | — | — | |||||||||||||
| 1,234,845 | 15,459,449 | 28,824,004 | 471,322 | 185,578 | |||||||||||||
| $ | 121,284,236 | $ | 1,385,507,716 | $ | 146,126,984 | $ | 154,098,545 | $ | 114,496,389 | ||||||||
| $ | 77,472 | $ | 1,157,184 | $ | 131,344 | $ | 94,600 | $ | 114,087 | ||||||||
| 150,364,570 | 1,381,679,781 | 147,855,873 | 140,068,622 | 114,997,475 | |||||||||||||
| (398,577 | ) | 123,618 | 97,087 | 14,138 | (13,055 | ) | |||||||||||
| (51,744,558 | ) | (98,275,928 | ) | (17,681,310 | ) | 4,576,933 | (3,981,511 | ) | |||||||||
| | 22,985,329 | | 100,823,061 | 15,723,990 | 9,344,252 | 3,379,393 | |||||||||||
| $ | 121,284,236 | $ | 1,385,507,716 | $ | 146,126,984 | $ | 154,098,545 | $ | 114,496,389 | ||||||||
| 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | |||||||||||||
| 7,747,173 | 115,718,389 | 13,134,390 | 9,459,968 | 11,408,671 | |||||||||||||
| $ | 15.66 | | $ | 11.97 | $ | 11.13 | $ | 16.29 | $ | 10.04 | |||||||
91
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| WASATCH FUNDS — Statements of Operations | ||
CORE GROWTH | EMERGING MARKETS SMALL CAP FUND | GLOBAL OPPORTUNITIES FUND1 | GLOBAL SCIENCE & TECHNOLOGY FUND | |||||||||||||
Investment Income: | ||||||||||||||||
Interest | $ | 6,348 | $ | 504 | $ | 1,967 | $ | 1,067 | ||||||||
Dividends2 | ||||||||||||||||
Unaffiliated issuers | 6,345,959 | 592,731 | 744,035 | 546,213 | ||||||||||||
Affiliated issuers* | — | — | — | — | ||||||||||||
Total investment income | 6,352,307 | 593,235 | 746,002 | 547,280 | ||||||||||||
Expenses: | ||||||||||||||||
Investment advisory fees | 4,033,387 | 467,257 | 921,286 | 766,275 | ||||||||||||
Shareholder servicing fees | 707,839 | 108,844 | 65,865 | 164,044 | ||||||||||||
Fund administration fees | 159,371 | 10,009 | 16,791 | 20,100 | ||||||||||||
Fund accounting fees | 106,067 | 29,913 | 45,871 | 29,642 | ||||||||||||
Reports to shareholders | 137,529 | 14,865 | 49,272 | 33,398 | ||||||||||||
Custody fees | 44,880 | 118,648 | 71,693 | 9,142 | ||||||||||||
Federal and state registration fees | 31,380 | 22,965 | 20,946 | 19,493 | ||||||||||||
Legal fees | 37,296 | 2,197 | 3,066 | 4,319 | ||||||||||||
Directors’ fees | 36,304 | 1,929 | 1,627 | 5,065 | ||||||||||||
Audit fees | 21,881 | 18,677 | 21,875 | 20,681 | ||||||||||||
Interest | 9,234 | 720 | 437 | 1,164 | ||||||||||||
Other | 78,570 | 12,556 | 16,109 | 20,845 | ||||||||||||
Total expenses before reimbursement | 5,403,738 | 808,580 | 1,234,838 | 1,094,168 | ||||||||||||
Reimbursement of expenses by Advisor | — | (247,151 | ) | (171,380 | ) | (96,846 | ) | |||||||||
Net Expenses | 5,403,738 | 561,429 | 1,063,458 | 997,322 | ||||||||||||
Net Investment Income (Loss) | 948,569 | 31,806 | (317,456 | ) | (450,042 | ) | ||||||||||
Realized and Unrealized Gain (Loss): | ||||||||||||||||
Net realized gain (loss) on investments and foreign currency translations | ||||||||||||||||
Unaffiliated issuers | (113,256,495 | ) | (19,394,560 | ) | 3,160,266 | (31,796,292 | ) | |||||||||
Affiliated issuers* | — | — | — | — | ||||||||||||
Net realized gain on options written | — | — | — | — | ||||||||||||
Realized foreign capital gains taxes | — | 142,312 | (7,109 | ) | — | |||||||||||
Change in unrealized appreciation (depreciation) on | 63,460,370 | 25,567,423 | 26,853,287 | 29,182,459 | ||||||||||||
Deferred foreign capital gains taxes | — | (395,368 | ) | (84,518 | ) | — | ||||||||||
Net gain (loss) on investments | (49,796,125 | ) | 5,919,807 | 29,921,926 | (2,613,833 | ) | ||||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (48,847,556 | ) | $ | 5,951,613 | $ | 29,604,470 | $ | (3,063,875 | ) | ||||||
| 1 | Fund inception date was November 17, 2008. |
| 2 | Net of $105,474, $39,785, $39,322, $32,997, $9,367, $2,371, $197,326, $86,992 and $61,969 in foreign withholding taxes, respectively. |
| * | See Note 8 for information on affiliated issuers. |
See Notes to Financial Statements.
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| FOR THE YEAR OR PERIOD ENDED SEPTEMBER 30, 2009 | ||
HERITAGE GROWTH | HERITAGE VALUE FUND | INTERNATIONAL GROWTH FUND | INTERNATIONAL OPPORTUNITIES FUND | MICRO CAP FUND | ||||||||||||||
| $ | 581 | $ | 177 | $ | 665 | $ | 2,067 | $ | 3,350 | |||||||||
| 1,117,349 | 67,586 | 2,560,298 | 1,165,751 | 2,894,323 | ||||||||||||||
| — | — | — | — | 30,371 | ||||||||||||||
| 1,117,930 | 67,763 | 2,560,963 | 1,167,818 | 2,928,044 | ||||||||||||||
| 463,546 | 22,162 | 1,954,312 | 1,160,742 | 4,511,273 | ||||||||||||||
| 176,193 | 24,528 | 254,806 | 228,307 | 253,263 | ||||||||||||||
| 26,118 | 1,250 | 50,574 | 22,366 | 90,101 | ||||||||||||||
| 27,238 | 11,159 | 52,743 | 39,252 | 67,970 | ||||||||||||||
| 28,068 | 20,440 | 45,958 | 64,368 | 49,929 | ||||||||||||||
| 13,094 | 587 | 58,851 | 66,171 | 28,771 | ||||||||||||||
| 16,020 | 17,950 | 23,580 | 20,852 | 21,788 | ||||||||||||||
| 6,104 | 8 | 10,157 | 5,167 | 23,451 | ||||||||||||||
| 5,703 | 130 | 12,619 | 3,331 | 19,794 | ||||||||||||||
| 20,682 | 20,681 | 20,681 | 20,681 | 20,681 | ||||||||||||||
| 1,161 | 47 | 4,405 | 3,583 | 3,500 | ||||||||||||||
| 19,061 | 10,452 | 35,387 | 14,962 | 41,623 | ||||||||||||||
| 802,988 | 129,394 | 2,524,073 | 1,649,782 | 5,132,144 | ||||||||||||||
| (172,728 | ) | (99,269 | ) | — | (315,306 | ) | — | |||||||||||
| 630,260 | 30,125 | 2,524,073 | 1,334,476 | 5,132,144 | ||||||||||||||
| 487,670 | 37,638 | 36,890 | (166,658 | ) | (2,204,100 | ) | ||||||||||||
| (10,184,195 | ) | (1,301,734 | ) | (54,639,494 | ) | (11,908,883 | ) | (66,419,003 | ) | |||||||||
| — | — | — | — | (4,058,938 | ) | |||||||||||||
| 100,213 | 358,188 | — | — | — | ||||||||||||||
| — | — | 17,660 | (61,480 | ) | — | |||||||||||||
| | 7,714,994 | | 831,023 | 66,502,437 | 33,815,147 | 35,754,956 | ||||||||||||
| — | — | (228,394 | ) | (70,405 | ) | — | ||||||||||||
| (2,368,988 | ) | (112,523 | ) | 11,652,209 | 21,774,379 | (34,722,985 | ) | |||||||||||
| $ | (1,881,318 | ) | $ | (74,885 | ) | $ | 11,689,099 | $ | 21,607,721 | $ | (36,927,085 | ) | ||||||
93
Table of Contents
| WASATCH FUNDS — Statements of Operations (continued) | ||
| MICRO CAP VALUE FUND | SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | STRATEGIC INCOME FUND | |||||||||||||
Investment Income: | ||||||||||||||||
Interest | $ | 1,104 | $ | 11,146 | $ | 2,825 | $ | 78,619 | ||||||||
Dividends1 | ||||||||||||||||
Unaffiliated issuers | 624,895 | 4,051,143 | 2,960,891 | 862,788 | ||||||||||||
Affiliated issuers* | — | — | 35,851 | — | ||||||||||||
Other | — | — | — | — | ||||||||||||
Total investment income | 625,999 | 4,062,289 | 2,999,567 | 941,407 | ||||||||||||
Expenses: | ||||||||||||||||
Investment advisory fees | 1,366,361 | 5,843,261 | 2,837,646 | 110,039 | ||||||||||||
Shareholder servicing fees | 144,534 | 806,346 | 405,895 | 42,824 | ||||||||||||
Distribution Fees | — | — | — | — | ||||||||||||
Fund administration fees | 26,572 | 226,568 | 74,623 | 6,208 | ||||||||||||
Fund accounting fees | 31,459 | 148,425 | 57,185 | 16,097 | ||||||||||||
Reports to shareholders | 30,040 | 216,967 | 98,168 | 18,432 | ||||||||||||
Custody fees | 28,568 | 60,170 | 25,845 | 4,812 | ||||||||||||
Federal and state registration fees | 26,118 | 46,125 | 24,133 | 16,067 | ||||||||||||
Legal fees | 6,296 | 53,957 | 19,511 | 1,592 | ||||||||||||
Directors’ fees | 5,137 | 43,563 | 17,569 | 1,163 | ||||||||||||
Audit fees | 20,681 | 20,682 | 20,681 | 21,881 | ||||||||||||
Dividends on securities sold short | 6,885 | — | — | 4,792 | ||||||||||||
Interest | 955 | 9,740 | 3,286 | 11,808 | ||||||||||||
Other | 16,880 | 71,705 | 39,816 | 13,375 | ||||||||||||
Total expenses before reimbursement | 1,710,486 | 7,547,509 | 3,624,358 | 269,090 | ||||||||||||
Reimbursement of expenses by Advisor | (138,226 | ) | — | — | (103,152 | ) | ||||||||||
Distribution fees waived | — | — | — | — | ||||||||||||
Net Expenses | 1,572,260 | 7,547,509 | 3,624,358 | 165,938 | ||||||||||||
Net Investment Income (Loss) | (946,261 | ) | (3,485,220 | ) | (624,791 | ) | 775,469 | |||||||||
Realized and Unrealized Gain (Loss): | ||||||||||||||||
Net realized gain (loss) on investments and foreign currency translations | ||||||||||||||||
Unaffiliated issuers | (22,748,259 | ) | (66,580,850 | ) | (109,704,992 | ) | (7,385,813 | ) | ||||||||
Affiliated issuers* | — | — | (6,809,925 | ) | — | |||||||||||
Net realized gain on options written | 1,864,290 | — | 908,649 | 126,196 | ||||||||||||
Net realized gain (loss) on short positions | (106,661 | ) | — | — | (86,106 | ) | ||||||||||
Change in unrealized appreciation (depreciation) on | 30,662,023 | 108,484,502 | 73,490,647 | 4,615,332 | ||||||||||||
Deferred foreign capital gains taxes | — | (37,629 | ) | — | — | |||||||||||
Net gain (loss) on investments | 9,671,393 | 41,866,023 | (42,115,621 | ) | (2,730,391 | ) | ||||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 8,725,132 | $ | 38,380,803 | $ | (42,740,412 | ) | $ | (1,954,922 | ) | ||||||
| 1 | Net of $24,204, $102,677, $477, $7,228, $6,645, $302,677, $56.862, $0 and $553 in foreign withholding taxes, respectively. |
| * | See Note 8 for information on affiliated issuers. |
See Notes to Financial Statements.
94
Table of Contents
| FORTHEYEARENDED SEPTEMBER 30, 2009 | ||
| ULTRA GROWTH FUND | INCOME EQUITY FUND | LONG/SHORT FUND | U.S. TREASURY FUND | INCOME FUND | ||||||||||||||
| $ | 2,306 | $ | 165,237 | $ | 8,851 | $ | 6,165,681 | $ | 3,927,332 | |||||||||
| 617,369 | 30,017,595 | 2,286,611 | — | 213,044 | ||||||||||||||
| — | — | — | — | — | ||||||||||||||
| — | — | — | 1,644 | — | ||||||||||||||
| 619,675 | 30,182,832 | 2,295,462 | 6,167,325 | 4,140,376 | ||||||||||||||
| 1,230,078 | 8,806,964 | 1,175,545 | 753,953 | 538,118 | ||||||||||||||
| 260,681 | 1,282,146 | 147,778 | 187,731 | 50,401 | ||||||||||||||
| — | 361,149 | 50,140 | — | 44,486 | ||||||||||||||
| 38,455 | 540,966 | 63,125 | 60,389 | 58,412 | ||||||||||||||
| 37,457 | 240,549 | 34,516 | 38,718 | 52,767 | ||||||||||||||
| 64,965 | 414,878 | 48,986 | 33,117 | 42,360 | ||||||||||||||
| 22,779 | 32,394 | 17,799 | 4,022 | 11,476 | ||||||||||||||
| 19,792 | 156,842 | 38,691 | 44,786 | 23,972 | ||||||||||||||
| 8,871 | 85,501 | 8,749 | 16,664 | 7,151 | ||||||||||||||
| 8,396 | 44,628 | 5,176 | 10,452 | 4,808 | ||||||||||||||
| 20,681 | 4,312 | 17,826 | 20,681 | 17,743 | ||||||||||||||
| — | — | 402,712 | — | — | ||||||||||||||
| 1,958 | 6,338 | 61,691 | — | — | ||||||||||||||
| 23,774 | 135,389 | 18,498 | 13,837 | 13,988 | ||||||||||||||
| 1,737,887 | 12,112,056 | 2,091,232 | 1,184,350 | 865,682 | ||||||||||||||
| (13,821 | ) | (787,715 | ) | — | (53,419 | ) | — | |||||||||||
| — | (361,149 | ) | (50,140 | ) | — | (44,486 | ) | |||||||||||
| 1,724,066 | 10,963,192 | 2,041,092 | 1,130,931 | 821,196 | ||||||||||||||
| (1,104,391 | ) | 19,219,640 | 254,370 | 5,036,394 | 3,319,180 | |||||||||||||
| (48,814,746 | ) | (96,935,144 | ) | (21,773,280 | ) | 9,178,548 | (214,026 | ) | ||||||||||
| — | — | — | — | — | ||||||||||||||
| — | — | 1,315,878 | — | — | ||||||||||||||
| 497,763 | — | 4,989,019 | — | — | ||||||||||||||
| | 41,929,072 | | 140,074,504 | 21,481,141 | 2,499,959 | 4,892,799 | ||||||||||||
| — | — | — | — | — | ||||||||||||||
| (6,387,911 | ) | 43,139,360 | 6,012,758 | 11,678,507 | 4,678,773 | |||||||||||||
| $ | (7,492,302 | ) | $ | 62,359,000 | $ | 6,267,128 | $ | 16,714,901 | $ | 7,997,953 | ||||||||
95
Table of Contents
| WASATCH FUNDS — Statements of Changes in Net Assets | ||
| CORE GROWTH FUND | EMERGING MARKETS SMALL CAP FUND | |||||||||||||||
| Year Ended September 30, 2009 | Year Ended September 30, 2008 | Year Ended September 30, 2009 | Year Ended September 30, 2008 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | 948,569 | $ | 4,856,128 | $ | 31,806 | $ | 127,023 | ||||||||
Net realized gain (loss) on investments and foreign | (113,256,495 | ) | 12,903,463 | (19,252,248 | ) | (4,510,609 | ) | |||||||||
Net realized gain on options written | — | 65,169 | — | — | ||||||||||||
Change in unrealized appreciation (depreciation) on | 63,460,370 | (267,260,766 | ) | 25,172,055 | (16,983,582 | ) | ||||||||||
Net increase (decrease) in net assets resulting from operations | (48,847,556 | ) | (249,436,006 | ) | 5,951,613 | (21,367,168 | ) | |||||||||
Dividends paid from: | ||||||||||||||||
Net investment income | (5,739,872 | ) | — | (29,720 | ) | (99,236 | ) | |||||||||
Net realized gains | — | (205,306,297 | ) | — | — | |||||||||||
| (5,739,872 | ) | (205,306,297 | ) | (29,720 | ) | (99,236 | ) | |||||||||
Capital share transactions: | ||||||||||||||||
Shares sold | 42,144,413 | 75,441,442 | 28,161,403 | 75,870,364 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 5,588,262 | 196,357,419 | 28,998 | 97,575 | ||||||||||||
Shares redeemed | (229,016,912 | ) | (421,955,118 | ) | (19,915,682 | ) | (18,336,592 | ) | ||||||||
Redemption fees | 51,587 | 49,702 | 116,524 | 11,293 | ||||||||||||
Net increase (decrease) | (181,232,650 | ) | (150,106,555 | ) | 8,391,243 | 57,642,640 | ||||||||||
Total increase (decrease) in net assets | (235,820,078 | ) | (604,848,858 | ) | 14,313,136 | 36,176,236 | ||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 645,769,108 | 1,250,617,966 | 36,176,236 | — | ||||||||||||
End of period | $ | 409,949,030 | $ | 645,769,108 | $ | 50,489,372 | $ | 36,176,236 | ||||||||
Undistributed net investment income (loss) included in | $ | 2,481,460 | $ | 1,509,194 | $ | 208,395 | $ | 29,714 | ||||||||
Capital share transactions — shares: | ||||||||||||||||
Shares sold | 2,140,091 | 2,304,714 | 23,140,526 | 40,105,645 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 301,417 | 5,657,085 | 34,937 | 50,039 | ||||||||||||
Shares redeemed | (11,075,467 | ) | (12,581,815 | ) | (20,231,688 | ) | (10,899,814 | ) | ||||||||
Net increase (decrease) in shares outstanding | (8,633,959 | ) | (4,620,016 | ) | 2,943,775 | 29,255,870 | ||||||||||
| 1 | Fund inception date was November 17, 2008. |
See Notes to Financial Statements.
96
Table of Contents
| SEPTEMBER 30, 2009 | ||
| GLOBAL OPPORTUNITIES FUND | GLOBAL SCIENCE & TECHNOLOGY FUND | HERITAGE GROWTH FUND | ||||||||||||||||||
| Period Ended September 30, 20091 | Year Ended September 30, 2009 | Year Ended September 30, 2008 | Year Ended September 30, 2009 | Year Ended September 30, 2008 | ||||||||||||||||
| $ | (317,456 | ) | $ | (450,042 | ) | $ | (1,853,536 | ) | $ | 487,670 | $ | 618,086 | ||||||||
| | 3,153,157 | | (31,796,292 | ) | (3,525,493 | ) | (10,184,195 | ) | 2,923,875 | |||||||||||
| — | — | 35,850 | 100,213 | 187,516 | ||||||||||||||||
| | 26,768,769 | | 29,182,459 | (60,039,104 | ) | 7,714,994 | (36,207,407 | ) | ||||||||||||
| 29,604,470 | (3,063,875 | ) | (65,382,283 | ) | (1,881,318 | ) | (32,477,930 | ) | ||||||||||||
| — | — | — | (167,143 | ) | — | |||||||||||||||
| — | — | (17,434,195 | ) | (220,964 | ) | (14,407,067 | ) | |||||||||||||
| — | — | (17,434,195 | ) | (388,107 | ) | (14,407,067 | ) | |||||||||||||
| 90,898,578 | 5,166,479 | 35,585,007 | 7,087,524 | 7,026,838 | ||||||||||||||||
| — | — | 16,802,106 | 374,358 | 14,080,421 | ||||||||||||||||
| (3,124,823 | ) | (24,729,028 | ) | (91,579,559 | ) | (23,413,598 | ) | (87,728,948 | ) | |||||||||||
| 6,824 | 2,298 | 30,453 | 915 | 2,612 | ||||||||||||||||
| 87,780,579 | (19,560,251 | ) | (39,161,993 | ) | (15,950,801 | ) | (66,619,077 | ) | ||||||||||||
| 117,385,049 | (22,624,126 | ) | (121,978,471 | ) | (18,220,226 | ) | (113,504,074 | ) | ||||||||||||
| — | 82,164,019 | 204,142,490 | 95,414,037 | 208,918,111 | ||||||||||||||||
| $ | 117,385,049 | $ | 59,539,893 | $ | 82,164,019 | $ | 77,193,811 | $ | 95,414,037 | |||||||||||
| $ | (352,634 | ) | $ | (367,611 | ) | $ | (656,537 | ) | $ | 499,398 | $ | 164,107 | ||||||||
| 35,880,124 | 593,548 | 2,381,520 | 933,157 | 643,479 | ||||||||||||||||
| — | — | 1,098,177 | 55,297 | 1,267,365 | ||||||||||||||||
| (1,129,075 | ) | (3,209,651 | ) | (7,049,819 | ) | (3,266,118 | ) | (7,926,581 | ) | |||||||||||
| 34,751,049 | (2,616,103 | ) | (3,570,122 | ) | (2,277,664 | ) | (6,015,737 | ) | ||||||||||||
97
Table of Contents
| WASATCH FUNDS — Statements of Changes in Net Assets (continued) | ||
| HERITAGE VALUE FUND | INTERNATIONAL GROWTH FUND | |||||||||||||||
Year Ended September 30, 2009 | Year Ended September 30, 2008 | Year Ended September 30, 2009 | Year Ended September 30, 2008 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | 37,638 | $ | 53,508 | $ | 36,890 | $ | (578,642 | ) | |||||||
Net realized gain (loss) on investments and foreign | (1,301,734 | ) | (776,364 | ) | (54,621,834 | ) | (6,811,237 | ) | ||||||||
Net realized gain on options written | 358,188 | 316,005 | — | — | ||||||||||||
Net realized gain (loss) on short positions | — | (986 | ) | — | — | |||||||||||
Change in unrealized appreciation (depreciation) on | 831,023 | (461,738 | ) | 66,274,043 | (185,431,901 | ) | ||||||||||
Net increase (decrease) in net assets resulting from operations | (74,885 | ) | (869,575 | ) | 11,689,099 | (192,821,780 | ) | |||||||||
Dividends paid from: | ||||||||||||||||
Net investment income | (47,255 | ) | (40,797 | ) | (466,090 | ) | (14,999,689 | ) | ||||||||
Net realized gains | — | (15,127 | ) | — | (53,899,506 | ) | ||||||||||
| (47,255 | ) | (55,924 | ) | (466,090 | ) | (68,899,195 | ) | |||||||||
Capital share transactions: | ||||||||||||||||
Shares sold | 894,306 | 3,275,032 | 23,024,110 | 56,044,771 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 43,764 | 55,698 | 447,546 | 67,297,473 | ||||||||||||
Shares redeemed | (1,051,758 | ) | (1,046,240 | ) | (56,255,429 | ) | (201,780,070 | ) | ||||||||
Redemption fees | 496 | 791 | 6,574 | 36,035 | ||||||||||||
Net increase (decrease) | (113,192 | ) | 2,285,281 | (32,777,199 | ) | (78,401,791 | ) | |||||||||
Total increase (decrease) in net assets | (235,332 | ) | 1,359,782 | (21,554,190 | ) | (340,122,766 | ) | |||||||||
Net assets: | ||||||||||||||||
Beginning of period | 3,792,166 | 2,432,384 | 194,779,919 | 534,902,685 | ||||||||||||
End of period | $ | 3,556,834 | $ | 3,792,166 | $ | 173,225,729 | $ | 194,779,919 | ||||||||
Undistributed net investment income (loss) included in | $ | 26,890 | $ | 33,894 | $ | (815,682 | ) | $ | (6,497,413 | ) | ||||||
Capital share transactions — shares: | ||||||||||||||||
Shares sold | 132,854 | 334,711 | 2,074,040 | 2,743,933 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 6,723 | 5,678 | 50,513 | 3,356,483 | ||||||||||||
Shares redeemed | (156,260 | ) | (114,532 | ) | (6,128,701 | ) | (11,547,140 | ) | ||||||||
Net increase (decrease) in shares outstanding | (16,683 | ) | 225,857 | (4,004,148 | ) | (5,446,724 | ) | |||||||||
See Notes to Financial Statements.
98
Table of Contents
| SEPTEMBER 30, 2009 | ||
| INTERNATIONAL OPPORTUNITIES FUND | MICRO CAP FUND | MICRO CAP VALUE FUND | ||||||||||||||||||||
| Year Ended September 30, 2009 | Year Ended September 30, 2008 | Year Ended September 30, 2009 | Year Ended September 30, 2008 | Year Ended September 30, 2009 | Year Ended September 30, 2008 | |||||||||||||||||
| $ | (166,658 | ) | $ | (48,164 | ) | $ | (2,204,100 | ) | $ | (6,107,945 | ) | $ | (946,261 | ) | $ | (1,351,039 | ) | |||||
| (11,970,363 | ) | (761,977 | ) | (70,477,941 | ) | 4,651,383 | (22,748,259 | ) | (12,006,387 | ) | ||||||||||||
| — | 21,037 | — | — | 1,864,290 | 2,052,817 | |||||||||||||||||
| — | 112,630 | — | — | (106,661 | ) | 605,545 | ||||||||||||||||
| | 33,744,742 | | (29,949,193 | ) | 35,754,956 | (173,381,475 | ) | 30,662,023 | (29,171,790 | ) | ||||||||||||
| 21,607,721 | (30,625,667 | ) | (36,927,085 | ) | (174,838,037 | ) | 8,725,132 | (39,870,854 | ) | |||||||||||||
| (168,034 | ) | (2,089,316 | ) | (777,904 | ) | — | — | — | ||||||||||||||
| — | (8,029,593 | ) | — | (98,389,979 | ) | — | (16,429,060 | ) | ||||||||||||||
| (168,034 | ) | (10,118,909 | ) | (777,904 | ) | (98,389,979 | ) | — | (16,429,060 | ) | ||||||||||||
| 31,749,891 | 41,682,055 | 20,400,999 | 16,149,674 | 37,751,896 | 46,417,131 | |||||||||||||||||
| 163,313 | 9,911,885 | 743,955 | 94,126,664 | — | 16,104,543 | |||||||||||||||||
| (15,224,838 | ) | (11,598,986 | ) | (70,303,414 | ) | (109,078,570 | ) | (29,184,165 | ) | (28,353,838 | ) | |||||||||||
| 37,390 | 6,956 | 7,314 | 6,533 | 11,986 | 4,193 | |||||||||||||||||
| 16,725,756 | 40,001,910 | (49,151,146 | ) | 1,204,301 | 8,579,717 | 34,172,029 | ||||||||||||||||
| 38,165,443 | (742,666 | ) | (86,856,135 | ) | (272,023,715 | ) | 17,304,849 | (22,127,885 | ) | |||||||||||||
| 55,690,511 | 56,433,177 | 359,393,513 | 631,417,228 | 97,911,544 | 120,039,429 | |||||||||||||||||
| $ | 93,855,954 | $ | 55,690,511 | $ | 272,537,378 | $ | 359,393,513 | $ | 115,216,393 | $ | 97,911,544 | |||||||||||
| $ | (726,819 | ) | $ | (1,759,002 | ) | $ | (15,825 | ) | $ | (332,765 | ) | $ | (218,261 | ) | $ | (153,784 | ) | |||||
| 24,187,957 | 21,166,986 | 6,736,914 | 3,153,341 | 21,422,418 | 20,583,227 | |||||||||||||||||
| 133,863 | 3,604,322 | 265,698 | 16,778,372 | — | 6,493,767 | |||||||||||||||||
| (11,518,529 | ) | (5,453,107 | ) | (23,747,004 | ) | (20,943,978 | ) | (21,193,792 | ) | (12,980,831 | ) | |||||||||||
| 12,803,291 | 19,318,201 | (16,744,392 | ) | (1,012,265 | ) | 228,626 | 14,096,163 | |||||||||||||||
99
Table of Contents
| WASATCH FUNDS — Statements of Changes in Net Assets (continued) | ||
| SMALL CAP GROWTH FUND | SMALL CAP VALUE FUND | |||||||||||||||
| Year Ended September 30, 2009 | Year Ended September 30, 2008 | Year Ended September 30, 2009 | Year Ended September 30, 2008 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (3,485,220 | ) | $ | (4,329,573 | ) | $ | (624,791 | ) | $ | 694,357 | |||||
Net realized gain (loss) on investments and foreign | (66,580,850 | ) | 10,759,204 | (116,514,917 | ) | (26,463,524 | ) | |||||||||
Net realized gain on options written | — | — | 908,649 | 1,264,596 | ||||||||||||
Net realized gain (loss) on short positions | — | (847,296 | ) | — | 862,688 | |||||||||||
Change in unrealized appreciation (depreciation) on | 108,446,873 | (265,175,462 | ) | 73,490,647 | (116,642,157 | ) | ||||||||||
Net increase (decrease) in net assets resulting from operations | 38,380,803 | (259,593,127 | ) | (42,740,412 | ) | (140,284,040 | ) | |||||||||
Dividends paid from: | ||||||||||||||||
Net investment income | — | — | — | (1,304,069 | ) | |||||||||||
Net realized gains | (1,539,215 | ) | (120,648,854 | ) | — | (141,790,472 | ) | |||||||||
| (1,539,215 | ) | (120,648,854 | ) | — | (143,094,541 | ) | ||||||||||
Capital share transactions: | ||||||||||||||||
Shares sold | 230,991,699 | 154,963,117 | 32,790,353 | 66,338,622 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 1,498,523 | 117,697,647 | — | 137,074,565 | ||||||||||||
Shares redeemed | (195,651,102 | ) | (232,359,422 | ) | (108,614,115 | ) | (243,774,324 | ) | ||||||||
Redemption fees | 91,021 | 53,796 | 7,697 | 16,798 | ||||||||||||
Net increase (decrease) | 36,930,141 | 40,355,138 | (75,816,065 | ) | (40,344,339 | ) | ||||||||||
Total increase (decrease) in net assets | 73,771,729 | (339,886,843 | ) | (118,556,477 | ) | (323,722,920 | ) | |||||||||
Net assets: | ||||||||||||||||
Beginning of period | 735,546,206 | 1,075,433,049 | 336,914,148 | 660,637,068 | ||||||||||||
End of period | $ | 809,317,935 | $ | 735,546,206 | $ | 218,357,671 | $ | 336,914,148 | ||||||||
Undistributed net investment income (loss) included in | $ | (70,280 | ) | $ | (205,808 | ) | $ | 741,563 | $ | (574,907 | ) | |||||
Capital share transactions — shares: | ||||||||||||||||
Shares sold | 9,654,965 | 4,910,006 | 15,948,161 | 18,735,565 | ||||||||||||
Shares issued to holders in reinvestment of dividends | 73,746 | 3,294,085 | — | 38,504,091 | ||||||||||||
Shares redeemed | (9,177,145 | ) | (7,263,863 | ) | (56,145,733 | ) | (64,253,288 | ) | ||||||||
Net increase (decrease) in shares outstanding | 551,566 | 940,228 | (40,197,572 | ) | (7,013,632 | ) | ||||||||||
| 1 | Effective September 19, 2008, the Funds changed their fiscal year end to September 30. |
See Notes to Financial Statements.
100
Table of Contents
| SEPTEMBER 30, 2009 | ||
| STRATEGIC INCOME FUND | ULTRA GROWTH FUND | INCOME EQUITY FUND | ||||||||||||||||||||||||
| Year Ended September 30, 2009 | Year Ended September 30, 2008 | Year Ended September 30, 2009 | Year Ended September 30, 2008 | Year Ended September 30, 2009 | Period Ended September 30, 20081 | Year Ended March 31, 2008 | ||||||||||||||||||||
| $ | 775,469 | $ | 1,229,319 | $ | (1,104,391 | ) | $ | (1,971,029 | ) | $ | 19,219,640 | $ | 6,391,793 | $ | 4,434,682 | |||||||||||
| (7,385,813 | ) | (3,227,582 | ) | (48,814,746 | ) | 5,945,886 | (96,935,144 | ) | 7,518 | 11,649,240 | ||||||||||||||||
| 126,196 | 387,076 | — | 274,600 | — | — | — | ||||||||||||||||||||
| (86,106 | ) | 1,439,965 | 497,763 | (414,078 | ) | — | — | — | ||||||||||||||||||
| | 4,615,332 | | (4,016,554 | ) | 41,929,072 | (87,629,925 | ) | 140,074,504 | (89,835,019 | ) | 14,606,996 | |||||||||||||||
| (1,954,922 | ) | (4,187,776 | ) | (7,492,302 | ) | (83,794,546 | ) | 62,359,000 | (83,435,708 | ) | 30,690,918 | |||||||||||||||
| (784,968 | ) | (1,057,146 | ) | — | — | (19,218,020 | ) | (6,175,815 | ) | (4,351,594 | ) | |||||||||||||||
| — | (2,217,011 | ) | — | (32,302,048 | ) | — | — | (14,377,983 | ) | |||||||||||||||||
| (784,968 | ) | (3,274,157 | ) | — | (32,302,048 | ) | (19,218,020 | ) | (6,175,815 | ) | (18,729,577 | ) | ||||||||||||||
| 1,068,106 | 11,271,913 | 12,125,756 | 23,567,676 | 874,385,368 | 493,306,878 | 316,064,382 | ||||||||||||||||||||
| 767,924 | 3,204,301 | — | 31,508,337 | 17,197,096 | 5,067,853 | 11,089,981 | ||||||||||||||||||||
| (3,276,167 | ) | (8,749,445 | ) | (27,365,051 | ) | (63,614,008 | ) | (329,662,507 | ) | (76,053,584 | ) | (59,294,127 | ) | |||||||||||||
| 894 | 3,128 | 12,255 | 5,057 | 62,658 | — | — | ||||||||||||||||||||
| (1,439,243 | ) | 5,729,897 | (15,227,040 | ) | (8,532,938 | ) | 561,982,615 | 422,321,147 | 268,580,236 | |||||||||||||||||
| (4,179,133 | ) | (1,732,036 | ) | (22,719,342 | ) | (124,629,532 | ) | 605,123,595 | 332,709,624 | 280,541,577 | ||||||||||||||||
| 21,889,180 | 23,621,216 | 144,003,578 | 268,633,110 | 780,384,121 | 447,674,497 | 167,132,920 | ||||||||||||||||||||
| $ | 17,710,047 | $ | 21,889,180 | $ | 121,284,236 | $ | 144,003,578 | $ | 1,385,507,716 | $ | 780,384,121 | $ | 447,674,497 | |||||||||||||
| $ | 179,094 | | $ | 84,045 | $ | (398,577 | ) | $ | (19,428 | ) | $ | 123,618 | $ | 542,260 | $ | 214,043 | ||||||||||
| 174,614 | 1,304,234 | 995,533 | 1,068,307 | 85,935,790 | 34,354,765 | 22,808,982 | ||||||||||||||||||||
| 136,331 | 347,534 | — | 1,297,708 | 1,663,444 | 359,009 | 764,998 | ||||||||||||||||||||
| (567,847 | ) | (926,251 | ) | (2,387,038 | ) | (2,896,081 | ) | (32,224,101 | ) | (5,377,107 | ) | (3,863,365 | ) | |||||||||||||
| (256,902 | ) | 725,517 | (1,391,505 | ) | (530,066 | ) | 55,375,133 | 29,336,667 | 19,710,615 | |||||||||||||||||
101
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| WASATCH FUNDS — Statements of Changes in Net Assets (continued) | ||
| LONG/SHORT FUND | U.S. TREASURY FUND | |||||||||||||||||||
| Year Ended September 30, 2009 | Period Ended September 30, 20081 | Year Ended March 31, 2008 | Year Ended September 30, 2009 | Year Ended September 30, 2008 | ||||||||||||||||
Operations: | ||||||||||||||||||||
Net investment income | $ | 254,370 | $ | 506,511 | $ | 1,651,685 | $ | 5,036,394 | $ | 4,603,385 | ||||||||||
Net realized gain (loss) on investments and foreign currency translations | (21,773,280 | ) | (1,639,401 | ) | 2,088,860 | 9,178,548 | 2,091,586 | |||||||||||||
Net realized gain on options written | 1,315,878 | — | — | — | — | |||||||||||||||
Net realized gain on short positions | 4,989,019 | — | — | — | — | |||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | 21,481,141 | (4,654,306 | ) | (3,078,118 | ) | 2,499,959 | 6,237,874 | |||||||||||||
Net increase (decrease) in net assets resulting from operations | 6,267,128 | (5,787,196 | ) | 662,427 | 16,714,901 | 12,932,845 | ||||||||||||||
Dividends paid from: | ||||||||||||||||||||
Net investment income | (556,325 | ) | (478,605 | ) | (1,739,672 | ) | (5,022,309 | ) | (4,603,049 | ) | ||||||||||
Net realized gains | (1,579,189 | ) | — | (2,150,358 | ) | — | — | |||||||||||||
| (2,135,514 | ) | (478,605 | ) | (3,890,030 | ) | (5,022,309 | ) | (4,603,049 | ) | |||||||||||
Capital share transactions: | ||||||||||||||||||||
Shares sold | 76,153,872 | 51,821,912 | 45,416,712 | 148,148,779 | 78,165,995 | |||||||||||||||
Shares issued to holders in reinvestment of dividends | 1,826,247 | 397,821 | 3,335,062 | 4,584,510 | 4,167,049 | |||||||||||||||
Shares redeemed | (58,109,974 | ) | (11,249,918 | ) | (12,008,607 | ) | (132,178,263 | ) | (85,104,785 | ) | ||||||||||
Redemption fees | 11,260 | — | — | 431,042 | 73,908 | |||||||||||||||
Net increase (decrease) | 19,881,405 | 40,969,815 | 36,743,167 | 20,986,068 | (2,697,833 | ) | ||||||||||||||
Total increase in net assets | 24,013,019 | 34,704,014 | 33,515,564 | 32,678,660 | 5,631,963 | |||||||||||||||
Net assets: | ||||||||||||||||||||
Beginning of period | 122,113,965 | 87,409,951 | 53,894,387 | 121,419,885 | 115,787,922 | |||||||||||||||
End of period | $ | 146,126,984 | $ | 122,113,965 | $ | 87,409,951 | $ | 154,098,545 | $ | 121,419,885 | ||||||||||
Undistributed net investment income (loss) included in net assets at end of period | $ | 97,087 | $ | 241,168 | $ | 148,570 | $ | 14,138 | $ | 53 | ||||||||||
Capital share transactions — shares: | ||||||||||||||||||||
Shares sold | 7,924,340 | 4,496,374 | 3,843,979 | 8,980,714 | 5,302,453 | |||||||||||||||
Shares issued to holders in reinvestment of dividends | 209,877 | 33,910 | 283,537 | 266,951 | 282,613 | |||||||||||||||
Shares redeemed | (6,298,177 | ) | (987,313 | ) | (1,022,364 | ) | (7,910,125 | ) | (5,828,618 | ) | ||||||||||
Net increase (decrease) in shares outstanding | 1,836,040 | 3,542,971 | 3,105,152 | 1,337,540 | (243,552 | ) | ||||||||||||||
| 1 | Effective September 19, 2008, the Funds changed their fiscal year end to September 30. |
See Notes to Financial Statements.
102
Table of Contents
| SEPTEMBER 30, 2009 | ||
| INCOME FUND | ||||||||||||||||||
Year Ended September 30, 2009 | Period Ended September 30, 20081 | Year Ended March 31, 2008 | ||||||||||||||||
| $ | 3,368,363 | $ | 1,665,562 | $ | 3,279,389 | |||||||||||||
| (263,209 | ) | (247,963 | ) | 199,120 | ||||||||||||||
| — | — | — | ||||||||||||||||
| — | — | — | ||||||||||||||||
| | 4,892,799 | | (2,942,965 | ) | 1,864,138 | |||||||||||||
| | 7,997,953 | | (1,525,366 | ) | �� | 5,360,647 | ||||||||||||
| (3,433,282 | ) | (1,804,021 | ) | (3,486,230 | ) | |||||||||||||
| — | — | — | ||||||||||||||||
| (3,433,282 | ) | (1,804,021 | ) | (3,486,230 | ) | |||||||||||||
| 50,831,732 | 16,839,954 | 28,822,272 | ||||||||||||||||
| | 2,876,487 | | 1,514,366 | 2,914,811 | ||||||||||||||
| (32,859,256 | ) | (12,925,350 | ) | (25,551,179 | ) | |||||||||||||
| 1,844 | — | — | ||||||||||||||||
| 20,850,807 | 5,428,970 | 6,185,904 | ||||||||||||||||
| 25,415,478 | 2,099,583 | 8,060,321 | ||||||||||||||||
| 89,080,911 | 86,981,328 | 79,821,007 | ||||||||||||||||
| $ | 114,496,389 | $ | 89,080,911 | $ | 86,981,328 | |||||||||||||
| $ | (13,055 | ) | $ | 74,375 | $ | 69,971 | ||||||||||||
| 5,205,427 | 1,717,846 | 2,940,070 | ||||||||||||||||
| | 294,467 | | 155,705 | 299,140 | ||||||||||||||
| (3,381,592 | ) | (1,324,409 | ) | (2,613,037 | ) | |||||||||||||
| | 2,118,302 | | 549,142 | 626,173 | ||||||||||||||
103
Table of Contents
| WASATCH FUNDS — Financial Highlights | ||
| CORE GROWTH FUND | Year Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net asset value, beginning of period | $ | 26.38 | $ | 42.98 | $ | 41.08 | $ | 43.92 | $ | 38.49 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) | — | 1 | 0.19 | (0.05 | ) | 0.17 | 0.56 | |||||||||||||
Net realized and unrealized gains (losses) on investments | (0.23 | ) | (8.98 | ) | 5.65 | 0.90 | 6.41 | |||||||||||||
Total from investment operations | (0.23 | ) | (8.79 | ) | 5.60 | 1.07 | 6.97 | |||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.27 | ) | — | (0.14 | ) | (0.63 | ) | (0.22 | ) | |||||||||||
Distributions from net realized gains | — | (7.81 | ) | (3.56 | ) | (3.28 | ) | (1.32 | ) | |||||||||||
Total distributions | (0.27 | ) | (7.81 | ) | (3.70 | ) | (3.91 | ) | (1.54 | ) | ||||||||||
Net asset value, end of period | $ | 25.88 | $ | 26.38 | $ | 42.98 | $ | 41.08 | $ | 43.92 | ||||||||||
Total return | (.45)% | (24.82)% | 14.28% | 2.46% | 18.58% | 2 | ||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 409,949 | $ | 645,769 | $ | 1,250,618 | $ | 1,381,027 | $ | 1,704,690 | ||||||||||
Ratio of expenses to average net assets | 1.34% | 1.21% | 1.18% | 1.17% | 1.20% | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.24% | 0.52% | (0.09)% | 0.38% | 1.30% | |||||||||||||||
Portfolio turnover rate | 30% | 44% | 54% | 42% | 42% | |||||||||||||||
| EMERGING MARKETS SMALL CAP FUND | Year Ended September 30 | Period Ended September 30 | ||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 20083 | ||||||||||||||||||
Net asset value, beginning of period | $ | 1.24 | $ | 2.00 | ||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income | — | 1 | — | 1 | ||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.33 | (0.76 | ) | |||||||||||||||||
Total from investment operations | 0.33 | (0.76 | ) | |||||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | ||||||||||||||||
Total distributions | — | 1 | — | 1 | ||||||||||||||||
Net asset value, end of period | $ | 1.57 | $ | 1.24 | ||||||||||||||||
Total return | 26.80% | (37.88)% | 4 | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 50,489 | $ | 36,176 | ||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 2.10% | 2.10% | 5 | |||||||||||||||||
Before waivers and reimbursements | 3.03% | 2.67% | 5 | |||||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 0.12% | 0.27% | 5 | |||||||||||||||||
Before waivers and reimbursements | (0.81)% | (0.29)% | 5 | |||||||||||||||||
Portfolio turnover rate | 78% | 38% | 4 | |||||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | In 2005, 0.03% of the Fund’s total return consisted of a voluntary reimbursement by the Advisor for amounts relating to errors in applying the Funds’ cross-trading policies. Excluding this item, the total return would have been 18.55%. |
| 3 | Fund inception date was October 1, 2007. |
| 4 | Not annualized for periods less than one year. |
| 5 | Annualized. |
See Notes to Financial Statements.
104
Table of Contents
| SEPTEMBER 30, 2009 | ||
| GLOBAL OPPORTUNITIES FUND | Period Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 20091 | |||||||||||||||||||
Net asset value, beginning of period | $ | 2.00 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment loss | (0.01 | ) | ||||||||||||||||||
Net realized and unrealized gains on investments | 1.39 | |||||||||||||||||||
Total from investment operations | 1.38 | |||||||||||||||||||
Redemption fees (see Note 2) | — | 2 | ||||||||||||||||||
Total distributions | — | |||||||||||||||||||
Net asset value, end of period | $ | 3.38 | ||||||||||||||||||
Total return | 69.00% | 3 | ||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 117,385 | ||||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 2.25% | 4 | ||||||||||||||||||
Before waivers and reimbursements | 2.61% | 4 | ||||||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | (0.67)% | 4 | ||||||||||||||||||
Before waivers and reimbursements | (1.03)% | 4 | ||||||||||||||||||
Portfolio turnover rate | 22% | 3 | ||||||||||||||||||
| GLOBAL SCIENCE & TECHNOLOGY FUND | Year Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net asset value, beginning of period | $ | 10.31 | $ | 17.69 | $ | 13.97 | $ | 12.98 | $ | 10.15 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment loss | (0.12 | ) | (0.25 | ) | (0.12 | ) | (0.14 | ) | (0.16 | ) | ||||||||||
Net realized and unrealized gains (losses) on investments | 0.93 | (5.65 | ) | 4.43 | 1.40 | 2.99 | ||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | 2 | ||||||||||||||
Total from investment operations | 0.81 | (5.90 | ) | 4.31 | 1.26 | 2.83 | ||||||||||||||
Redemption fees (see Note 2) | — | 2 | — | 2 | — | 2 | — | 2 | — | 2 | ||||||||||
Less distributions: | ||||||||||||||||||||
Distributions from net realized gains | — | (1.48 | ) | (0.59 | ) | (0.27 | ) | — | ||||||||||||
Total distributions | — | (1.48 | ) | (0.59 | ) | (0.27 | ) | — | ||||||||||||
Net asset value, end of period | $ | 11.12 | $ | 10.31 | $ | 17.69 | $ | 13.97 | $ | 12.98 | ||||||||||
Total return | 7.86% | (36.07)% | 31.63% | 9.81% | 27.88% | 5 | ||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 59,540 | $ | 82,164 | $ | 204,142 | $ | 126,359 | $ | 89,353 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 1.95% | 1.92% | 1.85% | 1.94% | 1.95% | |||||||||||||||
Before waivers and reimbursements | 2.14% | 1.92% | 1.85% | 1.94% | 1.97% | |||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | (0.88)% | (1.24)% | (0.97)% | (1.15)% | (1.52)% | |||||||||||||||
Before waivers and reimbursements | (1.07)% | (1.24)% | (0.97)% | (1.15)% | (1.54)% | |||||||||||||||
Portfolio turnover rate | 41% | 89% | 78% | 58% | 80% | |||||||||||||||
| 1 | Fund inception date was November 17, 2008. |
| 2 | Represents amounts less than $.005 per share. |
| 3 | Not annualized for periods less than one year. |
| 4 | Annualized. |
| 5 | In 2005, the Fund’s total return included a voluntary reimbursement by the Advisor for amounts relating to errors in applying the Funds’ cross-trading policies that had no impact on the total return. |
See Notes to Financial Statements.
105
Table of Contents
| WASATCH FUNDS — Financial Highlights (continued) | ||
| HERITAGE GROWTH FUND | Year Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net asset value, beginning of period | $ | 9.00 | $ | 12.57 | $ | 11.40 | $ | 11.43 | $ | 9.86 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) | 0.06 | 0.06 | (0.01 | ) | — | 1 | 0.02 | |||||||||||||
Net realized and unrealized gains (losses) on investments | 0.26 | (2.57 | ) | 1.53 | 0.28 | 1.55 | ||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | 1 | ||||||||||||||
Total from investment operations | 0.32 | (2.51 | ) | 1.52 | 0.28 | 1.57 | ||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.02 | ) | — | — | 1 | (0.01 | ) | — | ||||||||||||
Distributions from net realized gains | (0.02 | ) | (1.06 | ) | (0.35 | ) | (0.30 | ) | — | 1 | ||||||||||
Total distributions | (0.04 | ) | (1.06 | ) | (0.35 | ) | (0.31 | ) | — | |||||||||||
Net asset value, end of period | $ | 9.28 | $ | 9.00 | $ | 12.57 | $ | 11.40 | $ | 11.43 | ||||||||||
Total return | 3.74% | (21.54)% | 13.59% | 2.46% | 15.95% | 2 | ||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 77,194 | $ | 95,414 | $ | 208,918 | $ | 244,380 | $ | 304,670 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | |||||||||||||||
Before waivers and reimbursements | 1.21% | 1.01% | 0.95% | 0.95% | 0.99% | |||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 0.74% | 0.44% | (0.06)% | 0.01% | 0.17% | |||||||||||||||
Before waivers and reimbursements | 0.48% | 0.38% | (0.06)% | 0.01% | 0.13% | |||||||||||||||
Portfolio turnover rate | 33% | 48% | 56% | 54% | 36% | |||||||||||||||
| HERITAGE VALUE FUND | Year or Period Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 20073 | |||||||||||||||||
Net asset value, beginning of period | $ | 8.18 | $ | 10.23 | $ | 10.00 | ||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income | 0.08 | 0.08 | 0.01 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.20 | ) | (1.99 | ) | 0.22 | |||||||||||||||
Total from investment operations | (0.12 | ) | (1.91 | ) | 0.23 | |||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | ||||||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.10 | ) | (0.10 | ) | — | |||||||||||||||
Distributions from net realized gains | — | (0.04 | ) | — | ||||||||||||||||
Total distributions | (0.10 | ) | (0.14 | ) | — | |||||||||||||||
Net asset value, end of period | $ | 7.96 | $ | 8.18 | $ | 10.23 | ||||||||||||||
Total return | (1.13)% | (19.42)% | 2.40% | 4 | ||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,557 | $ | 3,792 | $ | 2,432 | ||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 0.95% | 0.95% | 0.95% | 5 | ||||||||||||||||
Before waivers and reimbursements | 4.09% | 3.89% | 24.78% | 5 | ||||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 1.19% | 1.31% | 1.49% | 5 | ||||||||||||||||
Before waivers and reimbursements | (1.95)% | (1.63)% | (22.34)% | 5 | ||||||||||||||||
Portfolio turnover rate | 246% | 246% | 0% | 4 | ||||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | In 2005, the Fund’s total return included a voluntary reimbursement by the Advisor for amounts relating to errors in applying the Funds’ cross-trading policies that had no impact on the total return. |
| 3 | Fund inception date was August 30, 2007. |
| 4 | Not annualized for periods less than one year. |
| 5 | Annualized. |
See Notes to Financial Statements.
106
Table of Contents
| SEPTEMBER 30, 2009 | ||
| INTERNATIONAL GROWTH FUND | Year Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net asset value, beginning of period | $ | 11.83 | $ | 24.42 | $ | 21.83 | $ | 18.50 | $ | 14.71 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) | (0.13 | ) | (0.28 | ) | 0.03 | (0.09 | ) | (0.10 | ) | |||||||||||
Net realized and unrealized gains (losses) on investments | 2.24 | (9.19 | ) | 6.61 | 3.42 | 3.91 | ||||||||||||||
Net increase from payment by affiliate | — | — | — | — | 0.01 | |||||||||||||||
Total from investment operations | 2.11 | (9.47 | ) | 6.64 | 3.33 | 3.82 | ||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.03 | ) | (0.68 | ) | — | — | — | |||||||||||||
Distributions from net realized gains | — | (2.44 | ) | (4.05 | ) | — | 1 | (0.03 | ) | |||||||||||
Total distributions | (0.03 | ) | (3.12 | ) | (4.05 | ) | — | 1 | (0.03 | ) | ||||||||||
Net asset value, end of period | $ | 13.91 | $ | 11.83 | $ | 24.42 | $ | 21.83 | $ | 18.50 | ||||||||||
Total return | 18.03% | (44.01)% | 34.02% | 18.00% | 2 | 26.02% | 3 | |||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 173,226 | $ | 194,780 | $ | 534,903 | $ | 383,135 | $ | 338,792 | ||||||||||
Ratio of expenses to average net assets | 1.94% | 1.83% | 1.76% | 1.78% | 1.84% | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.03% | (0.15)% | 0.11% | (0.42)% | (0.64)% | |||||||||||||||
Portfolio turnover rate | 56% | 44% | 60% | 64% | 32% | |||||||||||||||
| INTERNATIONAL OPPORTUNITIES FUND | Year or Period Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 20054 | |||||||||||||||
Net asset value, beginning of period | $ | 1.60 | $ | 3.65 | $ | 2.71 | $ | 2.19 | $ | 2.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) | 0.01 | 0.07 | (0.01 | ) | (0.01 | ) | — | 1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | 0.36 | (1.45 | ) | 1.13 | 0.53 | 0.19 | ||||||||||||||
Total from investment operations | 0.37 | (1.38 | ) | 1.12 | 0.52 | 0.19 | ||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | — | 1 | (0.14 | ) | — | 1 | — | — | ||||||||||||
Distributions from net realized gains | — | (0.53 | ) | (0.18 | ) | — | — | |||||||||||||
Total distributions | — | (0.67 | ) | (0.18 | ) | — | — | |||||||||||||
Net asset value, end of period | $ | 1.97 | $ | 1.60 | $ | 3.65 | $ | 2.71 | $ | 2.19 | ||||||||||
Total return | 23.60% | (45.33)% | 42.73% | 23.74% | 9.50% | 5 | ||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 93,856 | $ | 55,691 | $ | 56,433 | $ | 36,839 | $ | 29,440 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 2.26% | 6 | 2.25% | 2.25% | 2.25% | 2.25% | 7 | |||||||||||||
Before waivers and reimbursements | 2.79% | 6 | 2.59% | 2.51% | 2.62% | 3.09% | 7 | |||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | (0.28)% | (0.09)% | (0.18)% | (0.29)% | (0.21)% | 7 | ||||||||||||||
Before waivers and reimbursements | (0.81)% | (0.43)% | (0.44)% | (0.66)% | (1.05)% | 7 | ||||||||||||||
Portfolio turnover rate | 69% | 63% | 54% | 43% | 12% | 5 | ||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | In 2006, the Fund’s total return included a voluntary reimbursement by the Advisor for an amount relating to an incorrect settlement that had no impact on the total return. |
| 3 | In 2005, 0.07% of the Fund’s total return consisted of a voluntary reimbursement by the advisor for a realized investment loss. Excluding this item, the total return would have been 25.95%. The Fund’s total return also included, in 2005, a voluntary reimbursement by the Advisor for amounts relating to errors in applying the Fund’s cross-trading policies that had no impact on the total return. |
| 4 | Fund inception date was January 27, 2005. |
| 5 | Not annualized for periods less than one year. |
| 6 | Includes interest expense of 0.01%. |
| 7 | Annualized. |
See Notes to Financial Statements.
107
Table of Contents
| WASATCH FUNDS — Financial Highlights (continued) | ||
| MICRO CAP FUND | Year Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net asset value, beginning of period | $ | 4.14 | $ | 7.19 | $ | 6.79 | $ | 7.58 | $ | 7.05 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment loss | (0.03 | ) | (0.07 | ) | (0.09 | ) | (0.10 | ) | (0.11 | ) | ||||||||||
Net realized and unrealized gains (losses) on investments | (0.21 | ) | (1.81 | ) | 1.29 | 0.65 | 1.70 | |||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | 1 | ||||||||||||||
Total from investment operations | (0.24 | ) | (1.88 | ) | 1.20 | 0.55 | 1.59 | |||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.01 | ) | — | — | — | — | ||||||||||||||
Distributions from net realized gains | — | (1.17 | ) | (0.80 | ) | (1.34 | ) | (1.06 | ) | |||||||||||
Total distributions | (0.01 | ) | (1.17 | ) | (0.80 | ) | (1.34 | ) | (1.06 | ) | ||||||||||
Net asset value, end of period | $ | 3.89 | $ | 4.14 | $ | 7.19 | $ | 6.79 | $ | 7.58 | ||||||||||
Total return | (5.70)% | (30.46)% | 18.72% | 8.51% | 26.42% | 2 | ||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 272,537 | $ | 359,394 | $ | 631,417 | $ | 583,901 | $ | 579,244 | ||||||||||
Ratio of expenses to average net assets | 2.24% | 2.16% | 2.14% | 2.14% | 2.18% | |||||||||||||||
Ratio of net investment loss to average net assets | (0.96)% | (1.26)% | (1.25)% | (1.39)% | (1.58)% | |||||||||||||||
Portfolio turnover rate | 46% | 54% | 48% | 46% | 50% | |||||||||||||||
| MICRO CAP VALUE FUND | Year Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net asset value, beginning of period | $ | 1.80 | $ | 2.98 | $ | 2.93 | $ | 2.72 | $ | 2.57 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment loss | (0.02 | ) | (0.02 | ) | (0.03 | ) | (0.03 | ) | (0.04 | ) | ||||||||||
Net realized and unrealized gains (losses) on investments | 0.33 | (0.75 | ) | 0.64 | 0.50 | 0.49 | ||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | 1 | ||||||||||||||
Total from investment operations | 0.31 | (0.77 | ) | 0.61 | 0.47 | 0.45 | ||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||
Less distributions: | ||||||||||||||||||||
Distributions from net realized gains | — | (0.41 | ) | (0.56 | ) | (0.26 | ) | (0.30 | ) | |||||||||||
Total distributions | — | (0.41 | ) | (0.56 | ) | (0.26 | ) | (0.30 | ) | |||||||||||
Net asset value, end of period | $ | 2.11 | $ | 1.80 | $ | 2.98 | $ | 2.93 | $ | 2.72 | ||||||||||
Total return | 17.22% | (29.67)% | 22.84% | 18.89% | 19.87% | 3 | ||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 115,216 | $ | 97,912 | $ | 120,039 | $ | 95,508 | $ | 86,903 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 2.26% | 4 | 2.25% | 2.25% | 2.25% | 2.25% | ||||||||||||||
Before waivers and reimbursements | 2.46% | 4 | 2.35% | 2.30% | 2.33% | 2.36% | ||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | (1.36)% | (1.21)% | (1.06)% | (0.99)% | (1.41)% | |||||||||||||||
Before waivers and reimbursements | (1.56)% | (1.31)% | (1.11)% | (1.07)% | (1.52)% | |||||||||||||||
Portfolio turnover rate | 145% | 144% | 105% | 95% | 85% | |||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | In 2005, the Fund’s total return included a voluntary reimbursement by the Advisor for amounts relating to errors in applying the Funds’ cross-trading policies that had no impact on the total return. |
| 3 | In 2005, the Fund’s total return included a voluntary reimbursement by the Advisor for a realized investment loss that had no impact on the total return. |
| 4 | Includes dividend payments for securities sold short of 0.01%. |
See Notes to Financial Statements.
108
Table of Contents
| SEPTEMBER 30, 2009 | ||
| SMALL CAP GROWTH FUND | Year Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net asset value, beginning of period | $ | 26.50 | $ | 40.10 | $ | 36.99 | $ | 41.23 | $ | 34.94 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment loss | (0.12 | ) | (0.16 | ) | (0.25 | ) | (0.26 | ) | (0.25 | ) | ||||||||||
Net realized and unrealized gains (losses) on investments | 2.27 | (8.85 | ) | 6.28 | 0.84 | 7.32 | ||||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | 1 | ||||||||||||||
Total from investment operations | 2.15 | (9.01 | ) | 6.03 | 0.58 | 7.07 | ||||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||
Less distributions: | ||||||||||||||||||||
Distributions from net realized gains | (0.06 | ) | (4.59 | ) | (2.92 | ) | (4.82 | ) | (0.78 | ) | ||||||||||
Total distributions | (0.06 | ) | (4.59 | ) | (2.92 | ) | (4.82 | ) | (0.78 | ) | ||||||||||
Net asset value, end of period | $ | 28.59 | $ | 26.50 | $ | 40.10 | $ | 36.99 | $ | 41.23 | ||||||||||
Total return | 8.20% | (25.42)% | 16.94% | 1.40% | 20.73% | 2 | ||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 809,318 | $ | 735,546 | $ | 1,075,433 | $ | 1,234,978 | $ | 1,357,862 | ||||||||||
Ratio of expenses to average net assets | 1.29% | 1.21% | 1.19% | 1.18% | 3 | 1.18% | ||||||||||||||
Ratio of net investment loss to average net assets | (0.60)% | (0.47)% | (0.52)% | (0.64)% | (0.62)% | |||||||||||||||
Portfolio turnover rate | 52% | 51% | 43% | 41% | 36% | |||||||||||||||
| SMALL CAP VALUE FUND | Year Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net asset value, beginning of period | $ | 2.82 | $ | 5.22 | $ | 5.29 | $ | 5.67 | $ | 5.54 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) | (0.01 | ) | 0.01 | 0.01 | 0.05 | 0.05 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.06 | ) | (1.11 | ) | 0.67 | 0.36 | 0.86 | |||||||||||||
Net increase from payment by affiliate | — | — | — | — | — | 1 | ||||||||||||||
Total from investment operations | (0.07 | ) | (1.10 | ) | 0.68 | 0.41 | 0.91 | |||||||||||||
Redemption fees (see Note 2) | — | 1 | — | 1 | — | 1 | — | 1 | — | 1 | ||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | — | (0.01 | ) | (0.04 | ) | (0.07 | ) | — | ||||||||||||
Distributions from net realized gains | — | (1.29 | ) | (0.71 | ) | (0.72 | ) | (0.78 | ) | |||||||||||
Total distributions | — | (1.30 | ) | (0.75 | ) | (0.79 | ) | (0.78 | ) | |||||||||||
Net asset value, end of period | $ | 2.75 | $ | 2.82 | $ | 5.22 | $ | 5.29 | $ | 5.67 | ||||||||||
Total return | (2.48)% | (26.26)% | 13.32% | 7.88% | 19.47% | 4 | ||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 218,358 | $ | 336,914 | $ | 660,637 | $ | 664,625 | $ | 734,842 | ||||||||||
Ratio of expenses to average net assets | 1.92% | 1.76% | 1.69% | 1.68% | 1.72% | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.33)% | 0.15% | 0.18% | 0.81% | 0.94% | |||||||||||||||
Portfolio turnover rate | 89% | 78% | 84% | 40% | 43% | |||||||||||||||
| 1 | Represents amounts less than $.005 per share. |
| 2 | In 2005, the Fund’s total return included a voluntary reimbursement by the Advisor for amounts relating to errors in applying the Funds’ cross-trading policies that had no impact on the total return. The effect of net realized gains on the disposal of investments in violation of an investment restriction on total return was less than 0.01%. |
| 3 | In 2006, the Fund received a reimbursement of investment advisory fees, which had an impact on the Fund’s expense ratio of less than 0.01%. |
| 4 | In 2005, the Fund’s total return included a voluntary reimbursement by the Advisor for a realized investment loss that had no impact on the total return. |
See Notes to Financial Statements.
109
Table of Contents
| WASATCH FUNDS — Financial Highlights (continued) | ||
| STRATEGIC INCOME FUND | Year or Period Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 20061 | ||||||||||||||||
Net asset value, beginning of period | $ | 7.62 | $ | 11.00 | $ | 10.48 | $ | 10.00 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income | 0.29 | 0.55 | 0.48 | 0.31 | ||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.85 | ) | (2.29 | ) | 0.54 | 0.44 | ||||||||||||||
Total from investment operations | (0.56 | ) | (1.74 | ) | 1.02 | 0.75 | ||||||||||||||
Redemption fees (see Note 2) | — | 2 | — | 2 | 0.01 | — | 2 | |||||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.29 | ) | (0.50 | ) | (0.47 | ) | (0.27 | ) | ||||||||||||
Distributions from net realized gains | — | (1.14 | ) | (0.04 | ) | — | ||||||||||||||
Total distributions | (0.29 | ) | (1.64 | ) | (0.51 | ) | (0.27 | ) | ||||||||||||
Net asset value, end of period | $ | 6.77 | $ | 7.62 | $ | 11.00 | $ | 10.48 | ||||||||||||
Total return | (6.49)% | (18.17)% | 9.77% | 7.58% | 3 | |||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 17,710 | $ | 21,889 | $ | 23,621 | $ | 12,732 | ||||||||||||
Ratio of expenses to average net assets (including interest | ||||||||||||||||||||
Net of waivers and reimbursements | 1.05% | 0.97% | 1.05% | 0.95% | 4 | |||||||||||||||
Before waivers and reimbursements | 1.71% | 1.46% | 1.57% | 2.66% | 4 | |||||||||||||||
Ratio of expenses to average net assets (excluding interest | ||||||||||||||||||||
Net of waivers and reimbursements | 0.95% | 0.95% | 0.95% | 0.95% | 4 | |||||||||||||||
Before waivers and reimbursements | 1.61% | 1.44% | 1.47% | 2.66% | 4 | |||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 4.93% | 5.96% | 4.14% | 5.40% | 4 | |||||||||||||||
Before waivers and reimbursements | 4.27% | 5.47% | 3.62% | 3.69% | 4 | |||||||||||||||
Portfolio turnover rate | 84% | 81% | 86% | 14% | 3 | |||||||||||||||
| ULTRA GROWTH FUND | Year Ended September 30 | |||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net asset value, beginning of period | $ | 15.76 | $ | 27.78 | $ | 24.09 | $ | 27.98 | $ | 24.07 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment loss | (0.14 | ) | (0.22 | ) | (0.33 | ) | (0.34 | ) | (0.38 | ) | ||||||||||
Net realized and unrealized gains (losses) on investments | 0.04 | (8.28 | ) | 5.80 | 0.23 | 5.26 | ||||||||||||||
Net increase from payment by affiliate | — | — | — | — | 2 | — | 2 | |||||||||||||
Total from investment operations | (0.10 | ) | (8.50 | ) | 5.47 | (0.11 | ) | 4.88 | ||||||||||||
Redemption fees (see Note 2) | — | 2 | — | 2 | — | 2 | — | 2 | — | 2 | ||||||||||
Less distributions: | ||||||||||||||||||||
Distributions from net realized gains | — | (3.52 | ) | (1.78 | ) | (3.78 | ) | (0.97 | ) | |||||||||||
Total distributions | — | (3.52 | ) | (1.78 | ) | (3.78 | ) | (0.97 | ) | |||||||||||
Net asset value, end of period | $ | 15.66 | $ | 15.76 | $ | 27.78 | $ | 24.09 | $ | 27.98 | ||||||||||
Total return | (.63)% | (35.09)% | 23.80% | (.48)% | 21.00% | 5 | ||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 121,284 | $ | 144,004 | $ | 268,633 | $ | 306,406 | $ | 389,894 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | 1.75% | 1.53% | 1.49% | 1.48% | 1.50% | |||||||||||||||
Before waivers and reimbursements | 1.77% | 1.53% | 1.49% | 1.48% | 1.50% | |||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||
Net of waivers and reimbursements | (1.12)% | (0.93)% | (1.12)% | (1.19)% | (1.30)% | |||||||||||||||
Before waivers and reimbursements | (1.14)% | (0.93)% | (1.12)% | (1.19)% | (1.30)% | |||||||||||||||
Portfolio turnover rate | 64% | 84% | 55% | 76% | 65% | |||||||||||||||
| 1 | Fund inception date was February 1, 2006. |
| 2 | Represents amounts less than $.005 per share. |
| 3 | Not annualized for periods less than one year. |
| 4 | Annualized. |
| 5 | In 2005, the Fund’s total return included a voluntary reimbursement by the Advisor for amounts relating to errors in applying the Funds’ cross-trading policies that had no impact on the total return. |
See Notes to Financial Statements.
110
Table of Contents
| SEPTEMBER 30, 2009 | ||
| WASATCH-1ST SOURCE INCOME EQUITY FUND | Year Ended September 30 | Period Ended September 30 | Year Ended March 31 | |||||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 20081 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 12.93 | $ | 14.44 | $ | 14.80 | $ | 14.14 | $ | 13.61 | $ | 12.16 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.20 | 0.14 | 2 | 0.21 | 0.22 | 0.17 | 0.14 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.96 | ) | (1.52 | ) | 0.31 | 1.66 | 2.10 | 1.91 | ||||||||||||||||
Total from investment operations | (0.76 | ) | (1.38 | ) | 0.52 | 1.88 | 2.27 | 2.05 | ||||||||||||||||
Redemption fees (see Note 2) | — | 3 | — | — | — | — | — | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.20 | ) | (0.13 | ) | (0.21 | ) | (0.21 | ) | (0.18 | ) | (0.13 | ) | ||||||||||||
Distributions from net realized gains | — | — | (0.67 | ) | (1.01 | ) | (1.56 | ) | (0.47 | ) | ||||||||||||||
Total distributions | (0.20 | ) | (0.13 | ) | (0.88 | ) | (1.22 | ) | (1.74 | ) | (0.60 | ) | ||||||||||||
Net asset value, end of period | $ | 11.97 | $ | 12.93 | $ | 14.44 | $ | 14.80 | $ | 14.14 | $ | 13.61 | ||||||||||||
Total return | (5.63)% | (9.65)% | 4 | 3.22% | 13.69% | 17.72% | 17.17% | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,385,508 | $ | 780,384 | $ | 447,674 | $ | 167,133 | $ | 129,508 | $ | 103,127 | ||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements | 1.10% | 1.04% | 5 | 1.13% | 1.15% | 1.19% | 1.19% | |||||||||||||||||
Before waivers and reimbursements | 1.22% | 1.29% | 5 | 1.38% | 1.40% | 1.45% | 1.44% | |||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements | 1.93% | 1.99% | 5 | 1.43% | 1.52% | 1.25% | 1.10% | |||||||||||||||||
Before waivers and reimbursements | 1.81% | 1.74% | 5 | 1.18% | 1.27% | 0.99% | 0.85% | |||||||||||||||||
Portfolio turnover rate | 16% | 5% | 4 | 36% | 26% | 37% | 44% | |||||||||||||||||
| WASATCH-1ST SOURCE LONG/SHORT FUND | Year Ended September 30 | Period Ended September 30 | Year Ended March 31 | |||||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 20081 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 10.81 | $ | 11.27 | $ | 11.59 | $ | 11.21 | $ | 10.69 | $ | 10.59 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.02 | 0.05 | 2 | 0.27 | 0.26 | 0.21 | 0.08 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.50 | (0.46 | ) | 0.02 | 0.90 | 0.71 | 0.35 | |||||||||||||||||
Total from investment operations | 0.52 | (0.41 | ) | 0.29 | 1.16 | 0.92 | 0.43 | |||||||||||||||||
Redemption fees (see Note 2) | — | 3 | — | — | — | — | — | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.05 | ) | (0.05 | ) | (0.28 | ) | (0.28 | ) | (0.20 | ) | (0.09 | ) | ||||||||||||
Distributions from net realized gains | (0.15 | ) | — | (0.33 | ) | (0.50 | ) | (0.20 | ) | (0.24 | ) | |||||||||||||
Total distributions | (0.20 | ) | (0.05 | ) | (0.61 | ) | (0.78 | ) | (0.40 | ) | (0.33 | ) | ||||||||||||
Net asset value, end of period | $ | 11.13 | $ | 10.81 | $ | 11.27 | $ | 11.59 | $ | 11.21 | $ | 10.69 | ||||||||||||
Total return | 5.35% | (3.66)% | 4 | 2.34% | 10.44% | 8.80% | 4.07% | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 146,127 | $ | 122,114 | $ | 87,410 | $ | 53,894 | $ | 29,831 | $ | 25,127 | ||||||||||||
Ratio of expenses to average net assets (including interest expense and dividend payments for securities sold short): | ||||||||||||||||||||||||
Net of waivers and reimbursements | 1.91% | 1.77% | 5 | 1.75% | 1.84% | 1.72% | 1.71% | |||||||||||||||||
Before waivers and reimbursements | 1.96% | 2.02% | 5 | 2.00% | 2.09% | 1.98% | 1.97% | |||||||||||||||||
Ratio of expenses to average net assets (excluding interest expense and dividend payments for securities sold short): | ||||||||||||||||||||||||
Net of waivers and reimbursements | 1.47% | 1.46% | 5 | 1.57% | 1.56% | 1.63% | 1.64% | |||||||||||||||||
Before waivers and reimbursements | 1.52% | 1.71% | 5 | 1.82% | 1.81% | 1.89% | 1.90% | |||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements | 0.24% | 0.95% | 5 | 2.25% | 2.40% | 1.98% | 0.76% | |||||||||||||||||
Before waivers and reimbursements | 0.19% | 0.70% | 5 | 2.00% | 2.15% | 1.72% | 0.50% | |||||||||||||||||
Portfolio turnover rate | 167% | 71% | 4 | 179% | 172% | 123% | 206% | |||||||||||||||||
| 1 | Effective September 19, 2008, the Fund changed its fiscal year end to September 30. |
| 2 | Average shares method used in calculation. |
| 3 | Represents amounts less than $.005 per share. |
| 4 | Not annualized for periods less than one year. |
| 5 | Annualized. |
See Notes to Financial Statements.
111
Table of Contents
| WASATCH FUNDS — Financial Highlights (continued) | SEPTEMBER 30, 2009 | |
| U.S. TREASURY FUND | Year Ended September 30 | |||||||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||
Net asset value, beginning of period | $ | 14.95 | $ | 13.84 | $ | 14.12 | $ | 14.68 | $ | 13.77 | ||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.55 | 0.58 | 0.64 | 0.39 | 0.45 | |||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.29 | 1.10 | (0.29 | ) | (0.24 | ) | 1.05 | |||||||||||||||||
Total from investment operations | 1.84 | 1.68 | 0.35 | 0.15 | 1.50 | |||||||||||||||||||
Redemption fees (see Note 2) | 0.05 | 0.01 | 0.01 | 0.01 | 0.01 | |||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.55 | ) | (0.58 | ) | (0.64 | ) | (0.72 | ) | (0.60 | ) | ||||||||||||||
Distributions from net realized gains | — | — | — | — | — | |||||||||||||||||||
Total distributions | (0.55 | ) | (0.58 | ) | (0.64 | ) | (0.72 | ) | (0.60 | ) | ||||||||||||||
Net asset value, end of period | $ | 16.29 | $ | 14.95 | $ | 13.84 | $ | 14.12 | $ | 14.68 | ||||||||||||||
Total return | 12.49% | 12.33% | 2.68% | 1.21% | 11.41% | |||||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 154,099 | $ | 121,240 | $ | 115,788 | $ | 204,994 | $ | 82,599 | ||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements | 0.75% | 0.74% | 0.71% | 0.72% | 0.75% | |||||||||||||||||||
Before waivers and reimbursements | 0.79% | 0.74% | 0.71% | 0.72% | 0.86% | |||||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements | 3.34% | 3.85% | 4.23% | 4.21% | 4.01% | |||||||||||||||||||
Before waivers and reimbursements | 3.30% | 3.85% | 4.23% | 4.21% | 3.90% | |||||||||||||||||||
Portfolio turnover rate | 62% | 31% | 19% | 2% | 19% | |||||||||||||||||||
| WASATCH-1ST SOURCE INCOME FUND | Year Ended September 30 | Period Ended September 30 | Year Ended March 31 | |||||||||||||||||||||
| (for a share outstanding throughout each period) | 2009 | 20081 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||
Net asset value, beginning of period | $ | 9.59 | $ | 9.95 | $ | 9.73 | $ | 9.63 | $ | 9.88 | $ | 10.34 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.33 | 0.18 | 2 | 0.40 | 0.38 | 0.33 | 0.29 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.46 | (0.35 | ) | 0.24 | 0.13 | (0.18 | ) | (0.37 | ) | |||||||||||||||
Total from investment operations | 0.79 | (0.17 | ) | 0.64 | 0.51 | 0.15 | (0.08 | ) | ||||||||||||||||
Redemption fees (see Note 2) | — | 3 | — | — | — | — | — | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.34 | ) | (0.19 | ) | (0.42 | ) | (0.41 | ) | (0.40 | ) | (0.38 | ) | ||||||||||||
Distributions from net realized gains | — | — | — | — | — | — | ||||||||||||||||||
Total distributions | (0.34 | ) | (0.19 | ) | (0.42 | ) | (0.41 | ) | (0.40 | ) | (0.38 | ) | ||||||||||||
Net asset value, end of period | $ | 10.04 | $ | 9.59 | $ | 9.95 | $ | 9.73 | $ | 9.63 | $ | 9.88 | ||||||||||||
Total return | 8.42% | (1.69)% | 4 | 6.74% | 5.43% | 1.52% | (0.76)% | |||||||||||||||||
Supplemental data and ratios: | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 114,496 | $ | 89,081 | $ | 86,981 | $ | 78,921 | $ | 72,874 | $ | 75,445 | ||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements | 0.84% | 0.87% | 5 | 0.95% | 0.92% | 0.95% | 0.93% | |||||||||||||||||
Before waivers and reimbursements | 0.88% | 1.12% | 5 | 1.20% | 1.17% | 1.21% | 1.19% | |||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||
Net of waivers and reimbursements | 3.44% | 3.66% | 5 | 4.05% | 3.95% | 3.36% | 2.84% | |||||||||||||||||
Before waivers and reimbursements | 3.40% | 3.41% | 5 | 3.80% | 3.70% | 3.10% | 2.58% | |||||||||||||||||
Portfolio turnover rate | 28% | 15% | 4 | 56% | 59% | 70% | 79% | |||||||||||||||||
| 1 | Effective September 19, 2008, the Fund changed its fiscal year end to September 30. |
| 2 | Average shares method used in calculation. |
| 3 | Represents amounts less than $.005 per share. |
| 4 | Not annualized for periods less than one year. |
| 5 | Annualized. |
See Notes to Financial Statements.
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| WASATCH FUNDS — Notes to Financial Statements | SEPTEMBER 30, 2009 | |
1. ORGANIZATION
Wasatch Funds, Inc. is a Minnesota corporation registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and consists of 18 series or “funds” (each a “Fund” and collectively the “Funds”). The Core Growth Fund, Global Science & Technology Fund, Heritage Growth Fund, International Growth Fund, Micro Cap Fund, Micro Cap Value Fund, Small Cap Growth Fund, Small Cap Value Fund, Ultra Growth Fund, Wasatch-1st Source Income Equity Fund, Wasatch-Hoisington U.S. Treasury Fund (“U.S. Treasury Fund”), and Wasatch-1st Source Income Fund are each diversified funds. The Emerging Markets Small Cap Fund, Global Opportunities Fund, Heritage Value Fund, International Opportunities Fund, Strategic Income Fund, and Wasatch-1st Source Long/Short Fund are each non-diversified funds. Each Fund maintains its own investment objective. The Funds have entered into an investment advisory agreement with Wasatch Advisors, Inc. (the “Advisor” or “Wasatch”) as investment advisor.
The Core Growth Fund, Emerging Markets Small Cap Fund, Global Opportunities Fund, Global Science & Technology Fund, Heritage Growth Fund, Heritage Value Fund, International Growth Fund, International Opportunities Fund, Micro Cap Fund, Micro Cap Value Fund, Small Cap Growth Fund, Small Cap Value Fund, Strategic Income Fund, Ultra Growth Fund, Wasatch-1st Source Income Equity Fund, and Wasatch-1st Source Long/Short Fund are referred to herein as the “Equity Funds.”
1st Source Corporation Investment Advisors, Inc. (“1st Source”) signed an asset purchase agreement with Wasatch relating to the acquisition by Wasatch of certain 1st Source mutual fund advisor business assets related to its management of the 1st Source Monogram Income Fund, the 1st Source Monogram Income Equity Fund and the 1st Source Monogram Long/Short Fund.
At a Special Meeting of the Shareholders of the 1st Source Monogram Income Fund, a series of The Coventry Group, held on December 11, 2008, the shareholders of 1st Source Monogram Income Fund approved the acquisition of all of the assets of the 1st Source Monogram Income Fund by the Wasatch-1st Source Income Fund in exchange for shares of the Wasatch-1st Source Income Fund and the assumption of all liabilities of the 1st Source Monogram Income Fund by the Wasatch-1st Source Income Fund and the subsequent liquidation and dissolution of the 1st Source Monogram Income Fund.
At a Special Meeting of the Shareholders of the 1st Source Monogram Income Equity Fund, a series of The Coventry Group, held on December 11, 2008, the shareholders of 1st Source Monogram Income Equity Fund approved the acquisition of all of the assets of the 1st Source Monogram Income Equity Fund by the Wasatch-1st Source Income Equity Fund in exchange for shares of the Wasatch-1st Source Income Equity Fund and the assumption of all liabilities of the 1st Source Monogram Income Equity Fund by the Wasatch-1st Source Income Equity Fund and the subsequent liquidation and dissolution of the 1st Source Monogram Income Equity Fund.
At a Special Meeting of the Shareholders of the 1st Source Monogram Long/Short Fund, a series of The Coventry Group, held on December 11, 2008, the shareholders of 1st Source Monogram Long/Short Fund approved the acquisition of all of the assets of the 1st Source Monogram Long/Short Fund by the Wasatch-1st Source Long/Short Fund in exchange for shares of the Wasatch-1st Source Long/Short Fund and the assumption of all liabilities of the 1st Source Monogram Long/Short Fund by the Wasatch-1st Source Long/Short Fund and the subsequent liquidation and dissolution of the 1st Source Monogram Long/Short Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant policies related to investments of the Funds held at September 30, 2009.
Valuation of Securities — Securities are valued as of the close of the New York Stock Exchange (generally 4:00 p.m. Eastern Time) on the valuation date. Equity securities are valued using a commercial pricing service at the last quoted sales price taken from the primary market in which each security trades and, with respect to equity securities traded on NASDAQ, such securities are valued using the NASDAQ Official Closing Price (“NOCP”) or last sales price if no NOCP is available. If there are no sales on the primary exchange or market on a given day, then the security is valued at the most recent bid price on the primary exchange or market as provided by a pricing service. Debt securities (other than short-term instruments) are valued at current market value by a commercial pricing service, or by using the last sale or bid price. Short term securities, which mature in 60 days or less at time of purchase, are generally valued at amortized cost, unless it is determined that the amortized cost method would not represent fair value, in which case the securities are marked to market. Exchange-traded options are valued at the last sale price in the market where they are principally traded. If there are no sales on the primary exchange or market on a given day, then the option is valued at the most recent bid price on the primary exchange or market as provided by a pricing service. If market quotations are not readily available for the Funds’ investments in securities such as restricted securities, private placements, securities for which trading has been halted or other illiquid securities, these investments are valued at fair value in accordance with Board-approved Pricing Policies and Procedures by the Pricing Committee of the Advisor (“Pricing Committee”) with oversight by the Board of Directors. Fair value is defined as the price that would be received upon the sale of an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under market conditions. For each applicable investment that is fair valued, the Pricing Committee considers, to the extent applicable, various factors including, but not limited to, the financial condition of the company or limited partnership, operating results, prices paid in follow-on rounds, comparable companies in the public market, the nature and duration of the restrictions for holding the securities, and other relevant factors.
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Additionally, a Fund’s investments are valued at fair value by the Pricing Committee if the Advisor determines that an event impacting the value of an investment occurred between the closing time of a security’s primary market or exchange (for example, a foreign exchange or market) and the time the Fund’s share price is calculated. Significant events include, but are not limited to the following: significant fluctuations in domestic markets, foreign markets or foreign currencies; occurrences not directly tied to the securities markets such as natural disasters, armed conflicts or significant governmental actions; and major announcements affecting a single issuer or an entire market or market sector. In responding to a significant event, the Pricing Committee determines the fair value of affected securities by considering factors including, but not limited to: index options and futures traded subsequent to the close; American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) or other related receipts; currency spot or forward markets that trade after pricing of the foreign exchange; other derivative securities traded after the close such as Standard & Poor’s Depository Receipts (“SPDRs”) and other exchange traded funds (“ETFs”); and alternative market quotes on the affected securities. When applicable, the Funds use a systematic fair valuation model provided by an independent third party to assist in adjusting the valuation of foreign securities.
As of September 30, 2009, the aggregate amount of fair valued securities, excluding any foreign securities fair valued pursuant to a systematic fair valuation model, as a percentage of net assets for the Funds was as follows:
Core Growth Fund | 1.78 | % | |
Emerging Markets Small Cap Fund | 0.23 | % | |
Global Opportunities Fund | 0.12 | % | |
Global Science & Technology Fund | 2.51 | % | |
Heritage Growth Fund | — | ||
Heritage Value Fund | — | ||
International Growth Fund | — | ||
International Opportunities Fund | 0.61 | % | |
Micro Cap Fund | 1.00 | % | |
Micro Cap Value Fund | 2.10 | % | |
Small Cap Growth Fund | 1.03 | % | |
Small Cap Value Fund | 3.16 | % | |
Strategic Income Fund | 1.05 | % | |
Ultra Growth Fund | 5.09 | % | |
Wasatch-1st Source Income Equity Fund | — | ||
Wasatch-1st Source Long/Short Fund | — | ||
U.S. Treasury Fund | — | ||
Wasatch-1st Source Income Fund | 1.61 | % |
Foreign Currency Translations — Values of investments denominated in foreign currencies are converted into U.S. dollars using the current exchange rates each business day. Purchases and sales of investments and dividend income are translated into U.S. dollars using the current prevailing exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized gains or losses on securities is reflected as a component of such gains or losses on the Statement of Operations. Transactions in foreign denominated assets may involve greater risks than domestic transactions.
At September 30, 2009, the foreign currencies held by the Funds were as follows (amounts in U.S. dollars):
| Cost of Currency | Value of Currency | |||||
Core Growth Fund | ||||||
South Korean Won | $ | 27 | $ | 29 | ||
Emerging Markets Small Cap Fund | ||||||
Egyptian Pound | $ | 18 | $ | 18 | ||
Malaysian Ringgit | 4,840 | 4,840 | ||||
New Taiwan Dollar | 5,267 | 5,372 | ||||
South Korean Won | 1 | 1 | ||||
| $ | 10,126 | $ | 10,231 | |||
Global Opportunities Fund | ||||||
Euro Currency | $ | 3,069 | $ | 3,075 | ||
Japanese Yen | 1,578 | 1,586 | ||||
South Korean Won | 2 | 2 | ||||
| $ | 4,649 | $ | 4,663 | |||
Heritage Growth Fund | ||||||
Indian Rupee | $ | 241,140 | $ | 241,140 | ||
International Growth Fund | ||||||
Australian Dollar | $ | 7 | $ | 7 | ||
Egyptian Pound | 9 | 9 | ||||
Indian Rupee | 15,741 | 15,697 | ||||
Japanese Yen | 3 | 3 | ||||
New Taiwan Dollar | 16,718 | 17,603 | ||||
South Korean Won | 16 | 18 | ||||
| $ | 32,494 | $ | 33,337 | |||
International Opportunities Fund | ||||||
Euro Currency | $ | 5,441 | $ | 5,451 | ||
Hong Kong Dollar | 2,605 | 2,605 | ||||
New Taiwan Dollar | 3 | 3 | ||||
South Korean Won | 8 | 8 | ||||
| $ | 8,057 | $ | 8,067 | |||
Micro Cap Fund | ||||||
South Korean Won | $ | 11 | $ | 10 | ||
Ultra Growth Fund | ||||||
Indian Rupee | $ | 572,242 | $ | 570,636 | ||
Foreign Currency Contracts — The Funds may enter into foreign currency contracts to settle planned purchases or sales of securities or to protect against a possible loss resulting from the adverse change in the relationship between the U.S. Dollar and a foreign currency involved in an underlying transaction. Foreign currency contracts are agreements between two parties to buy and sell a currency at a set price on a future date. The market value of a foreign currency contract fluctuates with changes in currency exchange rates. Foreign currency contracts are marked-to-market daily and the change in market value is recorded by a Fund as unrealized appreciation or depreciation. When a foreign currency contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. These contracts may involve market risk in excess of the unrealized gain or loss reflected on the Statements of Assets and Liabilities. In addition, a Fund could be exposed to credit risk if a counterparty is unable or unwilling
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to meet the terms of the contracts or if the value of the currency changes unfavorably. In connection with these contracts, the Funds may segregate cash and/or securities in a sufficient amount as collateral in accordance with the terms of the respective contracts.
Investment in Securities and Related Investment Income — Security transactions are accounted for on the trade date. Gains or losses on securities sold are determined on the identified cost basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date except that certain dividends from foreign securities may be recorded after the ex-dividend date based on when the Fund is informed of the dividend. Interest income and estimated expenses are accrued daily. Bond discount and premiums are amortized using the interest method. To the extent dividends received from Real Estate Investment Trust securities include return of capital distributions; such distributions are recorded as income, and adjusted accordingly for tax purposes.
Short Sales — To a limited extent, the Equity Funds, except the Wasatch-1st Source Income Equity Fund, may enter into short sales whereby a fund sells a security it generally does not own (the security is borrowed), in anticipation of a decline in the security’s price. The initial amount of a short sale is recorded as a liability which is marked to market daily. Fluctuations in the value of the short liability are recorded as unrealized gains or losses. If a fund shorts a security when also holding a long position in the security (a “short against the box”), as the security’s price declines, the short position increases in value, offsetting the long position’s decrease in value. The opposite effect occurs if the security’s price rises. A Fund realizes a gain or loss upon closing of the short sale (returning the security to the counterparty by way of purchase or delivery of a long position owned). Possible losses from short sales may be unlimited, whereas losses from purchases cannot exceed the total amount invested. The Funds are liable to the buyer for any dividends payable on securities while those securities are in a short position. These dividends are an expense of the Funds. The Funds designate collateral consisting of cash, U.S. government securities or other liquid assets sufficient to collateralize the market value of short positions.
Options Transactions — The Equity Funds and the Income Fund may buy and sell put and call options, write covered put and call options, including over-the-counter options, on portfolio securities where the completion of the obligation is dependent upon the credit standing of another party. Options are a type of derivative financial instrument. The funds may invest in derivative financial instruments, including options, in order to manage risk or gain exposure to various other investments or markets. The risk in writing a call option is that a Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that a Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that a Fund pays a premium whether or not the option is exercised. A Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not
exist. Option contracts are valued daily and unrealized appreciation or depreciation is recorded. A Fund will realize a gain or loss upon expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. The Funds designate collateral consisting of cash, U.S. government securities or other liquid assets sufficient to collateralize the market value of written options.
Repurchase Agreements — The Funds may engage in repurchase transactions. Under the terms of a typical repurchase agreement, a fund takes possession of an underlying debt obligation subject to an obligation of the seller to repurchase and the fund to resell the obligation at an agreed upon price and time. The market value of the collateral must be at least equal at all times to the total amount of the repurchase obligation, including interest. Generally, in the event of counterparty default, the fund has the right to use the collateral to offset losses incurred.
Federal Income Taxes — It is the Funds’ policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all taxable income to shareholders. Accordingly, no provision for federal income or excise taxes has been made.
Expenses — The Funds contract for various services mostly on a collective basis. Most expenses are directly attributable to each Fund and therefore are charged accordingly. Expenses that are not directly attributable to one or more Funds are allocated among applicable Funds on an equitable and consistent basis considering such things as the nature and type of expense and the relative net assets of the Funds.
Use of Management Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported changes in net assets during the reporting period. Actual results could differ from those estimates.
Guarantees and Indemnifications — In the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds and/or its affiliates that have not yet occurred. Based on experience, however, the risk of loss is expected to be remote.
Redemption Fees — The Funds deduct a fee of 2.00% from redemption proceeds on shares of the Funds held 60 days or less. Redemption fees retained by the Funds are credited to additional paid-in capital.
3. DISTRIBUTIONS
Dividends from net investment income and net realized gains, if any, are declared and paid at least annually for all Funds, except for dividends from net investment income in five funds. The 1st Source Income Fund declares and pays dividends monthly. The Strategic Income, 1st Source Long/
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Short, U.S. Treasury and 1st Source Income Equity Funds declare and pay dividends quarterly. The amount of dividends and distributions from net investment income and net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. The Funds may utilize earnings and profits distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
To the extent these book and tax differences are permanent in nature, such amounts are reclassified at the end of the fiscal year among paid-in capital in excess of par value, undistributed net investment income (loss), and undistributed net realized gain (loss) on investments and foreign currency translations.
Accordingly, at September 30, 2009, reclassifications were recorded as follows:
| Core Growth Fund | Emerging Markets Small Cap Fund | Global Opportunities Fund1 | Global Science & Technology Fund | Heritage Growth Fund | Heritage Value Fund | |||||||||||||||||||
Increase (decrease) paid-in capital in excess of par | $ | (1,919,652 | ) | $ | — | $ | (372 | ) | $ | (705,095 | ) | $ | (20,695 | ) | $ | (4,730 | ) | |||||||
Increase (decrease) undistributed net investment income | 5,763,569 | 176,595 | (35,178 | ) | 738,968 | 14,764 | 2,613 | |||||||||||||||||
Increase (decrease) undistributed net realized gain (loss) | (3,843,917 | ) | (176,595 | ) | 35,550 | (33,873 | ) | 5,931 | 2,117 | |||||||||||||||
| International Growth Fund | International Opportunities Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | |||||||||||||||||||
Increase (decrease) paid-in capital in excess of par | $ | (6,168,653 | ) | $ | (820,507 | ) | $ | (4,013,632 | ) | $ | (40,333 | ) | $ | (4,191,086 | ) | $ | (617,672 | ) | ||||||
Increase (decrease) undistributed net investment income | 6,110,931 | 1,366,875 | 3,298,944 | 881,784 | 3,620,748 | 1,941,261 | ||||||||||||||||||
Increase (decrease) undistributed net realized gain (loss) | 57,722 | (546,368 | ) | 714,688 | (841,451 | ) | 570,338 | (1,323,589 | ) | |||||||||||||||
| Strategic Income Fund | Ultra Growth Fund | Wasatch-1st Source Income Equity Fund | Wasatch-1st Source Long/ Short Fund | U.S. Treasury Fund | Wasatch-1st Source Income Fund | |||||||||||||||||||
Increase (decrease) paid-in capital in excess of par | $ | (56,108 | ) | $ | (1,042,520 | ) | $ | (2,728 | ) | $ | (160,516 | ) | $ | — | $ | (25,904 | ) | |||||||
Increase (decrease) undistributed net investment income | 104,548 | 725,242 | (420,262 | ) | 157,874 | — | 26,672 | |||||||||||||||||
Increase (decrease) undistributed net realized gain (loss) | (48,440 | ) | 317,278 | 422,990 | 2,642 | — | (768 | ) | ||||||||||||||||
| 1 | Inception date of Fund was November 17, 2008. |
4. PURCHASESAND SALESOF SECURITIES
Cost of investment securities purchased and proceeds from sales of investment securities, excluding U.S. government and short-term securities for the year or period ended September 30, 2009 are summarized below:
| Core Growth Fund | Emerging Markets Small Cap Fund | Global Opportunities Fund1 | Global Science & Technology Fund | Heritage Growth Fund | Heritage Value Fund | International Growth Fund | |||||||||||||||
Purchases | $ | 120,053,039 | $ | 33,493,857 | $ | 82,660,738 | $ | 20,684,708 | $ | 22,168,679 | $ | 7,190,857 | $ | 73,927,086 | |||||||
Sales | 287,751,621 | 21,025,447 | 10,946,598 | 46,603,790 | 35,692,242 | 7,007,241 | 110,493,630 | ||||||||||||||
| International Opportunities Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | Strategic Income Fund | Ultra Growth Fund | |||||||||||||||
Purchases | $ | 54,174,600 | $ | 104,775,175 | $ | 103,728,511 | $ | 310,791,433 | $ | 168,308,258 | $ | 12,028,344 | $ | 63,678,698 | |||||||
Sales | 37,341,513 | 150,348,448 | 92,442,337 | 297,839,034 | 235,875,805 | 15,719,044 | 76,236,180 | ||||||||||||||
| Wasatch-1st Source Income Equity Fund | Wasatch-1st Source Long/ Short Fund | Wasatch-1st Source Income Fund | |||||||||||||||||||
Purchases | $ | 784,811,484 | $ | 176,221,764 | $ | 19,115,482 | |||||||||||||||
Sales | 146,806,925 | 149,602,134 | 11,169,436 | ||||||||||||||||||
| 1 | Inception date of the Fund was November 17, 2008. |
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Purchases and sales of U.S. government securities in the U.S. Treasury Fund were $111,535,708 and $91,231,938, respectively. Purchases and sales of U.S. government securities in the Wasatch-1st Source Income Fund were $36,330,110 and $14,848,979, respectively.
5. OPTIONS CONTRACTS WRITTEN
Options written activity during the period ended September 30, 2009 was as follows:
| Options Outstanding at Beginning of Period | Written | Closed | Exercised | Expired | Options Outstanding at End of Period | ||||||||||||||||
Heritage Growth Fund | |||||||||||||||||||||
Premium amount | $ | — | $ | 105,024 | $ | (20,790 | ) | $ | (35,404 | ) | $ | (48,830 | ) | $ | — | ||||||
Number of contracts | — | 725 | (110 | ) | (145 | ) | (470 | ) | — | ||||||||||||
Heritage Value | |||||||||||||||||||||
Premium amount | $ | — | $ | 393,382 | $ | (66,239 | ) | $ | (199,922 | ) | $ | (127,221 | ) | $ | — | ||||||
Number of contracts | — | 2,026 | (410 | ) | (969 | ) | (647 | ) | — | ||||||||||||
Micro Cap Value Fund | |||||||||||||||||||||
Premium amount | $ | — | $ | 1,864,290 | $ | — | $ | (1,076,110 | ) | $ | (788,180 | ) | $ | — | |||||||
Number of contracts | — | 12,779 | — | (7,643 | ) | (5,136 | ) | — | |||||||||||||
Small Cap Value Fund | |||||||||||||||||||||
Premium amount | $ | — | $ | 908,649 | $ | — | $ | (629,536 | ) | $ | (279,113 | ) | $ | — | |||||||
Number of contracts | — | 6,596 | — | (4,529 | ) | (2,067 | ) | — | |||||||||||||
Strategic Income Fund | |||||||||||||||||||||
Premium amount | $ | — | $ | 209,594 | $ | (29,467 | ) | $ | (101,798 | ) | $ | (57,452 | ) | $ | 20,877 | ||||||
Number of contracts | — | 3,096 | (557 | ) | (1,161 | ) | (1,105 | ) | 273 | ||||||||||||
Wasatch-1st Source Long/Short Fund | |||||||||||||||||||||
Premium amount | $ | — | $ | 3,319,545 | $ | (434,447 | ) | $ | (1,066,337 | ) | $ | (214,369 | ) | $ | 1,604,392 | ||||||
Number of contracts | — | 11,462 | (1,572 | ) | (2,878 | ) | (1,750 | ) | 5,262 | ||||||||||||
6. FEDERAL INCOME TAX INFORMATION
As of September 30, 2009, the cost and unrealized appreciation (depreciation) of securities on a tax basis were as follows:
| Core Growth Fund | Emerging Markets Small Cap Fund | Global Opportunities Fund1 | Global Science & Technology Fund | Heritage Growth Fund | Heritage Value Fund | |||||||||||||||||||
Cost | $ | 384,217,821 | $ | 42,318,213 | $ | 91,459,987 | $ | 54,678,880 | $ | 68,448,158 | $ | 3,203,433 | ||||||||||||
Gross appreciation | $ | 79,829,287 | $ | 10,217,011 | $ | 26,791,718 | $ | 10,345,467 | $ | 10,041,336 | $ | 355,828 | ||||||||||||
Gross (depreciation) | (52,074,616 | ) | (2,306,367 | ) | (547,070 | ) | (4,531,544 | ) | (3,322,479 | ) | (12,744 | ) | ||||||||||||
Net appreciation (depreciation) | $ | 27,754,671 | $ | 7,910,644 | $ | 26,244,648 | $ | 5,813,923 | $ | 6,718,857 | $ | 343,084 | ||||||||||||
| International Growth Fund | International Opportunities Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | |||||||||||||||||||
Cost | $ | 143,251,056 | $ | 74,430,794 | $ | 283,618,787 | $ | 97,956,904 | $ | 690,838,657 | $ | 213,751,658 | ||||||||||||
Gross appreciation | $ | 40,707,767 | $ | 24,242,018 | $ | 47,474,271 | $ | 20,157,785 | $ | 174,045,869 | $ | 37,624,473 | ||||||||||||
Gross (depreciation) | (12,870,711 | ) | (4,214,334 | ) | (56,990,084 | ) | (3,764,930 | ) | (47,434,007 | ) | (32,555,641 | ) | ||||||||||||
Net appreciation (depreciation) | $ | 27,837,056 | $ | 20,027,684 | $ | (9,515,813 | ) | $ | 16,392,855 | $ | 126,611,862 | $ | 5,068,832 | |||||||||||
| Strategic Income Fund | Ultra Growth Fund | Wasatch-1st Source Income Equity Fund | Wasatch-1st Source Long/Short Fund | U.S. Treasury Fund | Wasatch-1st Source Income Fund | |||||||||||||||||||
Cost | $ | 17,984,430 | $ | 99,364,727 | $ | 1,295,079,180 | $ | 134,648,365 | $ | 144,338,574 | $ | 110,405,080 | ||||||||||||
Gross appreciation | $ | 1,554,025 | $ | 31,348,235 | $ | 142,154,343 | $ | 16,935,847 | $ | 11,700,658 | $ | 3,829,851 | ||||||||||||
Gross (depreciation) | (2,226,699 | ) | (9,185,239 | ) | (41,331,593 | ) | (736,863 | ) | (2,356,406 | ) | (655,684 | ) | ||||||||||||
Net appreciation | $ | (672,674 | ) | $ | 22,162,996 | $ | 100,822,750 | $ | 16,198,984 | $ | 9,344,252 | $ | 3,174,167 | |||||||||||
| 1 | Inception date of the Fund was November 17, 2008. |
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The difference between book-basis and tax-basis unrealized gains are primarily attributable to wash sales and other temporary tax adjustments.
The components of accumulated earnings on a tax basis as of September 30, 2009 were as follows:
| Core Growth Fund | Emerging Markets Small Cap Fund | Global Opportunities Fund1 | Global Science & Technology Fund | Heritage Growth Fund | Heritage Value Fund | |||||||||||||||||||
Undistributed ordinary income | $ | — | $ | 379,063 | $ | 3,456,354 | $ | — | $ | 499,398 | $ | 30,339 | ||||||||||||
Undistributed capital gains | — | — | — | — | — | |||||||||||||||||||
Accumulated earnings | — | 379,063 | 3,456,354 | — | 499,398 | 30,339 | ||||||||||||||||||
Accumulated capital and other losses | (123,917,211 | ) | (23,409,174 | ) | — | (38,293,287 | ) | (10,370,229 | ) | (1,346,351 | ) | |||||||||||||
Other undistributed ordinary losses | — | — | (12,143 | ) | — | — | (3,545 | ) | ||||||||||||||||
Net unrealized appreciation* | 27,754,727 | 7,515,637 | 26,160,631 | 5,814,852 | 6,712,066 | 343,095 | ||||||||||||||||||
Total accumulated earnings (deficit) | $ | (96,162,484 | ) | $ | (15,514,474 | ) | $ | 29,604,842 | $ | (32,478,435 | ) | $ | (3,158,765 | ) | $ | (976,462 | ) | |||||||
| International Growth Fund | International Opportunities Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | |||||||||||||||||||
Undistributed ordinary income | $ | — | $ | — | $ | — | $ | 569,665 | $ | — | $ | — | ||||||||||||
Undistributed capital gains | — | — | — | — | — | — | ||||||||||||||||||
Accumulated earnings | — | — | — | 569,665 | — | — | ||||||||||||||||||
Accumulated capital and other losses | (79,143,833 | ) | (15,096,992 | ) | (85,872,772 | ) | (31,141,696 | ) | (64,814,461 | ) | (152,421,857 | ) | ||||||||||||
Other undistributed ordinary losses | — | (23,714 | ) | — | — | — | — | |||||||||||||||||
Net unrealized appreciation* | 27,621,803 | 19,957,778 | (9,515,325 | ) | 16,392,287 | 126,573,573 | 5,068,834 | |||||||||||||||||
Total accumulated earnings (deficit) | $ | (51,522,030 | ) | $ | 4,837,072 | $ | (95,388,097 | ) | $ | (14,179,744 | ) | $ | 61,759,112 | $ | (147,353,023 | ) | ||||||||
| Strategic Income Fund | Ultra Growth Fund | Wasatch-1st Source Income Equity Fund | Wasatch-1st Source Long/ Short Fund | U.S. Treasury Fund | Wasatch-1st Source Income Fund | |||||||||||||||||||
Undistributed ordinary income | $ | 65,128 | $ | — | $ | 509,535 | $ | — | $ | 498,119 | $ | — | ||||||||||||
Undistributed capital gains | — | — | — | — | 4,184,411 | — | ||||||||||||||||||
Accumulated earnings | 65,128 | — | 509,535 | — | 4,591,071 | — | ||||||||||||||||||
Accumulated capital and other losses | (9,468,279 | ) | (51,320,913 | ) | (98,275,928 | ) | (16,298,215 | ) | — | (3,776,285 | ) | |||||||||||||
Other undistributed ordinary losses | (15,230 | ) | — | (385,917 | ) | — | (91,459 | ) | (13,055 | ) | ||||||||||||||
Net unrealized appreciation* | (292,049 | ) | 22,163,107 | 100,823,061 | 14,437,982 | 9,344,252 | 3,174,167 | |||||||||||||||||
Total accumulated earnings (deficit) | $ | (9,710,430 | ) | $ | (29,157,806 | ) | $ | 2,670,751 | $ | (1,860,233 | ) | $ | 13,935,323 | $ | (615,173 | ) | ||||||||
| 1 | Inception date of the Fund was November 17, 2008. |
| * | On investments, securities sold short, derivative and foreign currency denominated assets and liabilities. |
Capital loss carryforwards are available through the date specified below to offset future realized net capital gains. To the extent future gains are offset by capital loss carryforwards, such gains will not be distributed.
Capital Loss carryforwards expire September 30:
| Fund | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | ||||||||||||
Core Growth Fund | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 23,065,472 | ||||||
Emerging Markets Small Cap Fund | — | — | — | — | — | 8,013,713 | ||||||||||||
Global Science & Technology Fund | 13,246,252 | |||||||||||||||||
Heritage Growth Fund | 1,497,283 | |||||||||||||||||
Heritage Value Fund | 1,178,729 | |||||||||||||||||
International Growth Fund | 37,186,858 | |||||||||||||||||
International Opportunities Fund | 6,306,993 | |||||||||||||||||
Micro Cap Fund | 36,417,364 | |||||||||||||||||
Micro Cap Value Fund | 17,636,668 | |||||||||||||||||
Small Cap Growth Fund | 18,434,963 | |||||||||||||||||
Small Cap Value Fund | 69,050,636 | |||||||||||||||||
Strategic Income Fund | 1,777,526 | |||||||||||||||||
Ultra Growth Fund | 18,431,927 | |||||||||||||||||
Wasatch-1st Source Income Equity Fund | — | 456,570 | — | — | 1,007,552 | — | ||||||||||||
Wasatch-1st Source Long/Short Fund | — | — | 1,392,157 | 4,660,126 | — | — | ||||||||||||
Wasatch-1st Source Income Fund | 269,703 | 958,942 | 1,382,991 | — | 561,725 | — | ||||||||||||
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| SEPTEMBER 30, 2009 | ||
Net capital losses incurred after October 31 and within the taxable year are deemed to arise on the first business day of the Funds’ next taxable year. For the year ended September 30, 2009, the following Funds deferred to October 1, 2009 post October capital losses and post October currency losses of:
| Fund | Capital Losses | ||
Core Growth Fund | $ | 100,851,739 | |
Emerging Markets Small Cap Fund | 15,395,461 | ||
Global Science & Technology Fund | 25,047,035 | ||
Heritage Growth Fund | 8,872,946 | ||
Heritage Value Fund | 167,622 | ||
International Growth Fund | 41,956,975 | ||
International Opportunities Fund | 8,789,999 | ||
Micro Cap Fund | 49,455,408 | ||
Micro Cap Value Fund | 13,505,028 | ||
Small Cap Growth Fund | 46,379,498 | ||
Small Cap Value Fund | 83,371,221 | ||
Strategic Income Fund | 7,690,753 | ||
Ultra Growth Fund | 32,888,986 | ||
Wasatch-1st Source Income Equity Fund | 96,811,806 | ||
Wasatch-1st Source Long/Short Fund | 10,245,932 | ||
Wasatch-1st Source Income Fund | 602,924 | ||
During the tax year ended September 30, 2009, the funds used capital loss carryforwards in the following amounts:
| Fund | Amount Used | ||
Wasatch-1st Source Income Equity Fund | $ | 311,230 | |
U.S. Treasury | 4,601,615 | ||
Wasatch-1st Source Income Fund | 13,344 | ||
The tax character of distributions paid during the year or period ended September 30, 2009 was as follows:
| 2009 | Core Growth Fund | Emerging Markets Small Cap Fund | Global Opportunities Fund1 | Global Science & Technology Fund | Heritage Growth Fund | Heritage Value Fund | ||||||||||||
Ordinary income | $ | 5,739,872 | $ | 29,720 | $ | — | $ | — | $ | 167,143 | $ | 47,255 | ||||||
Capital gain | — | — | — | — | 220,964 | — | ||||||||||||
Total | $ | 5,739,872 | $ | 29,720 | $ | — | $ | — | $ | 388,107 | $ | 47,255 | ||||||
| 2009 | International Growth Fund | International Opportunities Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | ||||||||||||
Ordinary income | $ | 466,090 | $ | 168,034 | $ | 777,904 | $ | — | $ | — | $ | — | ||||||
Capital gain | — | — | — | — | 1,539,215 | — | ||||||||||||
Total | $ | 466,090 | $ | 168,034 | $ | 777,904 | $ | — | $ | 1,539,215 | $ | — | ||||||
| 2009 | Strategic Income Fund | Ultra Growth Fund | Wasatch-1st Source Income Equity Fund | Wasatch-1st Source Long/ Short Fund | U.S. Treasury Fund | Wasatch-1st Source Income Fund | ||||||||||||
Ordinary income | $ | 784,968 | $ | — | $ | 19,218,020 | $ | 2,025,005 | $ | 5,022,309 | $ | 3,433,282 | ||||||
Capital gain | — | — | — | 110,509 | — | — | ||||||||||||
Total | $ | 784,968 | $ | — | $ | 19,218,020 | $ | 2,135,514 | $ | 5,022,309 | $ | 3,433,282 | ||||||
| 1 | Inception date of the Fund was November 17, 2008. |
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
The tax character of distributions paid during the year or period ended September 30, 2008 was as follows:
| 2008 | Core Growth Fund | Emerging Small Cap | Global Science & Technology Fund | Heritage Growth Fund | Heritage Value Fund | International Growth Fund | ||||||||||||
Ordinary income | $ | 9,254,596 | $ | 99,236 | $ | 6,265,922 | $ | — | $ | 55,924 | $ | 20,995,608 | ||||||
Capital gain | 196,051,701 | — | 11,168,273 | 14,407,067 | — | 47,903,587 | ||||||||||||
Total | $ | 205,306,297 | $ | 99,236 | $ | 17,434,195 | $ | 14,407,067 | $ | 55,924 | $ | 68,899,195 | ||||||
| 2008 | International Opportunities Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | Strategic Income Fund | ||||||||||||
Ordinary income | $ | 3,840,037 | $ | 4,999,978 | $ | 3,944,821 | $ | — | $ | 35,199,888 | $ | 2,956,671 | ||||||
Capital gain | 6,278,872 | 93,390,001 | 12,484,239 | 120,648,854 | 107,894,653 | 317,486 | ||||||||||||
Total | $ | 10,118,909 | $ | 98,389,979 | $ | 16,429,060 | $ | 120,648,854 | $ | 143,094,541 | $ | 3,274,157 | ||||||
| 2008 | Ultra Growth Fund | Wasatch-1st Source Income Equity Fund2 | Wasatch-1st Source Long/ Short Fund2 | U.S. Treasury Fund | Wasatch-1st Source Income Fund2 | |||||||||||||
Ordinary income | $ | 4,736,134 | $ | 6,063,576 | $ | 419,058 | $ | 4,603,049 | $ | 1,804,021 | ||||||||
Capital gain | 27,565,914 | — | — | — | — | |||||||||||||
Tax return of capital | — | 112,239 | 59,547 | — | — | |||||||||||||
Total | $ | 32,302,048 | $ | 6,175,815 | $ | 478,605 | $ | 4,603,049 | $ | 1,804,021 | ||||||||
| 1 | Inception date of the Fund was October 1, 2007. |
| 2 | Six month period. Effective September 19, 2008 the Fund changed its fiscal year end to September 30. |
| March 31, 2008 | Wasatch-1st Source Income Equity Fund | Wasatch-1st Source Long/ Short Fund | Wasatch-1st Source Income Fund | ||||||
Ordinary income | $ | 5,043,122 | $ | 3,276,239 | $ | 3,486,230 | |||
Capital gain | 13,662,031 | 613,791 | — | ||||||
Tax return of capital | 24,424 | — | — | ||||||
Total | $ | 18,729,577 | $ | 3,890,030 | $ | 3,486,230 | |||
| 1 | Inception date of the Fund was August 30, 2007. |
The tax character of distributions paid may differ from that shown in the Statements of Changes in Net Assets due to short-term gains being treated as ordinary income for tax purposes.
SUPPLEMENTAL TAX INFORMATION (UNAUDITED):
The Funds hereby designate the following amounts or maximum amounts allowable as long term capital gain dividends for the purpose of the dividends paid deduction.
| Amount | |||
Heritage Growth Fund | $ | 220,964 | |
Small Cap Growth Fund | 1,539,215 | ||
Wasatch-1st Source Long/Short Fund | 110,509 | ||
For the fiscal year ended September 30, 2009, certain dividends paid by each Fund may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. To the extent dividends are paid during the calendar year 2009, complete information will be reported on shareholders’ 2009 Form 1099-DIV.
The amount designated as qualified dividend income for the year of period ended September 30, 2009 will be at the highest amount permitted by law.
Corporate shareholders should note for the year ended September 30, 2009, the percentage of the Funds’ investment income (i.e., net investment income plus short-term capital gains) that qualified for the corporate dividends received deductions are as follows:
| Percentage | |||
Core Growth Fund | 94 | % | |
Heritage Growth Fund | 100 | % | |
Heritage Value Fund | 12 | % | |
Strategic Income Fund | 37 | % | |
Wasatch-1st Source Long/Short Fund | 100 | % |
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| SEPTEMBER 30, 2009 | ||
7. RELATED PARTY TRANSACTIONS
Investment Advisory Fees — As the Fund’s investment advisor, the Advisor receives a monthly fee calculated on average daily net assets. The Advisor has contractually agreed to waive its fees and/or reimburse a Fund should a Fund’s operating expenses exceed a specified annual limitation through at least January 31, 2010. Investment advisory fees and fees waived, if any, for the year or period ended September 30, 2009 are disclosed in the Statements of Operations. Investment advisory fee and expense limitation annual rates are shown below.
| Core Growth Fund | Emerging Markets Small Cap Fund | Global Opportunities Fund | Global Science & Technology Fund | Heritage Growth Fund | Heritage Value Fund | |||||||||||||
Advisory Fee | 1.00 | % | 1.75 | % | 1.95 | % | 1.50 | % | 0.70 | % | 0.70 | % | ||||||
Expense Limitation | 1.50 | % | 2.10 | % | 2.25 | % | 1.95 | % | 0.95 | % | 0.95 | % | ||||||
| International Growth Fund | International Opportunities Fund | Micro Cap Fund | Micro Cap Value Fund | Small Cap Growth Fund | Small Cap Value Fund | |||||||||||||
Advisory Fee | 1.50 | % | 1.95 | % | 1.95 | % | 1.95 | % | 1.00 | % | 1.50 | % | ||||||
Expense Limitation | 1.95 | % | 2.25 | % | 2.25 | % | 2.25 | % | 1.50 | % | 1.95 | % | ||||||
| Strategic Income Fund | Ultra Growth Fund | Wasatch- 1st Source Income Equity Fund | Wasatch- 1st Source Long/Short Fund | U.S. Treasury Fund | Wasatch- 1st Source Income Fund | |||||||||||||
Advisory Fee | 0.70 | % | 1.25 | % | 0.90 | % | 1.10 | % | 0.50 | % | 0.55 | % | ||||||
Expense Limitation | 0.95 | % | 1.75 | % | 1.10 | % | — | 0.75 | % | — | ||||||||
Distribution Fees, Waivers — The Wasatch Funds have not adopted a distribution plan with respect to the Funds pursuant to Rule 12b-1 under the 1940 Act.
However, The Coventry Group adopted a Distribution and Shareholder Service Plan (the “Plan”) with respect to the 1st Source Monogram Income Fund, the 1st Source Monogram Income Equity Fund and the 1st Source Monogram Long/Short Fund pursuant to Rule 12b-1 under the 1940 Act under which each Fund was authorized to pay Foreside Distribution Services, L.P., (“Foreside”), the Funds’ distributor, in an amount not in excess, on an annual basis, of 0.25% of the average daily net asset value of the shares of a Fund (the “12b-1 Fee”). Payments of the 12b-1 Fee to Foreside were used (i) to compensate Participating Organizations (as defined below) for providing distribution assistance relating to a Fund’s Shares, (ii) for promotional activities intended to result in the sale of Shares and distribution of prospectuses to other than current shareholders, and (iii) to compensate Participating Organizations for providing shareholder services with respect to their customers who are, from time to time, beneficial and record holders of Shares. Participating Organizations include banks, broker-dealers, Foreside and other institutions. Payments to such Participating Organizations may be made pursuant to agreements entered into with Foreside.
For the six months ended September 30, 2008 and the fiscal year ended March 31, 2008, the Funds voluntarily waived distribution fees to limit total fund operating expenses.
Affiliated Trades — Certain Funds are permitted to purchase or sell securities from or to certain related affiliated funds under specified conditions outlined in procedures adopted by the Board of Directors. The procedures have been designed to ensure that any purchase or sale of securities by the Funds from or to another fund that are, or could be, considered an affiliate by virtue of having a common investment advisor (or affiliated investment advisors), common Directors and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, each transaction is effected at the current market price, as that term is defined under the procedures. During the year or period ended September 30, 2009, the Funds below engaged in purchases and sales of securities pursuant to Rule 17a-7 of the 1940 Act:
| Purchases | Sales | |||
Global Opportunities Fund | 65,925 | — | ||
International Growth Fund | — | 465,848 | ||
International Opportunities Fund | 135,859 | — | ||
Micro Cap Fund | — | 715,386 | ||
Micro Cap Value Fund | — | 9,506 | ||
Small Cap Growth Fund | 692,034 | 276,726 | ||
Small Cap Value Fund | 66,850 | — | ||
Strategic Income Fund | 40,950 | — | ||
Ultra Growth Fund | 465,848 | — |
Affiliated Interests — An officer of the Funds owns approximately 38% of the shares outstanding of the Strategic Income Fund as of September 30, 2009. An affiliated person of the Funds owns approximately 15% of the shares outstanding of the Heritage Value Fund as of September 30, 2009.
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
8. TRANSACTIONSWITH AFFILIATES
If a Fund’s holding represents ownership of 5% or more of the voting securities of a company, the company is deemed to be an affiliate as defined by the 1940 Act. The following Funds conducted transactions during the period ended September 30, 2009 with “affiliated companies” as so defined:
| Share Activity | Dividends | Loss Realized on Sale of Shares for the Fiscal Year ended 9/30/09 | ||||||||||||||
| Balance 9/30/08 | Purchases/ Additions | Sales/ Reductions | Balance 9/30/09 | |||||||||||||
Micro Cap Fund | ||||||||||||||||
inTEST Corp. | 565,045 | — | 565,045 | — | * | $ | — | $ | (2,831,317 | ) | ||||||
Tamalpais Bancorp | 254,618 | — | 100,255 | 154,363 | * | 30,371 | (1,227,621 | ) | ||||||||
| $ | 30,371 | $ | (4,058,938 | ) | ||||||||||||
Small Cap Value Fund | ||||||||||||||||
MicroFinancial, Inc. | 742,623 | — | 742,623 | — | * | $ | 35,851 | $ | (6,809,925 | ) | ||||||
| *No | longer affiliated as of September 30, 2009. |
9. RESTRICTED SECURITIES
The Funds may own investments that were purchased through private placement transactions or under Rule 144A of the Securities Act of 1933 (the “Securities Act”) and cannot be sold without prior registration under the Securities Act or may be limited due to certain restrictions. These securities are generally deemed to be illiquid and are valued at fair value as determined by a designated Pricing Committee, comprised of personnel of the Advisor, with oversight by the Board of Directors and in accordance with Board-approved Pricing Policies and Procedures. If and when such securities are registered, the costs of registering such securities are paid by the issuer. At September 30, 2009, the Funds held the following restricted securities:
| Security Type | Acquisition Date | Acquisition Cost | Fair Value | Value as % of Net Assets | |||||||||
Core Growth Fund | |||||||||||||
Solar Capital, LLC | Common Stock | 3/7/07 | $ | 13,200,900 | $ | 7,304,498 | 1.78 | % | |||||
Global Opportunities Fund | |||||||||||||
Cardica, Inc. | PIPE | 9/25/09 | $ | 95,200 | $ | 106,304 | 0.09 | % | |||||
Cardica, Inc. | Warrants | 9/25/09 | 5,000 | 5,000 | — | ||||||||
| $ | 100,200 | $ | 111,304 | 0.09 | % | ||||||||
Global Science & Technology Fund | |||||||||||||
BlueArc Corp. | Warrants | 5/30/08 | $ | — | $ | — | — | ||||||
BlueArc Corp., Series DD | Preferred Stock | 6/6/06 | 324,998 | 324,998 | 0.55 | % | |||||||
BlueArc Corp., Series FF | Preferred Stock | 5/30/08 | 628,067 | 628,067 | 1.05 | % | |||||||
Cardica, Inc. | PIPE | 9/25/09 | 170,170 | 190,018 | 0.32 | % | |||||||
Cardica, Inc. | Warrants | 9/25/09 | 8,937 | 8,937 | 0.02 | % | |||||||
Incipient, Inc., Series D | Preferred Stock | 2/7/06 | 139,219 | — | — | ||||||||
Montagu Newhall Global Partners II-B, L.P. | LP Interest | 10/10/03 - 9/11/09 | 399,387 | 339,596 | 0.57 | % | |||||||
Xtera | Common Stock | 9/3/03 | 7,076 | 2,154 | — | ||||||||
| $ | 1,677,854 | $ | 1,493,770 | 2.51 | % | ||||||||
Micro Cap Fund | |||||||||||||
Alexza Pharmaceuticals, Inc. | PIPE | 9/29/09 | $ | 758,197 | $ | 676,495 | 0.25 | % | |||||
Alexza Pharmaceuticals, Inc. | Warrants | 9/29/09 | 36,766 | 36,766 | 0.01 | % | |||||||
Cardica, Inc. | PIPE | 9/25/09 | 767,550 | 857,076 | 0.31 | % | |||||||
Cardica, Inc. | Warrants | 9/25/09 | 40,312 | 40,312 | 0.01 | % | |||||||
Cardica, Inc. | Warrants | 6/7/07 | 19,380 | — | — | ||||||||
Familymeds Group, Inc. | Warrants | 12/1/04 | — | — | — | ||||||||
Goldwater Bank, N.A. | Common Stock | 2/28/07 | 1,540,000 | 1,111,880 | 0.41 | % | |||||||
Ithaca Energy, Inc. | Common Stock | 6/5/06 | 1,965,844 | 732,168 | 0.27 | % | |||||||
Washington Trust Bancorp | PIPE | 10/2/2008 | 2,328,800 | 2,040,029 | 0.75 | % | |||||||
| $ | 7,456,849 | $ | 5,494,726 | 2.01 | % | ||||||||
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| SEPTEMBER 30, 2009 | ||
| Security Type | Acquisition Date | Acquisition Cost | Fair Value | Value as % of Net Assets | |||||||||
Micro Cap Value Fund | |||||||||||||
Cardica, Inc. | PIPE | 9/25/09 | $ | 262,990 | $ | 293,665 | 0.25 | % | |||||
Cardica, Inc. | Warrants | 9/25/09 | 13,813 | 13,813 | 0.01 | % | |||||||
Cardica, Inc. | Warrants | 6/7/07 | 9,302 | — | — | ||||||||
Familymeds Group, Inc. | Warrants | 12/1/04 | — | — | — | ||||||||
Goldwater Bank, N.A. | Common Stock | 2/28/07 | 419,000 | 302,518 | 0.26 | % | |||||||
Idaho Trust Bancorp | Common Stock | 8/30/06 | 500,004 | 246,113 | 0.21 | % | |||||||
NeurogesX, Inc. | PIPE | 12/28/07 | 525,300 | 680,000 | 0.59 | % | |||||||
NeurogesX, Inc. | Warrants | 12/28/07 | 3,800 | — | — | ||||||||
| $ | 1,734,209 | $ | 1,536,109 | 1.32 | % | ||||||||
Small Cap Growth Fund | |||||||||||||
Alexza Pharmaceuticals, Inc. | PIPE | 9/29/09 | $ | 949,810 | $ | 847,460 | 0.10 | % | |||||
Alexza Pharmaceuticals, Inc. | Warrants | 9/29/09 | 46,058 | 46,058 | 0.01 | % | |||||||
Fluidigm Corp. Bridge Financing, 12.00%, 12/31/09 | Convertible Note | 8/18/09 | 113,374 | 113,374 | 0.01 | % | |||||||
Fluidigm Corp., Series E | Preferred Stock | 12/22/06 | 2,499,994 | 1,932,138 | 0.24 | % | |||||||
Fluidigm Corp. | Warrants | 8/18/09 | 11 | 11 | — | ||||||||
Incipient, Inc., Series D | Preferred Stock | 2/7/06 | 1,860,778 | — | — | ||||||||
Montagu Newhall Global Partners II-B, L.P. | LP Interest | 10/10/03 - 9/11/09 | 3,993,853 | 3,395,960 | 0.42 | % | |||||||
Montagu Newhall Global Partners III-B, L.P. | LP Interest | 3/16/06 - 9/14/09 | 945,000 | 809,385 | 0.10 | % | |||||||
Nanosys, Inc., Series D | Preferred Stock | 11/8/05 | 2,000,000 | 1,105,085 | 0.14 | % | |||||||
Orexigen Therapeutics, Inc., Series C | PIPE | 11/21/2006 | 1,000,001 | 1,440,060 | 0.18 | % | |||||||
Orqis Medical Corp., Series D | Preferred Stock | 2/28/07 | 1,200,000 | — | — | ||||||||
TargetRX, Inc., Series D | Preferred Stock | 4/8/05 | 769,098 | 3,628 | — | ||||||||
Valera Pharmaceuticals, Inc. Ureteral Stent CSR | Rights | 2/1/06 - 2/2/06 | 162,615 | — | — | ||||||||
Valera Pharmaceuticals, Inc. VP003 (Octreotide Implant) CSR | Rights | 2/1/06 - 2/2/06 | 243,922 | — | — | ||||||||
Zonare Medical Systems, Inc. | Common Stock | 6/30/04 | 1,500,000 | 194,427 | 0.02 | % | |||||||
Zonare Medical Systems, Inc. | Warrants | 6/30/04 | — | — | — | ||||||||
| $ | 17,284,514 | $ | 9,887,586 | 1.22 | % | ||||||||
Small Cap Value Fund | |||||||||||||
Solar Capital, LLC | Common Stock | 3/7/07 | $ | 7,079,100 | $ | 3,917,102 | 1.80 | % | |||||
Star Asia Financial Ltd. | Common Stock | 2/22/07 | 6,000,000 | 54,000 | 0.02 | % | |||||||
Washington Trust Bancorp | PIPE | 10/2/08 | 3,573,060 | 3,130,000 | 1.43 | % | |||||||
| $ | 16,652,160 | $ | 7,101,102 | 3.25 | % | ||||||||
Strategic Income Fund | |||||||||||||
Redcorp Ventures Ltd. | PIPE | 7/5/07 | $ | — | $ | — | — | ||||||
Redcorp Ventures Ltd. | Warrants | 12/18/08 | — | — | — | ||||||||
Redcorp Ventures Ltd., 13.00%, 7/11/12 | Corporate Bond | 7/5/07 | 241,978 | 23,906 | 0.13 | % | |||||||
Redcorp Ventures Ltd. — NSR Interest | Royalty Interest | 12/18/08 | — | — | — | ||||||||
Solar Capital, LLC | Common Stock | 3/7/07 | 294,000 | 162,680 | 0.92 | % | |||||||
Star Asia Financial Ltd. | Common Stock | 2/22/07 - 4/28/08 | 619,710 | 15,551 | 0.09 | % | |||||||
| $ | 1,155,688 | $ | 202,137 | 1.14 | % | ||||||||
Ultra Growth Fund | |||||||||||||
Alexza Pharmaceuticals, Inc. | PIPE | 9/29/09 | $ | 175,784 | $ | 156,842 | 0.13 | % | |||||
Alexza Pharmaceuticals, Inc. | Warrants | 9/29/09 | 8,524 | 8,524 | 0.01 | % | |||||||
Cardica, Inc. | PIPE | 9/25/09 | 392,700 | 438,504 | 0.36 | % | |||||||
Cardica, Inc. | Warrants | 9/25/09 | 20,625 | 20,625 | 0.02 | % | |||||||
Data Sciences International, Inc., Series B | Preferred Stock | 1/20/06 | 475,001 | 817,574 | 0.67 | % | |||||||
Montagu Newhall Global Partners II-B, L.P. | LP Interest | 10/10/03 - 9/11/09 | 3,594,467 | 3,056,369 | 2.52 | % | |||||||
Montagu Newhall Global Partners III-B, L.P. | LP Interest | 3/16/06 - 9/14/09 | 945,000 | 809,385 | 0.67 | % | |||||||
Nanosys, Inc., Series D | Preferred Stock | 11/8/05 | 500,001 | 276,272 | 0.23 | % | |||||||
Ophthonix, Inc. | Common Stock | 9/23/05 | 500,000 | 504 | — | ||||||||
TargetRX, Inc., Series D | Preferred Stock | 4/8/05 | 230,904 | 1,089 | — | ||||||||
TherOx, Inc., Series I | Preferred Stock | 7/7/05 | 1,000,000 | 429,267 | 0.35 | % | |||||||
Transoma Medical, Inc. | Common Stock | 5/12/09 | 2,531 | 2,531 | — | ||||||||
Xtera | Common Stock | 9/3/03 | 99,065 | 30,158 | 0.02 | % | |||||||
Zonare Medical Systems, Inc. | Common Stock | 6/30/04 | 1,000,000 | 129,618 | 0.11 | % | |||||||
Zonare Medical Systems, Inc. | Warrants | 6/30/04 | — | — | — | ||||||||
| $ | 8,944,602 | $ | 6,177,262 | 5.09 | % | ||||||||
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
10. PURCHASE COMMITMENTS
In September 2003, the Global Science & Technology, Small Cap Growth and Ultra Growth Funds entered into subscription agreements to acquire limited partnership interests in Montagu Newhall Global Partners II-B, L.P. The remaining commitment amounts at September 30, 2009 were $95,000, $950,000 and $855,000, respectively. Securities held by the Funds have been designated to meet these purchase commitments.
In December 2005, the Small Cap Growth and Ultra Growth Funds entered into subscription agreements to acquire limited partnership interests in Montagu Newhall Global Partners III-B, L.P. The remaining commitment amounts at September 30, 2009 were $555,000 per Fund. Securities held by the Funds have been designated to meet these purchase commitments.
11. LINEOF CREDIT
The Equity Funds opened two lines of credit totaling $75,000,000, one of which is $25,000,000 uncommitted, and the other of which is $50,000,000 committed, with State Street Bank and Trust Company on June 4, 2007 (together, the “Line”). The Line is for temporary or emergency purposes such as to provide liquidity for shareholder redemptions. The Equity Funds incur commitment fees on the undrawn portion of the committed part of the Line, and interest expense to the extent of amounts drawn (borrowed) under the entire Line. Interest is based on the higher of (a) the Federal Funds rate as in effect on the date of borrowing, plus a margin, and (b) the overnight LIBOR rate as in effect on the date of borrowing, plus a margin. Commitment fees are pro-rated among the Equity Funds based upon relative average net assets. Interest expense is charged directly to the fund based upon actual amounts borrowed by the fund.
The following Funds had borrowings:
| Fund | Average Daily Borrowings | Number of Days Outstanding | Interest Expense | Weighted Average Annualized Interest Rate | Balance at September 30, 2009 | |||||||||
Core Growth | $ | 5,797,824 | 17 | $ | 2,981 | 1.09 | % | $ | — | |||||
Emerging Markets Small Cap | 476,594 | 32 | 379 | 0.89 | % | — | ||||||||
Global Science & Technology | 2,368,333 | 6 | 365 | 0.92 | % | — | ||||||||
Heritage Growth | 308,318 | 22 | 150 | 0.80 | % | — | ||||||||
International Growth | 1,365,543 | 70 | 2,477 | 0.93 | % | — | ||||||||
Small Cap Growth | 2,358,000 | 30 | 1,454 | 0.74 | % | — | ||||||||
Small Cap Value | 727,923 | 13 | 327 | 1.24 | % | — | ||||||||
Ultra Growth | 714,609 | 23 | 493 | 1.08 | % | — | ||||||||
12. PRINCIPAL RISKS
Market and Credit Risk — In the normal course of business the Funds trade financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to a transaction to perform (credit risk). Similar to credit risk, the Funds may be exposed to counterparty risk, or the risk that an institution or other entity with which the Funds have unsettled or open transactions will default. The potential loss could exceed the value of the financial assets recorded in the financial statements. Financial assets, which potentially expose the Funds to credit risk, consist principally of cash due from counterparties and investments. The extent of the Funds’ exposure to credit and counterparty risks in respect to these financial assets approximates their carrying value as recorded in the Funds’ Statements of Assets and Liabilities.
Interest Rate Risk — Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. A rise in interest rates typically causes a fall in values. Interest rate risk should be modest for shorter-term securities, moderate for intermediate-term securities and high for longer-term securities. Generally, an increase in the average maturity of a Fund will make it more sensitive to interest rate risk.
Foreign Currency Risk — If a Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the U.S. dollar. This also includes the risk associated with higher transaction costs, delayed settlements, currency controls and adverse economic developments related to foreign investments.
Concentration Risk — Emerging Markets Small Cap Fund, Global Opportunities Fund, Global Science & Technology Fund, International Growth Fund and International Opportunities Fund each invest in equity and fixed income securities of non-U.S. issuers. Although the Funds maintain a diversified investment portfolio, political or economic developments within a particular country or region may have an adverse effect on the ability of domiciled issuers to meet their obligations. Additionally, political or economic developments may have an adverse effect on the liquidity and volatility of portfolio securities and currency holdings.
Shareholder Concentration Risk — A significant portion of the net assets of the International Opportunities Fund is owned by a group of shareholders advised by a common investment adviser. If this group of shareholders simultaneously redeems on the advice of their investment adviser, Fund expenses may increase and performance may be materially affected.
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13. FAIR VALUE MEASUREMENTS
The various inputs used in determining the fair value of the Funds’ investments are summarized in the three broad levels listed below:
| • | Level 1 — quoted prices in active markets for identical investments |
| • | Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| • | Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The following is a summary of the fair valuations according to the inputs used as of September 30, 2009 in valuing the Fund’s assets and liabilities:
| Fund | Category | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 9/30/2009 | |||||||||||
Core Growth Fund | ||||||||||||||||
Common Stocks | Asset Management & Custody Banks | $ | 14,290,037 | $ | — | $ | 7,304,498 | $ | 21,594,535 | |||||||
| Other | 364,284,616 | — | — | 364,284,616 | ||||||||||||
Preferred Stocks | 5,170,341 | — | — | 5,170,341 | ||||||||||||
Short-Term Investments | — | 20,923,000 | — | 20,923,000 | ||||||||||||
| $ | 383,744,994 | $ | 20,923,000 | $ | 7,304,498 | $ | 411,972,492 | |||||||||
Emerging Markets Small Cap Fund | ||||||||||||||||
Common Stocks | Restaurants | $ | 921,797 | $ | — | $ | 114,864 | $ | 1,036,661 | |||||||
| Other | 45,874,533 | — | — | 45,874,533 | ||||||||||||
Preferred Stocks | 2,251,663 | — | — | 2,251,663 | ||||||||||||
Short-Term Investments | — | 1,066,000 | — | 1,066,000 | ||||||||||||
Other Financial Instruments | (995 | ) | — | — | (995 | ) | ||||||||||
| $ | 49,046,998 | $ | 1,066,000 | $ | 114,864 | $ | 50,227,862 | |||||||||
Global Opportunities Fund | ||||||||||||||||
Common Stocks | Auto Parts & Equipment | $ | — | $ | — | $ | 29,082 | $ | 29,082 | |||||||
| Health Care Equipment | 6,979,270 | — | 106,304 | 7,085,574 | ||||||||||||
| Personal Products | 331,898 | — | 5,014 | 336,912 | ||||||||||||
| Other | 93,527,501 | — | — | 93,527,501 | ||||||||||||
Preferred Stocks | 771,566 | — | — | 771,566 | ||||||||||||
Warrants | — | 5,000 | — | 5,000 | ||||||||||||
Short-Term Investments | — | 15,949,000 | — | 15,949,000 | ||||||||||||
Other Financial Instruments | 192 | — | — | 192 | ||||||||||||
| $ | 101,610,427 | $ | 15,954,000 | $ | 140,400 | $ | 117,704,827 | |||||||||
Global Science & Technology Fund | ||||||||||||||||
Common Stocks | Health Care Equipment | $ | 4,199,308 | $ | — | $ | 190,018 | $ | 4,389,326 | |||||||
| Internet Software & Services | 2,055,437 | — | 2,154 | 2,057,591 | ||||||||||||
| Other | 44,239,255 | — | — | 44,239,255 | ||||||||||||
Preferred Stocks | — | — | 953,065 | 953,065 | ||||||||||||
Exchange Traded Funds | 572,033 | — | — | 572,033 | ||||||||||||
Limited Partnership Interest | — | — | 339,596 | 339,596 | ||||||||||||
Warrants | — | 8,937 | — | 8,937 | ||||||||||||
Short-Term Investments | — | 7,933,000 | — | 7,933,000 | ||||||||||||
Other Financial Instruments | (5 | ) | — | (5 | ) | |||||||||||
| $ | 51,066,028 | $ | 7,941,937 | $ | 1,484,833 | $ | 60,492,798 | |||||||||
Heritage Growth Fund | ||||||||||||||||
Common Stocks | $ | 73,712,015 | $ | — | $ | — | $ | 73,712,015 | ||||||||
Short-Term Investments | — | 1,455,000 | — | 1,455,000 | ||||||||||||
Other Financial Instruments | 4,315 | — | — | 4,315 | ||||||||||||
| $ | 73,716,330 | $ | 1,455,000 | $ | — | $ | 75,171,330 | |||||||||
Heritage Value Fund | ||||||||||||||||
Common Stocks | $ | 3,084,017 | $ | — | $ | — | $ | 3,084,017 | ||||||||
Preferred Stocks | 102,500 | — | — | 102,500 | ||||||||||||
Short-Term Investments | — | 360,000 | — | 360,000 | ||||||||||||
| $ | 3,186,517 | $ | 360,000 | $ | — | $ | 3,546,517 | |||||||||
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
| Fund | Category | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 9/30/2009 | |||||||||||
International Growth Fund | ||||||||||||||||
Common Stocks | $ | 163,970,184 | $ | — | $ | — | $ | 163,970,184 | ||||||||
Preferred Stocks | 3,571,928 | — | — | 3,571,928 | ||||||||||||
Short-Term Investments | — | 3,546,000 | — | 3,546,000 | ||||||||||||
Other Financial Instruments | (11,190 | ) | — | — | (11,190 | ) | ||||||||||
| $ | 167,530,922 | $ | 3,546,000 | $ | — | $ | 171,076,922 | |||||||||
International Opportunities Fund | ||||||||||||||||
Common Stocks | Auto Parts & Equipment | $ | — | $ | — | $ | 58,871 | $ | 58,871 | |||||||
| Education Services | 847,552 | — | 7,387 | 854,939 | ||||||||||||
| Internet Software & Services | 676,206 | 209,130 | — | 885,336 | ||||||||||||
| Personal Products | 513,432 | — | 8,523 | 521,955 | ||||||||||||
| Restaurants | 1,510,826 | — | 288,623 | 1,799,449 | ||||||||||||
| Other | 73,597,073 | — | — | 73,597,073 | ||||||||||||
Preferred Stocks | 1,237,352 | — | — | 1,237,352 | ||||||||||||
Exchange Traded Funds | 3,230,503 | — | — | 3,230,503 | ||||||||||||
Short-Term Investments | — | 12,273,000 | — | 12,273,000 | ||||||||||||
Other Financial Instruments | 976 | — | — | 976 | ||||||||||||
| $ | 81,613,920 | $ | 12,482,130 | $ | 363,404 | $ | 94,459,454 | |||||||||
Micro Cap Fund | ||||||||||||||||
Common Stocks | Health Care Equipment | $ | 13,630,673 | $ | — | $ | 857,076 | $ | 14,487,749 | |||||||
| Pharmaceuticals | — | — | 676,495 | 676,495 | ||||||||||||
| Specialized Finance | 3,342,771 | — | 1,111,880 | 4,454,651 | ||||||||||||
| Other | 236,870,884 | — | — | 236,870,884 | ||||||||||||
Preferred Stocks | 3,108,117 | — | — | 3,108,117 | ||||||||||||
Warrants | — | 77,078 | — | 77,078 | ||||||||||||
Short-Term Investments | — | 14,428,000 | — | 14,428,000 | ||||||||||||
| $ | 256,952,445 | $ | 14,505,078 | $ | 2,645,451 | $ | 274,102,974 | |||||||||
Micro Cap Value Fund | ||||||||||||||||
Common Stocks | Diversified Banks | $ | — | $ | — | $ | 246,113 | $ | 246,113 | |||||||
| Health Care Equipment | 5,817,746 | — | 293,665 | 6,111,411 | ||||||||||||
| Specialized Finance | 1,791,201 | — | 302,518 | 2,093,719 | ||||||||||||
| Steel | 1,240,980 | — | 1,561,340 | 2,802,320 | ||||||||||||
| Other | 89,154,383 | — | — | 89,154,383 | ||||||||||||
Warrants | — | 13,813 | — | 13,813 | ||||||||||||
Short-Term Investments | — | 13,928,000 | — | 13,928,000 | ||||||||||||
Other Financial Instruments | 92 | — | — | 92 | ||||||||||||
| $ | 98,004,402 | $ | 13,941,813 | $ | 2,403,636 | $ | 114,349,851 | |||||||||
Small Cap Growth | ||||||||||||||||
Common Stocks | Health Care Equipment | $ | 16,524,276 | $ | — | $ | 194,427 | $ | 16,718,703 | |||||||
| Pharmaceuticals | 6,131,045 | — | 847,460 | 6,978,505 | ||||||||||||
| Other | 704,812,672 | — | — | 704,812,672 | ||||||||||||
Preferred Stocks | — | — | 3,040,851 | 3,040,851 | ||||||||||||
Limited Partnership Interest | — | — | 4,205,345 | 4,205,345 | ||||||||||||
Convertible Note | — | — | 113,374 | 113,374 | ||||||||||||
Warrants | — | 46,058 | 11 | 46,069 | ||||||||||||
Rights | — | — | — | — | ||||||||||||
Short-Term Investments | — | 81,535,000 | — | 81,535,000 | ||||||||||||
| $ | 727,467,993 | $ | 81,581,058 | $ | 8,401,468 | $ | 817,450,519 | |||||||||
Small Cap Value Fund | ||||||||||||||||
Common Stocks | Asset Management & Custody Banks | $ | 5,759,448 | $ | — | $ | 3,917,102 | $ | 9,676,550 | |||||||
| Diversified REITs | — | 54,000 | — | 54,000 | ||||||||||||
| Steel | 2,275,926 | — | 2,977,249 | 5,253,175 | ||||||||||||
| Other | 194,690,765 | — | — | 194,690,765 | ||||||||||||
Short-Term Investments | — | 9,146,000 | — | 9,146,000 | ||||||||||||
| $ | 202,726,139 | $ | 9,200,000 | $ | 6,894,351 | $ | 218,820,490 | |||||||||
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| SEPTEMBER 30, 2009 | ||
| Fund | Category | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 9/30/2009 | |||||||||||
Strategic Income Fund | ||||||||||||||||
Common Stocks | Asset Management & Custody Banks | $ | 1,615,947 | $ | — | $ | 162,680 | $ | 1,778,627 | |||||||
| Diversified REITs | 169,260 | 15,551 | — | 184,811 | ||||||||||||
| Other | 10,997,185 | — | 10,997,185 | |||||||||||||
Exchange Traded Funds | 395,524 | — | — | 395,524 | ||||||||||||
Limited Partnership Interest | 340,202 | — | — | 340,202 | ||||||||||||
Royalty Interest | — | — | — | — | ||||||||||||
Corporate Bonds | — | 390,406 | — | 390,406 | ||||||||||||
Warrants | — | — | — | — | ||||||||||||
Put Options Purchased | 76,000 | — | — | 76,000 | ||||||||||||
Short-Term Investments | — | 3,149,000 | — | 3,149,000 | ||||||||||||
Call Options Written | (12,345 | ) | — | — | (12,345 | ) | ||||||||||
Securities Sold Short | (87,929 | ) | — | — | (87,929 | ) | ||||||||||
Other Financial Instruments | 406 | — | — | 406 | ||||||||||||
| $ | 13,494,250 | $ | 3,554,957 | $ | 162,680 | $ | 17,211,887 | |||||||||
Ultra Growth Fund | ||||||||||||||||
Common Stocks | Health Care Equipment | $ | 4,409,296 | $ | — | $ | 568,122 | $ | 4,977,418 | |||||||
| Health Care Technology | 1,824,908 | 2,531 | 1,827,439 | |||||||||||||
| Internet Software & Services | 2,380,632 | 30,158 | 2,410,790 | |||||||||||||
| Personal Products | 1,258,689 | — | 504 | 1,259,193 | ||||||||||||
| Pharmaceuticals | 129,514 | — | 156,842 | 286,356 | ||||||||||||
| Other | 102,602,422 | — | — | 102,602,422 | ||||||||||||
Preferred Stocks | — | — | 1,524,202 | 1,524,202 | ||||||||||||
Limited Partnership Interest | — | — | 3,865,754 | 3,865,754 | ||||||||||||
Warrants | — | 29,149 | — | 29,149 | ||||||||||||
Short-Term Investments | — | 2,745,000 | — | 2,745,000 | ||||||||||||
| $ | 112,605,461 | $ | 2,774,149 | $ | 6,148,113 | $ | 121,527,723 | |||||||||
Wasatch-1st Source Income Equity Fund | ||||||||||||||||
Common Stocks | $ | 1,315,207,930 | $ | — | $ | — | $ | 1,315,207,930 | ||||||||
Short-Term Investments | — | 80,694,000 | — | 80,694,000 | ||||||||||||
| $ | 1,315,207,930 | $ | 80,694,000 | $ | — | $ | 1,395,901,930 | |||||||||
Wasatch-1st Source Long/Short Fund | ||||||||||||||||
Common Stocks | $ | 110,670,763 | $ | — | $ | — | $ | 110,670,763 | ||||||||
Preferred Stocks | 6,477,086 | — | — | 6,477,086 | ||||||||||||
Limited Partnership Interest | 2,314,500 | — | — | 2,314,500 | ||||||||||||
Short-Term Investments | — | 31,385,000 | — | 31,385,000 | ||||||||||||
Call Options Written | (1,542,120 | ) | — | — | (1,542,120 | ) | ||||||||||
Securities Sold Short | (22,336,323 | ) | — | — | (22,336,323 | ) | ||||||||||
| $ | 95,583,906 | $ | 31,385,000 | $ | — | $ | 126,968,906 | |||||||||
U.S. Treasury Fund | ||||||||||||||||
U.S. Government Obligations | $ | 41,829,570 | $ | 110,974,256 | $ | — | $ | 152,803,826 | ||||||||
Short-Term Investments | — | 879,000 | — | 879,000 | ||||||||||||
| $ | 41,829,570 | $ | 111,853,256 | $ | — | $ | 153,682,826 | |||||||||
Wasatch-1st Source Income Fund | ||||||||||||||||
Asset Backed Securities | $ | — | $ | 3,669,552 | $ | — | $ | 3,669,552 | ||||||||
Collateralized Mortgage Obligations | — | 32,900,861 | — | 32,900,861 | ||||||||||||
Corporate Bonds | — | 29,863,117 | — | 29,863,117 | ||||||||||||
Municipal Bonds | — | 1,219,557 | 1,578,555 | 2,798,112 | ||||||||||||
Mutual Funds | 694,076 | — | — | 694,076 | ||||||||||||
Exchange Traded Funds | 1,493,520 | — | — | 1,493,520 | ||||||||||||
U.S. Government Agency Securities | — | 23,339,587 | — | 23,339,587 | ||||||||||||
U.S. Treasury Notes | — | 9,737,031 | — | 9,737,031 | ||||||||||||
U.S. Treasury Inflation Protected Securities | — | 4,983,744 | — | 4,983,744 | ||||||||||||
Preferred Stocks | 659,647 | — | — | 659,647 | ||||||||||||
Short-Term Investments | — | 3,440,000 | — | 3,440,000 | ||||||||||||
| $ | 2,847,243 | $ | 109,153,449 | $ | 1,578,555 | $ | 113,579,247 | |||||||||
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| WASATCH FUNDS — Notes to Financial Statements (continued) | ||
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) for the fund during the period ending September 30, 2009:
| Fund | Market Value Beginning Balance 10/01/2008 | Purchases at Cost/ Sales (Proceeds) | Realized Gain/(Loss) | Change in Unrealized Gain/(Loss) | Transfers in and/or out at Market Value | Market Value Ending Balance 9/30/2009 | ||||||||||||||||
Core Growth Fund | Investments in Securities | $ | 12,031,546 | $ | — | $ | (12,181,174 | ) | $ | 7,454,126 | $ | — | $ | 7,304,498 | ||||||||
Emerging Markets Small Cap Fund | Investments in Securities | — | — | — | (78,304 | ) | 193,168 | 114,864 | ||||||||||||||
Global Opportunities | Investments in Securities | — | 95,200 | — | (45,329 | ) | 90,529 | 140,400 | ||||||||||||||
Global Science & Technology Fund | Investments in Securities | 1,380,784 | 205,170 | (21,508 | ) | (79,613 | ) | — | 1,484,833 | |||||||||||||
International Opportunities Fund | Investments in Securities | 2,428 | — | (815,284 | ) | 511,048 | 665,213 | 363,405 | ||||||||||||||
Micro Cap Fund | Investments in Securities | 1,235,453 | 1,525,747 | (4,883,105 | ) | 4,767,356 | — | 2,645,451 | ||||||||||||||
Micro Cap Value Fund | Investments in Securities | 835,454 | 262,990 | (1,040,181 | ) | 813,459 | 1,531,914 | 2,403,636 | ||||||||||||||
Small Cap Growth Fund | Investments in Securities | 11,678,921 | 947,988 | (213,003 | ) | (4,012,438 | ) | — | 8,401,468 | |||||||||||||
Small Cap Value Fund | Investments in Securities | 6,450,945 | — | (3,328,550 | ) | 850,819 | 2,921,137 | 6,894,351 | ||||||||||||||
Strategic Income Fund | Investments in Securities | 267,540 | — | — | (104,860 | ) | — | 162,680 | ||||||||||||||
Ultra Growth Fund | Investments in Securities | 9,122,653 | 420,813 | 73,773 | (3,469,126 | ) | — | 6,148,113 | ||||||||||||||
Wasatch-1st Source Income Fund | Investments in Securities | 1,617,000 | — | — | (38,445 | ) | — | 1,578,555 | ||||||||||||||
14. FAIR VALUEOF DERIVATIVE INSTRUMENTS*
The following is a summary of the fair valuations of the Funds’ derivative instruments categorized by risk exposure:
WASATCH GLOBAL SCIENCE & TECHNOLOGY FUND
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended September 30, 2009:
| Derivatives not accounted for as hedging instruments under Statement 133 | |||||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | ||||||||||||||||
Realized Gain/(Loss) on Derivatives Recognized in Income | |||||||||||||||||||||
Net realized gain/(loss) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | (539,388 | ) | $ | (244,703 | ) | $ | (784,091 | ) | ||||||
WASATCH HERITAGE GROWTH FUND
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended September 30, 2009:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||||
Realized Gain/(Loss) on Derivatives Recognized in Income | ||||||||||||||||||||
Net realized gain on options written | $ | — | $ | — | $ | — | $ | 53,904 | $ | — | $ | 53,904 | ||||||||
Net Change in Unrealized Appreciation/(Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | (6,570 | ) | $ | — | $ | (6,570 | ) | ||||||
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WASATCH HERITAGE VALUE FUND
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended September 30, 2009:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||||
Realized Gain/(Loss) on Derivatives Recognized in Income | ||||||||||||||||||||
Net realized gain on options written | $ | — | $ | — | $ | — | $ | 93,828 | $ | — | $ | 93,828 | ||||||||
Net Change in Unrealized Appreciation/(Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | (712 | ) | $ | — | $ | (712 | ) | ||||||
WASATCH MICRO CAP VALUE FUND
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended September 30, 2009:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||||
Realized Gain/(Loss) on Derivatives Recognized in Income | ||||||||||||||||||||
Net realized gain on options written | $ | — | $ | — | $ | — | $ | 611,238 | $ | — | $ | 611,238 | ||||||||
Net Change in Unrealized Appreciation/(Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | (18,796 | ) | $ | — | $ | (18,796 | ) | ||||||
WASATCH SMALL CAP VALUE FUND
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended September 30, 2009:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||
Realized Gain/(Loss) on Derivatives Recognized in Income | ||||||||||||||||||
Net realized gain on options written | $ | — | $ | — | $ | — | $ | 482,491 | $ | — | $ | 482,491 | ||||||
WASATCH STRATEGIC INCOME FUND
Fair Values of Derivative Instruments on the Statement of Assets and Liabilities as of September 30, 2009:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||
Assets Derivatives | ||||||||||||||||||
Investments, at market value | $ | — | $ | — | $ | — | $ | — | $ | 76,000 | $ | 76,000 | ||||||
Liabilities Derivatives | ||||||||||||||||||
Call options written at value | $ | — | $ | — | $ | — | $ | 12,345 | $ | — | $ | 12,345 | ||||||
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| WASATCH FUNDS — Notes to Financial Statements (continued) | SEPTEMBER 30, 2009 | |
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended September 30, 2009:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||||
Realized Gain/(Loss) on Derivatives Recognized in Income | ||||||||||||||||||||
Net realized gain/(loss) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | — | $ | (203,944 | ) | $ | (203,944 | ) | ||||||
Net realized gain on options written | — | — | — | 43,721 | — | 43,721 | ||||||||||||||
| $ | — | $ | — | $ | — | $ | 43,721 | $ | (203,944 | ) | $ | (160,223 | ) | |||||||
Net Change in Unrealized Appreciation/(Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | 8,532 | $ | (146,200 | ) | $ | (137,668 | ) | ||||||
WASATCH-1ST SOURCE LONG/SHORT FUND
Fair Values of Derivative Instruments on the Statement of Assets and Liabilities as of September 30, 2009:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||
Liabilities Derivatives | ||||||||||||||||||
Call options written at value | $ | — | $ | — | $ | — | $ | 1,542,120 | $ | — | $ | 1,542,120 | ||||||
The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended September 30, 2009:
| Derivatives not accounted for as hedging instruments under Statement 133 | ||||||||||||||||||
| Interest Rate Contracts | Foreign Exchange Contracts | Credit Contracts | Equity Contracts | Other Contracts | Total | |||||||||||||
Realized Gain/(Loss) on Derivatives Recognized in Income | ||||||||||||||||||
Net realized gain on options written | $ | — | $ | — | $ | — | $ | 1,315,878 | $ | — | $ | 1,315,878 | ||||||
Net Change in Unrealized Appreciation/(Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||
Change in unrealized appreciation (depreciation) on investments and foreign currency translations | $ | — | $ | — | $ | — | $ | 62,272 | $ | — | $ | 62,272 | ||||||
| * | See Note 2 — Significant Accounting Policies for additional information. |
The derivative instruments outstanding as of September 30, 2009 as disclosed in the Notes to the Schedules of Investments and the amounts of realized and changes in unrealized gains and losses on derivative instruments during the period as disclosed in the Statement of Operations serve as indicators of the volume of derivative activity for the Funds.
15. SUBSEQUENT EVENTS
Management has evaluated the possibility of subsequent events existing in the Funds’ financial statements through November 25, 2009, the date the financial statements were available to be issued. Management believes that there are no additional material events that would require disclosure in the Funds’ financial statements through this date.
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| WASATCH FUNDS — Report of Independent Registered Public Accounting Firm | ||
To the Board of Directors
and Shareholders of
Wasatch Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the funds constituting the Wasatch Funds, Inc. (hereafter referred to as the “Funds”) at September 30, 2009, for the Wasatch-1st Source Income Equity Fund, Wasatch-1st Source Income Fund, and Wasatch-1st Source Long/Short Fund the results of each of their operations, changes in net assets and financial highlights for the year then ended, and for the remaining funds constituting the Funds the results of each of their operations for the period then ended, the changes in each of their net assets and financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities September 30, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial statements of the Wasatch-1st Source Income Equity Fund, Wasatch-1st Source Income Fund, and Wasatch-1st Source Long/Short Fund as of September 30, 2008, and the changes in each of their net assets and financial highlights for the six months then ended were audited by other auditors whose report dated November 26, 2008 expressed an unqualified opinion on those statements. The financial statements of the Wasatch-1st Source Income Equity Fund, Wasatch-1st Source Income Fund, and Wasatch-1st Source Long/Short Fund as of March 31, 2008, and the changes in each of their net assets for the year then ended and the financial highlights for each of the four years in the period then ended were audited by other auditors whose report dated May 22, 2008 expressed an unqualified opinion.
PricewaterhouseCoopers LLP
Kansas City, MO
November 25, 2009
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| WASATCH FUNDS — Supplemental Information | SEPTEMBER 30, 2009 (UNAUDITED) | |
Management Information. The business affairs of Wasatch Funds are supervised by its Board of Directors. The Board consists of four directors who are elected and serve until their successors are elected and qualified.
The directors and executive officers of Wasatch Funds and their principal occupations for at least the last five years are set forth below.
| Name, Address and Age | Position(s) Held with Wasatch Funds | Term of Office1 and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director | Other Directorships Held by Director2 | |||||
Independent Directors | ||||||||||
James U. Jensen, J.D., MBA c/o Wasatch Funds 150 Social Hall Ave. 4th Floor Salt Lake City, Utah 84111 Age 65 | Director and Chairman of the Board | Indefinite Served as Chairman of the Board since 2004 and Director since 1986 | Chief Executive Officer of Clearwater Governance Group (an operating board governance consulting company) July 2008 to present; Co-Founder and Chairman of the Board of Intelisum, Inc. (a company pursuing computer and measurement technology and products) 2001 to 2008; Consultant on corporate growth and technology transfer since 2004; Vice President, Corporate Development, Legal Affairs and General Counsel, and Secretary, NPS Pharmaceuticals, Inc. from 1991 to 2004. | 18 | Private companies and foundations.
Director of Cognigen Networks, Inc. (Internet and relationship enabled marketing company) since December 2007.
Director of Bayhill Capital Corp. (telephone communications) since December 2007. | |||||
William R. Swinyard, Ph.D. c/o Wasatch Funds 150 Social Hall Ave. 4th Floor Salt Lake City, Utah 84111 Age 69 | Director and Chairman of the Audit Committee | Indefinite Served as Chairman of the Audit Committee since 2004 and Director since 1986 | Professor of Business Management and Holder of the Fred G. Meyer Chair of Marketing (Emeritus), Brigham Young University since 1978. | 18 | None | |||||
D. James Croft, Ph.D. c/o Wasatch Funds 150 Social Hall Ave. 4th Floor Salt Lake City, Utah 84111 Age 67 | Director | Indefinite Served as Director since 2005 | Consultant since 2004 and Founder & Executive Director, Mortgage Asset Research Institute from 1990 to 2004. | 18 | None | |||||
Interested Director | ||||||||||
Samuel S. Stewart, Jr., Ph.D. CFA3 150 Social Hall Ave. 4th Floor Salt Lake City, UT 84111 Age 67 | President and Director | Indefinite Served as President and Director since 1986 | Chairman of the Board for the Advisor since 1975; Chief Investment Officer of the Advisor since 2004; Director of Research of the Advisor from 1975 to 2004; Chairman of the Board of Wasatch Funds from 1986 to 2004. | 18 | None | |||||
| 1 | A Director may serve until his death, resignation, removal or retirement. Each Independent Director shall retire as Director at the end of the calendar year in which he attains the age of 72 years. |
| 2 | Directorships are those held by a Director in any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of the Securities Exchange Act or any company registered as an investment company under the 1940 Act. |
| 3 | Mr. Stewart is an Interested Director because he serves as a director and officer of the Advisor. |
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| WASATCH FUNDS — Supplemental Information (continued) | ||
| Name, Address and Age | Position(s) Held with Wasatch Funds | Term of Office and Length of Time Served | Principal Occupation(s) during Past 5 Years | |||
Officers | ||||||
Daniel D. Thurber 150 Social Hall Ave. 4th Floor Salt Lake City, UT 84111 Age 40 | Vice President | Indefinite Served as Vice President since February 2007 | General Counsel, Chief Compliance Officer and Director of Compliance for the Advisor since 2006; Chief Compliance Officer and Secretary for Wasatch Funds from May 2006 to February 2007; Associate and Partner at Dorsey & Whitney LLP from 2001 to 2006. | |||
Russell L. Biles 150 Social Hall Ave. 4th Floor Salt Lake City, UT 84111 Age 41 | Chief Compliance Officer, Vice President and Secretary | Indefinite Served as Chief Compliance Officer and Vice President since February 2007 and Secretary since November 2008 | Chief Compliance Officer and Vice President for Wasatch Funds since February 2007; Counsel for the Advisor since October 2006; Senior Compliance Administrator for the Advisor from October 2005 to October 2006; Attorney and Managing Member of Nicholls Nicholls Biles & Bower, LLC from 2002 to 2005. | |||
Eric Huefner 150 Social Hall Ave. 4th Floor Salt Lake City, UT 84111 Age 45 | Vice President and Treasurer | Indefinite Served as Vice President since February 2008 and Treasurer from November 2008 to May 2009 | Vice President for Wasatch Funds since February 2008; Director of Mutual Funds for the Advisor since June 2006; Business Director, Campbell Soup Company, March 2003 to May 2006. | |||
Cindy B. Firestone, CPA 150 Social Hall Ave. 4th Floor Salt Lake City, UT 84111 Age 51 | Treasurer | Indefinite Served as Treasurer since May 2009 | Treasurer for Wasatch Funds since May 2009, Assistant Treasurer for Wasatch Funds from November 2008 to May 2009; Internal Auditor for the Advisor since December 2002. | |||
Additional information about the Funds’ directors is provided in the Statement of Additional Information and is available without charge, upon request, by calling 800.551.1700.
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| SEPTEMBER 30, 2009 (UNAUDITED) | ||
PROXY VOTING POLICIES, PROCEDURESAND RECORD
A description of the policies and procedures that Wasatch Advisors uses to vote proxies related to the Funds’ portfolio securities is set forth in the Funds’ Statement of Additional Information which is available without charge, upon request, on the Funds’ web site at www.wasatchfunds.com or by calling 800.551.1700 and on the Securities and Exchange Commission’s (SEC) web site at www.sec.gov.
Wasatch Funds’ proxy voting record is available on the Funds’ web site at www.wasatchfunds.com and the SEC’s web site at www.sec.gov no later than August 31 for the prior 12 months ending June 30.
QUARTERLY PORTFOLIO HOLDINGS DISCLOSUREON FORM N-Q
The Funds file their complete schedules of investments with the SEC for their first and third fiscal quarters of each fiscal year, commencing with the quarter ended December 31, 2004, on Form N-Q. The Funds’ Form N-Q is available on the SEC’s web site at www.sec.gov, and may be viewed at the SEC’s Public Reference Room in Washington, D.C. (information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330).
DISCLOSUREFOR BOARD APPROVALOF ADVISORYAND SERVICE CONTRACTFOR THE HERITAGE VALUE FUND
At a meeting held on May 13, 2009 (the “May Meeting”), the Board of Directors of Wasatch Funds, Inc. (the “Company”), including the Independent Directors, unanimously approved the Advisory and Service Contract (the “Advisory Contract”) between the Company on behalf of the Heritage Value Fund and Wasatch Advisors. To assist the Board in its evaluation of the Advisory Contract, the Independent Directors received materials and other information, in adequate time in advance of the May Meeting, which outlined, among other things:
| • | the terms and conditions of the Advisory Contract, including the nature, extent and quality of services provided by the Advisor; |
| • | the organization and business operations of the Advisor, including the experience of persons manage the Fund; |
| • | the profitability of the Advisor from serving as adviser to the Fund (plus profitability analysis for advisers to unaffiliated investment companies generally and the expenses of the Advisor in providing the services); |
| • | the management fees of the Advisor, including comparisons of such fees with the management fees of comparable, unaffiliated funds prepared by an independent third party and the Advisor’s fee schedule for other clients; |
| • | the expenses of the Fund, including comparisons with the expense ratios of comparable, unaffiliated funds compiled by an independent third party; |
| • | the Fund’s past performance plus such Fund’s performance compared to funds of similar investment objectives compiled by an independent third party and with recognized benchmarks; and |
| • | from Independent Counsel, a legal memorandum outlining, among other things, the duties of the Independent Directors under the 1940 Act, as well as the general principles of relevant state law in reviewing and approving advisory contracts; the requirements of the 1940 Act in such matters; an adviser’s fiduciary duty with respect to advisory agreements and compensation; the standards used by courts in determining whether investment company boards of directors have fulfilled their duties and factors to be considered by the Board in voting on advisory agreements. |
In addition to the materials, as noted, the Independent Directors met in executive session with Independent Counsel to discuss, among other things, the Advisory Contract, the materials provided, and the Board’s duties in reviewing and approving advisory contracts. The Independent Directors, in consultation with Independent Counsel, also reviewed the factors set out in judicial decisions and SEC directives relating to the renewal of advisory contracts. The information provided for the meeting supplements the information the Board received throughout the year regarding the Fund’s performance, expense ratios, portfolio composition, trade execution and sales activity. In this regard, the Independent Directors considered and recognized the extraordinary and challenging market conditions during the prior year and therefore focused their attention on the Fund’s performance throughout the year, including the Board’s deliberations at a special meeting held on October 17, 2008 (the “October Meeting”). In response to a request from the Board, for the October Meeting, each portfolio manager of the Wasatch Funds, including the portfolio manager of the Heritage Value Fund, provided written reviews of their respective Fund’s performance and proposed modifications deemed necessary or appropriate to the manner in which the Fund is managed. At the October Meeting, the Board met with management to discuss, among other things, the Advisor’s investment process and philosophy, investment strategies, and the portfolio managers’ evaluations of their respective Fund’s performance. The Independent Directors also met in Executive session with Independent Legal Counsel to discuss, among other things, each Fund’s performance, the portfolio managers’ reviews and recommendations, if any, and the current market environment.
As outlined in more detail below, the Independent Directors considered all factors they believed relevant with respect to the Fund, including the following: (a) the nature, extent and quality of the services to be provided by the Advisor; (b) the investment performance of the Fund as available (as described in further detail in Section (B) below); (c) the profits to be realized by the Advisor from the relationship with the Fund; (d) the extent to which economies of scale would be realized as the Fund grows; and (e) whether fee levels reflect these economies of scale for the benefit of Fund investors.
| A. | NATURE, EXTENTAND QUALITYOF SERVICES |
In evaluating the nature, extent and quality of the Advisor’s services, the Independent Directors reviewed
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| WASATCH FUNDS — Supplemental Information (continued) | ||
information concerning the types of services (advisory and non-advisory or administrative services) that the Advisor provides to the Fund; the performance record of the Fund; and information describing the Advisor’s organization and business. In connection with their service as Independent Directors of the Company, the Independent Directors also periodically have met with the Advisor’s personnel and have evaluated their professional experience, qualifications and credentials as well as their investment approach and research process. Given the Independent Directors’ experience with the Fund and Advisor, the Independent Directors were familiar with and have a good understanding of the organization, operations, investment philosophy and personnel of the Advisor.
In connection with their review of the advisory services being provided, the Independent Directors considered the investment philosophy and investment mandates of the Fund and whether the Advisor has performed consistently with such philosophy and mandates. While the Directors believe that the Advisor has consistently applied its traditional investment philosophy and processes in managing the Fund, the Directors also have recognized the Advisor’s continual review of its research process in order to keep refining and improving its investment process, particularly in light of recent market conditions. The Independent Directors further reviewed the compensation arrangements of the Advisor’s personnel to evaluate the Advisor’s ability to attract and retain key employees, including portfolio managers, preserve stability and reward performance but not provide an incentive for taking undue risks. In addition to compensation, the Directors also considered the Advisor’s succession plans to preserve stability over time. In light of the regulatory emphasis on compliance, in reviewing the services that have been provided to the Fund, the Independent Directors also considered the Advisor’s compliance activities and regulatory history.
In their review of services, the Independent Directors also evaluated the quality of administrative or non-advisory services provided. The terms of the Advisory Contract provide that the Advisor shall administer the Company’s affairs, including those of the Heritage Value Fund, to the extent requested by and subject to the supervision of the Board for the period and terms of the contract. In this regard, the Advisor provides business, administrative, compliance, marketing and other services required to operate the Fund, such as assistance with preparation and filing of regulatory and tax reports, preparation and distribution of prospectuses and shareholder reports, provision of information to Fund directors, analysis to ensure compliance with federal and state laws and regulations, valuation of portfolio securities, and oversight of the performance of the Fund’s service providers (e.g., administrator, fund accountant, transfer agent and custodian). The Advisor also pays for office space and facilities for the Fund. In reviewing the services provided, the Independent Directors considered the changes to Advisor personnel and the impact on the level of services provided to the Fund, if any.
Based on their review, the Independent Directors found that, overall, the nature, extent and quality of services provided under the Advisory Contract were satisfactory on behalf of the Fund.
| B. | THE INVESTMENT PERFORMANCEOFTHE FUND |
In evaluating the Fund’s performance, the Directors reviewed the historical performance of the Fund relative to its peer group and relevant benchmarks. More specifically, the Independent Directors reviewed, among other things, materials reflecting the Fund’s total return performance for the one-year and since inception periods ending March 31, 2009 compared to its respective benchmarks and unaffiliated funds in its investment category (a “Peer Group”). This information supplemented the performance information provided to the Board at each of its quarterly meetings as well as at other meetings or executive sessions held during the year in response to the Board’s requests, including the October Meeting. The Independent Directors further considered the performance of the Fund in the context of the volatile market conditions during the past year. Based on their review and in light of the above considerations, the Independent Directors were satisfied with Fund performance during these extraordinary times.
| C. | FEES, EXPENSESAND PROFITABILITY |
1. Fees and Expenses
In their evaluation of fees and expenses, the Independent Directors reviewed the Advisor’s management fees and expense ratios for the Fund in absolute terms as well as with comparisons of fees and expenses of funds in its closest Peer Group. In this regard, the Independent Directors reviewed and considered, among other things, comparisons of the Fund’s actual management fees, total expenses (including and excluding 12b-1/non-12b-1 service fees), and non-management expenses (such as transfer agency, custodian, administrative and accounting fees) with those of unaffiliated funds in its Peer Group compiled by an independent third party. In reviewing fees, the Independent Directors also considered the expense limitation agreement provided by the Advisor for the Fund and the amounts the Advisor has reimbursed to the Fund for the last two fiscal years which effectively reduces the amount of advisory fees paid to the Advisor.
As noted above, the Independent Directors considered not only the Fund’s management fee, but also its total expense ratio compared to its Peer Group. In this regard, the Fund had a total expense ratio (after fee waivers and expense reimbursements) and management fee below the median in its closest Peer Group.
In addition to reviewing fees and expenses in absolute terms and in comparisons to peers, the Independent Directors recognized the Advisor’s research intensive investment approach and the related costs, including, in particular, the Advisor’s significant investment in its research personnel. Given the foregoing, the Independent Directors determined that the current advisory fee levels were acceptable.
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| SEPTEMBER 30, 2009 (UNAUDITED) | ||
2. Fees Charged to Other Advisor Clients
In reviewing fees, the Independent Directors also considered the advisory fees to the fees the Advisor assesses other types of clients, including institutional and high net worth separate accounts and a private investment company. Currently, the Advisor does not manage a separate account portfolio in a style similar to that used for the Heritage Value Fund. The Independent Directors, however, are familiar with the fees the Advisor assesses other separately managed accounts following other investment strategies which are generally the same or higher than that for the Fund. In addition, with respect to the private investment company, the Independent Directors recognized that such company is not subject to the extensive regulatory scheme required of operating registered investment companies such as the Fund, and therefore the services required differ. The Independent Directors further noted the advisory fee arrangement of the private investment company with the Advisor provides for a performance fee and therefore its fee structure differs significantly from that of the Fund.
3. Profitability of Advisor
The Independent Directors reviewed pro forma profitability information for the Advisor derived from its relationship with the Fund for the calendar year ending December 31, 2008. In reviewing profitability, the Independent Directors reviewed the methodology utilized to allocate revenue and expenses of the Advisor among its product lines, including the funds. In considering profitability, the Independent Directors have recognized the inherent limitations in determining profitability which may be affected by many factors, including the allocation of expenses across multiple investment products served by the Advisor. The allocation of research and personnel expenses is also particularly difficult given the Advisor’s shared research culture. The Independent Directors further noted the impact on profitability due to the Advisor’s compensation arrangements and the reduction of assets under management during the recent challenging market conditions. The Independent Directors, however, also recognized that this is a relatively new Fund for which the Advisor is reimbursing certain Fund expenses and waiving a portion of its management fee. In addition to reviewing the Advisor’s profitability, the Directors also reviewed the Advisor’s relative profitability compared to publicly available information concerning unaffiliated advisers. However, the Independent Directors recognized the difficulties in comparing the profitability of various advisors given that individual fund or product line profitability of other advisers generally is not publicly available and the profitability information that is available for certain advisers or management firms may not be representative of the industry and may be affected by numerous factors including the structure of the particular adviser, the types of funds managed, its business mix, expense allocations, and the adviser’s capital structure and cost of capital. The Independent Directors noted that the Advisor’s profitability with respect to its mutual fund advisory services is within a reasonable range compared to the peer group of unaffiliated advisers. Based
on their review, the Independent Directors were satisfied that the Advisor’s level of profitability from its relationship with the Fund was not unreasonable in light of the services provided.
In addition to the above, the Independent Directors also considered that the Advisor benefits from soft dollar arrangements whereby it receives brokerage and research services from brokers that execute the Fund’s purchases and sales of securities, as described in further detail below.
| D. | ECONOMIESOF SCALEAND WHETHER FEE LEVELS REFLECT THESE ECONOMIESOF SCALE |
In reviewing advisory fees, the Independent Directors recognized that the advisory fee schedule for the Fund does not contain breakpoints that reduce the fee rate on assets above certain levels. The Independent Directors, however, noted that the management fee rate paid by the Fund was below the median fee rate of its closest Peer Group. Further, the Advisor has reimbursed certain Fund expenses and waived a portion of its management fees during the last two fiscal years effectively subsidizing the Fund until it reaches an adequate scale. The Independent Directors also have noted the costs associated with the Advisor’s research intensive investment approach. Considering the factors above, the Independent Directors concluded the absence of breakpoints was acceptable.
| E. | INDIRECT BENEFITS |
In evaluating fees, the Independent Directors also considered any indirect benefits or profits the Advisor or its affiliates may receive as a result of its relationship with the Fund. In this regard, the Independent Directors considered that the Advisor benefits from soft dollar arrangements pursuant to which it receives research from brokers that execute the Fund’s brokerage transactions. The Independent Directors reviewed information regarding the soft dollar arrangements including, among other things, the commissions paid, the research credits earned and the services provided. Further, the Independent Directors at prior meetings have had extensive discussions regarding the soft dollar arrangements. The Independent Directors recognized that soft dollar arrangements provide benefits to the Advisor derived from the Fund’s transaction by obtaining research that it would otherwise have to acquire with hard dollars. Accordingly, the Advisor’s profitability would be somewhat lower if it did not receive the research services pursuant to soft dollar arrangements. The Independent Directors took these “fall out” benefits into account when reviewing the level of advisory fees.
| F. | APPROVAL |
The Independent Directors did not identify any single factor discussed previously as all-important or controlling. The Independent Directors, including a majority of Independent Directors, concluded that the terms of the Advisory Contract for the Fund were fair and reasonable, that the Advisor’s fees are reasonable in light of the services provided to the Fund, and that the Advisory Contract should be and was approved on behalf of the Fund.
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| WASATCH FUNDS — Service Providers | SEPTEMBER 30, 2009 | |
Investment Advisor
Wasatch Advisors, Inc.
150 Social Hall Avenue, 4th Floor
Salt Lake City, UT 84111
Sub-Advisor for the U.S. Treasury Fund
Hoisington Investment Management Co.
1250 Capital of Texas Highway South
Building 3, #600
Austin, TX 78746
Sub-Advisor for the Wasatch-1st Source Income Fund
1st Source Corporation Investment Advisors, Inc.
100 North Michigan Street
South Bend, IN 46601
Administrator and Fund Accountant
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, MO 64105
Distributor
ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, CO 80203
Transfer Agent
UMB Fund Services, Inc.
803 West Michigan Street, Suite A
Milwaukee, WI 53233-2301
Custodian
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, MO 64105
Legal Counsel to Wasatch Funds and Independent Directors
Chapman and Cutler, LLP
111 West Monroe Street
Chicago, IL 60603
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
1100 Walnut, Suite 1300
Kansas City, MO 64106
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| WASATCH FUNDS — Guide to Understanding Financial Statements | SEPTEMBER 30, 2009 | |
Wasatch Funds provides reports to shareholders twice a year. The annual report is for the Funds’ fiscal year which ends September 30. The semi-annual report is for the six months or period ending March 31. Additionally, the Funds’ schedules of investments for the first and third quarters of each fiscal year are available to shareholders as described on page 126. These reports provide shareholders with important information that will help them evaluate the management and performance of their investments. It is the desire of Wasatch Funds to help shareholders stay in tune with their investments. If you have any questions about the information in this report, a shareholder services representative will be happy to assist you when you call 800.551.1700.
SCHEDULEOF INVESTMENTS
The holdings of each Wasatch Fund are detailed in the “Schedule of Investments.” This section provides a snapshot of the securities each Fund was invested in on the last day of the reporting period. The Wasatch Equity Funds invest primarily in Common Stocks of companies which are grouped together by industry. The U.S. Treasury Fund invests primarily in U.S. Treasury securities. The Wasatch-1st Source Income Fund invests primarily in fixed income securities. The Equity Funds will typically have only minor holdings in Short-Term Investments. At times the Funds may take temporary defensive positions by increasing cash or holdings in Short-Term Investments. Please see the prospectus under “Additional Information about the Funds.”
STATEMENTSOF ASSETSAND LIABILITIES
These financial statements show the Assets and Liabilities of a Fund on the last day of the reporting period. A Fund’s Assets include the value of securities owned, amounts receivable for purchases of Fund shares (capital shares receivable), securities sold, interest and dividends, prepaid expenses and other assets. Liabilities are amounts owed for shareholder redemptions (capital shares payable), securities purchased, investment advisory fees and other expenses. Totaling up the assets and subtracting the liabilities results in a Fund’s Net Assets.
Net Assets consist of capital stock, paid-in capital in excess of par, undistributed net investment income or loss, undistributed net realized gain or loss on investments and net unrealized appreciation or depreciation on investments. Capital stock is stock authorized by a company’s charter and having par value, stated value or no par value. Par value is set by the company issuing the shares and has no relation to Net Asset Value. The par value of one share of each Wasatch Fund is $.01. Paid-in capital in excess of par is capital received from shareholders in exchange for Fund shares that exceeds the par value of the shares. For example, if you bought one share of a Fund for $10, $.01 would show as “Capital stock” on the books of the Fund, and $9.99 would be accounted for under “Paid-in capital in excess of par.” Undistributed net investment income or loss is the amount of net investment income or loss of a Fund since inception that has not been paid to shareholders as a dividend.
Undistributed net realized gain (loss) on investments is the amount of net realized gains or losses generated by a Fund since inception that have not been distributed to shareholders in the form of a capital gain distribution. A gain or loss is realized when a security is sold by a Fund. Net unrealized appreciation (depreciation) on investments is the change in value from the purchase price of securities a Fund continues to hold.
The number of shares a Fund is authorized to sell can be found under Capital Stock, $.01 par value. Issued and outstanding indicates the number of shares owned by shareholders.
Net Asset Value (NAV), Redemption Price and Offering Price Per Share shows the value of one outstanding share of a Fund on the date of the report. A Fund’s share price (NAV) is calculated by dividing the value of all securities and other assets owned by a Fund, less the liabilities charged to that Fund, by the number of Fund shares outstanding. The share price is calculated at the close of business of the New York Stock Exchange on each day the Exchange is open for trading. Please see Wasatch Funds’ prospectus for more information about how share prices are calculated. Information about how the share price is affected by a Fund’s operation can be found under “Financial Highlights” on page 137.
STATEMENTSOF OPERATIONS
Statements of Operations show investment income and expenses for each Fund as well as realized gains or losses from securities sold and the appreciation or depreciation in the value of a Fund’s holdings during the reporting period.
Investment Income shows Interest and Dividends earned from interest-bearing and dividend-paying securities in a Fund’s portfolio.
Expenses show the various fees and expenses paid out of a Fund’s assets such as the fee paid to Wasatch Advisors, the Funds’ investment advisor. Additional fees include shareholder servicing, fund administration and accounting, custody of fund assets, federal and state registration, legal counsel, auditing and directors’ fees. The Funds pay for printing and mailing statements, prospectuses, annual reports and semi-annual reports to shareholders.
Net Investment Income (Loss) is the amount of dividends and interest income earned on securities held by a Fund, less the Fund’s expenses.
Net realized gain (loss) on investments and foreign currency translations is the net gain or loss on securities a Fund has sold. Change in unrealized appreciation (depreciation) on investments and foreign currency translations is the change in value of securities a Fund continues to hold.
Net gain (loss) on investments is the result of changes in the market value of securities a Fund has sold and securities it continues to hold.
STATEMENTSOF CHANGESIN NET ASSETS
Net Assets are a Fund’s remaining assets after taking into consideration any liabilities. Statements of Changes in Net
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| WASATCH FUNDS — Guide to Understanding Financial Statements (continued) | SEPTEMBER 30, 2009 | |
Assets show the increase or decrease in a Fund’s net assets during the reporting period. Investment operations, dividends and capital share transactions affect a Fund’s net assets. Operations is a summary of the Statements of Operations. It includes investment income or loss, net realized gain or loss on investments and foreign currency translations a Fund has sold as well as the change in appreciation or depreciation in the value of investments a Fund continues to hold.
Dividends are distributed by Wasatch Funds to sharehold-ers when Fund investments have earned income in excess of net expenses or when capital gains in excess of capital losses are realized from the sale of securities. Most shareholders choose to reinvest their dividends and capital gain distribu- tions. Each Fund is required by Internal Revenue Code regulations to distribute substantially all of its net investment income and capital gains to shareholders in order to retain its status as a “regulated investment company.”
Capital share transactions are any transactions involving shares of a Fund, including the selling of Fund shares, shares issued by a Fund to shareholders for the reinvestment of dividends, and share redemptions.
FINANCIAL HIGHLIGHTS
The Financial Highlights contain important historical operating information that you may find useful in making decisions or understanding the performance of your investment.
Net Asset Value (NAV) is defined under “Statements of Assets and Liabilities” on page 136. The difference between the Net asset value, beginning of period and the Net asset value, end of period in the Financial Highlights is the change in value of a Fund’s shares over the reporting period, but not its total return.
Income (loss) from investment operations shows how the share price was affected by a Fund’s operations on a per share basis. Net investment income (loss) is the per share
amount of dividends and interest income earned on securities held by a Fund, less the Fund’s expenses. Net realized and unrealized gains (losses) on securities is the per share increase or decrease in the value of securities a Fund holds or has sold during the reporting period. Gains or (losses) are realized when securities are sold. Gains or (losses) are unrealized when securities increase or decrease in value but are not sold.
Distributions are the per share amount that a Fund paid to shareholders from net investment income and net realized gains.
Total return is the percentage increase or decrease in the value of an investment over a stated period of time. A total return percentage includes both changes in unrealized and realized gains and income. For the purposes of calculating total return, it is assumed that dividends and distributions are reinvested at the share price on the ex-dividend day of the distribution. A FUND’S TOTAL RETURN CANNOT BE COMPUTED DIRECTLY FROM THE FINANCIAL HIGHLIGHTS.
Supplemental data and ratios are provided to help you better understand your investment. Net assets, end of period, are the net assets of a Fund on the reporting date. Ratio of expenses to average net assets shows the total of a Fund’s operating expenses divided by its average net assets for the stated period before and after waivers and reimbursements by the Advisor, if any. Ratio of net investment income to average net assets shows a Fund’s net investment income (loss) divided by its average net assets for the stated period before and after waivers and reimbursements by the Advisor, if any. Portfolio turnover rate measures a Fund’s buying and selling activity during the reporting period. It is computed by dividing total purchases or sales, whichever is less, by the average monthly market value of a Fund’s portfolio securities. This calculation does not include securities with a maturity date of less than 12 months.
| CONTACT WASATCH | ||
TELEPHONE
800.551.1700
M - F, 7:00 a.m. to 7:00 p.m. CT
Automated Line, 24 Hours
U.S. MAIL
Wasatch Funds
P.O. Box 2172
Milwaukee, WI 53201-2172
OVERNIGHT MAIL
Wasatch Funds
803 West Michigan Street, Suite A
Milwaukee, WI 53233-2301
ONLINE
www.wasatchfunds.com
shareholderservice@wasatchfunds.com
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WWW.WASATCHFUNDS.COM
800.551.1700
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| Item 2: | Code of Ethics. |
| (a) | Wasatch Funds, Inc. (the “Registrant”) has adopted a Code of Ethics that applies to the Registrant’s principal executive officer and principal financial officer. |
| (b) | No disclosures are required by this Item 2(b). |
| (c) | There have been no amendments to the Registrant’s Code of Ethics during the reporting period for Form N-CSR. |
| (d) | There have been no waivers granted by the Registrant to individuals covered by the Registrant’s Code of Ethics during the reporting period for Form N-CSR. |
| (e) | Not applicable. |
| (f) | A copy of the Registrant’s Code of Ethics is attached as an exhibit to this Form N-CSR. |
| Item 3: | Audit Committee Financial Expert. |
| (a) (1) | The Board of Directors of the Registrant has determined that the Registrant has one member serving on the Registrant’s Audit Committee that possesses the attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as “audit committee financial expert.” |
| (2) | For the reporting period, the name of the audit committee financial expert was James U. Jensen. Mr. Jensen was deemed to be “independent” as that term is defined in Item 3(a)(2) of Form N-CSR. |
| Item 4. | Principal Accountant Fees and Services. |
(a) Audit Fees – The aggregate fees billed for professional services rendered by the independent registered public accounting firm for the audit of the Registrant’s annual financial statements or services normally provided in connection with statutory and regulatory filings or engagements for the last two fiscal years ended September 30, 2009 and September 30, 2008 were $295,100 and $262,871, respectively.
(b) Audit Related Fees – The Registrant was not billed any fees by the independent registered public accounting firm for the fiscal year ended September 30, 2008 for assurance and related services rendered by the independent registered public accounting firm to the registrant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item 4. The Registrant was not billed any fees by the independent registered public accounting firm for the fiscal year ended September 30, 2009 for assurance and related services rendered by the independent registered public accounting firm to the registrant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item 4.
During the fiscal years ended September 30, 2009 and 2008, no fees for assurance and related services that relate directly to the operations and financial reporting of the Registrant were billed by the independent registered public accounting firm to the Registrant’s investment adviser or any other entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant.
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(c) Tax Fees – The aggregate fees billed for professional services rendered by the independent registered public accounting firm to the Registrant for tax compliance, tax advice, tax planning and tax return preparation for the last two fiscal years ended September 30, 2009 and September 30, 2008 were $76,000 and $69,400, respectively. These services consisted of the independent registered public accounting firm reviewing the Registrant’s excise tax returns, distribution requirements and RIC tax returns, as well as consultations regarding the tax consequences of specific investments.
During the fiscal years ended September 30, 2009 and 2008, no fees for tax compliance, tax advice or tax planning services that relate directly to the operations and financial reporting of the Registrant were billed by the independent registered public accounting firm to the Registrant’s investment adviser or any other entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant.
(d) All Other Fees – The aggregate fees billed for professional services rendered by the independent public accounting firm to the Registrant regarding the implementation of Financial Accounting Standards Board Release No. 48 for the fiscal year ended September 30, 2008 was $2,500. During the fiscal year ended September 30, 2009, there were no fees billed for products and services provided by the independent registered public accounting firm to the Registrant, other than the services reported in paragraph (a) – (c) of this Item 4.
During the fiscal years ended September 30, 2009 and 2008, no fees for other services that relate directly to the operations and financial reporting of the Registrant were billed by the independent registered public accounting firm to the Registrant’s investment adviser or any other entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant.
(e) Pre-Approval Policies and Procedures
(1) Pursuant to the registrant’s Audit Committee Charter, the Audit Committee shall evaluate the independence of the independent public accountants, including evaluating whether the independent public accountants provide audit services or consulting services to the Registrant or consulting services to the investment adviser, and to receive the specific representations of the independent registered public accounting firm as to their independence. Specifically, the Audit Committee will be responsible for evaluating the provision of non-audit services to the Registrant as required by Section 201 of the Sarbanes-Oxley Act, any pre-approval requests submitted by the independent registered public accounting firm as required by Section 202 of the Sarbanes-Oxley Act or as otherwise required under Section 2-01 of Regulation S-X, and shall monitor the conflict of interest requirements in Section 206 of the Sarbanes-Oxley Act, and the prohibitions on improper influence on the conduct of audits in Section 303 of the Sarbanes-Oxley Act. The Audit Committee shall pre-approve any engagement of the independent registered public accounting firm to provide any services (other than prohibited non-audit services) including the fees and other compensation to be paid to the independent registered public accounting firm.
The independent registered public accounting firm is authorized by the Audit Committee to provide non-audit services to the extent allowable under the Sarbanes-Oxley Act of 2002 for the Registrant provided that (i) the fees payable with respect to such services do not exceed $5,000 in any calendar quarter and (ii) such fees are ratified by the Audit Committee at its next meeting. The fees payable with respect to non-audit services may be increased by the affirmative vote of a majority of the members of the Audit Committee.
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(2) There were no pre-approval requirements waived for the services provided to the Registrant described in paragraphs (b)-(d) of Item 4 by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X (the “De Minimis Rule”). There were no fees billed for services provided to the investment adviser described in paragraphs (b)-(d) of Item 4 that were required to be pre-approved by the Audit Committee as described in paragraph (e)(1) of Item 4.
(f) No disclosures are required by this Item 4(f).
(g) The independent registered public accounting firm did not bill the Registrant or the Registrant’s investment adviser for any other ongoing non-audit services for the fiscal years ended September 30, 2009 and 2008 for the Registrant other than as disclosed above.
(h) No disclosures are required by this Item 4(h).
| Item 5. | Audit Committee of Listed Registrants. |
Not applicable.
| Item 6. | Schedule of Investments. |
| (a) | Schedule of Investments is included as a part of the report to shareholders filed under Item 1 of this Form N-CSR. |
| (b) | Not applicable. |
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
| Item 8. | Portfolio Managers of Closed-End Investment Companies. |
Not applicable.
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
| Item 10. | Submission of Matters to a Vote of Security Holders. |
The Board of Directors has not adopted procedures by which shareholders may recommend nominees to the Board.
| Item 11. | Controls and Procedures. |
| (a) | The Registrant’s principal executive and principal financial officers have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c)) are effective, as of a date within 90 days of the filing date of this Form N-CSR based on their evaluation of these |
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controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
| (b) | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
| Item 12. | Exhibits. |
| (a) (1) | Code of Ethics is attached hereto. |
| (2) | The certifications required by Rule 30a-2(a) of the 1940 Act are attached hereto. |
| (3) | Not applicable. |
| (b) | The certifications required by Rule 30a-2(b) of the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WASATCH FUNDS, INC. | ||
| By: | /S/ SAMUEL S. STEWART, JR. | |
| Samuel S. Stewart, Jr. | ||
| President (principal executive officer) of Wasatch Funds, Inc. | ||
Date: December 3, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| By: | /S/ SAMUEL S. STEWART, JR. | |
| Samuel S. Stewart, Jr. | ||
| President (principal executive officer) of Wasatch Funds, Inc. |
Date: December 3, 2009
| By: | /S/ CINDY B. FIRESTONE | |
| Cindy B. Firestone | ||
| Treasurer (principal financial officer) of Wasatch Funds, Inc. |
Date: December 3, 2009